Salvadorans renewed their confidence in Nayib Bukele, who proclaimed his re-election in Sunday's elections, based on the success of his “war” against the gangs. But analysts believe that economic difficulties predict the end of the honeymoon.
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“His second government will be problematic because people's expectations will not be met either economically or socially. The (economic) trends are not good for him,” independent Salvadoran economist César Villalona told AFP.
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Bukele is, according to polls, the most popular president in Latin America, mainly thanks to the repression of gangs that turned what was one of the most violent countries in the world into a much safer one.
Even if he manages to keep the gangs at bay, it may not be enough for Salvadorans to continue giving Bukele carte blanche in economic matters.
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“The security situation is better, but the economy is still bad,” analyst Michael Shifter, of the Inter-American Dialogue think tank in Washington, told AFP.
With these, there are now 4,000 prisoners in the new prison inaugurated at the end of January.
Before the first official scrutiny data was known, which took four and a half hours to arrive, the president of El Salvador, Nayib Bukele, celebrated his victory in the presidential elections this Sunday with “more than 85% of the votes” and began to receive congratulations from the foreign ministries of neighboring countries.
(You can read: Nayib Bukele: what is the life of the most popular president in Latin America like?)
Bukele said that “God wanted” to heal the country and that the citizens decided to “continue the path we are on in full freedom and full democracy.” During a speech of almost 29 minutes and before thousands of his followers, Bukele made strong reproaches to the special envoys of the foreign media.
'Everything is more expensive'
Bukele promised this Sunday “a period of prosperity” because “there is no longer a brake on creating a company”, studying, working, developing tourism. But complaints are beginning to be heard on the street.
As for “healthcare, education, a lot needs to change,” Blanca Noemí, a 52-year-old street vendor in San Salvador, explains to AFP.
His second government will be problematic because the people's expectations will not be met either economically or socially. The (economic) trends are not good for him.
“Everything is more expensive. The cost of basic products has gone up,” said taxi driver Miguel Juárez, 37.
Elizet García, a 35-year-old housewife, demands “more employment opportunities for young people.”
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According to Villalona, Slow economic growth and falling agricultural and industrial production do not bode well.
The cost of the basic food basket – which includes bread, beans, meat, eggs and fruit – has increased by about 30% in the last three years, while the minimum wage has only increased by 20%.
Almost 30% of Salvadorans live in poverty and almost one in ten in extreme povertyaccording to 2022 figures from the Economic Commission for Latin America (ECLAC).
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Nayib Bukele at the UN General Assembly.
A 2023 State Department report stated that nearly 70% of Salvadoran workers were in the informal sector without access to social benefits.
“The country's problems are much broader than the issue of security,” said Ana María Méndez-Dardón, director for Central America of the Washington Office on Latin America (WOLA).
“In terms of employment, education” and other social issues “there is no improvement,” he told AFP.
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The challenge of growth
Fiscal health is another of the main concerns, since Public debt stands at around 80% of GDP and the country is unable to sell bonds abroad to obtain cash or attract large investments.Villalona stated.
Instead, the government had to borrow from international organizations, as well as its own central bank and the national pension fund, which increased the deficit even further.
With less money in circulation, “consumption capacity is falling. And that does not seem to have a solution in the short term,” Villalona said.
(You can read: 'I'm not looking for it either': Bukele talks about 'indefinite re-election' in El Salvador)
The country is negotiating with the International Monetary Fund (IMF) a loan of about 1.3 billion dollars. But Villalona said Bukele is trying to avoid conditions that include cutting public spending, subsidies and raising consumption taxes “because it has a political cost.”
The State Department affirms that the emergency regime in force since March 2022 “is contributing to improving consumer confidence and economic optimism.”
However, This “has not translated” into significant foreign direct investment, in part because there is not much trust in the government and corruption remains “a challenge”.
(Continue reading: El Salvador: protests for the freedom of innocent people detained in the fight against gangs)
GDP in the third quarter of 2023 was 2.8% and the IMF forecasts a figure of 1.9% for 2024.
Consumption capacity is falling. And that doesn't seem like there will be a solution in the short term.
“The challenge is to grow at higher rates” reaching at least the Central American average of between 2.6% and 3.5%, former Central Bank governor Carlos Acevedo told AFP.
(In context: The keys to Bukele's license application to run for re-election in El Salvador)
In an attempt to revitalize the dollarized and remittance-dependent economy, Bukele made bitcoin legal tender along with the dollar in 2021, although studies show that Salvadorans hardly use it and the IMF asks him to reverse that decision..
According to Acevedo, only sustained economic growth can “decisively attack poverty.” Without social investment, he warned, “the issue of gangs or an equivalent (phenomenon) will re-emerge in the medium term,” he warned.
AFP
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