{
  "title": "IMF Staff Concludes Visit to El Salvador",
  "publication": "IMF News, November 8, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/11/08/pr19404-el-salvador-imf-staff-concludes-visit",
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  "summary": "End-of-Mission press release dated November 8, 2019.",
  "publishDate": "2019-11-08",
  "sections": [
    {
      "heading": "Mission overview",
      "content": "- End-of-Mission press release dated November 8, 2019.\n- Mission led by Ms. Alina Carare visited San Salvador during November 4-8, 2019.\n- Purpose: discuss the outlook, the 2020 budget and the government’s growth agenda, including structural reforms to promote investment.\n- Meetings held with: President Nayib Bukele; Chief of Cabinet Carolina Recinos; Finance Minister Nelson Fuentes; Central Bank President Carlos Federico Paredes; Superintendent of the Financial System Mirna Arevalo de Patiño; Minister of the Economy Maria Luisa de Hayem; Secretary of Commerce and Investment Miguel Kattan; Minister of Defense Rene Francis Merino Monroy; other senior government officials; members of the Legislative Assembly; and representatives of the private sector."
    },
    {
      "heading": "Economic outlook and risks",
      "content": "- Recent performance and near-term projection:\n  - “The economy grew 2.2 percent in the first half of the year, and inflation hovered around zero.”\n  - “After dipping in the second quarter, remittances growth returned to its long-term rate of 4 percent.”\n  - “In 2019 real GDP growth is expected to be 2½ percent on the back of improving business confidence.”\n  - Over the medium-term and under current policies, economic growth will converge to the estimated potential.\n- Downside risks:\n  - Weaker-than-expected global growth.\n  - Domestic policy slippages, notably if spending measures are adopted without identifying appropriate non-borrowing funding resources.\n- Upside possibility:\n  - Global financial conditions may prove more supportive than presently expected."
    },
    {
      "heading": "Structural reforms, governance, and business climate",
      "content": "- Positive actions and support:\n  - Authorities are aggressively tackling crime and corruption and are starting to improve the business environment to support growth.\n  - Mission welcomes implementation of the “Plan of Control Territorial” to improve security.\n  - Mission welcomes elimination of the so-called “gastos reservados” for the office of the presidency to reduce corruption.\n  - Mission supports efforts to expedite processing of business permits, including by creating a red tape committee and improving information sharing among public agencies to streamline business registration.\n- 2020 budget orientation:\n  - Higher spending on security, human capital, and infrastructure in the 2020 budget is welcomed as provision of public goods needed for economic growth."
    },
    {
      "heading": "Fiscal position, projections, and policy recommendations",
      "content": "- Recent fiscal performance:\n  - “The primary fiscal balance has improved by 2¾ percent of GDP since 2013 but remains broadly unchanged over 2018-2019 at 0.9 percent of GDP.”\n- 2020 draft budget:\n  - Envisages a further consolidation of 0.2 percent of GDP owing to better revenue administration.\n- Debt dynamics and recommended adjustment:\n  - Envisaged primary surpluses “of 1.2 percent of GDP on average during 2020-2021” would not be enough to offset the rising interest bill associated with the high stock of debt, absent sizeable frontloaded adjustment.\n  - Interest-growth differential remains considerable—about 4 percent—prompting continued recommendation for prudent fiscal adjustment.\n  - Further fiscal consolidation of about 2 percent of GDP by 2021 is recommended to ensure commitment to the fiscal responsibility law and put debt on a firmly declining path.\n  - Consolidation measures should be carefully calibrated, growth-friendly, and protect the poor and vulnerable.\n- Financing and market conditions:\n  - Market conditions currently remain favorable, but sizeable financing gaps are looming over the medium-term.\n  - Approving a strong budget and its financing on time will contribute to macroeconomic stability and enhance the investment climate."
    },
    {
      "heading": "Financial sector stability and policy support",
      "content": "- Banking sector soundness:\n  - “Banks are solid with low NPLs, high capital buffers, and abundant liquidity.”\n- Staff support for authorities’ efforts to preserve financial stability through:\n  - (i) Adopting the bank resolution legislation in line with best practices.\n  - (ii) Ensuring that the reactivated interbank market functions smoothly to increase banks’ efficiency in managing liquidity.\n  - (iii) Ensuring that measures supporting credit growth fully comply with the risk-based supervision framework.\n  - (iv) Continuing to promote financial inclusion, including the recently adopted amendments to the financial inclusion law."
    },
    {
      "heading": "Mission closing statement",
      "content": "- “The IMF greatly appreciates the frank and productive discussions and the warm hospitality of our Salvadoran counterparts.”\n\nIMF Staff Concludes Visit to El Salvador — Press Release No. 19/404 (November 8, 2019).\n\n---\n\n\n References\n\n- El Salvador and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/11/08/pr19404-el-salvador-imf-staff-concludes-visit"
    }
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    "Published: November 8, 2019",
    "End-of-Mission press release dated November 8, 2019.",
    "Mission led by Ms. Alina Carare visited San Salvador during November 4-8, 2019.",
    "Purpose: discuss the outlook, the 2020 budget and the government’s growth agenda, including structural reforms to promote investment.",
    "Meetings held with: President Nayib Bukele; Chief of Cabinet Carolina Recinos; Finance Minister Nelson Fuentes; Central Bank President Carlos Federico Paredes; Superintendent of the Financial System Mirna Arevalo de Patiño; Minister of the Economy Maria Luisa de Hayem; Secretary of Commerce and Investment Miguel Kattan; Minister of Defense Rene Francis Merino Monroy; other senior government officials; members of the Legislative Assembly; and representatives of the private sector.",
    "Recent performance and near-term projection:",
    "Downside risks:",
    "Upside possibility:",
    "Positive actions and support:",
    "2020 budget orientation:",
    "Recent fiscal performance:",
    "2020 draft budget:",
    "Debt dynamics and recommended adjustment:",
    "Financing and market conditions:",
    "Banking sector soundness:",
    "Staff support for authorities’ efforts to preserve financial stability through:",
    "“The IMF greatly appreciates the frank and productive discussions and the warm hospitality of our Salvadoran counterparts.”",
    "[El Salvador and the IMF](http://www.imf.org/external/country/SLV/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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