El Salvador: Request for Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for El Salvador

IMF Staff Country Reports, March 3, 2025

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El Salvador: Request for Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for El Salvador

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Bibliographic details

• Published: March 3, 2025
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798229003483.002

Overview

• Publication date: March 3, 2025.
• The paper examines El Salvador’s Request for an Extended Arrangement under the Extended Fund Facility.
• Core objective: ensure conditions are in place to boost El Salvador’s growth prospects and resilience by strengthening public finances, rebuilding external and financial buffers, and improving governance and transparency.
• Decisive ownership, implementation, and broad political and public support are identified as critical for program success.

Macroeconomic performance and recent developments

• The Salvadorean economy is described as steadily expanding.
• Key drivers of expansion: robust remittances and tourism, and a greatly improved security situation.
• External deficits have narrowed.
• Inflation has fallen.
• Recent liability management operations have reduced near-term financing needs.
• Bitcoin risks are being addressed as part of the program considerations.

Program objectives and policy focus

• Address macroeconomic imbalances.
• Strengthen governance and transparency.
• Boost growth prospects and resilience through:
  • Strengthening public finances.
  • Rebuilding external and financial buffers.
  • Improving governance and transparency.
• Emphasis on agile policy making and contingency planning to manage downside risks in the context of dollarization.

Risks and contingency planning

• Downside risks are highlighted in the context of dollarization, requiring agile policymaking and contingency plans.
• Political economy dimension: broad political and public support is necessary for successful implementation.
• Financial operations: recent liability management reduced near-term financing needs but underline importance of rebuilding buffers.

Policy recommendations and implementation priorities

• Ensure decisive ownership and robust implementation of policy measures.
• Strengthen governance and transparency frameworks (including measures relevant to Bitcoin transparency and audited financial statements).
• Rebuild external and financial buffers to enhance resilience.
• Pursue contingency planning tailored to constraints of dollarization.
• Address anti-money laundering and combating the financing of terrorism (AML/CFT) considerations integral to program design.

Subject areas and keywords (as listed)

• Anti-money laundering and combating the financing of terrorism (AML/CFT)
• Crime
• Economic sectors
• Expenditure
• Pension spending
• Public debt
• Public sector
• audited financial statements
• Bitcoin transparency
• Caribbean
• Central America
• Global
• publication of asset declaration
• staff appraisal

Source: International Monetary Fund — El Salvador: Request for Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for El Salvador (March 3, 2025).

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