Regarding policies for production transformation, El Salvador recently implemented the Plan de Desarrollo Industrial 2025-2029, designed to transform the productive matrix across 26 industrial sectors. This plan succeeds two previous policies. The first, the Política de Fomento, Diversificación y Transformación Productiva 2014-2024, aimed to address structural deficiencies in the economy by strengthening sectors with comparative advantages, diversifying export markets and fostering high-value-added activities. The second, Plan Cuscatlán 2019‑2024, was a broader strategic framework for public action, with technological modernisation as a key pillar. Particularly noteworthy is the Agenda Digital 2020‑2030, which defines specific goals for the axis “Innovation, Education and Competitiveness”, including promoting research on new technologies, fostering training and digital education to strengthen human capital and supporting innovative start-ups and technology parks. Additionally, the Política Nacional para el Desarrollo de la Micro y Pequeña Empresa focuses on increasing the productivity, competitiveness and sustainability of micro, small and medium-sized enterprises (MSMEs), particularly through innovation and technology. This policy is promoted by the Política Nacional de Innovación, Ciencia y Tecnologia.
Regarding public financing mechanisms for production transformation, the primary sources include the state budget (Presupuesto General del Estado), loans from the Inter-American Development Bank (IDB) and investments from the Development Bank of Latin America and the Caribbean (CAF). In 2023, the IDB approved a USD 100 million loan to support MSMEs, while CAF investments since 2022 have exceeded USD 1.5 billion. IDB funds, along with a significant portion of the state budget, are allocated to the Banco de Desarrollo de la República de El Salvador, the national development bank, which provides financial and technical assistance to projects designed to enhance the productivity, competitiveness and sustainability of enterprises, particularly micro, small and medium-sized enterprises (MSMEs). The range of credit facilities includes both direct and second-tier credit lines, covering green financing, micro-entrepreneur credit, productivity enhancement and a dedicated MSME credit line.
In terms of international partnerships for production transformation, the Central American Bank for Economic Integration, with financial support from the European Union and Germany, has established the DINAMICA II and Green MSME II initiatives. These programmes provide credit lines and technical assistance to MSMEs, including training to enhance skills, improve competitiveness and promote sustainability. Furthermore, a Memorandum of Understanding signed with the European Union supports El Salvador’s development in key areas, including the green transition and digital transformation. Through the World Bank’s Country Partnership Framework 2023‑2027, El Salvador is implementing eight projects aimed at fostering sustainable growth. Notably, the Proyecto de Energía Geotérmica para el Desarrollo Sostenible e Inclusivo, approved in March 2025, seeks to expand the country’s renewable energy generation capacity. In addition, the GeoH2Verde Triangular Co‑operation Project, developed jointly with Colombia, Germany and Honduras, aims to scale up geothermal energy and promote the development of green hydrogen.