World Bank2013-02-202013-02-202010-11https://hdl.handle.net/10986/12404This Public Expenditure Review (PER), produced jointly by the World Bank and the Inter-American Development Bank (IADB), is an in-depth economic and sector report on El Salvador. The study builds on the analysis and recommendations of the PER delivered in 2004 that concluded that El Salvador faced the dual challenge of addressing deteriorating fiscal trends while financing key investments required to accelerate growth and meet pressing social needs. This report is intended to provide the government with practical and useful near-and medium-term recommendations that will support the country's efforts to ensure sustainable fiscal balances and establish effective and transparent mechanisms to allocate public resources to promote broad-based economic growth, improve social indicators, and reduce poverty. Hence, the government knows that El Salvador is faced with two fiscal challenges that will have great influence on the economic performance over the coming years. The first is the need to improve the fiscal balance, by strengthening revenue and reducing expenditure, to ensure medium-term sustainability. The second is the need to finance priority investments required to accelerate growth, reduce unemployment, and cover basic social needs. Meeting both challenges simultaneously will require great skill, given the still fragmented political environment and the difficulties in creating a consensus on future policies. The country needs to strengthen its fiscal stance because not doing so jeopardizes the medium-term macroeconomic framework, and exposes the country to greater vulnerability in the face of external shocks and contingent liabilities.en-USCC BY 3.0 IGOACCOUNTINGADDED TAXASYMMETRIC INFORMATIONBANK DEPOSITSBANKING LAWBENEFIT INCIDENCEBUDGET EXECUTIONBUDGET PROCESSBUSINESS TAXCAPITAL EXPENDITURECAPITAL FLOWSCAPITAL GAINSCASH TRANSFERCASH TRANSFERSCENTRAL BANKCENTRAL GOVERNMENTCENTRAL GOVERNMENT SPENDINGCOLLECTION PROCESSCOMMODITY PRICESCONSUMPTION EXPENDITURECONTINGENT LIABILITIESCORPORATE INCOME TAXCORPORATE TAXCREDIT MARKETSCREDIT RATINGCURRENCYCURRENT ACCOUNT DEFICITCURRENT EXPENDITURESDEBT ACCUMULATIONDEBT BURDENDEBT LEVELDEBT MARKETDEBT RATIODEBT SERVICEDEBT STOCKDEFICITSDEVELOPMENT BANKDOMESTIC CREDITDOMESTIC INTEREST RATESECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTSEFFICIENCY OF TAX COLLECTIONELECTRICITY SUBSIDIESEMERGING ECONOMIESENERGY SUBSIDIESEXCHANGE RATEEXCISE TAXESEXPENDITURE BUDGETEXPENDITURE PROJECTIONSEXPENDITURESEXPORT PERFORMANCEEXPORT SUBSIDIESEXPORT SUBSIDYEXTERNAL BORROWINGFINANCESFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL INSTITUTIONSFINANCIAL RESOURCESFINANCIAL STABILITYFISCAL ACCOUNTSFISCAL AUTHORITIESFISCAL BALANCEFISCAL BALANCESFISCAL BURDENFISCAL CONSTRAINTSFISCAL DEFICITFISCAL DISCIPLINEFISCAL IMPACTFISCAL POLICYFISCAL SPACEFISCAL SUSTAINABILITYFLAT TAXFOREIGN BANKSFOREIGN DIRECT INVESTMENTFOREIGN INTERESTFOREIGN INVESTMENTFRAUDSGOVERNMENT ACCOUNTSGOVERNMENT EXPENDITUREGOVERNMENT FINANCEGOVERNMENT REVENUEGOVERNMENT REVENUESGROSS DOMESTIC PRODUCTINCOME INEQUALITIESINCOME TAXINCOME TAXESINDIRECT TAXATIONINFLATIONINFLATION RATEINSURANCEINSURANCE PREMIUMSINTEREST COSTINTEREST COSTSINTEREST INCOMEINTEREST PAYMENTSINTEREST RATEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL FINANCIAL CRISISINTERNATIONAL STANDARDSINVESTMENT FUNDINVESTMENT PORTFOLIOLABOR MARKETLIQUIDITYLOCAL GOVERNMENTSLPG SUBSIDYMACROECONOMIC FRAMEWORKMACROECONOMIC MANAGEMENTMACROECONOMIC POLICIESMACROECONOMIC STABILITYMACROECONOMIC VARIABLEMACROECONOMIC VARIABLESMARKET TRANSACTIONSMATURITYMATURITY STRUCTUREMEDIUM-TERM GROWTHMINISTRY OF FINANCEMUNICIPALITIESOIL PRICESPENSIONPENSION PROVISIONSPENSION REFORMPENSION SYSTEMPENSIONSPERSONAL INCOMEPERSONAL INCOME TAXPOLICY CHANGESPOLICY FRAMEWORKPOLICY PROCESSPOLITICAL ECONOMYPOLITICAL UNCERTAINTIESPOLITICAL UNCERTAINTYPRIVATE INVESTMENTPRODUCTIVE INVESTMENTPROPERTY TAXPRUDENT FISCAL POLICYPUBLIC BORROWINGPUBLIC DEBTPUBLIC DEBT RATIOSPUBLIC DEBT SUSTAINABILITYPUBLIC EMPLOYMENTPUBLIC ENTERPRISESPUBLIC EXPENDITUREPUBLIC EXPENDITURE REVIEWPUBLIC EXPENDITURESPUBLIC FINANCEPUBLIC FINANCE MANAGEMENTPUBLIC SECTOR DEBTPUBLIC SECTOR EXPENDITUREPUBLIC SECTOR SPENDINGPUBLIC SECTOR TRANSFERSPUBLIC SPENDINGREAL INTERESTREAL INTEREST RATEREAL INTEREST RATESREDISTRIBUTIVE IMPACTREMITTANCEREMITTANCESRESERVESRETURNRETURNSREVENUE COLLECTIONREVENUE PERFORMANCEREVENUE POLICYSAFETY NETSECONDARY MARKETSTOCK MARKETSTRUCTURAL REFORMSSUB-NATIONALTAXTAX ADMINISTRATIONTAX AMNESTYTAX AVOIDANCETAX BASETAX BASESTAX BRACKETSTAX BURDENTAX CODETAX COLLECTIONTAX COLLECTIONSTAX COMPLIANCETAX DEDUCTIONSTAX EFFORTSTAX EVADERSTAX EVASIONTAX EXPENDITURETAX HAVENSTAX LAWTAX LAWSTAX LEGISLATIONTAX LIABILITIESTAX LIABILITYTAX MEASURESTAX PAYMENTTAX PAYMENTSTAX PRODUCTIVITYTAX PURPOSESTAX RATETAX RATESTAX REFORMTAX REFORMSTAX REGIMESTAX REVENUETAX REVENUESTAX STRUCTURETAX SYSTEMTAX SYSTEMSTAXATIONTAXPAYERSTOTAL DEBTTOTAL EXPENDITURETOTAL EXPENDITURESTOTAL PUBLIC EXPENDITURETRADE LIBERALIZATIONTRADINGTRANSACTIONWATER SUBSIDIESWATER SUBSIDYWEALTH TAXWEALTH TAXESWorld Bank10.1596/12404