El Salvador will strengthen its public policy and fiscal management to face COVID-19

IDB loan supports the country's efforts to address health impacts and protect the income of vulnerable households in the face of the crisis, and will promote post-pandemic economic recovery

The Inter-American Development Bank (IDB) approved a budget support loan to El Salvador of $250 million to strengthen the efficiency and effectiveness of public policy and fiscal management to address the health and economic crisis caused by COVID-19.

The program supports the introduction of temporary measures to protect the income of vulnerable households and to increase the liquidity of firms during the health and economic crisis, among which the allocation of a monetary contribution to low-income households, suspension temporary payment of domiciliary services, and the postponement of the payment of taxes for certain groups of companies and shops. In addition, it promotes measures to support the economic and fiscal recovery in the post-pandemic period, including the formation of a High Level Strategic Group with consultative character to propose strategies for economic reactivation of the country.

To ensure that the resources destined to attend the pandemic are executed in the most agile and transparent manner, the program contemplates temporary changes in the regulations of public purchases to provide the necessary goods and services to the health sector in a timely manner, together with measures that They safeguard transparency such as the publication of periodic reports of expenditures made and the support of the International Commission Against Impunity in El Salvador (CICIES) to audit the use of resources related to the pandemic.

IDB financing will contribute to the country's efforts to obtain extraordinary financing within the framework of the Emergency Fund, Recovery and Economic Reconstruction (FERRE), approved by Legislative Decree 608.

The IDB budget support loan has a repayment term of 20 years, a grace period of five and a half years and an interest rate based on LIBOR.

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The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.