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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

May 31, 2022

Will El Salvador Reach a Lending Deal With the IMF?

The government of Salvadoran President Nayib Bukele would benefit from a lending deal with the International Monetary Fund, Moody’s said recently. But some commentators below point out that such a deal is far from certain. // File Photo: Salvadoran Government.

Q

  • El Salvador would benefit from a lending program with the International Monetary Fund, or IMF, given the weakened state of its finances, Moody’s Investors Service said in May. Earlier in the month, the ratings agency cut Salvadoran sovereign debt by two notches to Caa3, the agency’s third-lowest rating, due to “an increased probability of a credit event.” The IMF has been in talks with the Central American country’s government about several issues, including fiscal transparency and public fund accountability. How likely are El Salvador and the IMF to reach an agreement, and how could one benefit the country’s economy? What factors are shaping the possibility of a credit “event” in El Salvador? How significant has private investment been in the Central American country’s economic stability, which last year saw its highest levels of private investment in six decades?

A

Ilan Goldfajn, director of the Western Hemisphere Department at the International Monetary Fund: “IMF staff and Salvadoran authorities continue having regular discussions on key policy issues, including the pace and composition of fiscal measures while supporting growth and protecting vulnerable segments of the population. Our technical teams are also engaged in discussions around anti-money laundering, fiscal transparency, accountability in the use of public funds and strengthening the anti-corruption framework in line with international standards, as well as ways to minimize the risks arising from the country’s adoption of Bitcoin as a legal tender…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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