Fusades estimates that the government is facing a fiscal deficit in excess of $400 million for the remainder of the year, and there is no clarity as to how it will be financed.
The Salvadoran Foundation for Economic and Social Development (Fusades)"... updated its estimates of funding needs for the remainder of the year.In July, it was estimated that the uncovered financial gap ranged from $537.1 million to $622.9 million."
According to Moody's, the plan to reduce expenses announced by President Solís will not be enough to solve the illiquidity problem being faced, nor to avoid a rise in local interest rates.
The plan to cut costs that are not mandatory in the budget, such as the suspension of public purchases that have not yet started to be implemented, will not be enough to avoid the impact of the fiscal deficit on local interest rates.This is the opinion of the rating agency Moody's, regarding the cost cutting plan announced by President Solis to address the fiscal problem that is affecting the country.
At the end of April, the Central Government's fiscal deficit stood at 1.7% of GDP, and total expenses grew mainly due to an increase in capital expenditure.
From a statement issued by the Ministry of Finance:
The fiscal results as of April 2017 show stable behavior in
A bill has been proposed to create a fiscal council to ensure that the public budget contemplates reasonable assumptions and meets the requirements of the Fiscal Responsibility Law.
The bill is being prepared by the Ministry of Economy and Finance, and its chief, Dulcidio de la Guardia, told Prensa.com that in addition the Fiscal Council, aims to create"...
The countries facing the greatest risk of fiscal unsustainability within three years are El Salvador and Honduras, followed by Costa Rica and with less risk, Nicaragua and Panama.
From the "EconomicOutlook"section of the V Report on the State of the Region 2016:
Fusades has cited serious liquidity problems in public finances and stated that "without additional money, the state has only months in which to operate normally".
From a statement issued by the Salvadoran Foundation for Economic and Social Development:
In 2015 there was a slight improvement in economic growth in El Salvador; however, job creation is insufficient and in the first quarter of 2016 a deterioration has been observed.
At the end of the first quarter the financial deficit was 1.6% of GDP, below the 1.9% of GDP recorded in the same period in 2015.
From a statement issued by the Ministry of Finance:
At the end of the first quarter of the year, the fiscal figures showed a decline of close to ¢86,000 million in the primary deficit (revenue less noninterest expense) and close to ¢38,500 million in the financial deficit.
The financial deficit recorded at the end of the first quarter reached 1.3% of GDP, mainly due to a primary surplus of 0.3% of GDP having been achieved.
From a statement issued by the Ministry of Finance:
- The month of March 2016 had a primary surplus, the highest in the last seven years.
- Fall in collection of taxes from companies and fuel decreased growth rate of tax revenues.
The productive sectors have indicated that the state budget approved for 2015 is underfinanced and will force the government to raise taxes or issue more debt in order to comply with it.
The approved general budget for the nation is $4.824 billion an amount which according to the private sector can not be covered by current tax revenues, therefore in order to raise this amount there must be either be cuts made to services such as subsidies or social programs, increases or creation of more taxes, or more debt taken on.
"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.
EDITORIAL
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%.
The Central American Institute for Fiscal Studies has concluded that only the public debts of Panama and Nicaragua, using official data, are sustainable in the medium term.
The main theme of the fifth edition of the 'Lente Fiscal Centroamericano' (Central American Fiscal Lens) is an analysis of debt sustainability in Central America, which depends greatly on interest payments on debt, economic growth, inflation, revaluation and management of the fiscal deficit.
The president of the Bank of Guatemala, Edgar Barquin warned that "In a decade, the debt level will be critical."
Guatemala's foreign debt currently amounts to 25% of gross domestic product (GDP), and it appears to be far from the critical point, which is indicated by 40% of GDP.
However Barquín explains that the problem is in the low payment capacity of the Guatemalan state, which could be compromised in terms of the maintaining a fiscal deficit at a reasonable level.
The deficit of the nonfinancial public sector was 2.1% of GDP at the end of fiscal year 2012, compared with a deficit of 2.2% of GDP in 2011.
A statement from the Ministry of Economy and Finance reads:
The deficit of the nonfinancial public sector (NFPS), was 2.1% of GDP at the end of fiscal year 2012, compared with a deficit of 2.2% of GDP in 2011, total NFPS revenues increased by B /.
During the first month of 2013 government spending was 16% higher than in January 2012, while income rose by 8.4%.
Crhoy.com reports that "In general, the central government deficit during the first month of the year stood at 0.84% as a proportion of gross domestic product (GDP). Meanwhile, interest expenses increased in the order of 36%, whereas a year earlier it increased in the order of 10.1%. "
In November, the balance between government revenues and expenditures showed a deficit equivalent to 4% of GDP.
In November the government deficit amounted to $ 1.82 billion, or 4% of the gross domestic product (GDP), the same level as in 2010. Nevertheless, in 2010 the shortfall was lower, at $ 1.52 billion. Of the $1.82 billion shortage the government needs to cover its running costs, $1.12 billion were financed with domestic debt and $700 million with external debt.