dinero_admin The Legislative Assembly of El Salvador has taken a momentous step by approving a US$75 million loan with the Corporación Andina de Fomento (CAF), marking a significant milestone in strengthening education and supporting the country’s fiscal liquidity. With 57 votes in favor and one waiver of the requirement, the Executive Branch was authorized to sign this agreement, which, under the Broad Sector Focus Credit modality, becomes a rapidly disbursing and freely available instrument.
This capital injection not only underscores the commitment to educational development but also provides crucial relief to the fiscal treasury, allowing it to address strategic priorities and general obligations of the State.
This financing, called the “Sectoral Program to Support the Comprehensive Strengthening of Education in El Salvador”, represents a direct investment in the nation’s future. Beyond its educational focus, the loan offers invaluable flexibility for the salvadoran government. The funds can be channeled toward various pressing needs, from various transfers to potential support for the treasury, demonstrating the versatility of this agreement to positively impact multiple economic and social spheres.
The loan’s financial terms reflect a favorable structure for El Salvador. With a term of up to 18 years and a 24-month grace period, principal repayment will begin two years after the contract’s effective date, through semiannual payments. The reference rate plus a 1.95% margin, with the option to convert to a fixed rate, provides stability and predictability in financing costs. Additionally, commitment, financing, and evaluation fees, although present, are considered standard for this type of operation, ensuring viability and long-term benefits for the country.
The approval of this loan with CAF is not just a financial transaction; it is a clear indication of international confidence in El Salvador’s economic management and development vision. This US$75 million translates into capital that will boost educational quality, foster financial stability, and allow the government to address crucial challenges. The effective implementation and strategic use of these funds will be key to maximizing their impact and ensuring a more prosperous future for all salvadorans.
