The International Monetary Fund agreed to give El Salvador $120 million. This follows a review of a larger $1.4 billion loan deal made last year. The money comes from the Extended Fund Facility, a program meant to support economic reforms in countries facing financial trouble.
The decision is subject to approval by the IMF’s Executive Board. The IMF staff met with Salvadoran authorities and finalized their first review. The IMF staff discovered that El Salvador is achieving its main goals.
The nation achieved targets for finances and reserves. Government operation reforms, transparency, and financial stability are progressing. The IMF commended El Salvador for implementing its reform plans.
IMF calls for higher bank cash reserves
They registered robust gains, despite the uncertain global economic situation. El Salvador’s economic growth is ongoing, bolstered by remittances and improved public confidence. El Salvador will need to maintain its budget plan to remain on course.
The government is to lower its salaries bill and reduce spending. In the future, there will be reforms to the civil service and the pension system. A new fiscal sustainability law will serve as a guideline for long-term actions. The state also intends to increase its financial buffer.
It will keep more resources in the central bank as well as maintain tight spending controls. Banks will be required to reserve more funds. Financial regulation, including for cooperatives, will be enhanced.
Steps Align with IMF program conditions
The campaign against corruption will go on. There is a new anti-corruption law. The emphasis now will be on ensuring it is properly enforced. The administration also hopes to enhance the monitoring of public funds.
With Bitcoin, the government will not add to its overall holdings. It also intends to discontinue the Chivo wallet program by the end of July. The IMF’s conditions are aligned with continuing the reforms, as agreed by the IMF and El Salvador.
The government must be agile and careful. The measures are necessary for maintaining the stability of the economy and nurturing long-term growth. The IMF appreciated the cooperation displayed by Salvadoran authorities during negotiations.
