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El Salvador regresses

Friday, July 29, 2016


 

The Northern Triangle -- Guatemala, Honduras and El Salvador -- is generally regarded as the most troubled part of Central America.

But while all three countries continue to face major problems of violent crime, the economies of Guatemala and Honduras are showing encouraging signs.

Not so El Salvador, whose economy for several years has ranked last in the region in economic growth and foreign investment.

Even El Salvador’s once proud coffee industry has slumped.

Over the last six months, Costa Rica, Honduras, Panama, Nicaragua and Guatemala have recorded year-on-year output increases of as much as 30 percent.

Meanwhile, El Salvador’s crop has fallen by 40 percent.

These days, the country leading export by far is not coffee but labor, as Salvadorans working abroad – mostly in the United States – are expected to send a record $4 billion in remittances.

Before the 1980-92 civil war, El Salvador was a regional business and industrial powerhouse.

Since then, the country has been governed by governments of both left and right, but to little avail.

The current administration, led by President Salvador Sánchez Cerén, appears to be seeking a stand-by loan from the International Monetary Fund.

But such loans normally are granted on condition that the government imposes effective fiscal and monetary measures.

On the last two occasions on which El Salvador was granted a stand-by loan in principle, the accord collapsed because the conditions were never met.

The rest of Central America must hope that this time the Fund’s medicine will be administered.

Without it, the region could face having a permanent invalid in the family.