Fact Sheet: United States Support for Economic Growth and Development in Central America

In his meeting with the Presidents of Costa Rica, El Salvador, Guatemala, Honduras, Panama, Nicaragua, and Dominican Republic, and the Prime Minister of Belize, President Obama discussed the United States commitment to deepening economic collaboration and expanding prosperity and social inclusion in the region. The leaders also discussed citizen security cooperation and the importance of building safe communities that contribute to a favorable business and investment climate. The President emphasized the importance of promoting transparent and, accountable government institutions, and the full respect for human rights. The President joined a forum on inclusive economic growth in Central America hosted by INCAE Business School and the Inter-American Development Bank (IDB) that was attended by more than 200 private sector and civil society leaders. The President highlighted the region's untapped potential and the opportunity to expand prosperity through economic integration, removing barriers to trade, improving access to clean and affordable energy, creating educational opportunities, and investing in early childhood development.

The United States supports the region's economic growth and social inclusion efforts through multiple, complementary programs that contribute to: building strong, capable and transparent institutions; facilitating trade and creating favorable business and investment climates; expanding access to reliable, clean, and affordable energy; and investing in human capital so that citizens are prepared to contribute to the development of their communities.

For 2012, the United States committed $437 million to Central America to support nutrition, health, education, agriculture, women's entrepreneurship, the protection of workers' rights, the elimination of child labor, construction of transportation infrastructure, and creation of transparent government initiatives. The Overseas Private Investment Corporation (OPIC) and the Export Import Bank (EXIM) committed $330 million in financing and insurance that mobilized $100 million in private sector capital enabling new investments in microfinance, and expanded credit for the use of U.S. goods and services in the development of infrastructure, transport and other needs. These efforts created new markets abroad that supported jobs at home. Highlights of recent U.S. economic growth and social inclusion efforts are summarized below:

Facilitating Trade and Creating Favorable Business and Investment Climates:

•     Trade and investment flows have increased significantly since initial implementation of the Dominican Republic - Central America – United States Free Trade Agreement (CAFTA – DR) in 2006. U.S. exports to the CAFTA-DR countries in 2012 increased over 78 percent to $30.2 billion, while U.S. imports in 2012 from CAFTA-DR countries increased nearly 71 percent to $30.9 billion. Based on trade figures from the CAFTA-DR partners, trade among them has grown 56 percent between 2005 and 2011, demonstrating the benefits of greater intraregional integration.

•     The U.S. - Panama Trade Promotion Agreement (TPA) entered into force on October 31, 2012. U.S. exports to Panama increased by over $687 million, almost 23 percent, in the first four month period since entry into force of the TPA, compared to the same prior timeframe. U.S. imports from Panama rose almost 48 percent or $54 million during the first four months since entry into force of the TPA, over the same prior timeframe.

•     Under Pathways to Prosperity, where countries share best practices on inclusive economic growth, the Departments of Homeland Security and Commerce provided training to 250 representatives from the public and private sectors in risk management, single window, authorized economic operator programs, and ensuring public and private sectors work together to develop border management solutions.

•     USAID recently launched a new $18.9 million regional trade and food security program for Central America and the Dominican Republic, which will improve trade facilitation and support critical value chains to improve food security and link producers to markets.

•     The U.S. contributed $5 million to the $22 million Crossroads Fund administered by the IDB that provides assistance to develop cross-border infrastructure in Central America.

•     The Partnership for Growth (PFG) has marked a new approach to joint cooperation between the United States and El Salvador. PFG seeks to expand broad-based economic growth by reducing crime and insecurity, and improving the investment climate and productivity.

Expanding Access to Reliable Clean, and Affordable Energy:

•     By 2030, the World Bank estimates that Central America will need $25 billion in power sector investment to address increasing demand. OPIC and EXIM Bank have already supported several hundred million dollars in energy related and other projects in Mesoamerica. As of 2012, EXIM Bank has provided $187 million in loans to support exports of U.S. built wind turbine generators for the Cerro de Hula Wind Farm in Santa Ana, Honduras. The Cerro de Hula wind farm is producing six percent of the electrical power in Honduras.

•     The Energy and Climate Partnership of the Americas (ECPA) is providing grants to incentivize clean energy development, including a $1 million biomass waste to energy project in Costa Rica. Also under ECPA, the Departments of State and Energy are supporting the Connecting the Americas 2022 initiative, which promotes greater use of renewable energy and more reliable access to electricity through expanded regional electricity interconnections.

•     USAID has launched a five-year multi-million dollar Regional Clean Energy Initiative for Central America to improve the development of clean energy and to reduce energy consumption through energy efficiency.

Building Strong, Capable and Transparent Institutions:

•     In 2012, MCC completed its first Compact in El Salvador - a $461 million program that targeted reductions in poverty through strategic investments in agricultural production, rural business development, transportation infrastructure, education, and community level infrastructure.

•     The joint State Department-USAID Domestic Finance for Development initiative has allocated more than $10 million to projects in El Salvador and Honduras to improve public financial management by focusing on domestic revenue mobilization, fiscal transparency and anti-corruption measures.

•     In 2012, the Department of Treasury provided $7.3 million in technical assistance to the region. 33 Treasury Technical Advisors embedded in various ministries are providing expertise in tax administration and financial management. Treasury is also exploring with Central American finance ministers options to establish a pooled catastrophic risk insurance mechanism to provide fast-disbursing liquidity in the aftermath of natural disasters.

•     Guatemala recently agreed to a landmark labor enforcement plan under a CAFTA-DR settlement agreement that includes a process for developing a contingency mechanism to ensure payments owed to workers are made when an export company closes. This first such initiative in Guatemala offers an important opportunity to strengthen the social safety net for workers to ease their transition to a new job that could be replicated throughout the region.

Investing in Human Capital:

•     The Inter-American Foundation invested over $5.5 million in 2012 for human capital and citizen-led initiatives in communities in Central America and the Dominican Republic that included land titling and management, crop diversification, and sustainable agricultural practices.

•     The Department of Agriculture provided more than $76 million in assistance supporting food security, agricultural research and in cooperation with USAID, technical assistance to Central American farmers to help fight the spread of the Coffee Rust disease.

•     In 2012, OPIC provided $150 million in financing and insurance to support lending to microfinance institutions and small and medium enterprises throughout Central America.

•     The Small Business Network of the Americas and Women's Entrepreneurship in the Americas are leveraging public-private partnerships to energize small and medium business development and increase women's economic participation.

•     Under 100,000 Strong in the Americas, we are preparing students to participate in the 21st century workforce. More than 8,000 students from Central America and the Dominican Republic studied at U.S. institutions during the 2011-2012 academic year.