World Bank approves loan of $100 million to El Salvador

Best Growth Stock – The World Bank (WB) on Thursday approved a loan of US$ 100 million for El Salvador that will be used to improve tax collection in the country in order to invest in necessary social costs.

The Agency said in a statement that the loan aims to ensure that tax revenues move from 13.3 per cent of the gross domestic product (GDP) to 14.8%, which would represent an increase of $368 million by 2012.

The World Bank noted that the first phase of the loan will focus on solving problems in fiscal management and should increase revenues in $98 million.

The objective of the Government of El Salvador, according to the World Bank, is to strengthen and modernize each of the three agencies with competence in tax collection, in order to improve the hitherto little coordination and integration among them.

The World Bank recalled that tax collection in El Salvador as a percentage of GDP is low, thereby limiting the capacity to expand public services and social assistance.

The Agency pointed out in that regard, that in 2008, revenue in the countries of the Organization for cooperation and development (OECD) amounted to 27% of GDP, while in Latin America the figure was around 16.1%, compared to 13 per cent in El Salvador.

The World Bank loan has a maturity of 30 years and a period of grace five years.