El Salvador 

El Salvador country policy

Policy established 13 February 2002

• ILC, bank guarantee or central public guarantee (conditional)
• The country ceiling is 1500 mln euro
• Early warning signal 400 mln euro
• - of which was used as at 2012-02-29 41 mln euro

Country class: 4

El Salvador country facts

Atradius Dutch State Business Economic Research
Country Report last updated 5 March 2010

Country EL SALVADOR

Political Situation
First Left-Wing President Chosen

Head of state
President Mauricio Funes (since June 2009).

Form of government
Left-wing minority government of ruling Frente Farabundo Marti para la Liberacion Nacional (FMLN) (35 of the 84 seats).

Internal Economic Situation
Weak Economic Recovery

General situation
Economy will recover from the contraction of 3.0% in 2009 in line with the recovery of the US. For El Salvador the US is the largest trading partner, largest source of remittances and foreign direct investments. Therefore a weaker economic growth in 2011 in the US will result in a lower growth of 1.5% next year. In 2010 main contribution to growth is from private consumption. Although it recovers from a drop in demand it is still subdued. Remittances have decreased for 15 months in a row. Government spending is constrained by the IMF program. A negative contribution from the external balance. Inflation dropped to 0.6% in 2009 and is expected to increase to 1.1% in 2010 due to rising food and commodity prices. The mainly foreign owned banking sector is well capitalised and supervised but the global credit crisis will constrain lending by them.  Moderately high corruption: 67th rank of 180.
 
External Economic Situation
Weakened

Main sources of foreign exchange
Private transfers (2007: 17% GDP), industrial products (54%), coffee (5%).

Main foreign markets
USA (48%), Latin America (31%).

Main expenses of foreign exchange
Intermediate products.

Balance of payments  
An improvement in domestic demand results in a stronger rise in imports then exports. Therefore CA deficit increases again in 2010.