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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

December 12, 9525

What ‘Medicine’ Does El Salvador’s Economy Need?

President Nayib Bukele vowed earlier this month to reinvigorate El Salvador’s economy. // File Photo: Salvadoran Government.

Q

  • Salvadoran President Nayib Bukele on June 1 was sworn in for his second term, promising in a speech from the National Palace to pursue a new policy focus on the nation’s economy. The World Bank estimates that at least 27 percent of Salvadorans are living in poverty. Bukele declared the success of his crackdown on gangs, which has seen more than 80,000 Salvadorans arrested and a drop in crime but has also led to human rights complaints, and he said he would now apply a similar “medicine” to the economy. What are the main challenges facing El Salvador’s economy? How have Bukele’s security policies affected investment, local economic activity and national development? What policies will Bukele need to pursue to achieve his economic goals, and what are his prospects for success?

A

Valeria Vásquez, senior analyst at Control Risks: “President Nayib Bukele’s big pending task for his second term is fixing the country’s economy, while maintaining his high popularity levels. The pressure to address economic challenges will inevitably grow, especially with fast-rising consumer prices and high public debt levels. Securing a $1.4 billion IMF deal is crucial, but it will not be possible without key fiscal reforms, including those related to addressing the regulation of Bitcoin. As Bukele mentioned in his inaugural speech, he will need to implement tough measures, likely including comprehensive tax reforms to increase government revenue and spending cuts to reduce the fiscal deficit. Given the current economic landscape and the measures Bukele must take, his unwavering popularity may be tested during his second term. Meanwhile, thanks to Bukele’s security policies, which…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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