Press Release: IMF Mission and Salvadoran Authorities Reach Agreement on an Economic Program for 2011 in the Context of the Stand-By Arrangement

February 11, 2011

Press Release No. 11/41
February 11, 2011

Mario Garza, mission chief of the International Monetary Fund (IMF) to El Salvador, issued the following statement today in San Salvador:

“An IMF mission visited San Salvador during January 31-February 11, 2011 for discussions on the second review of the Stand-By Arrangement. The mission met with Technical Secretary of the Presidency Alex Segovia, Minister of Finance Carlos Cáceres, Central Bank President Carlos Acevedo, other senior officials, members of congress, and private sector representatives.

“The government’s economic program yielded important results in 2010. In particular, the economy began to recover modestly, the fiscal deficit was substantially lower than envisaged, all the performance criteria were observed, and the pace of implementation of structural benchmarks gained momentum.

“The mission and the authorities reached an agreement in principle on a macroeconomic program for 2011, in line with the government’s medium-term objectives laid out in the Stand-By Arrangement to support economic growth and social investment, undertake a gradual fiscal consolidation to ensure debt sustainability, and increase the resilience of the financial system.

“For 2011, real GDP growth is projected at 2.5 percent, supported by improved external and domestic demand conditions. The government will contain the fiscal deficit at 3.5 percent of GDP this year, sustained by strengthened tax administration and expenditure restraint, while at the same time increasing the share of priority investments and social projects on total government spending. As a result, public debt, including the central bank, is projected to stabilize at under 52 percent of GDP by end-2011. On the financial system, efforts will focus on improving supervision, strengthening liquidity buffers of the banking system, and enhancing banking resolution processes. The government also seeks to encourage private investment and exports through public-private partnerships and other mechanisms.

“Upon its return to Washington, staff will prepare a report describing the key elements of the authorities’ economic program and for consideration by the IMF’s Executive Board. The Board discussion for the completion of the second review of the Stand-By Arrangement is expected to take place in late-March 2011.”


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