EL SALVADOR - Authorities are looking at ways to spread the cost of El Salvador's 1998 pension reform over a period of time, since parametric reforms of the pension system would be "difficult to achieve."
In a staff report, the International Monetary Fund (IMF) suggested El Salvador introduce parametric pension reforms to contribute to fiscal consolidation. In response, however, the El Salvador authorities claimed political support for further reforms would not be feasible.
The country's fiscal pressures have arisen from large pension outlays and the cost of the pension reform carried out in 1998. Ways are being explored to either reduce this cost or spread it out over a number of years.
According to IMF staff, further reforms to the pension system would help bring the El Salvador economy onto a path of faster growth and social progress.
Raising the retirement age and contribution period, lowering replacement rates and limiting future pension increases were some of the measures recommended by the IMF.
However, due to the difficulty of getting support for such reforms, the authorities said they will undertake broad public debate over pension costs and their implications for taxation, priority spending and debt dynamics.
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