Government of El Salvador Lacks Liquidity

The delay in payments to suppliers to the state, corresponding to July, reflects the complicated situation of public finances in El Salvador.

Thursday, August 11, 2016

Arguing that "... July was a very bad month fiscally," Finance Minister Carlos Caceres, justified the delay in payment to suppliers of goods and services. According to the minister, in July the government "... had to pay $260 million in external debt and Treasury bills." adds that "... in August they need to pay another $40 million in Letes [Treasury bills] and yesterday they paid more than $36 million in foreign debt. Another payment that is behind schedule because of the government's fiscal situation is the transfer of resources to the Financial Investigation Unit for the rent of buildings. This entity already has already received threats of eviction and suspension of its internet service. "

"...Given this, Caceres has again called on the ARENA party to promptly give their votes to ratify the issuance of $1.2 billion in bonds, of which he said that $950 will be used to pay off short and medium term debt and $250 million to catch up on expenditure. "

More on this topic

El Salvador: Concerns Over State's Ability to Pay

June 2016

The government looks like it will be unable to cope with its obligations in the second half of the year, because "there is no money to make it to the end of the year."

Figures from the Salvadoran Foundation for Economic Development (Fusades) indicate that the current balance of government debt (Treasury bills) now exceeds $900 million, and to meet its obligations in the second half of the year $500 million more is needed, which will have also have to be borrowed.

El Salvador: Dangerous Increase in Government Debt

April 2015

Instead of cutting back on spending, the State has once again called on the Legislature to approve borrowing another $900 million, which will bring total debt to a record of nearly $17 billion.

Currently it is estimated that GDP is around $25 billion, meaning that state debt represents 68% of national production, excluding interest payments.

El Salvador: Legislators Vote No to Tax Reform

May 2014

The opposition in the Assembly is calling for government approval of the bill on fiscal responsibility before approving the issuance of debt of $1.15 billion and a proposed tax package.

The lawmakers argued that there is a need to thoroughly scrutinize the text of the proposed reforms, as there is uncertainty over the destination the government will chose for the proceeds as well as strategies to revive the national economy in order for the state to ensures there is liquidity rather continuing to generate more debt for the country.

El Salvador: Complaints Over Fiscal Discipline

May 2012

The governments cash-strapped position is reflected by delays in payments, while it increases short-term public debt and the IMF has suspended the precautionary agreement.

"Public debt in El Salvador between March 2011 and March 2012 increased by $450 million (+4.3%) to $13,232,000.

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