El Salvador Budget Shift Moves US$97 Million It Can Still Borrow
El Salvador's government wants to spend US$97 million it is already allowed to borrow. The money is left over from two domestic bond issues. The post El Salvador Budget Shift Moves US$97 Million It Can Still Borrow appeared first on The Rio Times .
, What happened: The Finance Ministry asked Congress on September 3 to add US$97 million to the 2026 budget., How big it is: The amount is under 1% of El Salvador’s US$10.56 billion budget for 2026., What it means: The funds come from unused bond authorizations, not new debt or surplus., The catch: This is not new money; it’s leftover permission to borrow that was already approved., Who it hits: Eleven state institutions, including security, agriculture, and tourism agencies., What comes next: The finance committee takes up the request first, then the full Assembly votes.
The government says it needs the money for prisons, farms and ID cards. The request also shows how El Salvador handles debt under its IMF programme.
On September 3, the Finance Ministry sent a request to the Legislative Assembly, which is El Salvador’s Congress. The request asks to reform the national budget and add US$97 million for the second half of 2026.
The Finance Ministry calls the costs ‘priority and unavoidable obligations’ for 11 state institutions. The full list is not public, but the largest items are known.
The US$97 million is not new borrowing. It comes from two domestic bond issues that Congress approved earlier but were not fully used.
The first issue was approved in November 2025 for US$344 million. The government used US$267 million, leaving US$77 million.
The second issue was approved in April 2026 for US$100 million. It left US$20 million unused.
Together, those leftovers make up the US$97 million. This is an important distinction.
The funds are pending authorizations, not surplus from bonds that were already sold. The government is asking for permission to use the remaining borrowing capacity it already has.
The largest single item, US$37 million, goes to the Ministry of Agriculture and Livestock. Reports differ on the exact use, from farm markets to running costs.
The next largest, US$30 million, is for prisoner rehabilitation. About US$19 million goes to the interior and territorial development ministry, split between running the ministry and social programmes.
Smaller sums go to the Attorney General’s office, the economy ministry and public works. The National Registry of Natural Persons gets US$1.19 million to issue free national ID cards for first-time applicants.
Other recipients include the environment ministry, tourism ministry, and CORSATUR, the state tourism promotion corporation. The decree does not say how long the bonds would run or what interest they would pay.
In El Salvador, changes to the national budget require approval by the Legislative Assembly. This includes using existing bond authorizations.
The request reached the Assembly as a formal letter from the Finance Ministry. The Assembly’s finance committee has been called to take up the request early next week.
A plenary vote would follow if the committee backs it. The Assembly could still change the request or reject it.
El Salvador is under a 40-month Extended Fund Facility (EFF) with the International Monetary Fund, approved in February 2025. The program provides about US$1.4 billion in loans.
In exchange, the government agreed to cut spending and raise revenue. The goal is to reduce public debt to about 83% of GDP by 2028.
That means running a primary surplus, which is revenue minus spending before interest payments. The IMF program also limits new debt.
Under the deal, the government cannot issue Bitcoin-linked bonds or other crypto-related guarantees.
El Salvador’s approved 2026 national budget is US$10,555.6 million. The request would move money inside that total.
Using leftover bond authorizations is a way to get cash without going to international markets. Fitch Ratings, a credit rating agency, said in May 2026 that it does not expect new Eurobond sales before 2027.
Instead, El Salvador relies on domestic borrowing and multilateral lenders like the IMF and World Bank. This request fits that pattern.
The IMF’s 3 September statement on the second and third reviews does not mention this request. The two are separate steps.
The IMF program requires deep spending cuts. El Faro, an independent Salvadoran outlet, reported that the IMF-backed plan implied social spending cuts of about US$623 million in 2025.
It put the cuts at over US$1 billion in 2026 and US$1.4 billion in 2027. The government says it is committed to fiscal consolidation.
In December 2025, an IMF staff statement praised the government’s ‘strong’ commitment. It said the 2025 primary balance target was on track.
But some targets have been missed. Fitch notes that the 2025 domestic debt reduction goal was not met.
A Q1 2026 indicative target was also missed. The end-2025 primary balance target, however, was achieved.
For investors and expats, this request shows how El Salvador manages its public finances under the IMF program. It is a mix of domestic borrowing, multilateral support, and strict spending controls.
The US$97 million is under 1% of the 2026 budget. It is a small sum, but the government still needs permission to spend it.
The request also signals that the government is avoiding new international debt for now. It also means less new debt sold abroad this year.
The key date is when the finance committee meets, likely early next week. If approved, the money will be distributed to the 11 institutions.
Also watch for the IMF’s final approval of the second and third reviews. That would release the next tranche of loan funds.
The government has not said when it will issue the remaining bonds. The interest rate and the term of the bonds have not been published.
