Finance, Nation

High tax collection in El Salvador ensures debt payment

The repurchase maneuver of Salvadoran bonds with maturities in 2023 and 2025 carried out by the Salvadoran Government generated savings of $275 million for the country and offered better prospects to investors.

The country managed to reacquire $565 million of the securities together, of which $133 million corresponds to those due in 2023, and $432 million to those due in 2025. However, $360 million was paid for both since the transaction was made at market value at the time.

After the operation, about $667 million of the 2023 bond, issued by the Francisco Flores administration, and $357 million of the 2025 bond, issued in the government of former President Mauricio Funes, remained pending payment. For the payment of both instruments, the Minister of Finance, Alejandro Zelaya, assured that there are sufficient funds.

“We still have to pay $667 million, and for the 2025 bond, it is $357 million. Funding sources are assured. The payment is already included in the budget for the following year ยป, he stated.

According to the official, most of the funds for the cancellation of this debt will come from the state coffers, which have been strengthened this year with tax collection.

“For this (debt payment), there is financing from multilateral organizations and own financing. The majority will be with their own funds,” Zelaya said.

In this regard, analysts from financial institutions such as Bank of America have stated that they are “convinced” that the government will pay the rest of the 2023 bonds. “We see a low risk in the fulfillment of that debt,” they mentioned.

On the other hand, regarding the improvement of the perspectives in the stock market, the international financial services firm Exor Latin America indicated in a recent analysis that the 2023 bond closed in September 2022 (the month in which the repurchase operation was carried out) with an increase in the price of the bond of 29.9% compared to July of this year.

Likewise, the price of the 2025 bond experienced an increase of 29.51% at the end of September this year compared to August.