Thursday, May 25, 2006

The IMF's view of El Salvador's economy

The International Monetary Fund recently released a report on the state of El Salvador's economy from the perspective of this global monetary institution. Here is an excerpt:

The economy has weathered well the oil price shock and the effects of tropical storm Stan. Real GDP grew almost 3 percent in 2005 and is running at a pace of 3½ percent for this year. Inflation has moderated after a brief increase last October due to the pass-through of higher oil prices and temporary food price increases caused by the tropical storm. The external current account deficit widened slightly to 4½ percent of GDP in 2005 due to a higher oil import bill, despite stronger workers' remittances and rising prices for traditional exports.

The government's program for 2006 seeks to maintain sound macroeconomic policies, place priority on social spending, and deepen structural reforms, with the aim of enhancing economic growth and social prospects. The mission supported plans to strengthen tax revenue by further reducing evasion and bringing informal activities into the tax base. We encouraged the authorities to strengthen the envisaged fiscal stance to help protect the external position of the economy in the face of sharply higher oil prices, while preserving planned infrastructure and social projects, and achieving a small reduction in the public debt/GDP ratio.

Looking ahead, the [IMF] mission welcomed the government's medium-term priorities of boosting economic growth and reducing poverty through greater integration with the global and regional economy. We encouraged the authorities to continue strengthening tax revenue, broaden pension reform, and further prioritize public spending, with a view to placing the public debt/GDP ratio on a firmly declining path, while strengthening responses to critical social and infrastructure needs. We supported efforts to further strengthen the banking system, particularly recent initiatives to tighten prudential rules, and improve the investment climate, including easing infrastructure bottlenecks and reducing red tape. This strategy should help enhance productivity and competitiveness, opening the way to take full advantage of opportunities opened up by the free-trade agreement with the United States (CAFTA), and create new sources of growth based on private investment and exports.

The mission agreed with the authorities' plan to streamline the fiscal incentives regime, in tandem with progress toward a regional code of tax incentives to help avoid tax competition in attracting foreign investment. The authorities and the mission also concurred on the importance of strengthening cross-border consolidated supervision and harmonizing regulatory practices to facilitate regional financial integration and enhance its benefits.

El Salvador has the clear potential to attain faster growth and social progress in the coming years. In this connection, it will be important to broaden the national consensus on the needed reforms across all segments of society. The IMF will maintain a close policy dialogue with the authorities as they implement their reform agenda.

4 comments:

David said...

Hi tim, how are you? It's a pride for me that you had posted in my blog SV Days and you have the best blog of El Salvador.

Looking back at the article about the development of El Salvador, I think that El Salvador is growing well in his structure, but doesn't in the social development, I think that El Salvador have to center in the Human development to avoid many violence that we have, and this will carry a very good country development. The good example is Costa Rica, maybe they doesn't have all the streets and civil structures in the highways, but almost all the people in Costa Rica has education, health, less violence and many things more that make they a good country.

Thanks for my attention, bye and congratulation for your blog.

Nelson said...

I am happy about the report. El Salvador has the clear potential to attain faster growth and social progress in the coming years? Good.They blame Stan, and oil prices. Good! 2006 social programns and deepen structural reforms as a priority? gime a break!I do not see in this wonderful report, about the social gap, Perhaps, like they said in the coming years. Will see, Will see.

tony rochman said...

I just wanted to say, I'm going to El Salvador today. Leaving tonight on the red eye. I don't care if they make me sit on the wing. It's Memorial Day here in the U.S.A. and all I can think is, down with America, it's filth and garbage - spit on the flag. I'm out. Even for a little while just to get away from this prison hellhole called freedom. El Salvador, my love, I am near. The sweetest pupusas in the world and I'm not talking food. Counting the minutes - I'm down to a few hours. Murders, hookers and slums. Three girls at a time. Paradise here I come.

okxiaonan said...

Welcome to our website for you World of Warcraft Gold,Wow Gold,Cheap World of Warcraft Gold,cheap wow gold,buy cheap wow gold,real wow gold,sell wow gold, ...Here wow gold of 1000 gold at $68.99-$80.99 ,World Of Warcraft Gold,buy wow gold,sell world of warcraft gold(wow gold),buy euro gold wow Cheap wow gold,cheapest wow gold store ... buy euro gold wow wow gold--buy cheap wow gold,sell wow gold.welcome to buy cheap wow gold--cheap, easy,wow gold purchasing.World of Warcraft,wow gold Super ...
We can have your wow gold,buy wow gold,wow gold game,world of warcraft gold, wow Gold Cheap wow, Cheap wow gold,world of warcraft gold deal,Cheap WOW Gold ...

Welcome to our website for you World of Warcraft Gold,Wow Gold,Cheap World of Warcraft Gold,wow gold,buy cheap wow gold,real wow gold,sell wow gold, ...
Here wow gold of 1000 gold at $68.99-$80.99,World Of Warcraft Gold,buy wow gold,sell world of warcraft gold(wow gold),buy gold wow lightninghoof instock Cheap wow gold,cheapest wow gold store ...
wow gold--buy cheap wow gold,sell wow gold.welcome to buy cheap wow gold--cheap, easy, wow gold purchasing.World of Warcraft,wow gold Super ...
Wow gold- Gold for buy gold wow lightninghoof instock EU-Server: ...wow Gold EU: starting from 84,99?; 3000 WoW Gold EU: starting from 119,99?. wow Gold- Leveling Services: ...
We can have your wow Gold,buy wow Gold,wow Gold game,wow gold, Cheap wow Gold, Cheap World of Warcraft Gold,world of warcraft gold deal,buy cheap wow gold,Cheap WOW Gold ...

Here wow Gold of 1000 gold at $68.99-$80.99,World Of Warcraft Gold,buy wow Gold,sell world of warcraft gold(wow gold),Cheap wow gold,cheapest World of Warcraft Gold store ...