El Salvador

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Development Challenge The USAID Program Other Program Elements Other Donors Program Data Sheets Summary Tables USAID Search: El Salvador Previous Years' Activities 2002, 2001, 2000, 1999, 1998, 1997 Last updated: 33     THE DEVELOPMENT CHALLENGE: Ten years ago, El Salvador embarked on a hard-won process of peace and democratization. Today rural poverty, the impact of natural disasters, high levels of crime and violence, and a justice system in need of repair challenge a democratic and free-market-oriented El Salvador. El Salvador is still recovering from the aftermath of the two massive earthquakes that have greatly weakened the rural economy and produced devastation across a wide swath of the country in early calendar year 2001. Even before the earthquakes, rural poverty was endemic with more than 54% of residents living below the poverty line, three in ten unable to read or write, and only 35% with access to potable water. The agricultural economy remains depressed. From 1993-2000, agricultural output declined in per capita terms and agriculture's share of Gross Domestic Product (GDP) represents only 12% of GDP today. All these difficulties are compounded by significant security concerns where violent crime, ranging from kidnapping to murder, has depressed domestic and foreign investment, contributing to low levels of national economic growth that barely keep pace with population increases. According to the most recent data, El Salvador's external debt is slightly more than $2.8 billion, or about 23% of GDP. The massive earthquakes of January 13 and February 13 of 2001 caused the loss of 1,159 Salvadoran lives, injured another 8,100 people, produced damage in excess of $2 billion, affected more than 1.6 million people, and destroyed or severely damaged 277,000 houses. Notwithstanding these problems, the process of national healing in the wake of the Peace Accords that brought to an end the country's civil war is well on its way. Elections have been effectively institutionalized and the most recent one, for local authorities and legislators, was deemed free and fair by international observers. Economic liberalization and market reforms are core to the government's growth strategy, and the Government of El Salvador (GOES) is committed to the promotion of free trade. The United States has multiple national interests in El Salvador. After the civil war, the UNITED STATES invested heavily in securing peace within the country, and the political and economic liberalization that we encouraged and that the country adopted is seen as a model for other developing countries. The United States is El Salvador's most important trading partner, absorbing 60% of its exports and providing more than 50% of its imports. More than 1.5 million Salvadorans reside in the United States, many of them illegally. By promoting growth in El Salvador with the Agency's new Partnership for Prosperity initiative for Central America and Mexico, the United States can stem the flow of economic migrants and reduce the country's vulnerability to narcotics abuse and trafficking. THE USAID PROGRAM: FY 2002 Estimate: $84.702 million1 FY 2003 Request: $33.724 million 1 In FY 2002, $100 million will be provided for El Salvador Earthquake Reconstruction: This is comprised of $64 million in FY 2002 resources , $25 million in IDA and $11 million in prior year resources. USAID requests funds for the four Strategic Objective programs within of economic growth and education, democracy and governance, health, and water and environment. In response to the massive earthquakes, USAID recently established a Special Objective program for a comprehensive reconstruction effort. The overall goal of USAID's program remains rural poverty reduction, and the primary focus is on poor women, youth, and children residing in rural areas. USAID is helping to get the rural sector back on its feet through microfinance, marketing, and rural infrastructure programs, in addition to increasing access to quality early childhood education in rural areas. USAID is also fostering continued democratic development by reinforcing the rule of law, and promoting active citizen participation and representation in government. USAID programs contribute to improving primary health care and reducing child mortality, strengthening and expanding reproductive health and family planning, and helping control HIV/AIDS, Tuberculosis (TB) and dengue. USAID is also increasing access of rural residents to safe water via improving watershed management and expanding water distribution systems. Under its earthquake program, USAID will (a) restore community infrastructure, focusing on houses, schools, health facilities, and potable water systems; (b) reactivate economic activity in the earthquake-affected areas, working with micro and small businesses and small farmers; (c) mitigate the adverse effects of future disasters; and (d) restore damaged municipal infrastructure. FY 2002 funds for core activities will be utilized to implement the planned programs described in the FY 2002 Congressional Budget Justification. USAID will utilize increased funding for its earthquake reconstruction program to respond to earthquake-related needs, especially housing for the rural poor. Specific activities funded by FY 2002 and FY 2003 appropriations are described in the program data sheets for the five programs. ONGOING PROGRAMS FOR WHICH NO NEW FY 2002 OR FY 2003 FUNDING IS REQUESTED:None. OTHER PROGRAM ELEMENTS: USAID's Regional Central American Program (G-CAP) will continue to help high-risk populations control and prevent the spread of HIV/AIDS in El Salvador communities. USAID's Global Health Bureau is collaborating with the NGO Salvadoran Demographic Association to achieve financial sustainability of the family planning services. The Office of Women in Development's Strategy for Advancing Girls' Education activity will work in tandem with the Mission's landmark Early Childhood Education program to build within the private sector business community and the country's press, a constituency for girls' education. USAID Central America Regional Program (G-CAP) will continue to work with the Mission under its regional electricity program to put in place a regulatory framework and tariff system for electricity that is conducive to promotion of economic activity in country. USAID Development Credit Authority (DCA)-funded loan guarantees help microfinance institutions revitalize and expand rural economic activity. G-CAP will provide technical assistance to promote private sector participation for improved municipal infrastructure. Finally, USAID's Economic Growth, Agriculture, and Trade Bureau is working with a local NGO to provide for water quality testing in rural areas. The test results contribute to the Mission's potable water activities. Earthquake reconstruction costs are estimated to exceed $2 billion. Last year at the IDB-sponsored Madrid Conference, international donors pledged $1.2 billion and the GOES has since allocated $260 million from its own resources for this purpose. OTHER DONORS: Most of economic development assistance for El Salvador comes from multilateral lending institutions such as the Inter-American Development Bank (IDB), the Central American Bank for Economic Integration (CABEI), and the World Bank. The IDB, by far the largest donor operating in country, is active in economic and social infrastructure as well as earthquake reconstruction. CABEI too is focusing on earthquake reconstruction, as well as roads. The World Bank emphasis is basic health services and emergency hospital reconstruction related to the earthquakes. Other active multilateral donors include the European Union (EU), the World Food Program, UNICEF and the Pan American Health Organization. Besides the United States, key bilateral donors consist of Spain (earthquake reconstruction), Japan (port infrastructure), and Germany. USAID is collaborating with the IDB (micro-finance, earthquake-related schools reconstruction), Germany (local governance, economic reactivation), the International Monetary Fund (tax reform), and the World Bank (earthquake-related hospital reconstruction), in addition to coordinating the donor group for the rule of law in which the IDB and the UNDP also are active. Program Data Sheets 519-001  Expanded Access and Economic Opportunities for Rural Poor Families 519-002   More Inclusive and Effective Democratic Processes 519-003  Sustainable Improvements in the Health of Women and Children Achieved 519-004  Increased Access by Rural Households to Clean Water 519-008  Lives of Targeted Earthquake Victims Improved Country Background Information Resources     CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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