El Salvador: Proposal for Fiscal Responsibility Regulations

The aim is to discipline and put limits on discretionary fiscal policy, leading to credibility in the management of public finances.

Wednesday, September 19, 2012

A statement by the Salvadoran Foundation for Economic and Social Development (FUSADES) reads:

Fiscal Responsibility in El Salvador

Trend of deteriorating public finances

El Salvador has a trend of deterioration in its public finances, fiscal deficit has increased, forcing significant increases in public debt. In the last four years, debt to finance the deficit increased by 15 percentage points as a ration of GDP, rising from 37.4% in 2007 to 52.7% in 2011. This performance has increased sovereign risk, the risk rating agencies downgraded El Salvador’s rating, damaging credit conditions for Salvadorans and has not allowed two agreements with the International Monetary Fund (IMF) to be met, affecting economic stability and credibility.

The consequences of high public debt are detrimental to social progress, economic growth and economy stability. Excessive debt prevents the government from fulfilling its functions properly, such as health services, education, public safety, infrastructure, among other things, because it must destine vast amounts of resources to managing debt, and restricts the scope for addressing contingencies caused by natural disasters or external shocks.

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A Cry in the Fiscal Night for Costa Rica

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"The defense and strengthening of the rule of law requires, as a starting point, enabling sound public finances. The rest is verbal pyrotechnics." Otton Solis.


Costa Rica is subject to a rare political situation, where the founder of the party in power and his first deputy, defends rationality as a tool of governance and for managing public finances, in the face of voluntarism in the matter on the part of the Executive, which adds more risk to the serious threat of the fiscal deficit inherited from previous governments, presenting a budget that increases state expenditures by 14%.

El Salvador: Businesses Demand Fiscal Responsibility Law

June 2014

The private sector demands limits on the government's ability to borrow, through means of a Fiscal Responsibility Law.

From a press release issued by the Chamber of Commerce and Industry of El Salvador (Camarasal):

The Camarasal has expressed dissatisfaction with the fact that the Legislature has authorized the government to issue a new bond debt for $1.156 million, without having first limited the state's debt capacity through the adoption of a Fiscal Responsibility Law.

Why are the Elite are Interested in Fiscal Policy?

June 2013

Analysis of the evolution of fiscal policy in the isthmus, as a reflection of the reconfiguration and influence of the economic elite in the region.

The report "Fiscal policy, elite groups and the state in contemporary Central America" by the Central Institute for Fiscal Studies (Icefi), "recognizes how powerful the present elite groups are and how much influence they have in each of the countries.