El Salvador’s president wants to buy back $1.6 billion in government debt as the country’s finances look increasingly strained after a series of ill-timed bets on Bitcoin.
In a Tuesday tweet, Nayib Bukele said he was sending two bills to Congress to approve funding for the buybacks.
The president, who made Bitcoin legal tender in the small Central American country in September, emphasized that El Salvador’s economy was indeed in good shape. The “transparent, public and voluntary” tender offer for the bonds will start in six weeks at market prices, Bukele added.
Today we are sending 2 bills to Congress to ensure that we have the funds available to make a transparent, public and voluntary tender offer to all holders of Salvadoran government bonds from 2023 to 2025 regardless of the market price at the time of each transaction.
“Contrary to what the media has been saying all this time, El Salvador has the liquidity not only to pay all of its obligations when they fall due, but also to buy all of its own debt (until 2025) in advance,” Bukele wrote.
After making Bitcoin legal tender – Salvadoran businesses must accept it if they have the technological means to do so – the eccentric leader has also used federal funds to buy BTC, admits he goes on Bitcoin buying sprees on his phone naked or “sometimes while on the toilet”.
If his tweets are anything to go by, Bukele has 2,381 Bitcoins – worth $52 million at today’s prices, according to the website Nayib Tracker which monitors the president’s announcements.
As the price of Bitcoin has plummeted – down 68% from last November’s record high of about $69,000 – Bukele’s investments have lost over 50% of their value, leading some to say his behavior is reckless and putting the country’s economy at risk .
The likes of JPMorgan and the International Monetary Fund have criticized Bukele for his Bitcoin project. Even the IMF so the country should drop the idea altogether.
But today, Bukele appeared to want to change that narrative, assuring investors that he wants to remain a member of the traditional financial system and one that can repay debt.
El Salvador’s Finance Minister, Alejandro Zelaya, so the offer was “a sign of the liquidity of our economy.” The county, one of the poorest in America, has a debt of 800 million dollars pay by January.
The announcement could also be a way for Bukele to buy time and show that he is in control of the country’s finances, said James Bosworth, founder of political risk analysis firm Hxagon. Decrypt.
“It’s cheaper to buy the bonds cheap than to pay them off in full in two years,” he said, adding, “but there may be more to show for it. We have to see if he puts real money into the program.”
After Bukele promised the investors a volcano powered Bitcoin City and a Bitcoin-backed bond, he now promises to get the country’s economy in order. The first two did not happen.
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