Los Números Rojos de la Economía Salvadoreña

English Version

Por décadas la economía de El Salvador ha navegado en aguas turbulentas; las medidas de ajuste estructural a inicio de los noventa; la dolarización en 2001; el impacto de terremotos, huracanes y tormentas tropicales; y la corrupción han sido grandes dificultades que han generado pobreza y llevado al país a incrementar su deuda pública hasta el límite de lo insostenible. En febrero de 2020 la deuda era de 19,845.54 millones de dólares[1], ubicándose como el cuarto país de América Latina con más endeudamiento, solo precedido por Venezuela, Argentina y Brasil. Con estos números la deuda pública de El Salvador, antes de la pandemia alcanzaba el 71.8 %, con respecto a su Producto Interno Bruto[2].

Como es de suponer, la deuda se debe pagar, aproximadamente una sexta parte del presupuesto anual del Estado se destina a este propósito, solo para el segundo semestre de 2020, El Salvador deberá pagar 400 millones en concepto de amortización de diferentes prestamos. El impacto económico del COVID19 agrava la situación, por ejemplo: al inicio del año se tenía una proyección de crecimiento por el orden del 2.5%, los nuevos cálculos establecen que habrá un decrecimiento de menos 5%. Por otra parte, se estima una caída de las remesas del 17%, significa que el país dejará de percibir en concepto de ingresos un total de 990 millones de dólares[3].

El presupuesto para el ejercicio fiscal 2020, aprobado antes de la pandemia, fue de $ 6,426 millones, el cual presentaba un déficit del 11.7%, es decir que según las proyecciones del gobierno los ingresos no serían suficientes para cubrir todos los gastos y habría necesidad de gestionar créditos por $755.9 millones[5]. Con la nueva realidad el déficit se incrementa a $1,745.9 millones, sin considerar todos los gastos extraordinarios que está demandando la atención de la emergencia.

Para enfrentar esta situación el Parlamento ha autorizado al gobierno central para contraer deuda por 3,000 millones de dólares, pero debido a la crisis, el acceso a los mercados internacionales para colocar deuda se vuelve mucho más difícil y a intereses más altos; sin embargo, el gobierno ha comunicado como buena noticia el aval de un crédito por $550 millones con el Banco Interamericano de Desarrollo, BID y otro por $389 millones con el Fondo Monetario Internacional, FMI[6].

Una desventaja consiste en que estos organismos condicionan el financiamiento a exigencias de política fiscal para el futuro. En opinión de la reconocida economista Julia Evelyn Martínez, El Fondo Monetario Internacional no concede préstamos para ayudar a los pueblos en momentos de crisis, sino más bien aprovecha las crisis para que los gobiernos se comprometan a poner en marcha medidas fiscales y financieras que comprometen el futuro de los pueblos y que evitan que futuros gobiernos sucumban a la tentación de romper con el neoliberalismo.

Según Martínez el FMI ha recomendado al gobierno medidas como la disminución del gasto público en $900 millones a partir del año 2021, aumentar los impuestos a la gasolina y al diésel, aumentar el Impuesto al Valor Agregado, IVA y las contribuciones fiscales especiales, como el impuesto a las telecomunicaciones y reducir el pago de salarios en el sector público, por medio del congelamiento de plazas, suspender nuevas contrataciones y prohibir las jubilaciones anticipadas de empleados públicos.

Independientemente que el gobierno asuma estas recomendaciones, un hecho concreto es que con estos y otros préstamos adicionales de los que ya se escucha hablar, la deuda pública podría llegar hasta el 90% del Producto Interno Bruto; dicho en otras palabras, de cada dólar que se produzca en el país, ya se deben noventa centavos; lo que llevará al Estado salvadoreño a una situación fiscal crítica y por tanto, la inversión en educación, salud, vivienda, agua potable y cualquier tipo de subsidio a los sectores más empobrecidos, será extremadamente limitada.

[1] https://diario.elmundo.sv/deuda-publica-llego-a-20533-millones-en-el-primer-trimestre/
[2] PNUD, COVID19 y Vulnerabilidad: Unamirada desde la pobreza multidimensional en El Salvador, San Salvador 2020,Pág. 12
[3] Nelson Fuentes, Ministro de Hacienda, entrevista, Frente a Frente, Tele corporación salvadoreña, 12 de mayo de 2020.
[4] https://www.elsalvador.com/eldiariodehoy/presupuesto-2020-es-de-6426-millones-y-requiere-creditos-por-755-millones/645093/2019/
[5] Nelson Fuentes, Ministro de Hacienda, entrevistaFrente a Frente, Tele corporación salvadoreña, 12 de mayo de 2020–
[6] https://www.diariocolatino.com/neoliberalismo-disfrazado-de-ayuda/
 

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El Salvador in the Red

For decades, El Salvador’s economy has sailed in troubled waters;  structural adjustment measures in the early 1990s;  dollarization in 2001;  the impact of earthquakes, hurricanes, and tropical storms;  and corruption have been huge challenges that have generated poverty and led the country to increase its national debt to an unstainable limit.

In February 2020, the country’s debt was $19,845 million ranking El Salvador the fourth country in Latin America, after Venezuela, Argentina and Brazil, with the highest national debt.  Before the pandemic even began, El Salvador’s dept reached 71.8%, with respect to its Gross Domestic Product (GDP).

As expected, this debt must be paid and approximately a sixth of the State’s annual budget is destined for this very purpose. For the second half of 2020, El Salvador will have to repay $400 million in different loans.

Unfortunately, the economic impact of COVID19 has only aggravated the situation. For example, at the beginning of the year, the economy was projected to grow by 2.5%, now new calculations project a decrease of -5%.  On top of that, a drop in remittances by an estimated 17%, means that the country will stop receiving a total of $990 million in annual income.

The 2020 fiscal budget, of $6,426 million was approved before the pandemic, and already presented a deficit of 11.7%. According to government projections, the income wouldn’t have been sufficient enough to cover all the year’s expenses and there would be a need to find and manage at least $755.9 million in loans.  With the new reality of a worldwide pandemic, the deficit has been increased to $1,745 million, this without even considering all of the extraordinary expenses that COVID19 related emergency care is currently demanding.

To face this situation, Parliament has authorized the central government to take on a $3 million loan, but since the crisis started, access to international market loans have become much more difficult and carry much higher interests rates than normal. Despite this, the government recently announced the endorsement of a loan for $550 million from the Inter-American Development Bank (IDB) and another for $389 million from the International Monetary Fund (IMF).

One disadvantage of being backed by these institutions, is that they make financing conditional on fiscal policy requirements for the future.  It’s the opinion of renowned Salvadoran economist, Julia Evelyn Martínez, that “the International Monetary Fund does not grant loans to help people in times of crisis, but rather takes advantage of crises so that governments commit to implement fiscal and financial measures that compromise both the nation’s future and prevents future governments from succumbing to the temptation to break with neoliberalism.”

According to Martínez, the IMF has recommended to the government measures such as: the decrease in public spending by $900 million starting in 2021, increasing taxes on gasoline and diesel, increasing the Value Added Tax (VAT) and other special tax contributions, such as the   telecommunications tax. It also proposes to reduce the payment of public sector wages, by way of freezing positions, suspending new hires and prohibiting early retirement for public employees.

Regardless of whether the government assumes these recommendations or not, a concrete fact is that with these and other additional loans that we are now hearing about, the public debt could reach 90% of our GDP.  In other words, for every dollar produced in the country, ninety cents are already owed. This will lead the Salvadoran State toward a critical fiscal situation that will result in extremely limited investments in education, health, housing, potable water and any type of subsidy previously offered to our most impoverished sectors of society.

IMF Mission Finds that El Salvador’s Financial System Intact After Global Financial Crisis

During May 18 -27, an International Monetary Fund (IMF) mission headed by Alfred Schipke visited El Salvador to meet with outgoing and incoming government officials and private sector representatives to discuss the current economic situation and to review the precautionary $800 million Stand-By Arrangement (SBA) that was approved in January. Though the mission found that El Salvador had a significantly large deficit to overcome and slower economic activity than expected, Mr. Schipke reported that as a whole, “El Salvador’s financial system has weathered well the aftershocks of the global financial crisis and the uncertainties surrounding the elections, and remains liquid and well-capitalized.”

According to the IMF information website, SBAs are the most common way that the IMF assists countries, and it is meant to cover short-term balance of payments issues. The SBA approved for El Salvador was a precautionary one, and it will not be drawn upon unless conditions deem it necessary to do so.

When the SBA was first approved, the IMF agreed that El Salvador was not facing any balance-of payment crises at that time. However, the recent mission found that “Exports, remittances, bank credit, and overall economic activity have been significantly below initial program projections.” Furthermore, this poor economic performance has had a detrimental effect on government revenue. Tax collections in the first quarter of 2009 totaled about $100 million less than projected, and the overall deficit of the non-financial public sector was US$115 million more than expected. Still, the IMF found that El Salvador was surviving the global financial crisis with its institutions intact, liquid, and well-capitalized.

This positive report showed that El Salvador’s relative success was possible through the “broad-based political support displayed by Congress in the recent approval of the financing package for the government.” Furthermore, they were encouraged by the incoming government’s “commitment to maintaining macroeconomic stability, fiscal sustainability and dollarization, and to honoring all contractual obligations.”

El Diario de Hoy, a daily news source in El Salvador, reported that Funes announced his new Economic Cabinet on May 26. Those announced were Héctor Dada Hirezi as minister of the Economy, Alex Segovia as Technical Secretary, Carlos Acevedo as president of the Central Reserve Bank and Carlos Cáceres as head of the Treasury department. The new Economic cabinet has thus far maintained that it would keep the dollar as El Salvador’s official currency, to create more economic transparency, a development bank within the Central Reserve Bank, and a mechanism to ensure that the large informal sector pays taxes. These goals are all in line with the IMF’s recommendations, and the IMF mission reiterated during their visit the goal of maintaining a close relationship with the incoming administration. Soon after the new administration has taken office, the IMF mission will return to evaluate the situation.

New Administration Will Face Historic Deficit

According to the most recent economic indicators, El Salvador’s economy continues to deteriorate.  Though the Internal Revenue Ministry projects significant budget deficits over the next three years, the Saca administration recently increased government spending by 23%, as they prepare to transfer power to the new Funes administration on June 1st. Analysts contribute the increased spending to the rising cost of transportation and energy subsidies.  Other rumors point to the million dollar mansions high funciontaries of ARENA have acquired int he past months, including President Saca and ex-candidate Rodrigo Avila.

In the first quarter of 2009, tax revenue fell 9.6% ($87 million), while Salvadorans living abroad sent home $68.9 million less than they did in the first quarter of 2008.  In addition, Salvadoran exports fell by 8.3% and employment in the industrial sector fell by 35.8% with over 4,000 lay-offs in the maquila sector alone. The National Foundation for Development (FUNDE) reported 9,675 lay-offs in the last two months of 2008.  Inflation remains steady at 2.3%.

With the decrease in revenue and increase in spending, the government is struggling to pay its bills.  The government spends 8 of every 10 dollars on salaries, contractors, and wire transfers.  The government owes $127 million for operational expenses, including electricity, gas, and water, for January 2009 alone.

To cover the costs of social programs, the government relies on loans, which now exceed $355 million.  Over $200 million of these loans are with the Inter-American Development Bank (BID). The Saca administration reports that the World Bank, International Monetary Fund (IMF), BID, and the Central American Economic Integration Bank (BCIE) have approved another 2.5 billion dollars in loans, which will be distributed for social programs in the near future.

The Internal Revenue Ministry and the Funes transition team are discussing numerous measures to increase government revenue and close the current budget deficits.  Some of their proposals include directing natural gas and electricity subsidies to families in need instead of providing assistance to everyone.  They are also considering new taxes on soft drinks and new cars, as well as fees for new ID’s and license plates.  The Ministry and transition team are also considering a tax system for street vendors and others in the informal markets. None of their proposals, however, include measures to collect the more than $2.7 billion that El Salvador’s largest companies did not paid in 2008.

Economist Santiago Ruiz sees the worst to come in the coming  months, and a recovery period lasting until September of 2011.  This recession compares  to the 1980’s civil war economy.  He believes the Funes administration will inherit a government without the resources to confront the economic crisis in it’s first two years in office.  Measures he recommends would be to invest in infrastructure and implement a Moratorium Law to help families or businesses in danger of losing their homes or other assets.  Funes’s economic advisor, Alex Segovia, and others on the transition team have not yet released concrete plans for their government, citing the need for further information from the Saca administration.