By Thomas Border and Alexa Licairac

With its 6.3 million inhabitants, El Salvador is the smallest and yet most densely populated country in Central America. Historically, its economy has been largely agricultural, until periods of industrialization in the 1960s and 1970s. By 2019, when Nayib Bukele came to power, El Salvador was struggling with a large national debt, little foreign investment, and competition from Asia in their primary industries.

Nayib Bukele grew up in a relatively wealthy family. He entered the Salvadoran political scene in 2012 at the age of 31, running and winning the race for mayor of a small town called Nuevo Cuscatlan. In 2019, Bukele won El Salvador’s presidential election running under his own Nuevas Ideas party. In his first term as president, Bukele, self-titled the “coolest dictator in the world,” waged war on the rampant gang violence that plagued the country. As a result, El Salvador went from having one of the highest homicide rates globally in 2022 to its lowest rate ever in 2023, with only 2.4 homicides per 100,000.

However, Bukele’s method of accomplishing this is far from what many would view as typical or  even ethical. Bukele’s legislature approved what is called a “state of exception”, under which police could arbitrarily imprison anyone with suspected gang relations. Over 80,000 Salvadorans are currently imprisoned in inhuman conditions: tortured or deprived of food, water, and healthcare. Amnesty International cautions that El Salvador is undergoing a “gradual replacement of gang violence with state violence.”

Bukele loyalists have been key contributors to the erosion of democracy in the country, reinterpreting the constitution in 2021 to allow an incumbent Bukele to serve a second consecutive term after earning 84.6 percent of the vote in February 2024. Nöe Del Cid, president of his neighborhood’s community association, echoing the thoughts of the average Salvadoran isolated from the injustices of the system, is in support of Bukele: “​​He took the action that we needed him to take.”

What’s Going Wrong: Economic Turbulence 

In his second term, Bukele is setting his sights on ‘curing’ the economy. According to the World Bank, the poverty rate in El Salvador increased from 26.8 percent in 2019 to 30.3 percent in 2023 primarily due to stagnant wages and unemployment. The monthly food basket has increased from $200 to $246, while the minimum wage has stayed at $234 per month for agricultural workers.

To tackle rising food costs for Salvadorans, Bukele has promised to eliminate tariffs and taxes on imported goods, despite the fact that basic food items already have minimal tariffs due to free trade agreements. He also blames price-gouging business mafias, threatening importers with the same fate as those he suspected of gang affiliation. In actuality, the rise in food prices is primarily due to increased dependence on imports. In 2020, Bukele canceled 5 agricultural programs that incentivized local production of staple foods. Before Bukele took office, the Ministry of Agriculture and Livestock projected 84.62 percent self-sufficiency in staple grains for 2019. Since then, production has declined, culminating in 2024 when El Salvador recorded its lowest production of basic grains since 2017. This overreliance on imported goods has led to the loss of 51,000 jobs in the increasingly weakening agricultural sector.

Moreover, the government has also severely restricted public access to information by taking control of the Institute of Access to Public Information (IAIP), once an independent institution. This has allowed Bukele to block access to any and all government documents, creating a culture of secrecy that permeates across all sections of the government. Notably, in 2021, the legislative assembly declared expenses, purchases, and payrolls sensitive, allowing corruption to be more easily hidden. In 2023, for example, the mayor of Nahuizalco threw an extravagant Christmas party where he arrived by helicopter accompanied by Santa Claus. Soon thereafter, the city hall concealed all information pertaining to the costs of the party. The World Economic Forum estimates that globally, corruption costs 5 percent of the world’s GDP. Additionally, according to the IMF, “corruption increases income inequality and poverty through lower economic growth.”

Furthermore, as part of Bukele’s plans to turn El Salvador into an international financial hub, he has laid the groundwork for what he calls “Bitcoin City,” a tax haven supported by cryptocurrency and supplied with geothermal energy from the Conchagua Volcano. While El Salvador became the first country to accept Bitcoin as legal tender in 2021, it remains largely irrelevant to the average Salvadoran concerned with how they will afford their basic needs. In La Union, a coastal town near the volcano, the government is actively displacing citizens to make room for the project. For example, plantations are to be converted into runways for an airport, access to mangrove fishing areas will be removed, and foreign businesses are already claiming to have purchased land that Salvadorans live on, effectively evicting them. It is unknown how much taxpayer money has been used on these crypto-related projects, but Bukele has expressed hope that these developments will help turn El Salvador into the “Singapore of the Americas.”

Looking Forward: ‘Curing’ the Issue 

Bukele’s economic policies aim to reduce the dependency on external debt, expand El Salvador’s technological capabilities, and deal with the food crisis. In July of this year, Bukele also revealed two parts of his six part economic plan to revitalize El Salvador’s economy. The first part of the plan aims to lower food costs by opening farmer markets. His second measure is the construction of  the country’s first industrial park: “Altius Tech Park”, which will require $30 million of private investment. He also expressed that the 2025 budget will be completely financed by El Salvador, though the validity of this statement is still uncertain. Experts “believe these ambitious measures face execution risks,” citing concerns about Bukele’s essentially unrestricted ability to implement spending policies in full with little governmental opposition. 

The details of Bukele’s economic plan remain elusive, leaving Salvadorans to wonder: will his ambitious vision lift the nation out of its economic turbulence, or will the mysteries surrounding his policies deepen the challenges ahead?