Counting the Invisible: El Salvador’s $50 Million Bid to Map Its Full Economy and Workforce

El Salvador’s $50 million IDB-backed programme will modernise economic statistics and use a new census to capture formal and informal activity more accurately. Its success could improve public spending and investment decisions, but will depend on data quality, institutional capacity, public trust and accessible results.

El Salvador's plan to invest $50 million in stronger economic statistics could influence decisions across government, business and development finance by revealing parts of the economy that conventional figures may fail to capture.

The Inter-American Development Bank has approved the loan for the Economic Statistics Strengthening Program, a four-year initiative that will finance a new Economic Census, modernise digital systems and strengthen the institutions producing official information. The Central Reserve Bank of El Salvador will execute the programme.

Although the investment centres on data, its implications extend to public spending, employment policy, taxation, financial inclusion and private investment. Reliable statistics help governments decide where infrastructure and services are needed, while businesses use them to evaluate markets, workforce availability and economic risks.

Bringing Informal Activity into the Economic Picture

An important objective of the census is to improve information about El Salvador's informal economy. Informal workers and enterprises contribute significantly to employment and productive activity but can remain underrepresented in administrative records and conventional business surveys.

A more comprehensive census could show where these businesses operate, which sectors support the most livelihoods and what obstacles prevent enterprises from becoming more productive. Such information could help policymakers design better-targeted programmes involving business registration, skills development, social protection and access to credit.

It could also expose regional inequalities. If some municipalities have high concentrations of small businesses but limited infrastructure, finance or digital connectivity, the government may be able to direct public resources more precisely.

However, measuring informal activity presents a trust problem. Business owners may be reluctant to participate if they believe the information could be used for taxation or enforcement. Authorities will need to communicate the purpose of the census clearly and demonstrate that confidential data will be protected. Weak participation would risk reproducing the economic blind spots the programme is intended to address.

A Stronger Foundation for Public Policy

For policymakers, the programme could provide a more accurate basis for budgeting and economic planning. Updated figures may improve decisions concerning transport, digital infrastructure, vocational education and support for small and medium-sized enterprises.

Better data could also help the government understand how economic shocks or policy changes affect different sectors. Instead of relying primarily on national averages, authorities may be able to examine variations by location, industry and business size.

The investment builds on earlier IDB support for El Salvador's statistical system, including work connected to the 2024 Population and Housing Census. Linking demographic information with economic data could help authorities understand the relationship between communities, employment and productive centres.

Nevertheless, better statistics will not automatically produce better policies. Ministries and other public institutions must have the capacity to interpret the findings, share information and incorporate evidence into budgets and programmes. Data released too late, presented only in technical reports or left unused by decision-makers would reduce the programme's development value.

Businesses Gain a Clearer Map of Opportunity

Companies and investors could benefit from clearer information about consumer demand, labour availability, business concentration and supply chains. Domestic enterprises may use census findings to locate potential customers and suppliers, while international investors could gain a more detailed picture of El Salvador's economic structure.

Banks and other financial institutions may also identify sectors or locations that appear underserved. This could support the development of financial products suited to smaller enterprises, although statistics alone cannot remove obstacles such as insufficient collateral, high borrowing costs or weak business documentation.

For international development partners, improved data could make programmes easier to target and evaluate. Credible baselines would allow institutions to identify gaps, direct technical assistance and measure whether development financing produces tangible results.

The modernisation effort could additionally create opportunities for providers of digital platforms, cybersecurity services, data management and statistical technology. Those opportunities will depend on procurement rules and the degree to which domestic companies can participate.

Implementation, Access and Trust Will Decide the Outcome

Digital technology will be used throughout the census cycle, from collecting information to managing, analysing and publishing it. This may reduce processing times, improve consistency and make the results more accessible to government agencies, businesses, researchers and citizens.

Digitalisation also creates risks. System failures, cybersecurity weaknesses, inadequate staff training or poor protection of business information could undermine public confidence. Connectivity limitations may complicate data collection in some locations.

The available material does not specify the census schedule, coverage targets, cybersecurity standards or arrangements for independent quality assurance. The loan's maturity, interest rate, grace period and any counterpart-financing obligations also require confirmation.

Long-term sustainability will be another test. The programme can finance technology and capacity building for four years, but El Salvador will need regular funding to maintain systems, retain skilled personnel and keep economic information updated after the IDB-supported period ends.

Success should therefore be measured by more than completing the census. Authorities will need to demonstrate that the data are accurate, released promptly and available in formats that non-specialists can use. They must also show how the findings influence budgets, regulations and economic-development strategies.

For El Salvador, the initiative offers a chance to understand more clearly how its citizens work and how its businesses create value. If executed transparently and translated into practical policy, stronger statistics could help public institutions spend more effectively, businesses invest with greater confidence and development partners direct resources where they are most needed.