El Salvador will not spend more than it produces after 2025: Bukele

Bukele said last June 1, in his inauguration of his second consecutive term – despite the fact that the Constitution prohibits immediate reelection – that he would seek in this five-year term to “heal” the economy, his main “failure” according to the polls, after defeating the “cancer” of gangs.

The president of El Salvador, Nayib Bukele, promised on Sunday that he will present before Congress a budget project for 2025 “completely financed” with own resources, so that the country does not spend more than it produces.

“I announce that by this September 30 we will present before the Legislative Assembly, for the first time in decades, the first fully financed budget, without the need to issue a single cent of debt for current spending,” Bukele said in his speech for the 203rd anniversary of Central American Independence.

He added: “El Salvador will no longer spend more than it produces annually, we are not even going to borrow money to pay interest on the debts we inherited. Even that we will pay from our own production”.

The Salvadoran president pointed out that “the benefits that this will bring will not only be immediate”, but that “every year they will be greater”.

Bukele said last June 1, in his inauguration of his second consecutive term -despite the fact that the Constitution prohibits immediate reelection-, that he would seek in this five-year term to “heal” the economy, his main “failure” according to the polls, after defeating the “cancer” of gangs.

The president gathered more than 18,000 members of the Armed Forces to give his speech, in which he stressed that the gangs would be “operationally disarticulated” by his “war” against these gangs, through a regime of exception, which suspends constitutional rights.

El Salvador will not spend more than it produces after 2025, Bukele promises

“The gangs are operationally disarticulated, but that does not mean that there are still no enemies to defeat. Perhaps the greatest of all is to change our way of being, understanding and acting in this new reality,” said the president.

El Salvador’s Legislative Assembly, with a large pro-government majority, approved last December a general state budget for 9,068.7 million dollars, which was said to have reduced the need for financing and would not need more loans.

With the budget, the issuance of more than 338 million dollars in debt to cover its deficit was approved, but in mid-May last year, the issuance of 1.5 billion dollars in bonds for current spending was authorized, and at the end of July, the incorporation of 1 billion dollars to the budget was approved.

According to data from the Central Reserve Bank, the total public debt in 2023 reached 20,097.64 million dollars, to which must be added the debt with pension funds for 10,116.43 million dollars.

International financial organizations and the main risk assessment agencies have been pointing out that El Salvador’s financial situation compromises its access to new loans, while the country has negotiated with the International Monetary Fund an agreement for 1,400 million dollars.

Source: Forbes Centroamerica