Republic of El Salvador

El Salvador, nicknamed the land of volcanoes because of its frequent earthquakes and volcanic activity, shares its borders with Guatemala and Honduras, and is characterised by a mainly mountainous terrain, a narrow coastal strip and a central plateau.

Independent from Spain since 1821 and from the United Provinces of Central America since 1839, El Salvador went through a 12-year civil war, which ended in 1992 with a death toll of 75,000. Since then, the country has undergone a democratic changeover.

The population has grown from 1.9 million in 1950 to around 6.35 million in 2024, with a high density over an area of 21,041 km². Mostly of mixed race, the population is made up of Amerindian and European descendants, with 64% living in urban areas.

Despite its small size, El Salvador is a key economy in Central America, ranking fifth in the region in terms of GDP per capita. The economy, hit hard by the 2008 global recession, has bounced back thanks to greater political stability, improved exports and an increase in remittances from Salvadorans abroad. By 2024, these remittances represented around 24.1% of GDP.

In 2006, El Salvador was the first country to ratify the Dominican Republic-Central America Free Trade Agreement, boosting exports and investment, particularly in the textile sector. The country has also privatised several sectors, including telecommunications, electricity, banks and pension funds.

With the adoption of the US dollar in 2001, El Salvador lost control of its monetary policy. El Salvador is also the first country to adopt bitcoin as legal tender in 2021.

Since the election of President Nayib BUKELE in 2019, El Salvador has seen major political changes. The new president has adopted a strict security approach, declaring a state of emergency in March 2022 to combat gang violence. This state of emergency, regularly renewed, has led to mass and prolonged detentions. The outgoing president was re-elected for a controversial second term in February 2024. Socially, El Salvador faces significant human rights challenges, with increasing restrictions on freedom of association and demonstration linked to the prolonged state of emergency.

After the last Indicative Cooperation Programme between El Salvador and Luxembourg expired in 2015, El Salvador was upgraded from a ‘priority partner country’ to a ‘project country’. Since 2016, LuxDev's role has been limited to accompanying and monitoring bilateral projects, through the project of the same name (1.8 MEUR for the period 2016-2024), particularly in the following three areas:

• support for the Government's social policy ;
• support for civil society via the ‘Fondo Concursable’, managed by the Salvadorian government;
• support for South-South and triangular cooperation through projects in which El Salvador acts either as a beneficiary or as a provider of aid and expertise to other Latin American countries.

In 2024, LuxDev, under a mandate from the ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, finalised the formulation of two new projects in El Salvador: one on youth employment in the field of digitalisation, with a budget of 7.5 MEUR for the period 2025-2029, and the other on South-South and triangular cooperation, with a budget of 2 MEUR for the same period. To support these projects, LuxDev has opened a satellite office within the regional office for Latin America and the Caribbean, located in Costa Rica.