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is El Salvador becoming the next Greece/Argentina?
About six years ago, I told my friends that El Salvador was heading towards becoming the Argentina of Central America. Too many loans to international creditors and the worst decision ever, change the currency to dollars. El Salvador changed its currency about 10 years ago, I think, and I was very very young, but I knew it was a bad idea. My friends were like "dude, stop reading, stop listening to the communist party" however I didn't change my mind. Why it was a bad idea? Well, people don't know what is involved in keeping the exchange rate at 8.75. Like in Argentina, we kept the dollar exchange rate static, and that is not something that you just do.
Keeping a static rate involves paying a lot of money (millions?) and yes we are paying to keep it static. The majority of people don't know that, and will never know. So, right now, we are paying a lot of money in interest so that the dollar "doesn't go up". We are wasting millions of dollars that we could use to help recover the economy or impulsing some fiscal benefits to big corporations in order to create jobs. It sucks right? Well, there is more.
Like Greece, we (El Salvador) became a nation of turism and services. Yeah, I've been reading the Greece case and their main focus for economy growth was turism/services. What are the companies that are establishing here in El Salvador? Call Centers (Services) and hotel chains (Turism) I'm not saying those are bad companies, what I'm trying to say is that we have no industry. We are not producing anything. We are importing way too much and producing way too little, kinda like Greece. Look around, research, read, we are almost under the same circumstances. El Salvador is a house of cards. What can we do? Argentina survived 'cause it had a well developed industry and agriculture. Yeah, you read that right, Argentina export vegetables and such, they had/have a surplus in export/import and they could recover their economy. They are not quite yet, but at least they are not in bankruptcy. Greece? Well... They are hanging in there. They have a big turism industry, unlike here, but their main focus was Services, just like here.
So, what about El Salvador? Well, soon we will fail as a country. Not because of gangs, but because we will go bankrupt. Many will disagree with me, they have the right to be wrong. What if we can't pay our loans, our creditors? We will go bankrupt, like in Argentina. What will happen to our money? lol our money. There are not national banks in which you can save your money, our money will be gone. Banks won't release the money, like in Argentina and there will be chaos.
What we can do? The only thing that we can do is start to work to get agriculture back on track. Try to get some industries to come here and create jobs. Balance the import/export rate. We can no longer be a Services nation.
We need to regulate the exchange rate. I'm not saying go back to our old currency. I'm saying stop the static rate. Either we do this now, or wait for chaos...
Keeping a static rate involves paying a lot of money (millions?) and yes we are paying to keep it static. The majority of people don't know that, and will never know. So, right now, we are paying a lot of money in interest so that the dollar "doesn't go up". We are wasting millions of dollars that we could use to help recover the economy or impulsing some fiscal benefits to big corporations in order to create jobs. It sucks right? Well, there is more.
Like Greece, we (El Salvador) became a nation of turism and services. Yeah, I've been reading the Greece case and their main focus for economy growth was turism/services. What are the companies that are establishing here in El Salvador? Call Centers (Services) and hotel chains (Turism) I'm not saying those are bad companies, what I'm trying to say is that we have no industry. We are not producing anything. We are importing way too much and producing way too little, kinda like Greece. Look around, research, read, we are almost under the same circumstances. El Salvador is a house of cards. What can we do? Argentina survived 'cause it had a well developed industry and agriculture. Yeah, you read that right, Argentina export vegetables and such, they had/have a surplus in export/import and they could recover their economy. They are not quite yet, but at least they are not in bankruptcy. Greece? Well... They are hanging in there. They have a big turism industry, unlike here, but their main focus was Services, just like here.
So, what about El Salvador? Well, soon we will fail as a country. Not because of gangs, but because we will go bankrupt. Many will disagree with me, they have the right to be wrong. What if we can't pay our loans, our creditors? We will go bankrupt, like in Argentina. What will happen to our money? lol our money. There are not national banks in which you can save your money, our money will be gone. Banks won't release the money, like in Argentina and there will be chaos.
What we can do? The only thing that we can do is start to work to get agriculture back on track. Try to get some industries to come here and create jobs. Balance the import/export rate. We can no longer be a Services nation.
We need to regulate the exchange rate. I'm not saying go back to our old currency. I'm saying stop the static rate. Either we do this now, or wait for chaos...
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