El Salvador should seek political agreements to reduce government expenses in a bid to stabilize the Central American nation’s weak economy before presidential elections in 2014, the International Monetary Fund said on Tuesday.
Pointing to El Salvador’s high public debt, which reached 55 per cent of gross domestic product (GDP) at the end of 2012, the IMF urged leftist President Mauricio Funes and the country’s policymakers to “organize a national dialogue ... to achieve agreement about basic policies that safeguard macro-economic stability during the transition to a new government.”
Official figures put the national debt at $13.3-billion.
The IMF proposed a target fiscal deficit of 2 per cent of GDP for 2014.
El Salvador notched 1.5 per cent GDP growth last year, the lowest in Central America, due to low domestic investment and heavy rains which damaged crops and infrastructure.
The government forecasts 2.3 per cent growth this year.