Overview

  • The smallest country in Central America, El Salvador has a population of 6.4 million (plus over 1.5 million Salvadorians living abroad) 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 2.5 percent in 2018 and its per capita GDP is US$4,058. 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. The country’s economy is expected to grow at 2.4 percent in 2019.

    The country’s low growth has translated into moderate poverty reduction. The poverty rate (based on a US$5.5 per person per day poverty line) declined from 39 percent in 2007 to 29 percent in 2017. Extreme poverty (US$3.2 per person per day) also declined from 15 percent to 8.5 percent over the same period.

    El Salvador’s levels of public debt (70.7 percent of GDP in 2018) are a matter for concern. The pension system reform 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.

    In terms of political developments, the country has accomplished noteworthy progress. Democracy and peace have been consolidated since the end of the civil war in 1992, and six 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, increased access to healthcare facilities, particularly by the poor, contributed to El Salvador’s ability to reach MDG 4 (reducing under-5 mortality). In education, both access 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 from 0.51 in 2001 to 0.38 in 2017, making El Salvador one of the most equal countries in Latin America.

    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), the country continues to have one of the highest homicides rate in the world: 61.8 homicides per 100,000 inhabitants in 2017.

    Crime and violence make doing business more expensive, negatively affect investment decisions and hinder job creation. El Salvador produces only 30,000 jobs per year while 40,000 jobs are needed every year to provide work for those entering the labor market. Crime and violence and lack of opportunities and jobs are the main drivers for many Salvadorians to migrate.

    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.

    El Salvador will need to take advantage of export markets to achieve sustainable long-term growth. Economic growth and household income could be boosted by increased regional integration. Solutions for the country’s challenges will likely involve efforts across a broad range of areas including skills, labor market opportunities, health, and the provision of infrastructure, among others.

    Last Updated: Oct 10, 2019

  • The current World Bank lending portfolio in El Salvador totals US$200 million and includes an investment project (pending Congressional approval) to boost resilient local economic development. The lending portfolio is complemented with trust-funded operations in the health and environment sectors, as well as advisory services and analytics in areas such as trade facilitation, e-government and disaster risk management, amongst others. The World Bank and the Government of El Salvador are preparing additional investment operations to further support health, early childhood education and clean energy.

    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: Oct 10, 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 later expanded to eight more in 2015. The project also 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 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, 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 Strengthening 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, procurement of 44 fully-equipped ambulances, improved management of medical waste in 30 hospitals, 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. 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. The project also supported the training of over 4,660 health staff.

    Promoting sustainability and resilience:

    The Earthquake Emergency Reconstruction and Health Services Extension Project rehabilitated three hospitals and reconstructed another three, which were either destroyed or damaged during two earthquakes in 2001. The project also conducted preventive maintenance of hospitals and improved hospital services to over 3 million beneficiaries. Through community outreach, the project extended health and nutrition services to 1.2 million women, children, and indigenous people in 141 poor municipalities.

    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.

    The Protected Areas Consolidation and Administration Project updated the National Strategy and Action

    Plan for consolidating and managing the Natural Protected Areas System and tested it in two pilot protected areas (Bahia de Jiquilisco and San Diego-Las Barras). The project prevented deforestation and promoted regeneration on over 20,207 hectares. Both protected areas were delineated, and land tenure conflicts were reduced. Training and alternative livelihood investments benefited local solidarity groups and cooperatives and strengthened their support for biodiversity conservation.

    Last Updated: Oct 10, 2019

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LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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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