On Wednesday, November 5, El Salvador’s private banks announced they would withdraw their suit against the recently approved progressive tax reforms as a gesture of good faith to the leftist administration of President Sánchez Cerén and the Farabundo Martí National Liberation Front (FMLN) party.

Seven of the nation’s leading banks had presented the suit against the newly approved taxes to the Supreme Court on August 29^th, claiming that a new financial transaction tax violated constitutional rights to economic freedom and private property. President Sánchez Cerén called on the banks to withdraw the suit in October, explaining that the new tax revenue was necessary “in order to guarantee the sustainability of all the social investment that has generated a new dynamic in the country.”  The President later convened a permanent roundtable for dialogue between the executive and the private banking sector.

The withdrawal of the suit represents a remarkable about-face for the conservative banking sector, which has until now played an oppositional role. Nevertheless, the leftist administration’s fiscal reforms still face several remaining legal challenges from various private sector associations and groups tied to El Salvador’s notoriously recalcitrant right-wing opposition. At least four suits have been filed challenging the constitutionality of the new taxes since their approval on July 31st—the most recent was presented the very day after the bank’s announcement; two have been accepted by the Supreme Court for consideration.