El Salvador prepares to buy back its sovereign debt ahead of schedule out of sheer spite.
A quick introduction for those who haven’t been keeping an eye on El Salvador for the last year: in September 2021 the country became the first to approve Bitcoin as legal tender, and since then El Salvadorian President Nayib Bukele twittedfrom time to time about purchasing cryptocurrency. In a year, the token has lost about $30,000 in its value, total losses in El Salvadorian Bitcoins are estimated at 50% of their purchase price. There were speculations that the falling Bitcoin price might provoke a default on its sovereign debt in 2023.
A week ago, Bukele announced that they are ready to buy back sovereign debt that is due in 2023 and 2025, each equals to about $800 million. This step is probably meant to dispel all doubts regarding the debt-paying ability of the country amid plunging cryptocurrency price. Just a couple of months ago Dania Gonzalez, Deputy of the Republic, shared that Bitcoin fluctuations have a minor influence on the country’s budget, but action speak louder than words, don’t they?
Not only the anti crypto community didn’t accept the El Salvadorian position regarding cryptocurrency as a legal tender, but also the International Monetary Fund constantly insisted on waiver of Bitcoin, pointing out high volatility and financial risks for the country. Advance repayment demonstrates that the budget is under control despite the global crypto downturn.
Way to go, El Salvador!