Alarms have been sounded after the Treasury announced an agreement with the IMF. Deputies will seek short-term reforms to improve savings profitability.
The opposition is noisy for Finance Minister Alejandro Zelaya to talk about comprehensive reforms to the pension system amid government talks with the International Monetary Fund (IMF), to obtain financing for about $ 1.3 billion which would serve “as the golden opportunity” to revitalize the economy, the official announced a few days ago in an interview with Reuters.
According to MPs Víctor Hugo Suazo, from the FMLN and Rodrigo Ávila, from SAND, Zelaya’s announcement seems “a rescue” that the Executive is looking for in the face of the “lack of liquidity” facing the Treasury for the “waste” of money of the state, loans and bonds used last year with the argument of attending to the emergency arising from the COVID-19.
“I am concerned that the government is announcing a pension reform under the agreement with the IMF for a fiscal package. Its interest is fiscal,” Suazo said.
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In the money management approved by the Assembly for the pandemic emergency, there are “anomalies” in more than $ 670 million that went to the Emergency Fund for Disaster Prevention and Mitigation (Fopromid ), in the custody of the Ministry of the Interior, according to the analysis carried out by the special committee of the Assembly investigating the use of public resources for the pandemic, based on the latest report received from the Supervisory Committee of these funds.
Reuters stressed in its news that, Zelaya wants the IMF to approve to the government a 36-month credit line, similar to the program announced this week for Costa Rica.
“It will help us (the funding) to leverage the budget gaps for the years 2021, 2022 and 2023,” Zelaya explained, deepening that this will help reduce the high costs associated with national debt.
“I’m worried that the government is talking about pensions, because everyone knows that the government will have a situation of lack of liquidity, because of the debt it has had, now it would not be the case that the government wants to get its hands on to the savings of the contributors, this would be disastrous, because everyone has their individual account and this must be respected, “said Ávila.
According to Zelaya, the reform proposal they propose to promote is based on three axes: “that it benefits the contributor first, something that has never been done; second, the state, and thirdly the actors who are managing pension funds “.
The last reforms to the pension system approved by the Assembly were in 2017. At that time, they explained, Ávila and Suazo, it was possible to improve the profitability of pensions from 1% to 4% and gradually has from rising to 5.8%. Also, they managed to make the pension a lifetime by creating a Solidarity Guarantee Fund.
With the impetus of the independent deputy, Francisco Zablah, of 25 initiatives that are under study in the ad hoc commission of pension reform, the Assembly endorsed that the contributors at the time of retiring do not have to reimburse the 25% advance that they have applied to the AFP and that their retirement is calculated based on the remaining balance; the ease of claiming their savings in the event of terminal illness and the non-renunciation of nationality by Salvadorans residing abroad to be eligible for the balance of their savings.
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In the remainder of the current legislature, Suazo sees it possible to make other one-off changes in the short term, but unlikely to block so that the government cannot use workers ’savings; while Zablah reprimanded that the work of the commission has been stopped for “lack of will and quorum” to sit down.
Ávila explained that the only way would be to reform the pension law to reduce the 40% available to the government to borrow money from savings, but considers that the problem is not whether it is a public or private system , but there are competitive rates that generate good interest for workers.
But he warns that a “threat” is coming from government talks with the IMF. “Because pensions will fall on them, this is very dangerous, this government has gone into liquidity, because they have spent in an unbridled way, they have wasted resources, they have used all the strength of the state for propaganda issues. “Avila lamented.
Suazo said the FMLN seeks in the short term to lower the commission charged by the AFPs. He added that in the reforms proposed by the Treasury the solution is not to be a public or private body, but that the savings management entity is managed by workers and pensioners mainly.