ECONOMY & GOVERNMENT

ECONOMY

El Salvador is the smallest country in the US but has the third largest economy and has grown through the years. In 2001, El Salvador adapted the US dollar as its currency because El Salvador lost control over monetary policy and must concentrate on maintaining a disciplined fiscal policy. El Salvador is committed to opening the economy to trade and investment, and has embarked on a wave of privatizations extending to telecom, electricity distribution, banking, and pension funds.

In 2006, the government and the Millennium Challenge Corporation signed a five-year, $461 million compact to stimulate economic growth and reduce poverty in the country's northern region through investments in education, public services, enterprise development, and transportation infrastructure.

GOVERNMENT

El Salvador is a democratic republic governed by a president and an 84-member unicameral Legislative Assembly. The president is elected by universal suffrage by absolute majority vote and serves for a 5-year term. A second round runoff is required in the event that no candidate receives more than 50% of the first round vote. Members of the assembly are elected based on the number of votes that their parties obtain in each department (circumscriptive suffrage) and serve for 3-year terms. The country has an independent judiciary and Supreme Court. Legislative and municipal elections will be held in January 2009. Presidential elections will be held in March 2009.

THE GOVERNMENT BUILDING

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