El Salvador's Fiscal Deficit Will Remain Large In 2021 As Government Maintains High Spending Levels

• El Salvador is expected to run a large fiscal deficit in the quarters ahead as elevated government spending supports economic activity while a subdued economic recovery undermines revenue growth.
• Fitch Solutions revised its 2020 budget forecast to -11.3% of GDP, from -9.6% previously, and the 2021 forecast to -9.4%, from -6.2%, as the contraction in economic activity has led to a larger than expected fall in revenues.
• Large deficits in 2020 and 2021 will push up public debt significantly, and it is anticipated that public debt will peak at 94.4% of GDP in 2022, up from 73.3% in end-2019.

(Source: Fitch Solutions)