Special: El Salvador seeks IMF funding, sees ‘golden opportunity’ for financial system, claims finance minister

(Reuters) – El Salvador is chatting to the Intercontinental Monetary Fund (IMF) about securing some $1.3 billion in financing and sees a “golden opportunity” to revitalize its economic climate immediately after the ruling party’s big win in legislative elections, a top govt formal said.

FILE Photo: Avenue sellers and municipality staff clean a avenue to start serving buyers as economy reopens after a a few thirty day period closure, as the coronavirus disease (COVID-19) outbreak proceeds, in downtown San Salvador, El Salvador June 18 2020. REUTERS/Jose Cabezas

Finance Minister Alejandro Zelaya advised Reuters in an job interview that El Salvador wants to get a 36-thirty day period extended fund facility authorised by the IMF, equivalent to the application announced this 7 days for fellow Central American country Costa Rica.

“It will help us leverage the budgetary gaps for 2021, 2022 and 2023” and enable decreased the highs costs related with El Salvador’s financial debt, Zelaya explained.

El Salvador sovereign dollar bonds jumped on Tuesday immediately after President Nayib Bukele, declared a landslide acquire in Sunday’s voting, saying his celebration and its allies had secured the major the vast majority in the country’s history.

“What (the ruling) New Suggestions occasion and President Bukele reached on Sunday is certainly a golden opportunity for El Salvador’s financial state to consider off,” reported Zelaya.

Fitch Ratings explained the legislative election end result finishes political gridlock that experienced hindered policy implementation and dented El Salvador’s capability to tap external funding.

That gridlock led to an around-reliance on domestic marketplace borrowing to meet higher government funding requires, pushing borrowing expenses larger, the rankings agency claimed.

Zelaya claimed financing from worldwide multilateral lenders really should make El Salvador’s financial debt and community paying sustainable. For 2021 “we want financing of about $2 billion, together with the short-expression personal debt administration prepare,” he included.

Integral reform of El Salvador’s pension process was wanted so pensions do not place force on government funds, Zelaya reported.

Even though no deal has been struck, the IMF could possibly disburse up to $450 million this 12 months, on major of prior commitments of $250 million from the Inter-American Progress Bank, $200 million from the World Bank and $600 million from the Central American Bank for Economic Integration, he mentioned.

Requested when the deal with the IMF may possibly be finalized, Zelaya claimed it was however much too early to say.

“We’re doing the job to get to an settlement. It normally takes two.”

Reporting by Anthony Esposito in Mexico Town and Nelson Renteria in San Salvador editing by Grant McCool