As of July 2024, the total amount owed by the government to the pension fund amounts to $10,185.96 million, according to data from the Central Reserve Bank.
The government doubled pension debt during Nayib Bukele's first term, from June 2019 to June 2024.
According to the data of the Central Bank, as of July this year, the current administration had accumulated heavy debts with the International Monetary Fund. Pensions Of the employees who contribute to the AFP (Pension Fund Administrators) in the amount of $10,185.96 million.
Official information indicates that the government received more than $691 million between January and July 2024, with the balance as of December 2023 amounting to $9,494.57 million.
Debt with shareholders has followed an unstoppable path in Bukele’s first five years, since he took office in June 2019, the debt was $5,082.7 million, but it closed the same year at $5,264.76 million. In just six months it rose by $182 million.
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In 2020, the year of the pandemic, the loans provided by the Workers Fund to the Executive continued to increase, but there were months when the amount did not change. However, that financial period ended with a pension debt of $5,555.9 million, an increase of $291.14 million compared to the previous year.
The following year, 2021, the behavior was similar as the balance increased every three months, but in the last quarter of that period the increase was more pronounced and closed with a balance of $5,809.13 million, an increase of $253.23 million over 2021, the year of the pandemic.
In 2022, the accumulated debt of the executive body with shareholders rose to $6,202.23 million. That was the year in which the debt with the pension fund increased month after month, and compared to the end of the previous year, the amount increased by $393.1 million.
But then comes a development that will allow Bukele’s government to tap more pension funds without limits. In December 2022, the ruling legislature approved a pension reform that forces pension funds to continue lending money to shareholders without further restrictions, and also makes it easier for them to reach an agreement with fund managers to exchange millionaires’ debts accumulated by then and defer the payment of principal and interest to workers for four years.
This has allowed it to save at least $500 million annually through 2026, but it must start paying back in 2027.
Standard Debt Year
Since 2023, the government has been increasing pension debt at an unstoppable pace.
Due to the December reform and the disbursement of debts in April last year, the balance is now $8,397.33 million. This amount includes the Certificates of Pension Investment (CIP) that the state already owes to pay pensioners under the old system. These investment investment programs have been renamed Certificates of Transitional Financing (CFT) under the new law.
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The reform also created a new number so that the government could continue to receive money from contributors: Certificates of Pension Obligations (COP), which will be issued by the new Salvadoran Retirement Institute (ISP).
These conferences have become a source of government funding, as noted by the English investment bank Barclays.
Finance Ministry data shows how the debt rose gradually in the first three months of last year. In January, for example, the first issue of these certificates was worth $46.8 million, in February $93.6 million, and in March $140.4 million.
But starting in April, the figure skyrocketed to $455.42 million and remained unchanged for three months. However, since July last year, the amount has been rising nonstop every month.
The BCR records that the COP issuance that month was worth $507.35 million and a year later, in July 2024, the amount the government took from the workers' fund was $1,789.68 million, more than three times what the pension fund had lent it 12 months earlier.
Since April 2023, when the government replaced the old CIP balance with the new CFT, the amount has increased by $1,334.26 million. But in April this year, total pension debt exceeded $10 trillion, raising alarm among workers and experts, as it continues to rise.
Bukele's first administration ended its five-year term leaving shareholders with a debt of $10,116.43 million, $5,033.73 million more than what was found.
