El Salvador has recently recognized Bitcoin as legal tender, becoming the first country in the world to do so. Its president, Nayib Bukele, is enthusiastically promoting Bitcoin and cryptocurrency investment in the country. However, his risky bets have already lost about $50 million in public funds. Investing in El Salvador is like gambling under Bukele’s rule.
President Bukele is speculating wildly with Bitcoin
In September 2021, President Bukele passed the Bitcoin Law, making Bitcoin mandatory legal tender in El Salvador. He also started buying Bitcoin with public funds, but it has lost half its value since November 2021. Bukele seems to be investing randomly without making the details public, and has likely lost around $50 million so far. His crypto gambles add uncertainty and reduce transparency.
Economy and public finance are strained
El Salvador already had high public debt before adopting Bitcoin. Government budget deficits remain high while financing is increasingly difficult. Rating agencies have downgraded its creditworthiness. Bukele’s tendencies make international lenders wary of granting loans. Economic growth is slowing down after an initial pandemic rebound.
Investment climate clouded by uncertainty
Bukele rules El Salvador like his private fiefdom rather than through democratic governance. He makes unilateral decisions without debate, like investing public money in the highly volatile Bitcoin. Foreign investors are spooked by the lack of transparency, concerns about money laundering, and authoritarian tendencies.
In summary, investing in El Salvador is filled with uncertainty under President Bukele, who governs arbitrarily with a focus on crypto speculation. The economy is strained while the investment climate has soured due to imprudent policies.