Law Of Liability Tax For The Sustainability Of The Finance Public And The Development Social.

Original Language Title: LEY DE RESPONSABILIDAD FISCAL PARA LA SOSTENIBILIDAD DE LAS FINANZAS PÚBLICAS Y EL DESARROLLO SOCIAL.

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1 Decree N ° 533 it Assembly Legislative of the Republic of EL SALVADOR, whereas: I.-that according to our Constitution, it person human is the origin and the end of the activity of the State, that is organized for the achievement of the justice, it security legal and the well common; purposes for which need be equipped with of tools indispensable and vital that conducive to and guarantee the exercise of a proper political and discipline fiscal, especially for the financing of the health, the education, it security and it infrastructure.
II.-that article 101 of the Constitution, establishes that the economic order should respond essentially at the beginning of social justice, that they tend to make all the inhabitants of the country an existence worthy of human beings, mandate compliance with which requires healthy and sustainable public finances, that ensure these conditions for current and future generations.
III.-that the article 226 of the Constitution, has that the organ Executive will be especially obliged to preserve the balance of the budget, to where is compatible with the compliance of them purposes of the State, by what should guide is to the balance, and manage is with criteria of prudence, responsibility and transparency.
IV.-that fiscal policy, it becomes a tool to generate economic and social development, and that in that sense, the country must have the guarantee of fiscal stability and to ensure a sustainable public finance scheme, involving a reasonable exercise of public spending and a progressive strengthening of public revenue.
V.-that the transparency and the access to it information public are conditions necessary for ensure a use efficient of them resources of the State in benefit of the population, that to his time allow ensure an effective participation citizen, that contribute to monitor from a perspective social and economic the execution of the budget General of the State.
Therefore, in use of his constitutional powers and at the initiative of the President of the Republic through the Minister of finance, and with the support of the deputies Guillermo Antonio Gallegos Navarrete, Lorraine Guadalupe Pena Mendoza, José Francisco Merino López, Eugenio Donato Vaquerano Rivas, Ana Vilma Albanez de Escobar, Carmen Elena Calderón de Escalón, Norma Fidelia Guevara de Ramirios, Rolando Mata sources , Rodolfo Antonio Parker Soto, Mario Antonio Ponce Lopez and Guadalupe Antonio Vásquez Martínez.
DECREES the following: 2 responsibility Prosecutor for the sustainability of Act LAS finance public and the development SOCIAL chapter I provisions General object the law article 1.-La present law aims to issue standards that ensure the fiscal sustainability of medium- and long-term public finances, and that contribute to the macroeconomic stability of the country; which is held through the establishment of: (i) rules tax that established limits to the deficit and indebtedness public, (ii) make congruent the budget with them goals established in the present law, (iii) ensure the allocation budget that corresponds to them areas social, and (iv) greater transparency and best accountability of accounts.
(Principles General article 2.-this law is sustained in three principles: to) the State of El Salvador must procure as principle essential, within the frame of the present law, ensure the balance fiscal in the long term, through the establishment of goals for the level of balance primary, that allow decrease it relationship debt to GDP to a goal pre-set and subsequently keep it stable;
(b) principle of budget's medium term. The preparation of the General budget of the State must be framed in a macroeconomic scenario and indicative budgets to five years, without implying last allocation of funds or commitments for the years following that will be actually submitted for approval; and, c) principle of transparency. All the institutions of the State must provide information full and enough detailed on the execution of each budget, investments made, passive contingent based in commitments formal and results obtained every six months, with a gap not greater to 60 days calendar. The Ministry of finance will have the responsibility of reporting consolidated for each period in the before certain periods, in such a way that allows verifying the fulfilment of the objectives of fiscal health and social sustainability and the financial situation of the public non financial Sector.

3 field of application article 3.-the provisions of the present law, is apply to them entities that make up the Government Central, understood as the organ Executive, legislative, Judicial, as well as the Ministry public and others institutions, as is regulates in it law of budget General of the State.
In addition, autonomous not financial institutions, the Salvadoran Institute of Social Security, the of the Río Lempa hydroelectricity and the municipalities, for the purpose of consolidation of public non financial Sector balance, shall provide to the Ministry of finance, all information that is requested them in accordance with the provisions of this law.
Responsibility for compliance with article 4.-this law will apply to all the institutions of the public non financial Sector (NFPs). He Ministry of Hacienda will be the entity guiding responsible of the compliance of this law and of issue the normative technical that is required for that end, including clauses of exception, when them are necessary, for them municipalities and them institutions official autonomous, to not hinder their operations or their programs of investment.
Definitions article 5.-for the effects of the present law; (as well as provisions of other legal regulations relating to this Act, shall take into account the following definitions: to) Public Sector not financial (NFPs): comprises the institutions that make up the General Government and the non-financial public enterprises. General Government comprises all the institutions of the Central Government and those who work with funds to finance public or who receive grants from the State, the Salvadoran Social Security Institute, municipalities and other decentralized institutions. Public enterprises not financial comprise the autonomous official institutions, such as the hydroelectric of the Rio Lempa, the Commission Executive port autonomous, national water and sewage management and the National Lottery charities and any other institution that in the future be part of this sector;

b) Balance of the Sector public non-financial or Fiscal Balance: result showing the difference between revenues and total expenditures of instrumentalities and entities of public non financial Sector;
(c) Balance primary of the Sector public not financial: is the Balance Fiscal of the Sector public not financial, excluding those payments of interest of the debt public;
(d) debt public of the Sector public not financial: is the sum of the debt external and internal, of all the entities public of the Sector public not financial;
e) pension debt: is the coming debt of the pension system, including 4 depreciation and interest;
(f) debt public of the Sector public not financial with Inns: the sum of the debt of the NFPs more the debt retirement;
(g) floating debt: is essentially used to remedy deficiencies in temporary income, under the terms stipulated in the article 227 of the Constitution of the Republic;
(h) income temporary: are those resources that is obtained with character exceptional and that can alter the situation patrimonial and financial of the State; such as sale of capital goods, capital transfers, granting concessions, among others;
(i) saving running: is the difference between the income current and expenses running;
j) expenses current public non financial Sector: are paid expenses for consumption and regular operation of the public administration. Include compensation, purchase of goods and services, commissions, transfers current, interests and others;
(k) the non-financial Public Sector Capital expenditure: are paid for directly and indirectly the gross capital formation and the purchase of property, intangible assets and other non-financial assets;
(l) expenses total of the Sector public not financial: is the sum of all the expenses actually paid by the Sector public not financial, both current, as of capital;
(m) gross tax burden: percentage of the amount of the taxes collected and the gross domestic product Nominal, (GDP) of a given year;
n) revenue streams: these come from the exercise of coercive power of the State to impose and require contributions to public benefit, as well as penalties and interest generated by mora, arrears or breaches of tax obligations, social security or credits provided by public bodies: those coming from the sale of goods and services, and current transfers received from the various economic agents; (and, or) them income current net: corresponds to the income current discounting them returns of taxes.

5 chapter II stabilization and sustainability Fiscal Framework Prosecutor of medium and long term article 6.-in order to ensure the timely and effective implementation of this law, created the Fiscal framework of medium and long term (MFMLP); Accordingly, is adopt them provisions, regulations, estimates and projections fiscal updated in a period of ten years, contained in the said instrument, to strengthen them objectives and purposes defined in the present law.
The MFMLP is a dynamic management tool, which illustrates and orients itself to the strategic decisions of fiscal policy making, providing a baseline of the multi-year fiscal projections of income, expenditure and financing, which express global indicative ceilings of these variables; (this tool is will and should be updated, with a fiscal projection of ten years and shall contain at least the following: a) an economic scenario base from which it shall draw up the General State budget and fiscal projections. This scenario will consider the estimates official of them variable macroeconomic of the Government and of agencies international;
(b) the goals and limits of them main indicators of political fiscal to be reached in the next 10 years, according to the present law;
(c) projections of income and tax expenditures, and debt flows;
(d) scheduling of public investment, including its source of funding;
(e) level of total public debt in dollars and as a share of GDP;
(f) assessment of tax risks;
(g) indicators of the sustainability of fiscal policy in the medium and long term;
(h) the percentage of execution of them resources current assigned and, especially, of the investment scheduled, with the respective supporting technical;
(i) detailed report of all subsidies, indicating their amount, cost management and source of funding; and an assessment of impact socio-economic and their contributions in the equity, which must be presented six months before end each period presidential;
(j) detailed report of the results and of the evolution of the finances of the companies public non financial (EPNF);
(k) amount total and the features of them obligations that have warranty or endorsement of the State, including information on its structure of maturity, the type of warranty and 6 beneficiaries, as well as of passive contingent; and l) estimating the rate of evasion of income, which serve as baseline for successive reductions and tax expenditure, according to the possibilities of the Ministry of finance.
Period of consolidation Attorney article 7.-to comply with the provisions in article 1 of this law, will be needed on an urgent basis, measures to allow a consolidation of the public finances for the next 3 years, starting from the beginning of the Fiscal year of 2017, for which there must be to implement measures of income and expenses, resulting at least 3.0 percent of gross domestic product.
The estimation of the goal of debt pension is established in the law of the system of saving for inns.
In the period of Fiscal consolidation debt of NFPs, discounting the pension debt, must be consistent with the adjustment program.
This period of tax consolidation, must be taken in the Fiscal framework of medium and long term, that has been created, by article 6 of this law.
Period of sustainability Fiscal Art. 8.-after the period of consolidation Fiscal, in the subsequent 7 years and in forward, is must ensure a proper sustainability in the long term; at the end of the consolidation period stated in article 7 of this law, the ratio of the debt of the NFPs should not be more than 45%.

At the end of the period of sustainability Fiscal and in the following years, the ratio of the debt of the Sector public not financial, discounting the debt pension, will be to the 42% of the product internal gross, to levels consistent with the program of adjustment.
The NFPs with pension debt, shall not exceed 65% of the GDP after the adjustment period.
To achieve the sustainability Fiscal, will be necessary adopt actions strategic e indispensable from the entities subject to this law, aimed to generate a management consistent, responsible and transparent of them finance public.
Of the policy Fiscal Government article 9.-the President, on the proposal of the Minister of finance, within ninety days subsequent to the date on which assume their functions, shall submit to the Council of Ministers, for its approval, the bases of fiscal policy that will be applied during his administration, which must contain a statement about the implications that will have your policy , on the Balance of the NFPs, which should be of the knowledge of the Commission of Hacienda and special of the budget of the 7 Assembly legislative. In addition, in the first six months must submit a program of public investment of its management, compatible with the present law.
(Rules of responsibility Fiscal Art. 10.-the Ministry of Hacienda, to attend it designated in the article that above and within a period of ten years, will proceed to run measures to ensure them goals of the NFPs of the form following: to) reach Balances primary positive after completed the period of consolidation fiscal. The limit of debt of the NFPs and the primary Balance, constitute the main rules of this law;
(b) starting from the third year of implementation of this law, the tax burden shall not be less than 17% of the GDP; (and, c) after the period of consolidation Fiscal, those expenses running not must be higher to the 18.5% of the GDP. For that purpose, the areas of wages and goods and services may not grow beyond the growth of Nominal GDP.
The goals contained in the present available, may modify is all time that is invoke the clause of exception expressed in the present law.
If there are changes in national accounts or the methodology of elaboration of gross domestic product, the goals of this law should be modified to meet the object of this law. The changes should be expressed in the Fiscal framework of medium and long term.
Chapter III of it responsibility Fiscal and the balance budget of the responsibility in the formulation, execution and evaluation of the result of the budget Art. 11.-the Ministry of Hacienda, in attention to it established in the Art. 4 of the present law, will be the responsible of ensure because is guarantees that, in the budget General of the State, is meets with them principles constitutional in this matter , as well as the regulated by the law organic of management financial of the State.
The Executive Body, in the appropriate field, will have the direction of public finances and especially obligated to preserve the balance of the budget, where it is compatible with the fulfilment of the purposes of the State. Budgeted expenditure should be consistent with current net income.
Similarly, you must ensure compliance with programmes of pre-investment and investment policy of indebtedness of the public sector, as well as ensure the sustainability of the 8 programs social investment contained in the fiscal policy that should occur in the terms laid down in this law.
Monitoring and evaluation of the budget article 12-the follow-up and evaluation of the budget and public finance will be framed in the projection of fiscal and macro-economic, goals established in the Fiscal framework of medium-term and long-term. To this end, indicators that allow to evaluate their fulfilment at the end of the fiscal year and as a reference for the planning of the budget for the following fiscal management should be.
He follow-up to is concerns the subsection above, will be to charge of the Ministry of Hacienda.
Limits of expenditure in exercises tax that concur it transition presidential Art. 13.-during the exercise fiscal that coincides with the home of a new administration of Government, is prohibited to it administration outgoing, it execution of the expenditure current in a proportion upper to the forty percent of the total of the allocation budget of expenditure current, for that exercise fiscal.
Prohibition create expenses without source of financing article 14.-all reform law or new legal system, involving delivery of resources requiring current spending, must contemplate its corresponding source of financing, as well as the estimate of expenses arising from the same.
Adjustment by Deficit Fiscal Art. 15.-When is active the exception of applicability willing in the present law, will correspond to the Ministry of Hacienda present a plan of measures for resume them goals expressed in the frame Fiscal of medium and long term, whose execution will be informed in detail to the Commission of Hacienda and special of the budget, at least with a frequency semi-annual.
Commitment to Social development and protection policies and social programs article 16.-the policies and social programs must have funding secured, should be to assess the efficiency of public spending and the impact of this on the basis of social indicators and poverty. These resources should be incorporated within the General budget of the State.
Planning, implementation and evaluation of policies and programmes aimed at reducing poverty, social will be determined by the Executive Body in the corresponding fields.

9 them programs social must be expressed within the framework Fiscal of medium and long term, whereas the availability and capacity financial of the State, and them resources with that should count to meet this commitment in matter of expenditure social.
Within these concepts, social programs that are run for the benefit of women, children, people with disabilities, elderly and other vulnerable population and extreme poverty must be guaranteed.
Chapter IV accountability and Fiscal transparency report goals and projections article 17. -The Minister of Hacienda, prior approval of the Council of Ministers, shall present to the Assembly Legislative the project of budget General of the State, accompanied of the frame Fiscal of medium and long term.

Evaluation Fiscal Art. 18.-in them first ninety days of the year, the Ministry of Hacienda must present to the Council of Ministers, and subsequently to the Commission of Hacienda and special of the budget of the Assembly legislative, an evaluation of it Management fiscal and of the compliance of the present law, to the closing of the year previous next to the report of the management financial of the State.
Free access to the information article 19.-the Ministry of finance should publish the reports referred to in this law, in its transparency Portal, without the expense of the citizens and law which gives the law on access to public information.
Article 20.-the Ministry of finance will publish monthly the balance loan requirements to General direction of cash, goods and services and current transfers, as well as credit notes issued pending payment and LLETS balances, as well as the flow of the LLETS issued and cancelled in each month.
Obligation to inform of the Governments Municipal Art. 21.-will be responsible for all Municipal Government, publish an annual report of those operations of emission or securitization of securities made to finance their operations, which also should send annually to the Ministry of finance, copy of it, to be placed in the institutional web page, and in this way facilitate the access of all citizens.
In addition, municipalities must inform the Ministry of finance when 10 financial transactions that involve the inflows of the Fund for economic and Social development.
Obligation to inform public Sector non-financial, to the Ministry of finance article 22.-for purposes of monitoring and evaluation, all institutions that are subject to the provisions of the organic law of the State financial administration, shall be obliged to provide to the Ministry of finance, monthly information as accurate and timely related to financial performance, both of the items of revenue and expenditure how internal and external financing operations, referred to in the General State budget and special budgets, as well as other supplementary information that may be required.
Likewise, the rest of institutions that make up the public financial Sector must inform the Ministry of finance, in the same way that prescribed by the preceding paragraph, in compliance with the provisions of this law.
Chapter V final provisions, sanctions, temporary, and duration of treatment should be given to the regime social security article 23.-within the guidelines laid down in this law, will be obligation by the Superintendence of the financial system, through the Ministry of finance, submitted a report attached to the report of the financial management of the State from the previous fiscal year, an actuarial report of the social security system containing the flows of income and expenditure for the financing of the expenditure in the field of pensions, with the priority objective of measures tending to the balance of the social security system over the long term.
Exception of applicability article 24.-when State of emergency, calamity, disaster, war or serious disturbance of the order pursuant to article 29 of the Constitution of the Republic, is current may temporarily suspend the application of fiscal targets required under this Act.
In the case of unforeseen economic events that negatively affect the economy, such as a significant slowdown of growth or a negative impact by a relevant variable such as remittances, exports and decrease in deposits of the local financial system, it will be the Legislative Assembly at the request of the Council of Ministers, ordering the temporary suspension of this law, in session convened for this unique effect.
A plan of adjustment that allows you to return to the path of sustainability, expressed in the Fiscal framework of medium and long term, within a reasonable time must be in designated cases. To this effect, the Ministry of Hacienda will issue the regulations corresponding.

11 specialty of it present law Art. 25.-by the nature of the content of the present law and because of its specialty, will prevail on any other ordering legal that it counteract, including on them of those institutions that require that is make mention express to them, for effects of that is les apply regulatory as them contained in this ordering legal.
Available transient article 26.-in it related to the debt floating, must adopt is them measures indispensable, to in the first year not is greater to the 20% of them income running a time placed and cancelled them balances of the debt of short term.
The limit established in the subsection previous may modify is in case not is approved loans of support budget, consistent with the program established in the MFMLP and it established in the Art. 7 of the present law.
Treatment to them funds of activities special Art. 27.-within a term of cent eighty days, counted starting from the force of the present law, is should regular through a regime special, them funds of activities special, as well as the mechanism that enable incorporate such funds, of a form gradual and systematic, to the budget General of the State.
By the nature extraordinary of these income, the same not are considered as part of them income running of the State.
Sanctions article 28.-the Minister of Hacienda will ensure by the compliance of this law, especially of those parameters of management financial established in them Arts. 2, 7, 8 and 10. Breach of these obligations, the Minister of finance may be convoked by the Legislative Assembly, and if it leads, lead to a recommendation to the President of the Republic so that it proceed with the dismissal of the official.
The Minister of finance must present an affidavit in strict compliance with the provisions of article 227 of the Constitution of the Republic and truthfulness and full inclusion of all expenses pertaining to the draft General budget of the nation law. If submission of the case that there is a legal impediment to incorporate any partial or total expenditure in the budget bill, the Minister must do so explicit in his affidavit.
For effects of the Art. 13 of the present law, if is fails to comply with the limit of expenses, the excess will be considered as an expenditure not authorized in the budget, and will be sanctioned according to the frame legal established.

12

The application of them sanctions referred in them interjections earlier, will be subject to the approval of them measures of income and expenses, consistent with the program of adjustment established in the Art. 7 of the present law.
Entry into force article 29.-the present Decree shall enter into force the first of January of the year two thousand and seventeen, following publication in the official journal.
GIVEN in the SALON blue of the Palace legislative: San Salvador, to the ten days of the month of November of the year two thousand sixteen.
GUILLERMO ANTONIO GALLEGOS NAVARRETE, PRESIDENT.
LORRAINE GUADALUPE PEÑA MENDOZA, DONATO VAQUERANO, FIRST VICE PRESIDENT. SECOND VICE PRESIDENT.
JOSÉ FRANCISCO MERINO LÓPEZ, RODRIGO AVILA, THIRD VICE PRESIDENT. FOURTH VICE PRESIDENT.
SANTIAGO FLORES ALFARO, FIFTH VICE PRESIDENT.
WILLIAM FRANCISCO MATA BENNETT, RENE ALFREDO PORTILLO BLOCK, FIRST SECRETARY. SECOND SECRETARY.
FRANCISCO JOSE ZABLAH SAFIE, REYNALDO ANTONIO LÓPEZ CARDOZA, THIRD SECRETARY. FOURTH SECRETARY.
JACKELINE NOEMI RIVERA AVALOS, SILVIA ESTELA OSTORGA ESCOBAR, FIFTH SECRETARY. SIXTH SECRETARIAT.
MANUEL RIGOBERTO SOTO TIE, JOSE SERAFIN ORANTES RODRÍGUEZ, SEVENTH SECRETARY. EIGHTH SECRETARY.

13. presidential House: San Salvador, eleven days after the month of November in the year two thousand and sixteen.
PUBLISHED, Salvador Sanchez Ceren, President of the Republic.
Juan Ramon Carlos Enrique Caceres Chavez, Minister of finance.
D. o. No. 210 volume no. 413 date: November 11, 2016 GM/adar 14-12-2016 legislative index

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