El Salvador’s president wants to buy back $1.6 billion in sovereign debt as the country’s finances look increasingly strained after a series of mistimed bets on Bitcoin.
In a Tuesday tweet, Nayib Bukele said he was sending two bills to Congress to authorize funding for the buybacks.
The president, who made Bitcoin legal tender in the tiny Central American country in September, stressed that El Salvador’s finances actually were in good shape. The “transparent, public and voluntary” purchase 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 available funds to make a transparent, public and voluntary purchase offer to all the holders of Salvadoran sovereign debt bonds from 2023 to 2025 at whatever the market price is at the time of each transaction.
— Nayib Bukele (@nayibbukele) July 26, 2022
“Contrary to what the media has been saying all this time, El Salvador has the liquidity not only to pay all of its commitments when they are due, but also purchase all of its own debt (till 2025) in advance,” Bukele wrote.
After making Bitcoin legal tender—Salvadoran businesses have to accept it if they have the technological means to do so—the eccentric leader also has used federal funds to buy BTC, admitting he goes on Bitcoin-buying sprees on his phone naked or “sometimes while in 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 Nayib Tracker website which monitors the president’s announcements.
As the price of Bitcoin has plunged—down 68% from its all-time high last November of roughly $69,000—Bukele’s investments have lost over 50% of their value, leading some to say his behavior is reckless and putting at risk the country’s economy.
The likes of JPMorgan and the International Monetary Fund have criticized Bukele for his Bitcoin project. The IMF even said the country should ditch the idea completely.
But today, Bukele appeared to want to change this narrative and reassure investors that he wants to remain a member of the traditional finance system and someone who can repay debts.
El Salvador’s finance minister, Alejandro Zelaya, said the offer was “a sign of the liquidity of our finances.” The county, one of the poorest in the Americas, has an $800 million debt to pay by January.
The announcement also could be a way of Bukele buying time and showing he’s in control of the country’s finances, James Bosworth, the founder of political risk analysis firm Hxagon, told Decrypt.
“It’s cheaper to buy the bonds on the cheap than pay them in full in two years,” he said, adding, “but it might be more for show. We’ll have to see if he puts real money into the program.”
After Bukele promised investors a volcano-powered Bitcoin City and a Bitcoin-backed bond, he is now promising to get the country’s finances in order. The first two did not happen.