El Salvador to Vote Amid Sluggish GDP Growth and Soaring CrimeMichael McDonald
El Salvador President Salvador Sanchez Ceren is seeking to retain control of congress and his economic agenda as all 84 seats in the Central American country’s legislature are up for grabs in elections this weekend.
Violence and sluggish economic growth remain the top concern among voters heading into the March 1 vote, said Jeannette Aguilar, director of the Public Opinion Institute at the Central American University in San Salvador. The opposition Arena party, which has vowed to limit spending and debt sales, needs to gain one seat to have the 29 necessary to veto international bond sales.
“We aren’t going to support more loans until we have a fiscal responsibility law that padlocks the galloping debt we have,” opposition lawmaker Carmen Elena Calderon said in a phone interview. “This can’t be done overnight, but we need to become more disciplined over time.”
El Salvador’s economy is forecast to expand 2.2 percent this year, according to the International Monetary Fund, the slowest rate in Central America. Under Sanchez Ceren, the legislature has not voted on a fiscal responsibility bill presented last year that seeks to increase tax revenue to 17 percent of gross domestic product and cut public debt to less than 42 percent of GDP from about 60 percent.
The government sold $800 million in 12-year international bonds in September. Yields on the notes have fallen to about 6.4 percent this week from a peak of more than 6.6 percent in January.
Arena’s demand to limit spending and debt issuance could force the government to issue local treasury notes instead of more international bonds, said Risa Grais-Targow, an analyst at the Eurasia Group.
“This will definitely make debt issuance more challenging, forcing more fiscal austerity,” she said.
With a population of about 6.1 million people, murders rose 57 percent to 3,913 last year, according to the National Police. That surge helped push a wave of unaccompanied child migrants to the U.S.
A survey by local newspaper La Prensa Grafica showed both parties have about 31 percent support, with the balance divided among smaller parties. The survey of 1,500 people was taken Feb. 4-8 and had a margin of error of 2.6 percentage points.
The tightness in the race this weekend shows that “El Salvador will remain deeply polarized politically,” Grais-Targow wrote in a Feb. 23 report.