Oct
Politics
ARPAS on the 2021 proposed Budget
The Salvadoran Government gave a proposed budget for 2021 on September 30th, this is ARPAS assessment about it:
The presentation took place amid exacerbations of the permanent tension between the government and the Legislative Assembly, this time due to the refusal of the Minister of Finance, Alejandro Zelaya, to explain the use of the funds provided during the COVID-19 pandemic that -according to reports from the Central Reserve Bank (BCR) – exceed 3,000 million dollars.
With the data and analysis available at the time, it is possible to make the following observations about the budget that the government already presents as “the best in the history of the country”.
The good: The expenses include a significant increase in social investment, especially in health, education and public security, areas to which 3,009.6 million dollars will be allocated, equivalent to 40.4% of the $7,453.5 million, which are the total amount of the budget presented. Of particular note are the 1,320.4 million for the Ministry of Education, an amount that -according to the Finance Minister- represents 5% of the Gross Domestic Product (GDP), thus complying with a historical demand.
It should be noted, however, that not everything is positive about the expenses. For example: there is a cut in funds for bodies such as the Institute for Access to Public Information (IAIP), which confirms that for this government it is not a priority to strengthen the institutions linked to access to information, transparency and accountability.
The bad: In terms of income, there is a deficit of 1,342 million dollars, which will be resolved by acquiring more public debt, which – as the Central American Institute for Fiscal Studies (ICEFI) warns – at the end of this year will represent 92% of the GDP. In addition, the income projection is based on a calculation of tax collection overvalued by about 450 million, according to an analysis of the Movement of Professionals for the Transformation of El Salvador (PROES).
The Executive says that the intended increase in tax collection will be the result of the fight against evasion. However, judging by the commitments made with the International Monetary Fund (IMF), it could be an increase in VAT and other indirect taxes on consumption.
The ugly: The budget is intertwined with next year’s elections, in which the ruling party (GANA-New Ideas) intends to achieve a parliamentary majority. That is why it has an implicit “trap” that puts the deputies “between a rock and a hard place”.
The dilemma is this: if the legislators question the underfunding, the overvalued tax collection or the distribution of some expenses, Nayib Bukele will crush them with his propaganda machine, accusing them of not wanting to approve the “historic” budget and will ask people to make them pay on February 28; or if, on the contrary, to avoid the political-electoral cost they approve it as it is, they will commit a great irresponsibility that will have serious consequences for the country, such as greater debt, an increase in VAT and other neoliberal fiscal adjustment measures.
Faced with this dilemma, from this editorial space we urge the president and the deputies to carry out a serious, responsible and non-electoral debate on the 2021 budget; and the citizens to participate actively in this discussion. It is what is necessary and what the country deserves.
