El Salvador

The crisis hit El Salvador’s economy hard. In 2020, gross domestic product (GDP) contracted by 7.9% annually. The population will not equally share the consequences. Based on the latest international comparable estimations, in 2020 the poverty rate reached 36.4%, among the highest in the Latin America and the Caribbean (LAC) region (30.9%). It has increased six percentage points from a year earlier, compared to an increase of four percentage points in LAC. The extreme poverty rate has reached 8%, an increase of 2.4 percentage points, compared to 10.0% and 1.9 percentage points, respectively, in LAC. Public expenditures on health before the crisis stood at 7.2% of GDP, slightly higher than in LAC (6.8%) but lower than Organisation for Economic Co-operation and Development (OECD) countries (8.8%). The perceived quality of health services was negatively affected. In 2020, 54.8% of people declared being satisfied with health care, compared to 48.2% in LAC. People’s satisfaction was 11 percentage points lower than ten years before, a larger decrease than in LAC (8.7 percentage points). Between March 2020 and May 2021 schools were fully closed for 46 weeks, more than in LAC (26 weeks) and the OECD (15 weeks). In 2020, 41.4% of El Salvador citizens thought that the government was corrupt, a lower share than in LAC (72.4%) and the OECD (58.8%).

El Salvador has adopted several measures to lessen the impact of the COVID-19 crisis on the most vulnerable, workers and enterprises. Regarding households, since the start of the confinement measures, the government announced a subsidy of USD 300 for more than 1 million families, as well as the delivery of food packages to all households with greater emphasis on the most vulnerable. Additionally, El Salvador allowed for the temporary deferral of utilities, phone and internet bills payments, as well as freezing payments on mortgages, loans and credit cards. To protect the most affected workers and enterprises, El Salvador implemented a job-retention subsidy for micro, small and medium-sized enterprise (MSMEs) workers, a programme to grant loans to formal enterprises and a programme to help finance small business owners in the informal sector.

Going forward, El Salvador is committed to providing a new approach through technological modernisation and institutional transparency, to respond to structural problems worsened by the crisis. Accordingly, the government proposed the Economic and Social Welfare Plan 2019-2024, a flexible, evidence-based tool that will allow the country to overcome the crisis and work towards the United Nations 2030 Agenda. El Salvador granted 1.2 million computers to students, launched a plan to transform territorial development in rural areas and made financial inclusion and the digital transformation priorities. As for long-term plans, El Salvador aims to build forward better through the execution of policies to increase private and public investment and to boost formalisation and growth of MSMEs, focusing on innovation and adoption of new technologies.

El Salvador’s international co-operation projects within and beyond the region focused on taking advantage of regional and international knowledge and resources to face the COVID-19 crisis. Within LAC, El Salvador’s co-operation schemes included a partnership with Colombia to strengthen the capacity of the El Salvador’s hospitals to attend to the pandemic and, through Sistema de la Integración Centroamericana, a donation to the Ministry of Health of the tools necessary for the detection of the virus. Beyond LAC, co-operation initiatives included the creation of the first university hospital in the country, with support from Luxembourg, and the construction of a speciality hospital dedicated to COVID-19 patients, with support from Morocco. To tackle the socio-economic challenges caused by the pandemic, El Salvador engaged in projects to prevent violence against women through a dedicated hotline (Spotlight Initiative) and created youth employability programmes through exchange of experiences and capacity building activities. Lastly, different Salvadorian women organisations, in close co-operation with the European Union, developed the programme “Strengthening agricultural cooperatives and peasant women’s organisations for the enforceability of the Human Right to Food and food sovereignty in El Salvador” (2021-2023) with the objective of improving the resilience and sustainability of agro-productive development processes in vulnerable situations following the climate and health emergency in the country.

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