IMF Recommends El Salvador to Maintain Dollarization

The International Monetary Fund endorsed the country's decision to continue with the dollarization process.

Wednesday, October 27, 2010

After approval of the Monetary Integration Law (2001), which gave way to the dollarization of the economy not everything has gone as desired, the report presented by the IMF showed.

"Jordi Prat, Senior Economist at the Department of the IMF's Western Hemisphere, and one of the authors of the study, said the Salvadoran economy and its ability to respond to international shocks suffered no major change before and after dollarization.

In post-dollarization the economy became less volatile, Prat stated, but not because of the currency exchange system, because there were fewer clashes.

One of the arguments defending the decision of dollarization was that, by lowering interest rates, investment and exports would increase, stimulating economic growth and inflation would remain low,” according to the article in

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Costa Rica's Economy Becoming Increasingly Vulnerable

May 2016

The IMF points to a greater vulnerability in the financial sector because of credit expansion in dollars and on the macroeconomic level because of the inability to reduce the fiscal deficit.

From a press release issued by the IMF:

On May 11, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Costa Rica.

Why It Would Be Impossible to de-Dollarize El Salvador

June 2012

An Argentine expert predicts that if the Salvadoran economy abandons the dollar it would trigger serious social upheaval ... and Argentines know all about that...

An article in by Eduardo Levy Yeyati, former official of the International Monetary Fund (IMF) and the World Bank, and "who has conducted research on the causes and consequences of dollarization, the behavior of markets in times of crisis and of monetary and exchange rate regimes, said a freeze on bank withdrawals in the country would be accompanied by a pronounced economic downturn, which would be associated with an imbalance in the payment system, ie, lack of liquidity. "

Costa Rica Considers Dollarization

July 2010

The Costa Rican Legislative Assembly is to review a proposed law that “will protect the purchasing power of Costa Rican salaries and pensions”.

An opposition congresswoman from the ML political party submitted the proposal, which would “dollarize” the Costa Rican economy and take away some responsibilities from the Costa Rican central bank, such as that of regulating monetary policy.

Salvadoran Economy Will Remain Dollarized

April 2010

This was stated by Carlos Acevedo, president of the Central Bank, in response to a proposal to return to the Salvadoran colón.

Acevedo added that President Mauricio Funes committed to keeping the country dollarized in his presidential campaign, reaffirming it many times afterwards.

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