Municipalities win bigger slice of budget pie

El Salvador Watch, No.64, November 1997

For the first time, a significant portion of El Salvador's national budget will be earmarked for municipal governments to provide services locally.

Over the objections of President Calderon Sol, the Legislative Assembly has mandated that 6% of the national budget be reserved for municipal spending. This amounts to $80 million of the proposed 1998 budget.

The measure passed increases the allocation by one percentage point each year until it reaches 12% in 2004.

According to San Salvador mayor Hector Silva, El Salvador's 262 municipalities currently must share a mere 0.7 % of the country's budget. This is in stark contrast with the rest of Latin America where, he noted, on average 17% of the national budget is controlled locally.

In the past, while the industry in larger towns and cities provided some tax base, residents of rural El Salvador have suffered from poor services their municipalities couldn't afford.

Another FMLN Victory!

Increasing support to the municipalities was a major plank of the FMLN's platform. This represents another in a string of legislative successes for the party, which include:

(*) the May repeal of the original law privatizing the national telecommunications agency ANTEL;

(*) an August vote recommending the dismissal of the President of the Central Reserve Bank, in light of his failure to prevent massive fraud within the finance system; and

(*) most recently, the forgiving of the agrarian debt on October 30.

In each of the above cases, the deputies from every other party sided with the FMLN and against ARENA.

Next on the FMLN's agenda is electoral reform, lowering the IVA (Value-Added Tax), and raising the minimum wage.