El Salvador: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for El Salvador
IMF Staff Country Reports, May 23, 2019
Source details
- Canonical URL
- El Salvador: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for El Salvador
Other formats
Bibliographic details
- Published: May 23, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498316972.002
Main findings and macroeconomic context
- Structural reforms, strengthened policy frameworks, and the ongoing smooth political transition have laid the foundations for sustained growth in El Salvador.
- Continued US dollar appreciation led to a significant decline in inflation and widening of the current account deficit.
- The authorities agreed that debt would continue to drift upward in the absence of measures.
- Weaker-than-expected global growth could have a negative impact on the domestic economy.
- The authorities emphasized their commitment to guarantee a smooth political transition by sharing information with the new administration and by inviting the Audit Office to oversee the handover process.
Risks and vulnerabilities
- Fiscal vulnerabilities remain a central concern, with public debt on a path to drift upward if no corrective measures are taken.
- External vulnerability: widening of the current account deficit associated with dollar appreciation.
- Governance and integrity risks: gaps in governance, anticorruption, and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) frameworks were identified as areas needing strengthening.
Policy recommendations
- Fiscal policy and transparency
- Increase the fiscal transparency of the 2020 budget laws.
- Strengthen audit and spending controls to reduce fiscal vulnerabilities.
- Governance, anticorruption, and AML/CFT
- Improve the governance and anticorruption frameworks.
- Strengthen the AML/CFT framework consistent with identified deficiencies.
- Revenue administration and public finance management
- Promptly implement electronic invoicing to enhance revenue administration and spending oversight.
- Political transition support
- Continue information sharing with the incoming administration and oversight by the Audit Office to ensure a smooth handover.
Focus areas for sustaining and boosting growth
- Implement recommended governance and fiscal measures to preserve macroeconomic stability.
- Adopt reforms and policies that boost long-term growth while addressing fiscal and governance vulnerabilities.
Source: El Salvador: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for El Salvador (May 23, 2019).
Content in this bundle
- 1slvea2019001