According to the ratings agency the political polarization that characterizes the Legislature which will take office on May 1 could hamper the implementation of the fiscal reforms that the country needs.
From an article by Fitch Ratings:
El Salvador's New Legislature May Yield Fiscal Restraint
Fitch Ratings-New York-23 March 2015: Gains by opposition parties in El Salvador's legislative assembly could result in a compromise to improve the sustainability of public finances but political polarization is likely to continue weighing on the prospects for growth-enhancing and security reforms, Fitch Ratings says.
Fitch Ratings has maintained its BB-rating but noted prevailing structural weaknesses such as low competitiveness, crime, weak human capital and the high cost of energy.
From a press release issued by Fitch Ratings:
Fitch Ratings has affirmed the long-term long-term debt rating in both dollars and local currency at 'BB-'. Fitch also affirmed the ratings of bonds in foreign and local currency without gurantee from El Salvador at 'BB-', maintaining the negative outlook.
The regulation increases the size of the "aguinaldo" (extra salary at the end of the year), depending on the number of worked years.
Those who have been working in a company for between 1 and 3 years will receive 15 days worth of 'aguinaldo' (end of year salary payment), those with between 3 and 10 years will receive 19 days worth of aguinaldo, and those who have worked for more than 10 years, will receive 21 days worth of aguinaldo.
El Salvador is not an easy country to govern, but despite all the difficulties faced during his presidential term, Mauricio Funes has the support of 79% of the population.
That makes him the most popular president in Latin America and this despite the fact El Salvador has the highest murder rate in the world and despite the fact its economy shrank 3.6% during the global economic crisis.
It seems that not everyone in Funes' Government shares his objective of making investors feel secure.
Referencing policies implemented by Chilean governments, Rafael Castellanos wrote in Laprensagrafica.com: " 1) It is necessary to enlarge the social security network and 2) To reduce poverty we need growth, and to grow we need to attract foreign investment, and for this we need to make investors feel safe, we need them to be sure that the Government won't change the rules at any moment, in the long term required for obtaining returns over investments. Those are two key pillars for Chile's success".