Statement by the IMF Mission to El SalvadorPress Release No. 11/309
August 18, 2011
Mario Garza, chief of the International Monetary Fund (IMF) mission to El Salvador, issued the following statement today in San Salvador:
“An IMF mission visited San Salvador during August 8-19, 2011 for discussions on the third review under the Stand-By Arrangement (SBA). The mission met with Technical Secretary Alex Segovia, Finance Minister Carlos Cáceres, Central Bank President Carlos Acevedo, other senior officials, members of congress, and business representatives. In the first half of 2011, implementation of the economic program supported by the IMF has been strong. The targets on the fiscal deficit and public debt through June were met, and structural measures on tax administration, public financial management, and banking reform advanced as programmed.
“Due to the recent deterioration in external conditions, economic growth during 2011 is projected at about 2 percent, somewhat lower than envisaged earlier in the year. The Government remains committed to reducing the overall fiscal deficit to 3½ percent of GDP in 2011, which would stabilize the public debt-to-GDP ratio at about 52 percent. The Government is also committed to making further strides towards fiscal consolidation in 2012, by further lowering the overall fiscal deficit to 2½ percent of GDP. To attain this goal, it will continue strengthening tax collection, further improve the targeting of subsidies, and keep current expenditure in check, while creating space for higher public investment. In the financial system, the authorities will support the shift to risk-based supervision, strengthen the liquidity buffers of the banking system, and advance the integration of the supervisory agencies. To facilitate private investment, the authorities intend to promote public-private partnerships, foster development credit, and establish a framework for investment funds.
“The IMF Executive Board is expected to consider completion of the third review under the SBA (see Press Release 10/95) in September 2011. The authorities have expressed the intention to continue treating the SBA as precautionary.”