El Salvador Finance Minister: We’re Waiting for Bitcoin Price Rise Before Issuing BTC Bonds
Per El Salvador’s Diario El Mundo, Alejandro Zelaya, the Minister of Finance, refuted notions that there was any kind of “deadline” on the issuance, and rejected allegations that the bonds project has “failed” – an accusation leveled at the government by numerous economic critics.
Rather, Zelaya claimed, the “market conditions” for the issuance were unfavorable due to circumstances that “we do not control” – such as the war in Ukraine and attempts made to fight inflation from the United States’ Federal Reserve.
Bitcoin prices have slumped or remained stagnant in recent weeks, and the finance chief stated that “for some investors, this discourages bond purchases,” so it was “normal that it should be done when the [BTC] price is high.”
He justified this by explaining:
“When we say that the price is high, it is when it is really being measured against the USD, so for each bitcoin, you will get more dollars. Thus, [as an investor,] I have the incentive to buy the bond with bitcoin and thus be able to earn because my accounts are held in dollars.”
Today, BTC trades at around USD 39,000 and is down 16% in a month and 32% in a year.
The government’s financial situation remains precarious: With International Monetary Fund (IMF) funding options looking almost non-existent, the Treasury had been hoping to raise some USD 1.5bn from the bond issuance – largely to honor the expiration of USD 800m worth of bonds set to expire in January 2023.
The media outlet noted that the “market” is concerned that the “Salvadoran government’s financing options are exhausted” – with a “possible default” now “feared.”
But Zelaya claimed that those calling the issuance plans a “fiasco” were ignoring the fact that markets conditions had hindered the state’s cause.
“The President [Nayib Bukele] is the one who tells us when the right time to make the issuance is. [The decision] will be made according to how we view the market.”
The statements came hot on the heels of a survey that found that most citizens are using the state-run Chivo BTC app and wallet sparingly, with the majority only downloading it to receive a USD 30 worth of bitcoin from state funds as a golden hello before going back to using the fiat dollar.
Zelaya has previously cited the Ukraine war as a reason for the delay, after an initial time frame of mid-March had been floated. Bukele has since claimed that pension-related issues were the reason for the hold-up, while the national news and political agendas have been dominated by the government’s struggle against the pandilla crime gangs.
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