Washington, DC: Mr. Torres, Mission Chief for El Salvador, issued a statement following in person and virtual discussions over the past months with the Salvadoran authorities on the second review of the 40-month Extended Fund Facility (EFF) Arrangement.
"Progress continues in the negotiations toward a staff level agreement on the second review of the EFF program.
"The economy is expanding at a faster than anticipated pace on the back of improved confidence, record remittances, and buoyant investment. Real GDP growth is projected to reach around 4 percent this year and with very good prospects for next year.
"The authorities' commitment to fiscal consolidation remains strong—the end-2025 primary balance target is well on track to be met, and the recently approved 2026 Budget is consistent with a further reduction in the deficit along with an expansion in social spending. These efforts are supporting reserve accumulation and a reduction in domestic borrowing in line with program targets.
"The structural agenda is advancing. To help underpin the projected consolidation, an actuarial pension study has been recently published, along with a Medium-Term Fiscal Framework. Financial stability reforms have been approved to strengthen the legal framework for bank resolution, crisis management, and deposit insurance schemes, and Basel III regulations have been recently adopted to enhance liquidity coverage and net stable funding. Meanwhile, a new AML/CFT law has been approved by the Legislative Assembly, better aligning the legal framework with international best practices.
"Finally, negotiations for the sale of the government e-wallet Chivo are well advanced, and discussions with regards to the Bitcoin project continue, centered on enhancing transparency, safeguarding public resources, and mitigating risks.
"Close engagement with the Salvadoran authorities is expected to continue in the period ahead with the objective of reaching a staff level agreement on all policies and reforms needed to complete the second review of the EFF program.
