Regarding policies to mobilise domestic resources for development and improve fiscal conditions, El Salvador has embarked on significant efforts highlighted by recent reforms to its Income Tax Law in March 2024. Reforms such as the exemption from taxation of passive income from foreign sources were designed to attract foreign investment and simplify tax regulations. These initiatives are pivotal in broader efforts aimed at enhancing fiscal transparency, improving the business climate, and aligning with the goals outlined in the National Development Plan (NDP), known as Plan Cuscatlán. The NDP addresses critical challenges such as climate vulnerability, poverty, food insecurity and migration, aiming for inclusive and sustainable growth pathways. These strategies prioritise infrastructure development and economic resilience, reflecting El Salvador’s commitment to fostering long-term development.
Regarding policies to advance a sound, inclusive and sustainable financial market, El Salvador has implemented robust public policy initiatives to foster financial inclusion and deepen its banking sector. The National Financial Inclusion Policy (NFIP), launched in 2021, is designed to expand financial access and services across marginalised groups. Co‑ordinated by the Central Reserve Bank of El Salvador and other stakeholders, NFIP focuses on enhancing digital financial services, promoting financial literacy, and developing innovative financial products. This initiative plays a crucial role in improving access to financial services for low-income individuals and women as well as micro, small and medium-sized enterprises, thereby fostering economic empowerment and resilience. Concurrently, El Salvador is committed to developing its capital markets through initiatives aimed at strengthening equities, bond markets and private equity investments. These measures are pivotal for diversifying funding sources, attracting both domestic and foreign investments, and establishing a robust financial infrastructure essential for sustainable economic growth.
In terms of regional and international finance and partnerships to catalyse international resources, El Salvador strategically engages in initiatives aimed at enhancing co‑ordination and mobilising external financing. The country prioritises sustainable and inclusive economic growth, focusing on productive inclusion, digital transformation, and the transition to a green economy. Investments in renewable energy and public infrastructure play a crucial role in creating quality jobs, boosting income growth, and fostering environmental sustainability. These investments are supported by institutions like the European Fund for Sustainable Development Plus and the European Investment Bank, as well as by the active engagement of the European Union private sector. Additionally, El Salvador's involvement in the US Agency for International Development’s Regional Development Co‑operation Strategy aims to address regional challenges such as economic prosperity, governance, security, and environmental resilience. These efforts align with El Salvador’s NDP and its commitments to sustainable development frameworks.