Assembly reformed Budget Act 22 times in five months

Photo of author

By LatAm Reports Staff Writers

Amendments to the current Budget Act included the incorporation of resources from external loans, donations, own resources from institutions and surpluses in tax collection

In five months of this 2024, the Legislative Assembly approved 22 amendments to the General Budget Act of 2024, for the incorporation of resources of more than $271.6 million, from external loans, tax collection, among others.

The Assembly dominated by New Ideas maintains the trend of constant changes to the budget law such as the previous two years, as it approved a total of 57 reforms to the budget structure during 2023 and 56 reforms during 2022.

So far this year, more than $64.4 million was incorporated into the current budget from external loans already contracted by the government with multilateral agencies and the largest amount, that is, $207.2 million would be funds from “excesses” in tax collection, according to the information contained in the decrees approved at the request of the government.

While an additional $84.5 million correspond to reorientations of funds that were already incorporated into the law in some institutions, as was the case with the $64.7 million that were part of the Salvadoran Institute of Vocational Training (INSAFORP) that were distributed among the new Integration Directorate, the National Institute of Training and Training (INCAF) and the Ministry of Finance.

Among the institutions that received the resources with the reforms is the Ministry of Agriculture and Livestock (MAG), which received two reinforcements of $40 million and $27.9 million for the Agricultural Packages program and the food security program.

It also highlights a strengthening of $26.8 million that was authorized for the Presidency of the Republic, whose destination was not specified, but was only justified that it would be – to finance operating costs of the Secretariats of the Presidency of the Republic.

Budget underfunded

For opposition MPs, the constant change to the budget, which should be the country’s main public policy tool, reflects a lack of effective planning on the part of the Executive in terms of annual expenditure.

Changing budgets in the way it has been done implies that the way of budgeting does not work and that there is no route to follow and that budgets are presented as a simple formalism. And they’re not really planning, they’re presenting a defunded budget.

Marcela Villatoro, deputy of ARENA

He considered that, therefore, what is really an income and expenditure plan is not fulfilled. The word budget means that it is a program or plan of allocations and resources that will be used to fulfill the development plan of a State, in simple words, Villatoro added.

Congresswoman Claudia Ortiz, from Vamos, also believes that the budget is not used as a development planning tool.

It is a tool of economic policy and development and if it is not used as such, then it can be a double-edged weapon,” he warned.

Legislative Assembly approved more indebtedness for the government this year. Photo EDH/ Susana Peñate

The parliamentarian explains that if the objectives to attend to social programs are not budgeted, how many beneficiaries it will have, how much the spending cap of the institutions will be and how much will be allocated to investment projects, then it is only a great pocket of money at the disposal of a public administration that is not clear where it is going and that is going to step up, according to the circumstances.

It appreciates that in recent years the implementation of the budget has not been due to the objectives of development, social inclusion or economic promotion. “It’s a promise that breaks every year,” Ortiz said.

“One of the symptoms that the budget when presented in September of each year is badly done and is, in practice, defunded, because there are expenses that can be interpreted as public investment or social programs that are not included.

Claudia Ortiz, MP for Vamos

For both deputies, the government makes more spending than it planned for this year and therefore needs constant reforms to the law, which are endorsed without further discussion by the ruling bench.

Without explaining destiny

Of the last reforms approved at the end of May, resources were the incorporation of resources for nine public institutions, amounting to $85.2 million. Although the decree mentions some of the activities to be covered by these funds, Congresswoman Ortiz warned that there was no detail of the budget unit or the items in which they would be distributed.

The response of the representatives of the Treasury was that it was going to be the ministries that were going to define them, he said. He adds that official deputies – with immature answers – avoided explaining the fate of the resources.

Nor was there any further information on which areas would be reinforced by the resources allocated to the Presidency of the Republic, from surplus income from the Income Tax, according to estimates as of April 2024.

On the other hand, there are more and more setbacks in the transparency of the budget. And I don’t say this, the International Budget Partnership, an international entity that reviews the levels of transparency of budgets around the world and there we have gone backwards in that index, he said.

Loan funds

Among the approved reforms are several incorporations of loan funds to develop programs, such as the Ministry of Health, which received $12.1 million from the loan with the International Bank for Reconstruction and Development (BIRF) of the El Salvador Response Project to COVID-19.

These resources would be for the supply, installation and commissioning of the Magnetic Resonance and its generators in the Rosales and San Juan de Dios National Hospitals, San Miguel. Also for the readjustment and expansion of the area of Emergency Care in the Zacamil National Hospital and to carry out the modifications to contracts for the acquisition of digital X-ray equipment for the Zacamil and Rosales National Hospitals.

The Health branch also received more than $33 million from a loan from the Andean Development Corporation (CAF) of the Program for the Implementation of a Telemedicine System in El Salvador, by the El Salvador Hospital.

The decree says that they will be destined for the acquisition of software, design and construction of the new building for the Telemedicine system; hiring of medical personnel in the implementation stage; adaptation of offices, equipment and furniture; service of medical assistant for Artificial Intelligence; financing commission and cloud storage service.

The telemedicine program will be implemented by the El Salvador National Hospital with loan funds. Photo EDH/ Jessica Orellana

More than $3 million of a loan from the BIRF was added to the budget of the Ministry of Public Works (MOP) to make repairs to 164 educational centers affected by Tropical Storm Julia.

The Ministry of Housing received $4.3 million in its budget from a financial agreement with Cassa Depositi and Prestiti of the project “Rescue of the Housing Function in the Historic Center of San Salvador, through the implementation of Housing Cooperatives for Mutual Aid.”

The resources would be used for Italian consultancy and technical assistance, quality control laboratory for three housing projects, supervision and design of housing complexes; the restoration and rehabilitation of the “Casa Rey Prendes,” located in the Historic Center of San Salvador.

The budget of the Ministry of Economy also had a reform of incorporation of $311,653, coming from a loan with the Inter-American Development Bank (IDB) to finance the implementation of the program called the Program of Components I, III and IV.

And the National Institute of Sports (INDES) received $10.2 million of a loan to continue the interventions of sports scenarios.

Sowing of trees

Of the surplus income from the Transfer of Furniture and the Provision of Services (VAT) income compared to the estimates scheduled for March 2024, $5.5 million was allocated to MOP. Of this amount, $3 million is for the planting of trees in Maquilishuat, this activity includes the supply, logistics of distribution, sowing and maintenance.

Institutions that received fundraiser

At least twenty government institutions received a strengthening of funds, whether loans, surplus tax revenue or own resources:

  • Agriculture and Livestock $67,900,000
  • Health $65,202,532
  • Justice and Public Security $31,750,000
  • Public Works $28,510,861
  • Presidency of the Republic $26,800,000
  • Economy $16,270,988
  • CEL $19,490,897
  • INDES $10,294,603.86
  • SIGET $5,800,000
  • Foreign Affairs $5,512,419
  • Housing $4,348,000
  • Management Energy, Hydrocarbons and Mines $3,991,845
  • ISTU $3,000,000
  • Corsatur $3,000,000
  • Tourism $2,000,000
  • Treasury $739,680
  • ANDA $550,002
  • MARN $249,600
  • APLAN $250,000
  • FINET $149,305
  • Education $25,000

This article has been translated after first appearing in El Salvador