El Salvador

El Salvador's first photovolcaic energy plant to open in April 2017

A solar energy project worth US$151 million in investment is due to begin operations in April 2017 (El Diario de Hoy, 14 December 2016). The project, Providencia Solar 1, includes the Antares plant, awarded through a public bidding process, and the Spica plant, negotiated privately with energy distribution company DelSur (La Prensa Gráfica). French company Neoen developed and financed US$33 million of the project, and other investors included the Inter-American Development Bank with US$88 million and the Agence Française de Développement (AFD) subsidiary Proparco with US$30 million (El Diario de Hoy). The complex will produce 101 megawatts of energy, which can power 200,000 homes. The energy produced by Antares will be sold to DelSur, Edesal, B&D and four of AES El Salvador's distributors, while Sica will sell exclusively to DelSur (El Diario de Hoy). According to Neoen, Providencia Solar 1 will be the largest solar plant in Central America and a spokesperson cited El Salvador as a growing market for the development and construction of solar panel systems.

Salvadoran president denies judge’s accusations of armed forces participating in threats

Salvadoran Judge Rodolfo González announced on 10 December 2016 that he and three other judges of the Constitutional Court would present evidence to the Attorney General connecting the governing party and armed forces to protests where judges were threatened (La Prensa Grafica). President Salvador Sánchez Cerén, the Commander-in-Chief of the Armed Forces (FFAA), denied that the FFAA had an agenda to attack the Court and accused the Court of trying to destabilize the FFAA (El Diario de Hoy). Defense Minister David Munguía Payes denied giving orders for FFAA members to participate in marches, as the judges suggested (El Diario de Hoy). González said he would present proof that state vehicles assigned to Frente Farabundo Martí para la Liberación Nacional (FMLN) party members were present at the protests. Furthermore, the judges referenced pamphlets and posters circulating calling for their death with photos of their faces (La Prensa Grafica). Attorney General Douglas Meléndez has ordered an investigation into the alleged death threats. Additionally, the government and FMLN accused the magistrates of blocking state financing and pushing the government into a liquidity crisis.

OPP Films opens manufacturing plant in El Salvador

Salvadoran President Salvador Sánchez Cerén oversaw opening ceremonies for OPP Film’s manufacturing plant for film and coasted plastic for packaging on 12 December 2016 (El Mundo). OPP Film, a subsidiary of Oben Holding Group based out of Peru, began building the factory in October 2014 (La Prensa Grafica). According to La Prensa Grafica, the manufacturing plant represents a US$54 million investment. Organismo Promotor de Exportaciones e Inversiones de El Salvador (PROESA) cited geographic location in relation to main markets and a dollarized economy as top reasons for OPP Film’s choice to build the plant in El Salvador (La Prensa Grafica).

YouTube video: alleged police vow to kill Salvadoran gang members

A group of alleged members of the Salvadoran Policía Civil released a video on YouTube announcing a plan to target and execute all gang members, according to El Heraldo on 29 November 2016. The video depicts a man in uniform, his face obscured by a ski mask and sunglasses with his voice altered. The man promises to exterminate all gang members and to partake in the killings not as police nor military members but as Salvadorans (El Heraldo).

El Salvador evaluates charging toll for international vehicle transit

Salvadoran officials decided to evaluate charging a special toll for vehicles passing through the country carrying merchandise and goods internationally (El Diario de Hoy, 28 November 2016). Presidential Technical Secretary Roberto Lorenzana cited a toll as a fair way to tax cargo vehicles passing through due to the wear and tear they cause to the highways. The proposal comes after opposition parties refused to support a government initiative to increase the gasoline tax to raise funds needed for highway maintenance (El Diario de Hoy).

AES El Salvador launches rural solar energy project

AES El Salvador launched a US$80,000 project on 16 November 2016 to bring electricity to rural communities via solar energy through their company CLESA (Estrategia y Negocios). The launch is a pilot project in a small community in the department of Ahuachapán and gives members access to electricity through photovoltaic cells, including storage batteries (El Diario de Hoy). Another component of the project includes turbo-stoves that use 10 percent as much wood as the community’s current stoves and would result in less smoke, both a health and environmental hazard. According to AES President Abraham Bichara, he hopes to emulate this project in other rural areas to move El Salvador from 95 percent to 100 percent in terms of population access to electricity (La Prensa Grafica). Around 60,000 Salvadorans, or 5 percent of households, do not currently have access to electricity. Internal AES data reported by El Diario de Hoy showed that the company has helped move this percentage from 70 to 95 since 2001. 

Hearing against former President Mauricio Funes postponed

San Salvador's Second Civil Chamber postponed an evidentiary hearing scheduled for 15 November 2016 against former President Mauricio Funes, as the financial report on Funes would not be turned in until the end of November (La Prensa Gráfica, 11 November 2016). Once the report has been completed and submitted, the Chamber plans to reschedule the hearing. Funes, who fled to Nicaragua at the end of August 2016 and received political asylum, is on trial for alleged illegal enrichment. El Salvador's Supreme Court designated the Second Civil Chamber to investigate Funes' crimes, froze his assets and restricted his financial transfers (El Diario de Hoy).

Advances in Guatemala – El Salvador customs union

Foreign Trade and Integration Deputy Ministers Enrique Lacs, of Guatemala, and Luz Estrella Rodríguez, of El Salvador, met from 7 to 11 November 2016 in the fourth round of negotiations to discuss regulations on integrated controls and procedures for border posts between the two countries (Central America Data). Negotiation teams discussed customs, migration, security and health measures (El Economista). The Guatemala-El Salvador customs union represents part of a plan that came out of a June 2016 meeting of the Sistema de la Integración Centroamericana to move towards a regional customs union for Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Dominican Republic, Belize and Panama (El Economista).

Moody’s downgrades El Salvador’s government bond ratings due to financial crisis

Moody’s Investors Services announced on 7 November 2016 that it downgraded El Salvador’s issuer and long-term debt ratings from B1 to B3 with a negative outlook after concluding a review for downgrade that began on 11 August (El Diario de Hoy). The ratings agency downgraded El Salvador due to significant increase in liquidity risks, as well as the Legislative Assembly’s inability to pass a measure to release long-term debt via bonds to solve the short-term debt issue and finance government operations. Moody’s also lowered the long-term foreign-currency bond and deposit ceilings from Ba2 to B1, while short-term foreign-currency bond and deposit ceilings remained the same (Moody's). 

Telefónica invests US$250 million for 4G/LTE network in El Salvador

Spanish telecommunications company Telefónica announced on 8 November 2016 a plan to invest US$250 million to deploy the first 4G/Long Term Evolution (LTE) network in El Salvador (W Radio). The network is expected to increase speeds tenfold, will operate under the Movistar brand, and will be available as early as 1 December in San Salvador, La Libertad, Santa Ana and San Miguel. Telefónica plans to roll out the new network to all of the departmental capitals by the end of the first quarter of 2017 (Estrategia y Negocios). Salvadoran President Salvador Sánchez Cerén commended the investment as a step towards improving digital infrastructure and decreasing the digital divide (Estrategia y Negocios). The President added that faster networks will allow consumers and companies access to new technological opportunities and improved efficiency. Telefónica has installed similar networks in Panama, Costa Rica, Guatemala and Nicaragua (W Radio).

Municipal employees block roads in El Salvador to demand government payment

Mayors and municipal employees from various municipalities blocked major roads across El Salvador to demand the government distribute funds from the Fondo para el Desarrollo Económico y Social de los Municipios de las Municipalidades (FODES) that it has owed since September 2016 (La Prensa Grafica). The government cannot distribute the funds because of the current financial crisis. Mayors say the lack of FODES funds means they cannot undertake projects, nor pay salaries (El Diario de Hoy). The government has been in the midst of negotiations with the opposition party to issue bonds and bring the country out of financial crisis (La Prensa Grafica).

Former Salvadoran President and officials in detention for money laundering, graft

Investigations by the Salvadoran Attorney General found that former President Elías Antonio Saca transferred US$15.5 million from public funds into his personal accounts during the first six months of his presidency (El Diario de Hoy). Judge Nelly Edith Pozas announced on 5 November 2016 that Saca and five others would remain in provisional detention, although they would receive beds, visits from doctors and family, as well as time outside (La Prensa Grafica). Pozas decreed preventative seizure for all property under the names of the six accused, and the Attorney General’s office froze their bank accounts (La Prensa Grafica). The former President's former private secretary Elmer Charlaix issued some of the fifty checks that transfered public funds to the President's private account, and allegedly received US$1.659 million from public funds between July 2004 and March 2005 (El Diario de Hoy).

El Salvador falls in Doing Business 2017 ratings

The 2017 Doing Business report from the World Bank (WB) ranked El Salvador 95 out of 190 economies, a nine-position decrease from the previous year (El Diario de Hoy). According to the data, the fall in position was due primarily to a reform that reduced credit bureau coverage and made it more difficult to obtain credit history information (El Mundo). The WB noted that El Salvador did improve in four of the ten areas evaluated, including cross-border trade, opening a business, property registration and obtaining electricity (El Diario de Hoy). But the analysis also showed that El Salvador’s economy has the largest decrease in the region.

El Salvador's President creates new Vice-Minister of Foreign Investment position

Salvadoran President Salvador Sánchez Cerén created a new public position, Vice-Minister of Foreign Investment and Financing, and appointed the leader of the political party Frente Farabundo Martí para la Liberación Nacional (FMLN), José Luis Merino (La Prensa Grafica, 22 October 2016. As reported by La Prensa Grafica, opposition party member Milena Calderón de Escalón criticized the appointment for sending a negative message, because it could be seen as an attempt at immunity for Merino, who has been questioned for possible arms and drug trafficking. The new Vice-Minister position’s focus includes managing foreign investment in the country and channeling financing for development (Prensa Latina).

Mara Salvatrucha begin to amass arms in response to government crackdown

The Mara Salvatrucha (MS-13) in El Salvador is rolling out a multi-phase national plan in response to the government’s recent crackdown on gangs and criminals (ElSalvador.com, 11 October 2016). According to calls intercepted by the Attorney General’s (FGR) Centro de Intervención de Telecomunicaciones, the strategy consisted of figuring out the government’s intended security measures before they were introduced and analyze how these would effect street gangs. El Diario de Hoy identified a purported gang leader named Tío, who said in an intercepted call the government planned to enact extraordinary security measures when the homicide rates increased. Thus, street gangs like the MS-13, pandilla 18 Revolucionarios, and the Sureños needed to decrease homicides or hide and bury their victims. A second plan was created after authorities continued with its security plan and placed gang leaders in the Zacatecoluca maximum security prison. Referred to as the ‘Proyecto de la Mara o Familia’, extortion funds would be used to raise US$600,000 to buy 500 arms and create an elite unit to combat police and the armed forces. Diario de Hoy reported the MS had started Plan C by buying arms, hand grenades, grenade launchers and other weapons in Honduras, Guatemala and Mexico. Days after the publication of the intercepted phone calls, Guatemalan law enforcement detained Juan Francisco Parada Morán, the suspected "international leader for the MS-13 (La Prensa, 19 October 2016).

Mexico signs migratory labor agreement with Northern Triangle

Mexico signed an agreement of understanding on labor cooperation with the Northern Triangle to allow temporary workers from the three countries to work in Mexico via the Programa Laboral Migratorio Temporal (La Tribuna, 15 October 2016). The agreement allows temporary workers from El Salvador, Guatemala, and Honduras to work in Mexico for no more than 180 days in the agriculture and service industries during high demand (El Universal). Mexicans can also work seasonally in these three countries and Mexican Labor Minister Alfonso Navarrete Prida commented that the memorandum represents a step toward instituting mechanisms for a regional solution to labor migration (La Tribuna).

El Salvador wins arbitration battle against mining company

The World Bank’s International Centre for Settlement of Investment Dispute (ICSID) ruled on 14 October 2016 in favor of El Salvador in an arbitration case with mining company OceanaGold (Elsalvador.com). ICSID ruled the Canadian company, which bought the Australian Pacific Rim company involved in the 2013 case, pay El Salvador US$8 million in damages and Attoreny General Douglas Meléndez announced the money would go to a general fund (La Prensa Grafica). Pacific Rim tried to negotiate before the ICSID’s decision, but Meléndez refused. The mining company brought El Salvador to court, asking for more than US$300 million in compensation for alleged obstructions, after they lost their right to mine in El Dorado (El Diario de Hoy). Pacific Rim received the rights for exploratory mining in 2002, but these rights were revoked in 2006 and later the company was denied mining permits (La Prensa Grafica).

S&P lower El Salvador’s ratings due to financial crisis

Standard & Poor’s announced on 13 October 2016 they lowered El Salvador’s long term rating from a B to a B- due to the country’s political stalemate and inability to find a solution to their fiscal problems and rising debt (La Prensa Grafica). The agency decided to keep El Salvador on the Special Revisions list, which means it is likely their grade might decrease again, and it indicates a negative projection for the country (ElSalvador.com). S&P noted the continued polarization between political parties, Frente Farabundo Martí para la Liberación Nacional (FMLN) and the opposition Alianza Republicana Nacionalista (ARENA), has stagnated fiscal and pension reforms (ElSalvador.com). Due to the inability to pass these reforms, the country’s debt has increased and is projected to reach 60 percent of GDP by 2018 (La Prensa Grafica). Due to these issues, S&P sees El Salvador as a higher risk for investors. International concern has increased and the International Monetary Fund has stepped in to maintain a permanent mission in El Salvador until the political parties and the government can reach an agreement to solve the financial problem (La Prensa Grafica).

Jumex puts plant in El Salvador up for sale

Grupo Jumex put their factory in El Salvador up for sale, eight months after announcing they would stop making juice in El Salvador (ElSalvador.com). The Corporación de Exportadores de El Salvador (Coexport) Executive Director Silvia Cuéllar confirmed a few companies have already expressed interest and made visits to the space. Jumex Vice-President and General Director Manual Martínez said the company had decided to reduce their investments in Central America due to the changing situation in the region and issues such as tariffs and trade barriers. Martínez claimed the previous benefits to manufacturing in the region have declined, while production costs have increased by 40 percent in El Salvador due to the strong dollar (Forbes). Martínez added, the company planned on focusing on their production in Mexico and exports to the U.S.