The Inter-American Development Bank (IDB) announced on Thursday the approval of a $ 250 million loan to El Salvador to finance measures to contain the health crisis caused by the COVID-19 pandemic.RELATED
The financial agency assured that with these funds the Salvadoran authorities will be able to mitigate the impact of the disease on vulnerable households and promote policies that reduce its effect on the economy and mitigate the drop in tax revenues in the short term.
As a counterpart, the Government of the Central American country commits with the entity to reduce the fiscal deficit, focus public investment in areas of high relevance for economic recovery and maintain a competitive and transparent economy once the health emergency is overcome.
This measure thus responds to a need generated in El Salvador since it began executing a set of actions with the aim of serving people and companies directly affected by the health emergency.
As the IDB explains in a statement, these initiatives include the temporary suspension of payment for services such as drinking water, electricity and telecommunications, the delivery of $ 300 to almost 1.5 million vulnerable families who lost their source of income, a monthly bonus of 150 dollars to essential public employees and the extension of the payment of income tax for the fiscal year 2019 to various types of taxpayers.
“The effects of the pandemic on public finances, particularly the significant amount of indebtedness required to meet the emergency, will require decisive measures in the medium term to protect macroeconomic stability, so this credit is also based on the commitment of the Government to implement measures in the medium term aimed at reducing public debt in line with the Fiscal Responsibility Law, “said the IDB about this loan.
The loan has a repayment term of seven years, a grace period of three years and an interest rate based on LIBOR.