Government net lending/borrowing in El Salvador

The government deficit measures the balance of El Salvador's public accounts: a deficit arises when spending exceeds revenue over the period, and a surplus when the reverse holds. It is compiled by the Ministry of Finance and the Central Reserve Bank and is usually expressed as a share of GDP.

It is calculated as the difference between non-financial revenue and spending of the general government over the period, based on the national fiscal accounts. The balance is set against GDP to obtain the ratio, which may follow IMF definitions to allow international comparison.

The deficit drives El Salvador's borrowing needs and the path of its debt, a particularly sensitive matter for a dollarised economy with no monetary policy of its own. A wider-than-expected deficit tends to tighten funding conditions and weigh on sovereign bond valuations and the credit rating.

It is a low-frequency figure and is subject to revision. It is worth separating the headline balance from the primary balance (which excludes interest payments) and from the cyclical component tied to the economic cycle; one-off operations and the exact public-sector perimeter also matter.