Given the outbreak of covid-19 and the imposition of restrictions on economic activity, between February and June of this year the amount of loans granted by the banking sector reported a 1.2% drop.
Data from the Superintendence of the Financial System (SSF) indicate that between February (the month before the beginning of the health and economic crisis) and June of this year, the credit portfolio contracted by $149 million, from $13.276 million to $13.127 million.
The interest rate rise in the US and the perceived risk of the Salvadoran economy have taken their toll on foreign debt bonds, whose yields have risen by about 2% in recent weeks.
This increase in yield of debt securities traded on the international market will be reflected in the forthcoming issues made by the government, which, according to economic analyst Mauricio Choussy, "...
$500 million is the estimated amount that has not been invested due to bad business climate, poor image and lack of institutional credit, which frightens investors away.
These are the indications of the economist and former president of the Central Reserve Bank, Mauritius Choussy: "In four years, the amount lost adds up to $2 billion, which could have generated more than 150,000 jobs.
Academics and politicians are proposing an intersectoral agreement from which comprehensive tax reforms can arise in order to make public finances sustainable.
According to an article in Elmundo.com.sv, "The forum called 'Are Public Finances sustainable?', brings together economists and two deputies from the Special Committee on Finance and Budget of the Legislative Assembly to discuss and present their proposals for solutions to the current fiscal situation.
Guatemala´s BB+ sovereign risk rating and stable perspective, which is so close to the desired “Investment Grade,” is facing four threats.
According to an article by C.Véliz and J. Gramajo in Sigloxxi.com, Mauricio Choussy, the director of Fitch Central America, notes that four weaknesses persist in the country: “Low tax revenue, weak social indicators, social instability, and high levels of delinquency.”
On April 23 and 24, El Salvador will host the Second Latin American and Caribbean Meeting of Trade and Investment.
Among the topics to be discussed at the meeting organized by the Salvadoran Commission for the Promotion of Exports and Investments (PROESA and EXPORTA) are: the impacts of the global crisis on developing countries and the measures that have been taken to mitigate it; an analysis of the Latin American and Caribbean competitive situation in infrastructure and trade services and the situation of the tourism sector, including its current challenges and opportunities.
El Salvador reported lower inflation and greater stability unlike other countries in the region.
Both factors have boosted Salvadoran exports to the isthmus which totaled $1.191 billion between January and November, 2008, an increase of 23.7% over the same period in 2007.
An article in laprensagrafica.com reported that Mauricio Choussy, director of Fitch Ratings Central America, said: ""Salvadoran firms are growing by exporting to the region and have taken advantage of low inflation and the fixed exchange rate with the dollar.'
Fitch warns that credit restrictions will stop private investment and, with that, economic activity will decline.
Elsalvador.com publishes in its website: "The executive director of the risk assessors, Fitch Ratings, Mauricio Choussy, calculated that the crisis will have a transfer delay of some three quarters from the United States to the Central American region, a forecast that was confirmed by the former minister of the Salvadorian Economy, Yolanda de Gavidia, ´I believe that El Salvador has not yet felt the worse part and my perception is that it is going to be in the upcoming second semester that we are going to feel it,´ she affirmed."
The credit rating company Fitch warned that rising interest rates and out-of-control inflation could cause debtors to default on their loans.
Maurice Choussy, executive director of Fitch Centroamérica, said the rise in inflation is affecting the ability to pay for both families and businesses.
As well, he said, they must face the high costs of primary materials and salary demands from employees.