El Salvador’s crypto-king president wants to show investors that the country’s finances work.
President of El Salvador wants to purchase back $1.6 billion worth of sovereign debt. El Salvador’s finances are looking increasingly troubled after several mistimed bets on Bitcoin.
Nayib Bukele tweeted Tuesday that he was sending two bills (to Congress) to authorise funding for buybacks.
President Bukele made Bitcoin legal in tiny Central American country in September. He stressed that El Salvador’s finances were actually in good condition. Bukele said that the “transparent, voluntary, and public” purchase of bonds will begin in six weeks at market price.
Bukele wrote that El Salvador, contrary to media reports, has the liquidity to not only pay its obligations when due but also to purchase its entire debt (till 2025) in the future.
After Bitcoin became legal tender, Salvadoran businesses must accept it if they are technologically capable. The eccentric leader has also used federal funds to purchase BTC, admitting that he sometimes uses the toilet while on a Bitcoin-buying spree on his phone naked.
If his tweets are any indication, Bukele holds 2,381 bitcoins, worth $52 million today’s prices, according to the Nayib Tracker website, which tracks the president’s announcements.
The price of Bitcoin is dropping 68% since its peak of $69,000 in November last year. Some believe that Bitcoine’s reckless behavior has put at risk the country’s economy.
JPMorgan and International Monetary Fund both criticized Bukele’s Bitcoin project. even suggested that the country abandon the idea.
Today, however, Bukele seemed to be trying to change the narrative and reassure investors he wants to stay a part of traditional finance and can repay debts.
Alejandro Zelaya , El Salvador’s finance Minister, said that the offer was a “sign of the liquidity of our financial resources.” currently has $800 million in debt and must pay it by January.
This announcement could also be a way for Bukele to buy time and show he has control over the country’s finances. James Bosworth, founder of Hxagon political risk analysis firm, said Decrypt.
He said that it was cheaper to buy bonds cheaply than to pay them off in full within two years. But, it could be more for show. We will have to wait and see if he invests real money in the program.
Bukele had promised investors a Bitcoin-powered Bitcoin City as well as a Bitcoin backed bond. Now, he’s promising to fix the country’s finances. The second and third did not occur.
