El Salvador faces today two fiscal challenges that will greatly influence its economic performance over the coming years. The first is to regain a solid fiscal footing, by reversing partly some of the recent rapid growth in public debt. The second is the need to finance certain priority investments required to accelerate growth and meet pressing social needs. This public expenditure review (PER) focuses on these fiscal challenges. It reviews overall trends in expenditures and revenues and lays out options for reducing debt gradually to levels that would grant greater flexibility to fiscal policy in the future, which is likely to be needed to respond to future shocks and contingencies and to aid in counter-cyclical economic management. In addition, the report provides in-depth attention to critical social expenditures, particularly those in health, education, water and sanitation, rural roads and electrification, which together represent over forty percent of the Central Government's budget. It also reviews the public expenditure management framework and offers some recommendations to ensure that public funds are used productively and efficiently.