[Congressional Record Volume 144, Number 71 (Thursday, June 4, 1998)]
[Extensions of Remarks]
[Pages E1021-E1022]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  STATEMENT RECOGNIZING EL SALVADOR'S SUCCESSFUL PRIVATIZATION PROGRAM

                                 ______
                                 

                        HON. BENJAMIN A. GILMAN

                              of new york

                    in the house of representatives

                         Thursday, June 4, 1998

  Mr. GILMAN. Mr. Speaker, I would like to join with the honorable 
gentleman from North Carolina, Mr. Ballenger, to recognize the 
successful privatization program being implemented in El Salvador. Mr. 
Ballenger is a distinguished member of our Committee on International 
Relations, and he and I share a longstanding interest in El Salvador.
  After more than a decade of civil war, many people understand that El 
Salvador has made a successful transition into a healthy, functioning, 
multi-party democracy--one in which the former FMLN rebels are now 
completely integrated into Salvadoran society as a political party. 
What is not as widely known, however, is the fact that El Salvador has 
also undergone an equally dramatic economic transition. With this 
statement, we would like to pay tribute to the people of El Salvador 
and their political leaders, including especially President Armando 
Calderon Sol, and congratulate them for the success of their recent 
privatization efforts.
  In 1990, El Salvador embarked on the process of modernizing its 
national economy, including the privatization of key industries. The 
effect of these policies on the people of El Salvador has been 
dramatic. In 1997, El Salvador's economy grew by 4 percent, the 
inflation rate was pushed (from highs of 30 percent in the late 1980s) 
to below 1.93 percent and unemployment fell to around 7 percent in 
urban areas. El Salvador is now ranked by the Heritage Foundation as 
the third most open

[[Page E1022]]

economy in Latin America. In addition, Moody's recently issued a Baa3 
investment grade rating for the country--effectively putting it on par 
with some of its larger neighbors in Latin America most notably Chile.
  Recently, El Salvador successfully privatized its state electricity 
industry. The state entity known as CEL (the Comision Ejecutiva 
Hidroelectrica del Rio Lempa) has been the traditional operator of 
electricity generation and transmission assets in El Salvador.
  On January 20, 1998, CEL auctioned 75 percent of the shares of four 
state-owned electric distribution companies in El Salvador for a total 
of $586.1 million dollars. This transaction was the first successful 
privatization of the electric industry in central America, and 
represents the most money earned to date from any privatization in the 
region. The three international investors who won the bidding process 
were: Enersal C.A. of Venezuela, Electricidad de Central America (a 
division of EMEL) of Chile (in which Pennsylvania Power and Light is a 
major stock holder) and AES Aurora El Salvador from the United States. 
Each company reserved 20 percent of its shares for purchase by its 
workers. The remaining 5 percent shares in each of the four companies 
will be offered to individual investors on June 10, 1998 on the El 
Salvador stock exchange.
  In April, El Salvador launched a new retirement system based on the 
Chilean pension fund model. Five companies, including Citibank from the 
United States, were authorized to manage pension funds. After passing 
legislation to create the new pension fund retirement system in 
December, 1996, the Salvadoran government worked carefully to create a 
proper framework to safeguard and regulate the new pension system. The 
United States Agency for International Development provided key 
training for the Superintendencia de Pensiones.
  The Government of El Salvador is planning to finalize the 
privatization of the state telephone company ANTEL next month. In 
addition to French, Spanish, Swedish and Mexican concerns, three U.S. 
companies, GTE, Bell South and Southwest Bell have submitted bids.
  These privatizations have brought significant private investment to 
El Salvador. Moreover, to date, organized labor and El Salvador's 
political parties have been involved and have supported the 
government's efforts. The privatization process has also been roundly 
praised for its transparency and openness. These privatizations put El 
Salvador on the map as a good place to invest in the region.
  We extend our best wishes for success to El Salvador as it moves 
forward with its privatization process.

                          ____________________