El Salvador Bitcoin Bet: Country Pays Full $800 Million Bond Plus Interest

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Salvadoran President Nayib Bukele confirmed in a tweet thread that the country has fully paid the $800 million repayment of its Eurobond due in January 2023. This is a major achievement for the country, especially after his “Bitcoin (BTC/USD) bet” which drew a lot of criticism from the likes of the International Monetary Fund (IMF).

The IMF argued that making bitcoin legal tender exposed the country’s coffers to cryptocurrency price volatility. El Salvador, however, closed its ears to the rest of the world and instead bought $25 million worth of bitcoins in October and then decided to use its bitcoin earnings to build 20 schools. Of course, that was before bitcoin prices turned south.

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El Salvador survives BTC bear market

After the FTX debacle in November 2022, the price of bitcoin fell to around $15,000 as global markets also fell due to rising inflation and uncertainty caused by Russia’s invasion of India. Ukraine. BTC fell more than 50% from its all-time high as El Salvador government bonds followed the plunge.

The bonds fell to 40% of their original value, raising concerns among investors about whether the country would be able to pay its next debt payment which was due on January 24, 2023. In addition, several agencies credit companies, including Fitch and Moody’s, downgraded El Salvador’s rating citing “increased reliance on short-term debt,” primarily citing the $800 million Eurobond repayment that was to be repaid in January 2023. The downgrade means the South American country had to pay creditors higher interest rates because it was seen as a higher risk.

The country’s debt to GDP ratio was also projected to reach around 86.9% by the end of 2022; which further heightened concerns about the country’s medium-term debt sustainability.

However, contrary to everyone’s outlook, the country emerged strong after fully paying off its $800 million plus interest debt on time despite a difficult year economically.

Bitcoin is currently on a recovery trajectory with investors expecting a break above $25,000.

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