On July 8, the Salvadoran government issued $1 billion in bonds on the international market at a 9.5% interest rate with a maturity date of 2052.
The resources collected through this international issue are part of the $3 billion debt issuance authorized by the government and will be used to finance the health and economic crisis resulting from the spread of the Covid-19.
In order to redirect public resources due to the covid-19 outbreak, the government decided that investment projects that have not started to be implemented and those that are at an advanced stage will be suspended.
A letter signed by the Minister of Finance, Nelson Fuentes, and sent to the heads of state institutions, explains that the programs and projects contained in the Budget and Annual Public Investment Program Law (PAIP) are suspended.
Since October 1st, the payment of the Real Estate Transfer Tax Declaration can be made through a digital platform.
Elmundo.sv reviews that "... Alejandro Zelaya, Vice Minister of Revenue, reported that not only will there be a reduction in time, but also these 'procedural aspects' will reduce the economic cost of users, such as the elimination of payment to messengers who make the different processes for tax declaration.
Authorities from both countries agreed to work on the unification of their stock markets, starting with the issuance of a quota of Guatemalan subsidized debt directed to Salvadoran investors.
Representatives of the Guatemalan Ministry of Finance and the Ministry of Finance of El Salvador informed that before the end of this fiscal year, the Guatemalan subsidized debt will be approximately $13 million.
Driven by the financial commitments of the Central Government and those originated by pensions, the country's public debt increased 3% at the end of 2018, reaching $18.975 million.
Finance Ministry statistics detail that between 2017 and 2018 the public debt that includes credits contracted by the Central Government, its financial and non-financial public companies, as well as the Central Reserve Bank, increased $602 million, from $18.373 million to $18.975 million.
In El Salvador, it is expected that electronic invoicing will be in effect in 2020, since reforms to the Tax Code and the Law on the Transfer of Movable Goods Tax are still needed.
Authorities from the Ministry of Finance reported that to implement electronic invoicing, they already meet with representatives of the Inter-American Development Bank (IDB) and expect the arrival of experts from Costa Rica.
The Sanchez-Ceren administration plans to issue $800 million in debt securities to repay obligations that will expire next year and another $1.407 million to complement the 2019 national budget.
The Ministry of Finance presented to the Congress next year's Budget project, which includes, among other aspects, adjustments to the fiscal deficit that the government will register next year.
In order to guarantee the supply of basic grains in the country, the Salvadoran government has signed an agreement to import 35,000 tons of white corn.
Due to the lack of rain that has affected crops in areas of the east of the country, the government signed an executive agreement between the ministries of Agriculture, Economy and Finance, to import basic grain.
In El Salvador the plan is to implement a pilot plan to test the electronic billing system over the next two months, starting with six companies.
The global project that will simplify 63 processes currently carried out by large taxpayers is expected to be consolidated in the next two or three years, since it is still in the stage of purchasing computer equipment.
Requesting more loans or issuing bonds are the options under consideration by the Ministry of Finance in order to raise funds needed to cover the 2018 budget deficit.
On top of the funds that the Sánchez Cerén administration needs to finish 2017, there is also a shortfall to cover the budget for the next year.The funds needed are for the propane gas subsidy and for servicing debt related to the Preliminary Investment Certificate (CIP by its initials in Spanish).It is estimated that the shortfall is at least $925 million, according to explanations given by the Minister of Finance, Carlos Cáceres.
In search of fresh resources, capital shares in sugar factories and plants held by Corporación Salvadoreña de Inversiones will be sold to private companies.
The aim of the Sánchez Cerén administration is to part with its shares and obtain fresh resources to pay off debts amid the liquidity crisis it is facing.The decree approved by the Legislative Assembly"... establishes a deadline up until October 10 for Corsain to be able to gradually sell the shares it owns, which could be worth about $23 million."
Fitch Ratings has downgraded El Salvador's Long-term (LT) Local Currency Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'B'/Negative.
From a report by Fitch Ratings:
Fitch Ratings-New York-10 April 2017: Fitch Ratings has downgraded El Salvador's Long-term (LT) Local Currency Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'B'/Negative.
It has been announced that the new "Comprasal II" will allow access to information on tenders in real time, and its entry into operation is scheduled for early 2017.
The Ministry of Finance explained that some state institutions are already using it, in a first test phase.It is expected that other institutions will start using it in January.
The government has already reached 72% of the maximum amount of issuance of Treasury Bills that is permitted by law, and it only has $370 million available to borrow this year.
Given the critical fiscal situation, the Sanchez Ceren administration is insisting in the Legislature on the approval of a bill to issue another $1.2 billion in debt.According to the government, several commitments can not meet unless these funds are available.For the remainder of the year the only remaining possibility is the issuance of $370 million in short-term debt in the local market.
The delay in payments to suppliers to the state, corresponding to July, reflects the complicated situation of public finances in El Salvador.
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 $260million in external debt and Treasury bills."
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