The Ministry of Finance of El Salvador has submitted a request to the Legislative Assembly to incorporate $24 million into the 2025 national budget as part of a landmark environmental commitment tied to a U.S.-backed debt-for-nature swap. The funds are the first installment in a 20-year obligation totaling $350 million aimed at preserving the Lempa River basin, enhancing water security, and restoring critical ecosystems.
Finance Minister Jerson Posada Molina formally presented the budget reform to lawmakers, seeking the Assembly’s approval to include the amount in the General State Budget for 2025. The $24 million is scheduled to be disbursed in two tranches: $12 million in April and another $12 million in October of next year.
The financial commitment stems from a broader agreement facilitated during President Joe Biden’s administration, under which the U.S. Development Finance Corporation (DFC) provided political risk insurance to support the refinancing of $1 billion in Salvadoran debt by JPMorgan Chase & Co. in October 2024. The operation resulted in significant interest savings that are now being directed toward this ambitious environmental initiative.
A multi-institutional board, initially consisting of seven members—including representatives from the Salvadoran government, the U.S. Agency for International Development (USAID), and five other government officials—was established to oversee the program. Since then, projects previously managed by USAID have been transitioned to the U.S. Department of State, according to Secretary Marco Rubio.
“This agreement is not only a win for El Salvador’s fiscal stability but also a crucial investment in long-term environmental resilience,” said a senior official from the Ministry of Environment and Natural Resources.
The restoration program will be jointly led by the Salvadoran government, the Environmental Investment Fund of El Salvador (FIAES), and Catholic Relief Services (CRS). The initial phase will involve a detailed environmental assessment carried out in collaboration with local communities, the ministry confirmed.
Beyond financing, El Salvador has committed to several governance and regulatory reforms as part of the deal. These include the creation of a dedicated entity to oversee the basin’s restoration, the approval of a National Plan for Integrated Water Resources, and the development of public feedback mechanisms for environmental complaints. Furthermore, by 2044, the government must declare 75,000 hectares as protected aquifer recharge zones and establish transparent standards for calculating the cost of drinking water and sanitation.
The Assembly’s Committee on Finance and General Budget is scheduled to meet on Tuesday, April 22, to begin discussing the proposed reform.
“This is a once-in-a-generation opportunity to strengthen our country’s environmental stewardship while deepening ties with the United States,” said Minister Posada.
As climate change and water scarcity loom over Central America, the Lempa River—El Salvador’s largest and most vital water source—could emerge as a symbol of cooperation, sustainability, and international innovation.