El Salvador: The line in the sand

Research evidence excerpt

El Salvador: The line in the sand

J P M O R G A N Latin America Economic Research

08 July 2026

• With the review process stalled for over seven months, we expect progress Emerging Markets Economic and

on El Salvador’s IMF program to remain at a standstill for now. Policy Research

• Still, El Salvador continues to follow IMF guidelines and fiscal Mariana Zepeda

consolidation is on track. (1-212) 272-0919

mariana.n.zepeda@jpmorgan.com

• Near-term financing needs appear manageable without the IMF, but the Katherine Marney

credibility that comes with its backing would be hard to replace. (1-212) 834-2285

• Sovereign Credit: We are MW El Salvador, but valuations would look katherine.v.marney@jpmorgan.com Emerging Markets Strategy attractive if we do get an IMF breakthrough (not yet our base case).

Leonardo Tiago AC

• We hold our recommendation on El Salvador’s state-contingent IO strip; (1-212) 834-2479

the April 2026 Macro Test failed on the stalled IMF review, triggering the leonardo.tiago@jpmorgan.com

step-up to the 4.0% coupon rate. Emerging Market Research

• We see a relatively high chance the Macro Test fails again at the October Ben Ramsey

2026 measurement date, which would likely reprice the strips higher. (1-212) 834-4308

benjamin.h.ramsey@jpmorgan.com

In our view, El Salvador’s second and third IMF program reviews under the EFF J.P. Morgan Securities LLC

remain on hold mainly due to an impasse over Bitcoin accumulation. Ongoing

discussions on pension reform and the pending sale of the El Chivo wallet have also

slowed progress, but they do not appear to be the binding constraint. Looking

forward, we see a rising probability that the program remains on hold. The recent

coupon step up adds up to an incremental cost of $18.8mn between April and