El Salvador

After signing a peace agreement in 1992, this small, densely populated country, managed to emerge from a bitter civil war in the 1980s, during which an estimated 75,000 people died.

Since the end of the conflict, El Salvador has made significant progress towards consolidating peace and democracy. The country's political transformation led to major structural reforms and stable macroeconomic policies that resulted in strong economic performance (an average yearly growth of around 6%) during the 1990s.

Poverty levels in the country declined significantly between 1991 and 2002 (about 27% points), with extreme poverty dropping by half over the same period. There were also important social advances, as infant and maternal mortality rates were reduced and school enrollment and access to reproductive health and water services increased.

Economic growth reached 4.7% in 2007, but for El Salvador the effects of the global financial crisis in 2008 resulted in a drop in exports and remittances, higher levels of unemployment and rising food and energy prices. Between 2007 and 2008, the percentage of people in poverty increased from 35.5% to 42.3%.

The Salvadorian economy experienced a GDP contraction of 3.1% in 2009, and then managed a modest growth of 1.4% in 2010.

In response to the effects of the economic downturn, the Government formulated the Anti-Crisis Plan for 2009-11, with a stimulus package of nearly US$600 million that included measures to create temporary jobs, build basic infrastructure and increase the coverage of social services.

The Salvadoran economy has begun to recover at a slow pace from the impact of the international crisis: it registered a 1.5% growth in 2011 and it is forecasted to grow 1.3% in 2012 and 2.3% in 2013.

However, crime and violence threaten social development and economic growth in El Salvador and negatively affect the quality of life of its citizens. After a sharp and sustained increase in the levels of violent crime since 2000, the murder rate peaked at 71 homicides per 100,000 inhabitants in 2009, declining slightly to 69 in 2011. An ongoing truce between rival street gangs has further reduced homicide rates in El Salvador since the pact began in March of 2012.

El Salvador's vulnerability to adverse natural events, exacerbated by environmental degradation and extreme climate variability, also compromises the country's sustainable development and long-term economic growth. In 2011, Tropical Depression 12E hit El Salvador, affecting more than 1.4 million people and causing US$902 million in damages and losses.

As a net importer of corn and wheat, El Salvador’s fragile economic recovery could be affected by rising food prices. The World Bank’s Food Price Watch recorded a 10% increase of global food prices between June and July 2012. 

Currently, the World Bank lending portfolio in El Salvador comprises US$290 million in commitments and includes five projects focused primarily on serving vulnerable groups; enhance government efficiency, protect the environment and expanding opportunities for all.

In 2009 the World Bank Executive Board approved a Country Partnership Strategy (CPS) covering the period from 2010 to 2012 with a proposed $650 million lending program, technical assistance and analysis to support Government efforts to reduce poverty. After the 2011 Progress Report, the current CPS period was extended to 2014.

The CPS focuses on the following aspects:

• Strengthen fundamentals for economic recovery by addressing the macroeconomic and institutional vulnerabilities.
• Improving the provision of social services for vulnerable groups.
• Expand economic opportunities, particularly for the poor.

The current World Bank projects in El Salvador include:

Income Support and Employability Project 

This US$50 million operation assists the Government’s Temporary Income Support Project (PATI), which provides temporary income support, training services and job placement for poor people in urban areas.

Local Government Strengthening Project 

With US$80 million in financial support from the World Bank, this project aims to improve the administrative, financial and technical processes, systems and capacities of local governments to deliver basic services, as prioritized by local communities.

Education Quality Improvement Project

This US$60 million project will assist public schools in 29 municipalities to adopt the Inclusive Full Time School model, in order to increase access, retention and graduation rates for secondary students. More than 41,000 secondary students in El Salvador will have access to better quality education.

Fiscal Management and Public Sector Performance Technical Assistance Loan

The objective of this US$20 million project is to strengthen the institutional capacity of government processes and agencies to increase the effectiveness and efficiency of revenue and expenditure management, and enhance accountability and transparency in the public sector.

Strengthening the Public Health Care System

The objective of this US$80 million project is to strengthen El Salvador’s Public Health Care System, increasing service coverage for the 92 poorest municipalities in the country and providing better access to quality health services for 2.1 million Salvadorans. Approval of this project by the National Assembly is pending.

Secondary Education Project 

Launched in 1997, this project sought to improve the quality and efficiency of private and public secondary schools and to upgrade the quality of entrants to the labor market to increase the country’s competitiveness in the global market. Secondary enrollment rose to 46.1% between 1998 and 2005, exceeding the planned target of 40%.

Judicial Modernization Project 

The project helped to strengthen the capacity of the Judicial Branch by modernizing administrative processes and improving oversight of judges and legal professionals. The project focused on strengthening the capacity for monitoring and evaluation of the entire judicial system, including the participation of judges, technical and administrative staff in 160 training activities.

To learn more about results in El Salvador, visit El Salvador: Moving Forward.