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Government agencies and politicians have frequently criticized Salvadoran President Nayib Bukele, a maverick Bitcoin promoter, for the way he handles the country’s finances.
But things may be paying off for the eccentric leader of the small Central American nation. The country’s debt is growing rapidly.
Bonds rose after the country asked holders of nine dollar-denominated deals to bid for the bonds, according to Bloomberg data. Simply put, the government made an offer to buy them back from investors for cash. This is one way for countries to restructure their debt.
El Salvador said in a statement Friday that it would issue the new banknotes as “part of a refinancing transaction to realize savings and promote certain conservation and sustainability initiatives.”
Today, we officially launched a purchase proposal for foreign debt due from 2027 to 2052 🇸🇻
All holders of bonds in the Republic of El Salvador have access to this public and voluntary buyback.
Learn more: https://t.co/eL0Ell6Hs4
— Nayib Bukele (@nayibukele) October 4, 2024
The country has previously been criticized for its handling of finances, but investors are now eyeing the once-obscure country for investment opportunities.
James Bosworth, founder of political risk analysis firm Hexagon, told Decrypt that El Salvador’s bonds are attractive because of their potential for high returns.
“El Salvador is a risky investment, but it’s high risk, high return, and investors like what they get for their risk,” he said.
“Many investors believe that Mr. Bukele has the funds to pay down the debt and is popular enough to push through Congress the necessary budget to ensure the country’s fiscal stability.”
Bosworth added that the International Monetary Fund has problems with El Salvador for its “lack of budget transparency and professional management, with Bitcoin policy being the biggest evidence.” .
Bukele is also controversial because of his bets on Bitcoin. In 2021, millennial leaders made Bitcoin the legal tender in the country alongside the dollar. Businesses must also accept Orange Coin if they have the technical means to do so.
The International Monetary Fund (IMF) has been one of the most vocal critics of the move. Just last week, the group announced it was calling on governments to limit public sector exposure to cryptocurrencies. El Salvador has been negotiating with the IMF for years to secure subsidies to boost growth in poor countries.
Is Bukele really doing things right?
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