El Salvador’s pro-crypto president Nayib Bukele wants to run for another term

Ahead of the upcoming elections in 2024, El Salvador’s President Nayib Bukele has said he wants to run for a second term. However, the country has just been downgraded by Fitch Ratings for its financial situation considered to be very fragile.

Nayib Bukele plans a second presidential term

Nayib Bukele, the President of El Salvador who made Bitcoin (BTC) legal tender in September 2021, has announced that he will be running for a second presidential term.

Until last year, El Salvador forbade incumbent presidents from running for the country a second time. But in the month of September 2021, the Supreme Court of the Central American country amended the constitution so that this becomes possible.

The United States Embassy and various foreign powers then expressed concern about this decision, calling it “unconstitutional”. Nayib Bukele, for his part, welcomed this new possibility during his public statement yesterday, Thursday, September 15:

Developed countries allow re-election and, thanks to the new configuration of the democratic institution of our country, El Salvador will also do so. 

Although he is now best known for enabling El Salvador to become the first country in the world to adopt Bitcoin, Nayib Bukele was elected with a majority in 2019 through a center-right conservative policy and a crime-focused platform. and poverty.

According to the CID Gallup polling institute, the Salvadoran president seems to be enjoying some success with the country’s inhabitants. Indeed, 85% of those questioned said they were satisfied with the policy pursued by the leader.

El Salvador singled out for its financial instability

Coincidentally, on the day of Bukele’s declaration, the international financial rating agency Fitch Ratings downgraded El Salvador from “CCC” to “CC”, considering that the country is in a “disastrous” liquidity situation.

According to the Fitch rating document, El Salvador will need $3.7 billion in financing by January 2023 and has an “unidentified financing gap” of approximately $900 million.

At the end of July, Nayib Bukele made a point of clarifying the country’s financial position in a tweet, declaring in particular that the country had the means to repay its debt.

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 claiming all along, El Salvador has the liquidity to not only pay all of its commitments when they are due, but also to prepurchase all of its own debt (until 2025). 

However, Fitch Ratings pointed out that this decision could further weaken the country’s financial situation:

The government of El Salvador recently announced a voluntary cash redemption of USD 360 million for its external bonds from 2023 to 2025 at a price below par, which will likely further weaken its already stretched liquidity position. 

According to the agency, El Salvador will have to settle all of its obligations in euros by January 2023, or 800 million dollars, to hope to get out of it financially in the long term.