El Salvador emerged as the Central American country that most successfully reduced its country risk in 2024, according to the latest data from J.P. Morgan Chase’s Emerging Bond Indicator (EMBI). Over the course of the year, El Salvador’s EMBI dropped by an impressive 43.5%, from 6.87 points on January 2 to 3.88 points by December 31.

The EMBI, a key metric used by international investors to gauge the risk associated with emerging market bonds, showed significant improvement for El Salvador. This decrease of 2.99 points reflects positive developments in the country’s economic outlook, including progress made on a financing agreement with the International Monetary Fund (IMF), which was announced in August 2024.

Among other Central American countries, Costa Rica also reported a reduction in its country risk, with a 15.8% decrease in its EMBI, from 2.35 points to 1.98 points. Guatemala saw a more modest drop of 6.1%, moving from 2.16 points to 2.03 points. However, both Panama and Honduras experienced increases in their country risk. Panama’s EMBI rose by 3.6%, while Honduras saw the highest rise in the region, with an increase of 3.9%.

While El Salvador closed the year with a lower EMBI compared to the beginning of 2024, the country was still the one with the highest country risk in the region, surpassing Honduras, which had an EMBI of 3.77 points at year-end. As of January 9, 2025, El Salvador’s EMBI had increased slightly to 4.07 points, marking its highest level since early December 2024.

The EMBI remains a critical tool for assessing the fiscal health and payment prospects of emerging economies. A lower EMBI indicates improved confidence among investors that a country can meet its financial obligations, while a higher EMBI suggests higher perceived risk. El Salvador’s substantial improvement in 2024 is seen as a positive step towards economic stabilization, though the recent uptick in early 2025 suggests continued challenges ahead.