The current President of El Salvador, known as an outspoken supporter of bitcoin – Nayib Bukele – has said that he will contest the next presidential election in 2024. During his reign, El Salvador launched many BTC initiatives, such as making the currency legal money within the borders of the nation.
On another note, US credit rating agency Fitch Ratings downgraded El Salvador’s long-term foreign currency issuer default rating (IDR) to ‘CC’ from ‘CCC’. The entity said the move stemmed from the country’s “strained liquidity position” and troubled economy.
Bukele was elected for a second term
Nayib Bukele – El Salvador’s pro-bitcoin President who won 53% of the vote in the 2019 election – has said he will run in the 2024 election as well. His decision comes despite the nation’s constitution barring Presidents from having consecutive terms.
“I announce to the people of El Salvador that I have decided to run for President of the Republic,” Bukele announced in his Independence Day speech yesterday (September 15).
Although the country’s law bars Bukele from running in the 2024 elections, the Supreme Court ruled in 2021 that he could run for a second consecutive term. The President argued that El Salvador should follow the example of developed countries where re-election is allowed:
“Developed countries have re-election. And thanks to the new configuration of our country’s democratic institution, now El Salvador will do the same.”
It is worth noting that Bukele has a good chance to regain his position again after the majority of the local population approves his presidency. A recent poll estimated that 85% of El Salvadorans surveyed are satisfied with their regime.
In addition to the war against local drug cartels and criminal groups, the Bukele administration has also paid special attention to bitcoin. Last September, the country made headlines for becoming the first where the main cryptocurrency is an official payment method.
Other efforts include buying BTC on a macro level and building a massive pet hospital with the profits. The creation of a city dedicated to the asset is also on the agenda, while earlier this year, authorities launched “La Casa Del Bitcoin” – an educational center that helps people learn about the benefits of the digital asset.
It remains to be seen whether El Salvador’s cryptocurrency revolution will continue beyond 2024 if residents re-elect Bukele as President.
The downgrade by Fitch rating
Despite the successful operations against criminal gangs and the interaction with bitcoin, the country has to face some significant economic problems. The current inflation rate in El Salvador is over 7%, while many residents lack basic financial access and live in poverty.
Noting these trends and noting “tight fiscal and external liquidity and extremely limited market access amid high fiscal financing needs,” Fitch Ratings downgraded the country’s Long-Term Foreign Currency Issuer Default to ‘CC’ from ‘CCC’.
The credit rating agency also recalled that El Salvador’s government recently disclosed a voluntary cash buyback of $360 million for its 2023 and 2025 external bonds at lower levels, “which will likely further weaken its already strained liquidity position ».
Fitch Ratings then pointed out that the country’s financing needs from September 2022 to January 2023 are $3.7 billion ($1 billion in fiscal deficit, $1.2 billion in amortization, including the payment of Eurobonds 800 million and $1.5 billion in short-term debt). Expected multilateral disbursements were not fast enough to meet year-to-date liquidity constraints.
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