International Monetary Fund to review El Salvador's financing program to authorize next disbursement

The International Monetary Fund's board will review the second and third evaluations of the program with El Salvador on October 1. The International Monetary Fund (IMF) board will evaluate this Thursday, October 1, the second and third evaluations of El Salvador's program, as explained by Mauricio Choussy, an economics expert and former president of the Central Reserve Bank, during an interview on Frente a Frente. Choussy said that one review corresponded to September 2025 and the other to March 2026. Choussy noted that on September 3 the Salvadoran government and the Fund's team reached a technical agreement to jointly complete both processes. He added that this understanding requires board approval and compliance with the prior measures set out in the program. The economist detailed that the session will address three matters: the approval of the two combined reviews, the requests for waivers for non-compliance with performance criteria, and the proposed changes to those targets. The third point, he added, will be the possible approval of a disbursement of approximately USD 140 million. Choussy indicated that this is the figure included in the agenda that, he explained, the IMF board will review. "On October 1 the Fund will analyze the second and third combined review of the program," Choussy stated. In his view, the decision will reveal the modifications requested by the government, the commitments accepted by the organization, and the new conditions for continuing with the disbursements. Choussy linked the board meeting to the presentation of the general budget bill of the nation for 2027, scheduled for September 30. According to his interpretation of the program, that submission was one of the prior measures the government had to fulfill before the review. The IMF evaluates the approval of a disbursement close to 140 million dollars for Salvadoran finances. (REUTERS/Benoit Tessier/File photo) The interviewee argued that the bill did not have to be approved by the Legislative Assembly on the same day as its presentation. He maintained that the Fund could assess whether the submitted budget aligned with the program's targets, even if the legislative process continued afterward. The economist said that, according to the IMF evaluation he cited during the interview, Salvadoran economic activity is above what was forecast. He also stated that the organization expects growth of 4.5% in 2026, supported by security improvements and greater investor confidence. Choussy added that, according to those documents, the fiscal and external situation remains aligned with the program. He explained that the public sector's primary surplus should rise to 2.9% in 2026 and 3.7% in 2027, while international reserves and banking liquidity would exceed the projected targets. The former official noted that pending matters include commitments related to bitcoin, transparency and governance, the pension reform, and the civil service law. He said that the review corresponding to September 2025 included fiscal matters, bitcoin purchases, the operation of Chivo, and transparency obligations. Choussy maintained that the March 2026 evaluation added other non-compliance issues related to governance, the pension reform, and the civil service law. In his view, the request submitted to the IMF would seek to modify the dates and conditions of commitments that the government failed to meet within the initial timeline. According to Mauricio Choussy, the submission of the general budget bill of the nation for 2027 was one of the prior measures set out before the IMF review. (Infobae Centroamérica/ Emerson Del Cid) Choussy avoided stating that the retirement age will rise by five years. However, he said that the pension system is not sustainable and mentioned raising the retirement age as one of the measures that could contribute to its sustainability. The interviewee explained that a parametric reform can modify the retirement age, the years of contributions, and the contributions of workers and employers. He also maintained that a person who works five more years accumulates more savings and could achieve a higher pension. "The pension system is not sustainable and one of the ways to give it sustainability is to raise the retirement age," he said. Choussy indicated that, in an individual accounts system, the pension depends on what has been saved and the age at which each person stops contributing. The economist maintained that pensions seek to cover food, clothing, and housing during old age, not to maintain the standard of living prior to retirement. Therefore, he considered that anyone aspiring to maintain that level of spending must have additional savings. El Salvador will have to recognize approximately USD 2,400 million in obligations linked to the expiration of a grace period in April 2027, according to the expert. (REUTERS/Willy Kurniawan/File) Choussy identified the payment of approximately USD 2,400 million in April 2027 as the most delicate matter for public finances. According to his explanation, that amount corresponds to obligations that will have to be recognized after the expiration of a grace period on interest owed. The economist stated that the figure appeared in the technical note associated with the budget that the government would present to the Legislative Assembly. He noted that the document had to specify how the payment would be financed. Choussy warned that the State must find a formula to settle that obligation without incurring what the rating agencies call a selective or restricted default. In his view, such a scenario would once again raise the country risk. The interviewee maintained that the rating agencies and investors remain attentive to how El Salvador will resolve the maturity. He added that, in his assessment, "the cash isn't there" to pay USD 2,400 million all at once. Choussy explained that the bonds held by the pension funds ultimately belong to the contributors of the individual accounts. Therefore, he stated, the rating agencies demand a solution that does not reduce the credit quality or the financial returns of those securities.