Bold strategies allowed the government of El Salvador to pay $800 million in debt.

The Minister of Finance, Alejandro Zelaya, assured that El Salvador paid in full the debt of $800 million plus interest that was due this month due to increases in tax collection, the limitation of current spending, and the intelligent management of liabilities and sovereign risks.

As a first point, Minister Zelaya declared that the country is about to close the $2,000 million gap that did not enter the state coffers as a result of the tax collection strategy consolidated with the Anti-Evasion Plan.

“In our government, we are committed to combating tax evasion; we have collected an additional $1.8 billion to what was collected in 2018; we are ordering and modernizing the Salvadoran State; we have prioritized public investment,” added the official.

In addition, the minister explained that fiscal spending has been “tightened” in terms of current spending and public investment has been prioritized, which has led to an increase in the Gross Domestic Product (GDP).

“Our percentage of debt has been decreasing; I think we are going to close 2022 with 77% debt; if we compare it with the 87.9% we reached during the pandemic, we have decreased by 10 percentage points in two years,” he added.

That is without counting, according to Alejandro Zelaya, the achievements through other types of maneuvers such as the management of liabilities and sovereign risks.

“In the country, there was never a strategy to make repurchases of bonds; it was the government of President Nayib Bukele that has gone to repurchase in the secondary market, and that option has always been there because the debt contracts have always been in force,” he pointed out.

The Treasury spokesperson recalled that the FMLN, when it held the presidency of the republic in 2017, had the opportunity to make repurchases in the secondary market because the values fell due to default. “We have taken advantage of a situation in which we have been the subject of a smear campaign (to buy back bonds),” he added.

The payment of the $800 million plus interest, Zelaya explained, was made under different modalities. In the early purchase of the 2023 bond, $133 million was disbursed, and an additional $63 million was disbursed for the second repurchase. In the two amounts, a total of $196 million was reached and paid before the expiration of the term. This allowed a savings of $23 million in the payment of interest and principal on this 2023 bond.

Later, he added that the analysts began to carry the risk to the 2025 maturities, which lowered the market price to 50%, making the repurchase a “good deal” for which the purchase was offered to investors for $353 million in two purchase operations.

“The announcement that we want to make is not only that we pay the 2023 bond, but additionally, for the 2025 bond, only $347 million must be paid. That is the total balance that has remained from the 2025 bond », he pointed out.

The operation in both maturities allowed the country to save $288 million that is used to pay other types of government debt. It should be noted that both commitments—2023 and 2025—added $1.6 billion to the country’s debt.

Likewise, Minister Zelaya clarified that, contrary to what opposition analysts affirm, El Salvador did not use funds from allied multilateral organizations, such as the Central American Bank for Economic Investment (CABEI), the Development Bank of Latin America-CAF, the Inter-American Bank Development Bank (IDB), or the World Bank (WB), to settle the debt.

“We cannot say that there is an exclusive multilateral organization that has supported El Salvador to get ahead with the payment of the bonds. They have all acted in accordance with El Salvador’s financial situation. What we have is a strategy to strengthen public finances,” concluded the head of the Treasury.