*El Salvador’s 60-member unicameral legislature has approved a new US$500m loan from the Inter-American Development Bank (IDB) aimed at advancing macroeconomic and fiscal sustainability. It follows the agreement reached by El Salvador’s government led by President Nayib Bukele and the International Monetary Fund (IMF), which the IMF signed off on last month, which includes provisions to restore fiscal sustainability to boost growth and resilience. According to an IDB press release dated 20 March, this loan will provide the country with the fiscal space “to advance on reforms to increase tax revenue, reduce public debt, rebuild international reserves and improve financial governance and integrity”. It notes that the loan, which has a seven-year maturity, a three-year grace period and an interest rate based on the Secured Overnight Financing Rate (SOFR), is part of various initiatives approved by the IDB since 2016 to “support policy reforms and institutional strengthening in El Salvador”. These have also included initiatives to improve tax and customs administrations as well as to address the economic and social impacts of the coronavirus (Covid-19) pandemic.
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