El Salvador Economy

Economy

GDP per capita is roughly half that of Brazil, Argentina, and Chile, and the distribution of income is highly unequal. The government is striving to open new export markets, encourage foreign investment, modernize the tax and healthcare systems, and stimulate the sluggish economy. Implementation of the Central America-Dominican Republic Free Trade Agreement, ratified by El Salvador in 2004, is viewed as a key policy to help achieve these objectives. The trade deficit has been offset by annual remittances from Salvadorans living abroad - 16% of GDP in 2004 - and external aid. With the adoption of the US dollar as its currency, El Salvador has lost control over monetary policy and must concentrate on maintaining a disciplined fiscal policy.