El Salvador Needs Policy Changes to get IMF Financing – IMF Spokesman

By Eddie Galdamez  |  Nov 4th, 2021
International Monetary Fund (IMF)

Gerry Rice, IMF spokesman stated in a November 4, 2021, press conference that to get financing with the International Monetary Fund, El Salvador’s government needs to change some of its policies.

Talks between the Salvadoran government and the International Monetary Fund (IMF) to seal a loan valued at 1.3 billion dollars began last April.

“The talks have been progressing,” said Gerry Rice at the press conference.

Development since that time will require some recalibration of policies needed to ensure inclusive growth, fiscal sustainability, and financial stability,” declared Rice.

Rice announced that the authorities of the IMF technical mission have agreed to complete the Article IV consultation in the next few months.

“That would allow time to prepare the completed assessment of the underlying policy measures needed to achieve those goals,” said Rice.

Article IV is a periodic consultation that the IMF carries out with all the signatory countries of the fund’s agreements on macro-fiscal and economic results.

The Monetary Fund warned El Salvador on several occasions that adopting bitcoin as legal tender may involve significant financial risks. Nonetheless, El Salvador made Bitcoin a legal currency in June 2021.

In its latest global growth forecasts, published in October, the IMF forecast a 9% economic growth in El Salvador this year.

The economic growth is driven by advances in the covid-19 vaccination process, public infrastructure projects, and the recovery of business partners.

Finance minister Alejandro Zelaya has been optimistic that the negotiations with the IMF will be done soon and the implementation of Bitcoin will not be an issue.

In a June conversation with the IMF regarding the Bitcoin implementation, Zelaya said the following.

“They have understood; they told us that they are not against it. We only want to measure the impacts and the effects it may have.” Salvadoran Finance Minister Alejandro Zelaya.