El Salvador Misses April Payment of Pension Certificates

CENTRAL AMERICA - Report 18 Apr 2017 by Francisco de Paula Gutiérrez and Felix Delgado

The facts: on Friday April 7th, 2017, the government started to miss debt payments to the private pension funds (Certificados de Inversión Previsional through the trust fund for pensions created in 2006), to finance annual outlays of the PAYG system (currently close to $500 million yearly). By mid-April some $29 millions of such certificates were due, out of a total $55 millions in April and $230 for the whole year. No provision was included in 2017 budget, that was criticized as incomplete by the opposition ARENA, rejecting their votes for the bill, as explained in January report. On March 15th, an independent lawyer demanded the government before the Constitutional Court for failing to comply with constitutional provisions to include all known expenditures in the national budget. In fact, the government included only a symbolic amount of $1.000 to pay for the pension certificates due to private pension operators, instead of the actual amount of $230 million due during 2017.

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