El Salvador is the country in the region with the highest public spending

El Salvador is the country in the region with the highest public spending

A report by the Economic Commission for Latin America and the Caribbean details fiscal measures that governments have taken that have raised expenditures.

El Salvador is the Latin American country in which central government spending grew the most in 2020, according to the Financial Panorama Report issued by the Economic Commission for Latin America and the Caribbean (ECLAC).

The spending made by the government of Naguib Boukil represents 8.4% of GDP and has focused on subsidies and current transfers, as it accounts for 4.3% of GDP, and only less than Argentina (5.7%) and Brazil (5.5%). The report notes that Colombia’s expenditures (4.3%) are comparable to spending.

At the Central American level, public spending by governments in relation to GDP was: Panama 4.9%, Honduras 1.9%, Guatemala 1.7% and Costa Rica, 0.4%.

The Economic Commission for Latin America and the Caribbean report also reflects that another percentage of El Salvador’s spending was on loans, interest payments and salary payments.

According to the agency, in El Salvador, “the increase in current transfers from the central government is due to the greater resources that were transferred to decentralized institutions (including public hospitals).”

The report also indicates that spending increased due to transfers to the El Salvador Development Bank (Bandesal) to finance the Corporate Economic Recovery Fund (Firempresa).
The government has channeled $ 600 million into the Firempresa program, which sought to revitalize the economy and support companies hit by the pandemic.

Likewise, the report notes that the increase in money transfers was due to the allocation of “municipal governments to support them in providing public services in the context of increased demand due to the impact of the epidemic.”

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However, this contradicts the repeated complaints made by the municipal governments since June of last year, and the Bukele government did not transfer Fodes (Economic and Social Development Fund) to it, as required by law, causing economic difficulties for them. Municipalities, to the point where they had to suspend services due to lack of resources.

But the Finance Minister, Alejandro Zelaya, insisted that he did not have the money to pay the mayoralties, and even asserted that they could not “force” him to pay the Fodes money he owed them. The majority of municipalities where funds have not been transferred will be governed by the ruling New Ideas Party from May 1.

What’s more: The government used $ 476 million for COVID-19 in a month

Latin America has allocated 4.6% of its GDP to fight the crisis
Latin America, the region most affected by the epidemic in the world, allocated 4.6% of its GDP on average in 2020 to social aid to combat the economic crisis caused by COVID-19, a financial effort that must be sustained this year, SEPAL. .

The agency warned that the expected growth for this year (about 3.7%) will not be able to compensate for the fall of 2020, and will not reflect the increase in poverty and inequality, hence the need for financial expansion, especially through the current financial aid and transfers.

“The persistence of the pandemic and the disparities in vaccination, combined with asynchronous and disparate recovery rates, are putting a blanket cover of uncertainty about the speed and sustainability of the recovery,” said Santiago-based Executive Secretary Alicia Barcena.

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The Latin American economy shrank by 7.7% in 2020 – the largest recession in the last 120 years – and poverty and extreme poverty rates rose to 33.7% (209 million people) and 12.5% ​​(78 million), levels not seen. In the last 12 and 20 years respectively.

Barcena told Efe that without social transfers, “poverty in the region would have reached 230 million people and extreme poverty 98 million.”

The massive corporate shutdown pushed the unemployment rate up last year to 10.7%, while last year’s per capita regional GDP level ended at the same level as 2010, meaning the region faces a new lost decade, like the decade that lived. In the eighties.

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Aygen Marsh

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