Digital Assets: El Salvador Not Likely To Default On $800M Debt, Says Finance Minister

July 15, 2022 | Digital Assets, News
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El Salvador’s finance minister (pictured) has rubbished forecasts that the country will default on its debt obligations.

The world of crypto assets is currently strewn with stories of defaults and bankruptcies such as those of Three Arrows Capital, Voyager Digital, and most recently, Celsius Network. Could a country such as El Salvador, known to have invested substantially in bitcoin, join this motley group? El Salvador Finance Minister, Alejandro Zelaya, has trashed international markets forecasters’ predictions that the country will default on USD 800 million bond payments early next year.

According to ElSalvador.com, the website of the newspaper El Diario de Hoy, Zelaya has claimed that such an eventuality was unlikely because the country was likely to avail of various financing options from multilateral organizations.

Zelaya said that a loan arrangement was under finalization with the Development Bank of Latin America, and that the World Bank had “just approved a loan of USD 100 million” for the country. Furthermore, the Central American Bank for Economic Integration had also greenlighted a loan of USD 220 million to El Salvador.

Zelaya also claimed that the $800 million debt was “not unpayable,” and that “it does not cause us any concern.”

To avert default, the country could avail other options for finance: “I can go to the regional debt market or I can issue a three-year local bond in Central America. The truth is, USD 800 million in a [national] budget of USD 7,000 million is a marginal amount. It is small,” the minister said.

El Salvador and bitcoin

Regarding President Nayib Bukele’s penchant for El Salvador’s bitcoin adoption, the New York Times published an article titled “El Salvador’s Big Bet on Bitcoin Isn’t Paying off.”

Bukele tweeted a sharp response:

“Since when [has] the New York Times devoted so much time and space to El Salvador’s economic initiatives? It’s clear they’re afraid [that] bitcoin is inevitable. By the way, they say we’re heading to default. Will they publish an apology once we pay everything on time?”

Related Story: Digital Assets – Crypto Winter Travails

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