Viewing cable 08SANSALVADOR1332
Title: EL SALVADOR UNSURE HOW TO PAY DECEMBER SHORT-TERM

IdentifierCreatedReleasedClassificationOrigin
08SANSALVADOR13322008-12-03 15:14:00 2011-08-30 01:44:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy San Salvador
VZCZCXYZ0001
OO RUEHWEB

DE RUEHSN #1332 3381514
ZNR UUUUU ZZH
O 031514Z DEC 08
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0399
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
UNCLAS SAN SALVADOR 001332 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN PGOV ECON ES
SUBJECT: EL SALVADOR UNSURE HOW TO PAY DECEMBER SHORT-TERM 
DEBT 
 
REF: A. SAN SALVADOR 1238 
     ¶B. CHRISTENSEN-SENICH E-MAILS 11/26/08 
 
¶1. (SBU) SUMMARY. The Ministry of Finance is unsure how to 
pay $80 million in short-term government debt on December 15. 
 The Ministry had planned on $200 million in funds from the 
Central American Bank for Economic Integration (CABEI), but 
was informed in late November that CABEI could only provide 
$50 million, which the Government of El Salvador (GOES) had 
already used.  Post has contacted the Department of Treasury 
regarding the GOES's request for additional technical 
assistance and will report septel on other fiscal/liquidity 
issues.  END SUMMARY. 
 
¶2. (SBU) On November 26, Manuel Rosales, Director of Fiscal 
Policy and Public Credit at the Ministry of Finance, called 
Econoff to alert him that the Government of El Salvador 
(GOES) was unsure how to cover $80 million in short-term debt 
in December.  According to Rosales, the GOES has $60 million 
in Letters of Treasury ("Letes") which it needs to pay or 
roll over on December 15.  In addition, because of an 
economic slowdown, the Ministry of Finance now projected a 
$20 million shortfall in tax revenue for December and would 
need to issue $20 million in new Letes to cover this budget 
deficit.  The Ministry of Finance had successfully covered 
November's approximately $65 million in Letes, primarily by 
using cash deposits from the various "semi-autonomous 
institutions" (e.g., the port authority). 
 
¶3. (SBU) Rosales noted that local banks continued to refuse 
to roll over their Letes.  The Ministry of Finance had used 
$100 million in funds from the Central American Bank for 
Economic Integration (CABEI) to cover its October Letes and 
expected to receive an additional $200 million (reftel A). 
Rosales reported, however, that CABEI informed the GOES in 
late November that they would only receive $50 million more. 
This last CABEI loan would cover Letes "up to December 15." 
The Ministry of Finance does not currently have a plan to 
cover its December debt and requested recommendations and/or 
follow-on assistance from U.S. Treasury's Office of Technical 
Assistance (OTA). 
 
¶4. (SBU) COMMENT: The GOES had continued to bank on CABEI 
funds even after many non-government analysts had projected 
that CABEI did not have the money (reftel A).  Post has 
already contacted Treasury (reftel B) and will report septel 
on additional fiscal/liquidity issues. 
BLAU