Moody’s Investors Service, the risk agency, stated that the decline in insecurity levels will bolster the attraction of investments and enhance the outlook for economic growth in El Salvador.
“Sustained improvements in security are likely to remove a major deterrent to diversifying the economy,” stated Moody’s announcement, which was shared by President Nayib Bukele on February 7, 2024.
Moody’s analysis included the results of the 2024 presidential elections; the credit agency indicated that President Nayib Bukele’s re-election win is an indicator of the approval of Bukele’s anti-crime agenda.
Nayib Bukele won the 2024 presidential elections in the first voting round with over 2.6 million votes, over 84.4% of total votes.
The credit rating agency pointed out that violence in El Salvador contributed to chronic underinvestment, which kept this indicator at around 17% of the Gross Domestic Product (GDP) between 2014 and 2019.
Under the Bukele administration, the nation’s security has seen improvement. In 2019, the country’s daily homicide rate was 6.57 or 35.8 per 100,000 people. Presently, El Salvador’s homicide rate is 0.42 per day or 2.4 murders per 100,000 inhabitants, ranking among the lowest in the Americas.
Moody’s also noted that the Bukele Administration has eroded checks and balances of power to the point that its “policy formulation has become opaque and erratic.”
However, “we suspect that its successful suppression of violence will support investment and economic prospects in El Salvador, which is good for credit,” noted the credit agency.
In summary, the credit rating agency noted that sustained security improvements are likely to remove a major obstacle to diversifying El Salvador’s economy.
El Salvador’s security has improved to levels not seen in over 40 years; however, the Bukele administration has been accused of eroding democracy and human rights violations.