WASHINGTON, August 01, 2025 - The World Bank's Board of Executive Directors today approved a loan to support El Salvador's efforts to strengthen fiscal sustainability and enhance its capacity to respond to risks associated with natural disasters and climate change.
The Fiscal Sustainability and Resilience Development Policy Financing with a Catastrophe Deferred Drawdown Option (Cat DDO) is the first in a programmatic series of three operations. The financing total is US$350 million, of which US$100 million is allocated to the Cat DDO, which can be triggered following an official declaration of emergency due to natural or health-related disasters.
"El Salvador has taken decisive steps to stabilize its economy, strengthen the sustainability of public finances, and improve market confidence. This financing supports our commitment to responsible fiscal management, as well as to protecting the population from increasing climate risks. It also aligns with the Government's objectives, promoting macroeconomic stability that fosters the creation of productive jobs," said Jerson Posada, Minister of Finance of El Salvador.
The program is structured around two pillars. The first aims to promote fiscal sustainability by strengthening public financial management. It also supports measures to rationalize the public wage bill and modernize the regulatory framework governing the civil service. Additionally, it backs actions to increase the efficiency of public investment and attract private capital for infrastructure through reforms to the regulatory framework for public-private partnerships and mixed-economy enterprises.
The second pillar supports measures to enhance the country's preparedness for natural and climate-related emergencies. This includes financial risk management tools, safer building codes, and improved emergency response capacity. It also promotes resilient metropolitan planning in San Salvador, with the aim of benefiting over 200,000 people through green spaces that mitigate extreme heat and flooding.
This financing also contributes to the achievement of the country's objectives under its program with the International Monetary Fund (IMF), by strengthening fiscal sustainability and prioritizing resilient investments.
"Our commitment is to support fiscal sustainability through more efficient public management and the attraction of private investment to generate quality jobs and more effective services. We also aim to strengthen resilience through actions that support the expansion of green spaces, more sustainable construction processes, and improved emergency response capabilities, so that communities can live in safe and healthy environments," said Carine Clert, World Bank Country Manager for El Salvador and Costa Rica.
The program, to be implemented over the next three years, is financed by the International Bank for Reconstruction and Development (IBRD) and is part of a broader international effort coordinated with the IMF and other multilateral institutions.Suscríbete a nuestro boletín mensual.
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