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El Salvador has shown a notable improvement in its investment risk, evidenced by the recent drop in the Emerging Markets Bond Index (EMBI) to 386 points in december 2024. This result represents a considerable reduction compared to the 457 points recorded in November of the same year. The sustained decline in this index reflects the fiscal measures implemented by the government, such as the bond buyback and the planning of a funded budget, which have contributed to improving investor confidence.
The EMBI, an indicator that measures the risk perceived by international markets regarding a country’s ability to meet its financial obligations, now places El Salvador in a more favorable position vis-à-vis its Central American peers. For the first time in a long time, Honduras surpasses El Salvador as the riskiest country in the region, with an EMBI of 398 points. This change in position highlights the efforts made by the Salvadoran government to stabilize its finances.
In the regional context, Costa Rica maintains an EMBI of 204 points, the lowest in Central America, followed by Guatemala with 208 points and Panama with 283 points. The salvadoran government’s fiscal strategies, such as the early repurchase of bonds and a more sustainable approach to budget management, have been key to this improvement.
These actions have not only reduced the country’s financial burden, but have also increased confidence in its long-term ability to pay. This contrasts with previous periods in which El Salvador faced criticism due to the high risk perceived by the markets.
The drop in the salvadoran EMBI represents an important achievement for the current administration and a positive signal for international investors. Although challenges remain, this progress marks a turning point in the country’s risk perception, providing it with better opportunities to access financing on more favorable terms.
