El Salvador: $200 Million to Finance Public Budget

The IDB loan will be used to finance the payment of pensions in general and of the Armed Forces, subsidize electricity, and increase salary scales for police officers and teachers.

Friday, June 21, 2019

The $200 million loan from the Inter-American Development Bank (IDB) has an amortization period of 20 years, a grace period of five and a half years, and an interest rate based on LIBOR, according to the international organization.

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From the Legislative Assembly statement:

Finance the Fiscal Strengthening Program for Inclusive Growth II and, consequently, partially complement the financing of the 2019 budget; the Legislative Plenum authorized the Executive Branch to sign a $200 million loan contract with the Inter-American Development Bank (IDB). With the resources it would be possible, among other things, to cover the payment of pensions in general and of the Armed Force, subsidize electricity, increase salary scales of the National Civil Police and teachers.

Such loan does not mean a new debt for the country, but rather a change in the source of financing of these resources, since they had been contemplated in the issuance of securities authorized by the Legislative in December 2018 to finance the current budget of the nation; at that time $1,297 million was guaranteed to be placed indistinctly in the national or international market.

Read full statement.

More on this topic

Costa Rica Keeps Getting into Debt

October 2019

The Legislative Assembly approved a $35 million loan from the Inter-American Development Bank to "support the country in the implementation of its fiscal reform program.”

At the beginning of July, in the midst of the controversy generated by the recent implementation of fiscal reform in Costa Rica, the approval of a credit to strengthen fiscal sustainability was announced.

Costa Rica: More Debt to Control Spending?

July 2019

Costa Rica "will strengthen its fiscal sustainability by controlling expenditure and modernizing the tax system with a $350 million loan approved by the Inter-American Development Bank (IDB)."

During the controversy generated by the implementation of the fiscal reform in Costa Rica, the approval of a $350 million credit was announced to "support the country in the implementation of its fiscal reform program."

Costa Rica: State Debt Keeps Growing

May 2019

The Andean Development Corporation approved a $500 million loan for the government, which will be used to "cover the needs contemplated in the 2019 Regular Budget."

The terms of the loan are at 6 months plus a margin of 1.85% at an annual Libor rate of 18 years from the effective date of the loan agreement.

El Salvador: $350 million to Cover Fiscal Deficit

June 2018

El Salvador's Congress approved an IDB loan of $350 million to finance the government budget deficit at a 3.25% rate.

The president of the Legislative Assembly, Norman Quijano, stated that " ..." with the conditions offered by the IDB we will have an interest rate estimated at 3.25%, with the bonds we had an average rate of 7 and 8%, the reduction of interests will mean a saving of tens of millions of dollars for the country.' "

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