
On September 15, 2024, President Nayib Bukele addressed thousands of military personnel in a national broadcast, marking the 203rd anniversary of independence and El Salvador’s emergence as a sovereign nation.
Among other announcements, President Bukele declared, “This September 30, we will present to the Legislative Assembly, for the first time in decades, the first fully financed budget. It will no longer be necessary to issue debt for current expenditures, not even for the payment of debt interest.”
For decades, El Salvador has been acquiring loans to finance its operational expenses, thereby accumulating national debt, operating on funds borrowed to sustain itself. This continual borrowing was the result of government spending that far exceeded the revenue generated from taxes and minimal other incomes.
President Bukele emphasized, “El Salvador will no longer spend more than it produces annually”; a common-sense approach to maintaining a healthy economy and avoiding the pitfalls of dependency on international lenders.
Contrary to some politicians from other countries who advocate heavily taxing their populaces and businesses, El Salvador’s experience highlights that heavy taxation is unnecessary and even counterproductive for national prosperity.
Christian Guevara, head of the New Ideas party, reinforced this stance in previous months by confirming that no new taxes would be imposed.
Remarkably, not only have taxes not been increased, but several have been eliminated. Initiatives such as the Law for the Promotion of Technological Innovation and Manufacturing in El Salvador have significantly reduced taxes, alongside the abolition of taxes on money coming from abroad.
It’s worth mentioning that a few weeks ago, Nayib Bukele met with renowned economist Arthur Laffer, a key proponent of tax reduction to stimulate economic growth.
This meeting aligns closely with El Salvador’s fiscal policies under Bukele’s administration. Not only has the government refrained from increasing taxes, but it has also actively eliminated several taxes, reflecting Laffer’s economic principles that lower taxes can lead to enhanced economic productivity and revenue.
All these changes have helped increase the country’s revenue, utilizing the fiscal policies that Bukele has maintained since the beginning of his presidency. These policies have been significantly bolstered following the development and implementation of a robust public security plan.
El Salvador draws inspiration from Singapore, aiming to emulate its success to the greatest extent possible. President Bukele’s administration focuses on implementing successful practices rather than adhering to outdated policies that involved borrowing for operational costs. By doing so, El Salvador strives to achieve financial independence concerning its national budget.
The country also seeks independence in other areas, such as national food production. With the partnership of the agricultural company Atider, El Salvador has launched a high-yield corn planting program. Although the country is not yet fully self-sufficient in food production, the goal is to achieve 100% self-production of maize and beans within four years.
This broader approach to sovereignty is especially crucial in today’s complex global landscape, where international debts often force countries to adopt or promote policies that may not align with the interests of their populations.
El Salvador’s move towards financial and operational independence provides a stronger foundation for the country to maintain neutrality and avoid involvement in external conflicts, focusing on the well-being of its people.
This news has surprised many, as the majority of Salvadorans have never seen the country be able to fully self-finance. It was usual in the past to see news coverage every year of deputies discussing how much money they would borrow to pay for the country’s current expenses.