IMF, El Salvador advance negotiations

The International Monetary Fund (IMF) reported significant progress in negotiations with Salvadoran authorities on an IMF-supported programme.

“Progress has been made in the negotiations towards a Fund-supported programme, focused on policies to strengthen public finances, boost bank reserve buffers, improve governance and transparency, and mitigate the risks from Bitcoin” the IMF statement reads.

Preliminary agreements include plans to improve the primary balance by approximately 3.5 per cent of GDP over the next three years, focusing on rationalising the public wage bill while preserving essential social and infrastructure spending.

Additionally, strategies are being developed to strengthen financial system reserve buffers and support private sector growth, alongside efforts to reduce the government’s reliance on domestic financing through consolidation and potential support from the IMF and other multilateral development banks.

On the structural front, a multi-year strategy is being devised to enhance governance, transparency, and the investment climate. This includes legislative proposals aimed at tackling corruption and improving procurement frameworks.

Moreover, regarding Bitcoin, while risks have not fully materialised, both parties recognise the need for greater transparency and measures to address potential fiscal and financial stability risks. Continued discussions will address these issues to ensure stability and prosperity for El Salvador.

Attribution: IMF