El Salvador and Argentina to strengthen fiscal sustainability and social protection programs with IDB support

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WASHINGTON, USA — A $200 million loan will provide budget support for priority government expenditures, in El Salvador thereby protecting public investment and social program funding to promote inclusive growth; meantime Argentina will ensure the sustainability and effectiveness of its social protection programs with a $600 million loan approved by the Inter-American Development Bank.

El Salvador will strengthen fiscal sustainability

El Salvador will strengthen fiscal sustainability by securing resources for complementary financing of the General State Budget with a $200 million loan approved by the Executive Board Directors of the Inter-American Development Bank (IDB).

The government of El Salvador has maintained its commitment to continue with the necessary reform processes that the country is implementing in order to advance in the strengthening of fiscal management, with particular emphasis on the efficiency of public spending and pension sustainability, through the implementation of legal instruments of fiscal responsibility and pension systems, as well as the strengthening of the institutional capacities of the State.

The country has implemented a series of structural actions and reforms, which have been supported by the IDB for its development and execution, which highlight the creation of a regulatory framework of fiscal responsibility that promotes sustainability of public finances and increased efficiency and transparency in purchasing processes.

A budget reform will also be implemented that links resources with results and the strengthening of public investment management, as well as measures that simplify regulations and facilitate investment by favoring the productive private sector.

Likewise, measures have been implemented aimed at improving the institutional capacity for tax collection, incorporating the country to international standards of transparency, and the institutional strengthening of the pension system to achieve its long-term sustainability, grant life annuities and improve intergenerational equity.

Fiscal sustainability has direct and indirect benefits for the Salvadoran entire population, promoting the continuous financing of State services, raising the quality of public investments and supports a favorable macroeconomic situation for development and productive activity. The loan will also benefit vulnerable groups (women, children and the elderly) by promoting specific measures that protect social spending.

The IDB loan, for $200 million, has a repayment period of 20 years, a five and a half year grace period and an interest rate based on LIBOR.

Argentina to strengthen social protection programs

This project marks the second phase of two separate and sequential operations. The goal of both phases is to guarantee the sustainability of money disbursement programs for the poor and encourage improvements in the effectiveness of these initiatives by strengthening their management through the use of digital transformation tools.

The second phase of the program will finance for one year disbursements to 213,000 people taking part in the program known as Hacemos Futuro (We are Building the Future). It will also work to see that the availability of workplace training for these people meets demand in the public and private sectors.

The project will also help improve public transport and finance for one year the public transport discount that those who are eligible receive.

Finally, the project will support implementation of a pilot program that will aim to complement so-called Progesar grants with other policies designed to keep low-income youths from dropping out of university level studies.

The $600 million IDB loan is payable over 25 years, with a grace period of five years and an interest rate pegged to the LIBOR.

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