El Salvador’s President, Nayib Bukele, announced that the country will not rely on external debt to finance its 2025 national budget. Interestingly, this marks a significant shift in El Salvador’s financial strategy as it continues to distance itself from the reliance on foreign loans and debt to support its fiscal operations.
BTC has Reshaped the Country’s Economic Outlook
While speaking on Independence Day, Bukele attributed much of this financial progress to the country’s innovative Bitcoin strategy. The president emphasized that the Bitcoin initiative has contributed significantly to reshaping the country’s economic outlook.
Meanwhile, El Salvador’s adoption of Bitcoin has had its challenges. Initial skepticism from international financial organizations and critics about cryptocurrency’s volatility created a turbulent environment. However, Bukele’s administration has remained committed to the strategy, aiming to boost financial inclusion and reduce remittance costs.
Notably, the decision to avoid external borrowing for the 2025 budget reflects El Salvador’s progress in improving its financial health.
El Salvador Marks 3 Years of BTC as Legal Tender
Three years ago, on September 7, 2021, El Salvador became the first country in the world to accept BTC as legal tender. That move marked a significant milestone in the nation’s financial history and made the North American nation a trailblazer in digital asset usage. Primarily, BTC adoption as a legal tender aims to provide financial inclusion for citizens and improve remittances from diaspora communities.
El Salvador has witnessed continued investment in Bitcoin through daily purchases. With President Nayib Bukele in charge, the cumulative Bitcoin portfolio has soared to over $318 million or 5,865 BTC. Given the fluctuating price of the digital asset, the buying price has averaged about $43,877 per BTC. Despite criticisms, Bitcoin adoption is a plus for the country.
El Salvador and Bitcoin
As per earlier reports, El Salvador passed a new law in December 2023 to extend citizenship to foreign investors holding significant stakes in Bitcoin. Furthermore, the country established a National Bitcoin Office (ONBTC) to manage all cryptocurrency-related initiatives. According to venture capitalist Tim Draper, Bitcoin will make El Salvador one of the world’s richest countries.
A few days ago, Vera Bergengruen, a TIME Magazine reporter, suggested that the country’s adoption of Bitcoin may be more about image than real economic reform. Vera also revealed that Bukele’s advisors referred to the BTC initiative as part of a “great rebranding” and “complete PR move.” Vera noted that Bukele claimed to have $400 million in the country’s public Bitcoin wallet.
While Bukele’s term runs until 2029, questions remain over whether his BTC move will yield tangible benefits for the people of El Salvador or serve as an alleged PR strategy.
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