Overview

  • The smallest country in Central America, El Salvador has a population of 6.4 million (2017) and is one of the most densely populated countries, ranking in the 83rd percentile worldwide in terms of population density.

    GDP growth in El Salvador reached 2.3 percent in 2017 and its per capita GDP equaled almost US$4,000 the same year. Agriculture, livestock, forestry and fisheries, manufacturing and mining, and commerce, restaurants and hotels accounted for about two-thirds of the observed growth. The country also continues to benefit from a strong inflows of workers remittances, totaling US$5.4 billion in 2018 (21.3 percent of GDP).

    However, El Salvador suffers from persistent low levels of growth. Annual GDP growth has exceeded 3 percent only twice since 2000 and averaged just 2.3 percent in the last five years, one of the lowest growth rates in the Central American region. The country is expected to grow at 2.6 percent in 2019.

    The country’s low growth has translated into modest poverty reduction and high rural poverty. The poverty rate (based on a $5.5 per day poverty line) declined from 39 percent in 2007 to 31 percent in 2016. Extreme poverty (based on a $3.2 per day poverty line) also declined from 15 percent to 10 percent over the same period.

    El Salvador’s high levels of public debt (70.7 percent of GDP in 2018) are a matter for concern. The pension system reform made in 2017 reduced the financing needs of the public sector. As a result, it is expected that the fiscal deficit will stabilize around 2.5 percent of GDP in the coming years. However, the significant risk associated to the higher debt service resulting from higher interest rates is a call for additional fiscal consolidation efforts to reduce public debt levels. 

    In terms of political and social developments, the country has accomplished noteworthy progress on both fronts. Democracy and peace have been consolidated since the end of the civil war in 1992, and five consecutive democratic presidential elections have taken place with peaceful transitions of power. Moreover, El Salvador continues to make progress in advancing human development outcomes mainly through the expansion of access to public services. For example, in the health sector, increased access to healthcare facilities, particularly by the poor, contributed to El Salvador’s ability to reach MDG 4 (reducing under-5 mortality).

    Immunization rates have increased from 76 percent in the 1990s to 93 percent in 2016. Similarly, the share of the population with access to improved water sources increased from 79 percent to 89 percent, and the share with access to improved sanitation expanded from 56 percent to over 95 percent during the same period. In education, both access (particularly at the primary level) and literacy rates have increased, with the most significant advances in urban areas. Yet, high school dropouts remain a challenge.

    El Salvador is also becoming a more equal country. Inequality – measured by the Gini coefficient – declined by about 5 percentage points between 2007 and 2016. This reduction was driven by income growth for the poorest 20 percent in 2016, making El Salvador the most equal country in Latin America the same year, after Uruguay.

    But crime and violence threaten social development and economic growth in El Salvador, and negatively affect the quality of life of its citizens. While gang-related violence has substantially dropped in recent years (OSAC, 2018), El Salvador continues to have one of the highest homicides rate in the world: 60.07 homicides per 100,000 inhabitants in 2017. Crime and violence make doing business more expensive, negatively affect investment decisions and hinder job creation.

    The country has also very high exposure and vulnerability to natural hazards, including earthquakes and volcanic eruptions. It is also highly vulnerable to climate change impacts, including increased occurrences of floods, droughts, and tropical storms.

    Last Updated: Apr 04, 2019

  • Two projects, focused on improving retention and graduation rates at the secondary education level and expanding the coverage, quality, and equity in utilization of health services, recently closed and the World Bank and the Government of El Salvador are preparing new investment operations to further support health, early child education, resilient local development and clean energy. The current World Bank portfolio in El Salvador comprises trust funds and analytical and advisory services supporting efforts related to fiscal management, capital and financial markets development, climate change, disaster risk management and health.

    The Country Partnership Strategy for El Salvador (CPF) was approved in June 2015 and is based on two pillars: building the foundations to promote inclusive growth and promoting sustainability and resilience.

    Specific objectives include:

    · Building capacities to make communities safer to foster increased economic development.

    · Improving academic performance of secondary school students.

    · Increasing employability and job skills of young people.

    · Increasing financial inclusion.

    · Promoting efficient public spending and expanding fiscal space.

    · Building capacities to mitigate natural disasters and environmental challenges.

    A new CPF is expected to be prepared during fiscal year 2020.

    Last Updated: Apr 04, 2019

  • Promoting inclusive growth:

    Through the Income Support and Employability Project, the World Bank financed the government’s Temporary Income Support Program (PATI), which benefitted approximately 41,000 people living in poverty with temporary community jobs and technical training. The program was initially implemented in 25 municipalities and subsequently expanded to eight more in 2015. Additionally, the project supported the Ministry of Labor in establishing 49 employment offices to offer job placement services to beneficiaries, along with mobile employment kiosks, employment fairs, and an on-line Jobs portal serving around 200,000 persons overall.

    The Local Government Strengthening Project benefited around 3.4 million people across 262 municipalities through the development of 507 local infrastructure projects, such as electrification, clean water and sanitation, waste management, construction and improvement of roads, and bridges, as well as renovation of sports and recreation spaces to support violence prevention programs. In addition, these local infrastructure projects generated around 12,987 temporary jobs.

    Promoting sustainability and resilience:

    The Education Quality Improvement Project expanded the adoption of the Inclusive Full Time School (IFTS) Model in 29 municipalities in the country. The project supported the construction of 32 schools with refurbished infrastructure to implement the IFTS model, the renovation of 563 school facilities (classrooms, libraries, study rooms, teacher rooms, sports and recreation spaces) and the provision of educational material and equipment to 195 schools to adopt the IFTS model. The project benefited more than 151,000 students and teachers, including 6,259 students in grades 7 to 9 who received more than 30 hours per week of additional pedagogical activities with the IFTS model, and about 2,500 teachers who got certified in pedagogical skills such as art, physical education, and indigenous cultures, among others.

    The Public Health Care System Project supported the expansion of the Integrated Health Care Services Model in the 82 poorest municipalities of the country. Project results include the construction of the first national radiology center for cancer treatment and the biomedical laboratory, the procurement of 44 fully-equipped ambulances, the development of the first national strategy for chronic diseases and the creation of the national directorate of chronic diseases within the Ministry of Health, and the improved management of medical waste in 30 hospitals. During the implementation of the project, more than 1,300 pregnant women and 14,000 children under age 3 received maternal and child care services. Also, around 85,000 people benefited from immunization vaccines and close to 8,000 chronic kidney patients received treatment kits after the acquisition of medical supplies and medicines funded by the project. The project also supported the training of over 4,660 health staff.

    Last Updated: Apr 04, 2019

Api


LENDING

El Salvador: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

More Photos Arrow

Additional Resources

Country Office Contacts

EL SALVADOR +503 2526-5900
Calle El Mirador, Edificio Torre Futura, Nivel 9, oficinas 904 y 905, Colonia Escalón, San Salvador
cleonjuarez@worldbank.org
EEUU +1 202 473-1000
1818 H Street NW, Washington, DC 20433
amaso@worldbank.org