On January 8, 2018 the Trump Administration announced that it would end Temporary Protected Status or “TPS” for individuals from El Salvador living in the United States through that program. As of now, TPS will end September 9, 2019 at which point, approximately 200,000 Salvadorans will face deportation back to their native El Salvador, unless they find other means to stay legally or otherwise in the US The administration had been threatening to end TPS for Salvadorans since the 2016 election, linking them to the gang MS-13, known for its brutal violence. While MS-13 initially started in Los Angeles, California, the gang is made up of mostly Salvadorans and has strong ties to El Salvador. It is estimated that approximately 9,000 members of MS-13 live in the United States, but what does this mean for the other 190,000 Salvadorans in the US who have been living in the US under TPS since 2001 or even earlier? That remains to be seen. In the meantime we checked in with two of our partner institutions in El Salvador to find out what effect this may have on their operations. We first spoke with our partner ASEI. Their CFO mentioned that one of the issues this raises is a potential decrease or elimination in remittances to El Salvador from the US. In 2017 Salvadorans living in the US sent over $4.5 Billion to friends and family in El Salvador. Given that the GDP of El Salvador was around $26.8 Billion that year, remittances represent a remarkable portion of the national economy. ASEI told us they have seen an increase in remittances over the past few months as nationals living in the US are transferring their assets to El Salvador ahead of the end of the TPS in case they end up moving back.
It will be tough going for those moving back from the US, despite their skills in English, technical and sometimes university education, and the experience they have gained in their fields. According to ASEI, returning emigrants likely have amassed capital they can use to start their own businesses, and given the large influx of people into the country there will likely be opportunity in construction, services and education. Of course that negates the fact that children of TPS participants may have only ever known the US as their home, and will be leaving their friends and everything they know, returning to a foreign land. Returnees can also expect a lower quality of life. Crime rates are very high in El Salvador due to gang violence and El Salvador is a developing country in Central America which means it is subject to natural disasters, political unrest and poverty. With regard to microfinance, ASEI is considering launching a new financial product in 2019-2020 aimed at people returning to El Salvador from the US to help them set up their own businesses. ASEI is concerned about the lack of remittances to the country, but as a practice they only count fifty-percent of the average remittances a family receives as normal income when evaluating a client’s credit worthiness. ASEI mentioned that the productivity of the economy in El Salvador is low, only growing at a rate of 2.5% per year. One reason for this is the high level of remittances coming into the country. Individuals are able to work part-time or take a minimum wage job with support from a family member abroad. According to ASEI, if remittances end, Salvadorans will have to be more industrious and entrepreneurial which made lead to overall economic growth and opportunity. Salvadorans in El Salvador and those living in the US are all staying tuned in to the rapid political changes taking place in the US and worldwide and calculating what it means for their and their families well being.
