the past, the country produced gold and silver, but recent attempts to re-open the mining sector, which were expected to add hundreds of millions of dollars to the local economy, collapsed after President Saca shut down the operations of Pacific Rim Mining Corporation. The U.S.-Canadian company had spent $77 million to discover a gold deposit estimated at 1.4 million troy ounces. President Funes and the FMLN upheld the gold and silver mining ban.
As with other former colonies, El Salvador was considered a mono-export economy (an economy that depended heavily on one type of export) for many years. During colonial times, the Spanish decided that El Salvador would produce and export indigo, but after the invention of synthetic dyes in the 19th century, the newly created modern state turned to coffee as the main export.
The government has sought to improve the collection of its current revenues, with a focus on indirect taxes. A 10% value-added tax (IVA in Spanish), implemented in September 1992, was raised to 13% in July 1995.
Inflation has been steady and among the lowest in the region. Since 1997 inflation has averaged 3%, with recent years increasing to nearly 5%. As a result of the free trade agreements, from 2000 to 2006, total exports have grown 19% from $2.94 billion to $3.51 billion, and total imports have risen 54% from $4.95 billion to $7.63 billion. This has resulted in a 102% increase in the trade deficit, from $2.01 billion to $4.12 billion.
Despite being the smallest country in Central America, El Salvador has the third largest economy, with a per capita income that is roughly two-thirds that of Costa Rica and Panama, but more than double that of Nicaragua. Growth has been modest in recent years, and the economy contracted nearly 3% in 2009. Because of the recent growing and dollarized economy, El Salvador is seeing an increase of Central American, South American, and Caribbean immigrants from Guatemalans, Hondurans,
