El Salvador’s economic strategy built on Bitcoin is initially international in the crossfire of criticism especially from financial institutions and political leaders.
Nayib Bukele, the country’s president, used unusual methods to stabilize the economy, which seemed to many to be a bold decision. The declaration of Bitcoin as legal tender, which came into effect in 2021, divided public opinion, but now it seems that Bukele’s steps are starting to pay off and bring economic results to the country.
Growth of bonds
Recently, the government bonds of the Central American country have shown a significant increase, which is a remarkable turnaround compared to the previous economic situation. The Bloomberg data According to El Salvador’s government bonds, they got a boost when the government offered to buy back some of its dollar-denominated bonds from investors in the form of cash compensation. This can be interpreted as a kind of debt restructuring that allows for savings and support for sustainability projects.
Investor confidence is growing
According to James Bosworth, founder of the political risk analysis firm Hxagon, investors find El Salvador’s government bonds attractive because they are a high-risk but high-return investment. Bosworth said many investors believe Bukele will be able to repay the debt and get Congress to pass an adequate budget for stability.
International reviews and Bitcoin
Bukele’s decision to make Bitcoin legal tender also drew heavy criticism from the International Monetary Fund (IMF), which called on El Salvador to limit public sector exposure to cryptocurrencies. Still, Bukele’s popularity is growing and investors are increasingly optimistic about the country’s economic future.
Bukele’s strategy: Is he doing the right thing?
Despite the critics, Bukele’s strategy appears to be paying off. The country’s government bonds are showing growth, and investor confidence is also growing. Although concerns remain about transparency and budget management, El Salvador appears to have opened a new path to economic stability.