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El Salvador will strengthen fiscal management with IDB support

The program, the first operation of a loan based on policies, will support the approval of laws, regulations.


IDB 13 Jun 2018, 11:12 PM El Salvador
  • The program will support the establishment of the Fiscal Responsibility Law, a Medium and Long-Term Fiscal Framework (MFMLP) and fiscal rules. (Image Credit: Wikipedia)

El Salvador will strengthen its fiscal management, protecting public investment and finance social programs to promote inclusive growth with the support of the Inter-American Development Bank (IDB), through a recently approved USD 350 million policy support program.

The program, the first operation of a loan based on policies, will support the approval of laws, regulations, as well as actions to implement reforms in the fiscal area. The program will support the establishment of the Fiscal Responsibility Law, a Medium and Long-Term Fiscal Framework (MFMLP) and fiscal rules, mechanisms that will help the government better manage its level of spending and indebtedness.

In addition, the program will strengthen the institutional capacities of the public procurement, pension, Budget for Results (PfR) and Medium Term Expenditure Framework (MTEF) system; of the public investment system; and the management of collection and tax transparency.

IDB financing is part of a context of many years of technical assistance for reforms that are being implemented by the government of El Salvador to strengthen its fiscal situation, and that to date have included the implementation of the LRF and modifications to the System. of Savings for Pensions (SAP), reforms that received technical support from the IDB from its initial conception to its regulation and implementation.

The program loans approved by the IDB will have a term of 20 years, a grace period of 5.5 years and a LIBOR-based rate.

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