Salvadoran Assembly approves US$1.29 billion for “food sovereignty” and coffee rescue

RIO DE JANEIRO, BRAZIL – The Legislative Assembly of El Salvador approved this Tuesday, May 25, two trust funds for US$1.2 billion for the “rescue” of the agricultural and coffee sector with loans.

The Legislative body, with a large majority of the ruling party, approved with the votes of 73 legislators -out of 84- the Law for the Creation of the Trust Fund for Food Sovereignty and the Rescue of the Agricultural Sector.

This trust fund consists of US$650 million, and its purpose is the delivery of loans for food production and the construction of infrastructure for the collection and distribution of food. The trust will last for 25 years and will be administered by Banco de Desarrollo de El Salvador (Bandesal).

The Legislative Assembly also approved with 77 votes the Law for the Creation of the Trust for the Rescue of the Coffee Industry, with an endowment of US$640 million, which will also be administered by Bandesal. According to the Legislative body, this initiative “is part of the Agricultural Rescue Master Plan” of the Executive.

The Mesa Nacional por la Caficultura, formed by producers and the Government, agreed in early April 2017 to seek financing of US$300 million to reactivate the sector, hit mainly by the effects of climate change and rust.

Coffee is one of the main agricultural export products of the Central American country, which produces bourbon, pacas, and pacamara varieties in six different regions.

Ricardo Castaneda, an economist at the Central American Institute for Fiscal Studies (Icefi), noted on his social networks that both trust funds are equivalent to “close to 5% of GDP” and “a quarter of all tax revenue expected by 2021.”

The current legislature has given the green light, until before this approval, to US$1.33 billion in various loans.

According to the Central Reserve Bank figures, the total public debt as of March 2021 was US$23 billion, 11.9% more than the US$20.5 billion computed in March 2020.

The Government of El Salvador is in talks with the International Monetary Fund (IMF) for an loan agreement for up to US$1.4 billion, despite the international controversy caused by the dismissal of Supreme Court magistrates and the Attorney General by the Parliament.