Fitch Ratings has raised the Salvadoran debt rating to CCC, but warned that political polarization could continue to affect the approval of new long-term loans.
The decision to raise the IDR risk rating in local currency was taken by Fitch Ratings after the government paid interest on Pension Funds Certificates (CIPs) to private pension funds on April 28.
The union of private companies has filed suit citing unconstitutionality against the law authorizing the state to use the savings of contributors to pay debts.
The National Association of Private Enterprise (ANEP) filed with the Supreme Court (CSJ) a claim of unconstitutionality against thelaw recently approved by the Assembly.
A law passed by the Legislative Assembly authorizes the State to use the savings of contributors to pay debts, putting at risk the value of future pensions.
The Salvadoran Association of Pension Funds (Asafondos) is opposed to the measure because it involves "... an endless cycle of debt generation, which would grow unchecked over time, without guarantee of payment for workers."
Up to $372 million of the state pension scheme could be invested in public infrastructure projects in Costa Rica.
Funding public works using Costa Rica's national savings funds saw a new and positive development in matters relating to the management of resources in the economy. The Board of Directors of the Costa Rican Department of Social Security approved a policy that allows allocation of up to $375 million of the reserves from the regime for Disability, Old Age and Death (IVM by its initials in Spanish) to be invested in public infrastructure projects, reported Nacion.com.
Banco Popular in Costa Rica plans to register bond issues in the financial markets of El Salvador, Panama and Nicaragua.
Pension funds in El Salvador and institutional investors in Nicaragua are the target for Banco Popular from Costa Rica, who plans to start three programs of issuances of debt worth $50 million.
Gerardo Abarca, financial manager of the company , told Elfinancierocr.com: "We want to internationalize the bank in terms of fundraising. We had a good experience in Panama, an already well consolidated market. We expect to leverage these new places a niche of investors with an appetite for terms of over one year. In Costa Rica , investments in accounts as well as on the National Stock Exchange, are still very short, with terms of six months to one year.
With different modus operandi, the governments of Costa Rica and El Salvador are degrading the future value of workers' savings deposited with Pension Operators.
EDITORIAL
In the case of Costa Rica it is the voracity with which the Treasury has to go to the stock market in order to raise money to pay for increased spending, especially on staff salaries, leading to low yields on government bonds, which in an obligatory manner make up the portfolio of the Supplementary Pension Operators (PCO), assets which are supposed to safeguard the future value of pensions.