## IMF Survey: IMF Makes $800 Million Available to El Salvador

_IMF News, January 16, 2009_

## Source details

**Canonical URL:** [IMF Survey: IMF Makes $800 Million Available to El Salvador](https://www.imf.org/en/news/articles/2015/09/28/04/53/soint011609a)

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## Bibliographic details
- Authors: Arrangement. Why
- Published: January 16, 2009

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### Overview of the arrangement
- The IMF's Executive Board approved an $800 million precautionary Stand-By Arrangement for El Salvador.
- The arrangement covers a 14½-month period.
- The Salvadoran authorities do not intend to draw on the resources made available under the arrangement unless the need arises.
- The arrangement is described as precautionary and aimed to bolster confidence amid electoral uncertainty and fallout from the global financial crisis.

### Economic context and impact
- El Salvador has strong economic fundamentals, a moderate public debt-to-GDP ratio, and is not currently facing balance of payments pressures.
- The global financial turmoil, the U.S. recession, and election-related uncertainty prompted proactive measures by the authorities to reduce potential impact.
- So far, the impact of the global financial crisis on El Salvador has been limited, but there are signs of a significant slowdown in growth.
- Remittances have been adversely affected and strong remittance growth is not likely to resume soon; this will impact the most vulnerable.
- Exports have been holding up quite well despite the U.S. recession.
- The financial system is described as highly liquid and well-capitalized.
- Overall assessment: 2009 is expected to be a difficult year, but El Salvador is in a good position to weather the storm.

### Rationale for choosing a Stand-By Arrangement
- The IMF's new Short-Term Liquidity Facility cannot be used as a precautionary arrangement; members accessing it are expected to draw on Fund resources immediately.
- El Salvador sought a precautionary arrangement because it wishes to bolster defenses without immediately drawing Fund resources.
- By approving a precautionary Stand-By Arrangement, the IMF demonstrates flexibility in tailoring assistance to member countries' needs.

### Policy measures and institutional actions
- The authorities sought reasonably priced external financing from multilateral institutions, negotiating loans with the World Bank and the Inter-American Development Bank for budget support and to increase bank credit supply.
- Measures taken to increase resilience to shocks:
  - Continue pursuing a sound fiscal policy to keep public debt on a sustainable path.
  - Increase the liquidity buffer of the financial system.
  - Upgrade the regulatory and supervisory framework for the financial sector.
  - Secure financing from the World Bank, the Inter-American Development Bank, and the IMF to shore up resilience.

### Political continuity and program sustainability
- Presidential elections are scheduled "this March."
- The two leading presidential candidates publicly expressed support for the main elements of the economic program and reiterated commitment to maintaining macroeconomic stability and dollarization.
- Broad political consensus on maintaining economic stability is cited as helping ensure policy continuity through the political transition.

*Interview with Alfred Schipke; IMF Survey online, January 16, 2009.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Survey Interview](https://www.imf.org/en/news/search)
- [Stand-By Arrangement](https://www.imf.org/external/np/exr/facts/howlend.htm)
- [Press release](https://www.imf.org/external/np/sec/pr/2009/pr0910.htm)
- [El Salvador and the IMF](https://www.imf.org/external/country/SLV/index.htm)
- [Latin America's better policies](https://www.imf.org/external/pubs/ft/survey/so/2008/CAR112408B.htm)
- [Outlook for Latin America](https://www.imf.org/external/pubs/ft/reo/2008/WHD/ENG/wreo1008.htm)
- [Latin America grapples with crisis](https://www.imf.org/external/pubs/ft/survey/so/2008/CAR102708A.htm)
- [Transparency aiding Latin America](https://www.imf.org/external/pubs/ft/survey/so/2008/CAR018A.htm)
- [Short-Term Liquidity Facility](https://www.imf.org/external/pubs/ft/survey/so/2008/POL102908A.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/soint011609a_