The economy joins security as Bukele’s main challenges in his new mandate

LOOK: Nayib Bukele overwhelmingly wins the presidential elections in El Salvador

According to the CID Gallup pollster, Bukele entered the elections with 90% approval of his management and 81.7% voting intention. The main reason for this resounding popular support is the fight against crime that he has undertaken since he became president in 2019.

That year, El Salvador recorded 36 homicides per 100,000 inhabitants, a figure that dropped dramatically to 7.8 per 100,000 inhabitants by 2022. A wave of murders that occurred during the first quarter also led to In 2022, Congress will declare the emergency regime at the request of the president.

This measure has been expanded monthly since then, giving rise to the so-called war against the maras (gangs) and leaving a balance of more than 70 thousand detainees. Furthermore, the homicide rate continued to decline until reaching an unprecedented 2.4 per 100,000 inhabitants.

Various civil society organizations and human rights organizations have denounced that many of the arrests have been arbitrary; However, Salvadorans assure that the streets are safer than ever and crimes such as extortion or murder seem to have disappeared.

But will this be enough?

“There are two challenges for this new mandate. One is the sustainability of the security issue, but the greatest concern of Salvadorans is related to the issue of employment, the cost of living and the economic situation. The country presents a fairly complex scenario of high debt, no foreign investment and static economic growth for years.“, warns Trade the director of the Institute of Science, Technology and Innovation of the Francisco Gavidia University, Óscar Picardo.

“The security situation is better, but the economy remains bad”, analyst Michael Shifter, from the Inter-American Dialogue think tank in Washington, summarized to the AFP agency.

– The cost of security –

The Salvadoran government keeps under strict confidentiality the total investment it has made in its so-called war against gangs. “Bukele has spent a lot of money, in a five-year period approximately 10 billion dollars, which although it includes expenses due to the pandemic, is a lot”says Picardo.

With this, the question becomes ripe: will Bukele be able to maintain his fight against crime for five more years?

“It is very complex to know how long this war against gangs will last because the causes of the problem have not been attacked. Young gang members have been captured, but the origin, which has to do with school dropouts, aspects of exclusion and poverty, has not been touched upon. Therefore, it can be thought that the issue can evolve and that although it may not reappear in the same gang form, it can do so with other manifestations.”warns Picardo, who assures that education is another great challenge that has been dragging on in the country for several governments and there seems to be no intention to face it..

“Education is fundamental for the change of the future in a country, but it is not electorally attractive. The presidents, not only Bukele but also the previous ones, never opted for investment in quantity or quality in the public education system. That is a big debt and a big challenge for the future. According to the PISA 2022 test, we are in penultimate place along with Paraguay, the Dominican Republic and Cambodia,” points out.

This is especially important if we consider that in the last two years the government has had to redirect certain social funds to security coffers in order to maintain its operations. The last case of this type was recorded in September of last year, when Bukele announced an injection of 30 million dollars to his security plan, money he obtained after cutting the budget of the Salvadoran Institute of Vocational Training (Insaforp) in half. .

“Insaforp has been weakened, 60 million dollars were also taken from the Ministry of Education, 42 million dollars have not been paid to the state university. And paradoxically, events such as the Miss Universe or the Central American Games have been held. So, there is an asymmetry or an imbalance”says Picardo.

– Poorer –

Unlike security, the Salvadoran economy did not experience any evolution during Bukele’s mandate.

To date, rather, the cost of the basic basket has increased by 30% during the last three years, 70% of workers are informal, 30% of the population lives in poverty and 10% in extreme poverty. .

“According to the 2022 Multipurpose Household Survey, 14,000 new poor people increased and there is no strategy to address this problem. Insecurity was obviously a very restricting factor, now people no longer pay rent (extortion), nor do companies, but it is not enough to think about an economic takeoff in the short term.”Picardo warns.

In this new period, Bukele will also have to find a way to boost the GDP, which according to the International Monetary Fund (IMF) is projected to grow by just 1.9% in 2024, quite far from the between 2.6% and 3.5%. regional average.

With the intention of tackling these problems, the Bukele government is negotiating a loan for 1.3 billion dollars with the IMF, although this would imply accepting conditions such as reducing public spending, subsidies and increasing consumption taxes in a country with a public debt close to 80% of GDP and in which the president seems to be guided by popularity levels.

While the security plan has made El Salvador a much safer country, this “has not been translated” in significant foreign direct investment, in part because there is not much trust in the government and corruption remains “a challenge”warned the State Department in a recent report on the Central American country.

“What can change the economic matrix is ​​the attraction of foreign investment and I believe that we are not an attractive country. We depend on the 8 billion dollars annually that arrive through remittances, the growth is 2.1% according to ECLAC, we import a lot, we export little, Bitcoin did not work. “The economic forecast is very reserved and I would not be surprised if in the future they release a digital token to not print banknotes and thus solve liquidity problems,” Picardo comments.

Not even the controversial strategy of converting Bitcoin into the official currency of circulation has allowed the Salvadoran government to attract foreign investment. On the contrary, the 107 million dollars that Bukele invested in September 2021 for the State to acquire 2,381 of these cryptocurrencies have suffered a loss of around 45 million dollars due to the 37% devaluation of said digital currency.

Despite the government’s plan to grant $30 to each user who downloads the government digital wallet to carry out operations with bitcoins, including receiving remittances, to date almost no citizen uses it. The same thing happens with tourists.

However, those who would be taking advantage of it would be gangs like MS-13, which operate in El Salvador, Honduras and Guatemala, to carry out their illicit businesses without being detected, warned the Georgetown Journal of International Affairs in a report published in March of the year. past.

“Support for Bukele is very high, almost religious, but if he does not take care of the economic challenges, people are very sensitive and popularity can drop quickly. There is an expectation that the economic situation will improve, but the hard data from the rating agencies and the IMF tell us that the situation does not look good at all.”concludes Picardo.