Country Report El Salvador 1st Quarter 2015

Update Country Report El Salvador 09 Jan 2015

US renews TPS scheme for Salvadoran migrants

Event

On January 6th the US Department of Homeland Security announced an extension to its existing Temporary Protection Status (TPS) programme for more than 200,000 illegal Salvadoran migrants.

Analysis

This is the tenth consecutive extension of the TPS programme, which was first established following two earthquakes suffered by El Salvador in January and February 2001. Eligible applicants must have entered the US, whether legally or otherwise, in the immediate aftermath of the disasters; successful applicants are then granted temporary protection from deportation and are allowed to work, and can even travel home to El Salvador and return to the US. However, the protected status only lasts for 18 months, after which time applicants must re-apply.

Such is the social and financial importance of the Salvadoran diaspora community in the US that securing a renewal of TPS for the more than 200,000 illegal ex-patriots who have successfully applied has become a permanent feature in government policy in El Salvador. The left-leaning administration of the president, Salvador Sáanchez Cerén, as its predecessors have done in the past, lobbied hard for the latest extension, which lasts until March 2016. In purely economic terms, remittances from the estimated 2.5m-strong Salvadoran migrant community in the US have become a major driving force behind consumer spending on everything from day-to-day household goods, to real estate, and even education and private healthcare bills. According to the Banco Central de Reserva de El Salvador (the Central Bank), those remittances amounted to US$3.8bn-a year on year rise of 7%-between January and November this year. The possibility of migration to the US (albeit involving a journey filled with dangers, particularly when crossing through Mexico) also provides a vital escape valve for a densely-populated country, where there are few real job opportunities for the young and the poor, especially in the countryside.

Given the contribution of migration and remittances towards maintaining stability in El Salvador, it is also unsurprising that successive US administrations have continually renewed the TPS programme. The number of beneficiaries is relatively small and the political risk for the US government is considerably less than would accompany, for example, a broader reform of the immigration laws (which would also need Congressional approval). Similar TPS programmes are also in place for Honduran and Nicaraguan ex-patriots.

Impact on the forecast

Our baseline forecast remains unchanged in its assumption that remittance levels and ongoing migration to the US will help to contribute to medium-term stability in El Salvador.

© 2015 The Economist lntelligence Unit Ltd. All rights reserved
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