From the Executive Board
| Pages | 331-333 |
Page 331
The IMF approved a 17-month stand-by credit for El Salvador in an amount equivalent to SDR 37.7 million (about $52 million), to support the government's 1998-99 economic program. The government of El Salvador said it intends to treat the credit as precautionary.
The authorities' program for 1998-99 aims at maintaining sustainable high rates of growth, while containing inflation to that of its trading partners, in the context of a fixed exchange rate. The program aims at a rate of growth of GDP of 4 percent in 1998 and 4.5 percent in 1999, which is predicated on the assumption that the turmoil in international markets does not have a significant adverse effect on El Salvador's exports or investment in 1999. Inflation is expected to be contained at about 3.5 percent in 1998 and 3 percent in 1999, and net international reserves are expected to increase to the equivalent of seven months of imports.
The fiscal program envisages a widening of the overall deficit (after grants) of the nonfinancial public sector from about 2 percent of GDP in 1997 to less than 3 percent of GDP a year in 1998-99. Structural Reforms
Following significant progress in structural reforms earlier in 1998, the program envisages further reform of the public sector and the pension system, privatization of the sugar mill and of the Mortgage Bank, a strengthening of bank supervision and prudential regulations, an improvement in monetary policy instruments, and a lowering of import tariffs.Page 332
The program supports partial use of the privatization proceeds to provide a permanent source of revenue for expanded and improved social expenditure. In addition, lending programs for El Salvador approved by the Inter-American Development Bank and the World Bank include expenditures on a health sector reform program, a water and sewer program and sector reform, the rehabilitation and construction of schools, and primary and secondary education projects.
El Salvador joined the IMF on March 14, 1946; its quota is SDR 125.6 million (about $172 million); it has no outstanding use of IMF credit.
Press Release No. 98/43, September 24
The IMF approved a three-year credit for Bulgaria equivalent to SDR 627.6 million (about $864 million at the current exchange...
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