A ECLAC report details the financial measures taken by governments and the increase in spending.
El Salvador is the Latin American country where central government spending increased the most in 2020, according to the Fiscal Panorama report of the Economic Commission for Latin America and the Caribbean (ECLAC).
Expenditure by the Nayib Bukele government accounts for 8.4% of gross domestic product (GDP) and has focused on subsidies and current transfers, accounting for 4.3% of GDP, just below Argentina (5.7%) and Brazil ( 5.5%) and similar to the expenditures made by Colombia (4.3%), the report shows.
At the Central American level, the public expenditures that governments made in relation to GDP were: Panama 4.9%, Honduras 1.9%, Guatemala 1.7% and Costa Rica, 0.4%.
The ECLAC report also reflects that another percentage of El Salvador’s expenditure 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 greater resources that have been directed to decentralized institutions (including public hospitals).”
The report also mentions that expenses have increased due to transfers to the Development Bank of El Salvador (Bandesal) to finance the Trust for the economic recovery of companies (Firempresa).
The government has directed 600 million dollars that are part of the Firempresa program, which sought to revive the economy and support companies affected by the pandemic.
Similarly, he points out that the increase in remittances is due to the fact that they have been allocated to “municipal governments to support them in providing public services in a context of greater demand due to the effect of the pandemic”.
However, this contrasts with the repeated complaints made by municipal governments, because since June last year, the Bukele government has not transferred Fodes (Economic and Social Development Fund) to them, as required by law, and this has brought them economic difficulties for municipalities, to the point where they had to suspend services due to lack of resources.
But Finance Minister Alejandro Zelaya insisted he had no money to pay the town halls and even said he could not “force” him to pay the fodder he owed. Most communes in which the money has not been transferred will be governed by the New Ideas party from May 1.
AND: The government used $ 476 million for COVID-19 in one month
Latin America has allocated 4.6% of GDP to combat the crisis
Latin America, the region most affected by the pandemic in the world, has spent an average of 4.6% of its GDP in 2020 on social assistance to combat the economic crisis caused by covid-19, a fiscal effort that should be maintained this year, Cepal.
The agency warned that the expected increase for this year (around 3.7%) will not be able to offset the fall in 2020, nor will it reverse the rise in poverty and inequality, hence the need for fiscal expansion, especially through subsidies and current transfers.
“The persistence of the pandemic and asymmetries in vaccination, along with asynchronous and divergent recovery rates, put a blanket of uncertainty about the speed and sustainability of recovery,” the agency’s executive secretary said in Santiago. Alicia Bárcena.
The Latin American economy contracted by 7.7% in 2020 – the largest recession in 120 years – and poverty and extreme poverty rates rose to 33.7% (209 million people) and 12.5% ( 78 million), levels that have not been observed in the last 12 and 20 years, respectively.
Without social transfers, Bárcena told Efe, “poverty in the region would have reached 230 million people and extreme poverty at 98 million.”
The massive closure of companies led to the unemployment rate last year at 10.7%, while the level of GDP per capita ended last year at the same level as in 2010, which means that the region is facing a new decade. lost, like one lived in the 1980s.
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