El Salvador’s Pro-Bitcoin President Will Seek Re-Election in 2024

The current President of El Salvador known as an outspoken bitcoin proponent – Nayib Bukele – said he will compete in the next presidential elections in 2024. Throughout his reign, El Salvador launched numerous BTC initiatives, such as turning the coin into a legal tender inside the nation’s borders.

On another note, the American credit rating agency Fitch Ratings downgraded El Salvador’s Long-Term Foreign Currency Issuer Default Rating (IDR) to “CC” from “CCC.” The entity said the move resulted from the country’s “strained liquidity position” and troubled economy.

Bukele Determined for a Second Mandate

Nayib Bukele – the pro-bitcoin President of El Salvador who collected 53% of the votes in the 2019 election – said he will be a candidate in the 2024 election, too. His decision comes despite the nation’s constitution that prohibits Presidents from having consecutive terms.

“I’m announcing to the Salvadoran people that I’ve decided to run as a candidate for President of the Republic,” Bukele announced in an Independence Day speech yesterday (September 15).

Even though the country’s law forbids Bukele from participating in the 2024 election, the Supreme Court ruled in 2021 that he could run for a second consecutive term. The President argued that El Salvador should follow the example of developed nations where re-election is permitted:

“Developed countries have re-election. And thanks to the new configuration of the democratic institution of our country, now El Salvador will too.”

It is worth noting that Bukele has a high chance of re-capturing his post since the majority of the local population approves of his presidency. A recent poll estimated that 85% of the surveyed El Salvadorans are satisfied with his regime.

Besides waging war against local drug cartels and criminal groups, Bukele’s administration has also paid special attention to bitcoin. Last September, the country made the headlines becoming the first where the primary cryptocurrency is an official payment method.

Other endeavors include purchasing BTC on a macroeconomic level and building a massive pet hospital with the profits. Creating a city dedicated to the asset is also on the agenda, while earlier this year, the authorities launched “La Casa Del Bitcoin” – an education center that helps individuals learn about the digital asset’s merits.

It is yet to be seen whether the cryptocurrency revolution in El Salvador will continue after 2024 should residents re-elect Bukele as President.

The Downgrade From Fitch Ratings

Despite the successful operations against criminal gangs and the interaction with bitcoin, the country has to cope with some significant economic problems. The current inflation rate in El Salvador surpasses 7%, while many residents lack basic financial access and live in poverty.

Observing those trends and noting “the tight fiscal and external liquidity positions and extremely constrained market access amid high fiscal financing needs,” Fitch Ratings downgraded the nation’s Long-Term Foreign Currency Issuer Default Rating to “CC” from “CCC.”

The credit rating agency further reminded that the government of El Salvador recently disclosed a voluntary cash buyback of $360 million for its 2023 and 2025 external bonds at below par, “which will likely further weaken its already strained liquidity position.”

Subsequently, Fitch Ratings pointed out that the country’s finance needs from September 2022 through January 2023 equal $3.7 billion ($1 billion in fiscal deficit, $1.2 billion in amortizations including the $800 million Eurobond payment, and $1.5 billion in short-term debt). Expected multilateral disbursements have not been fast enough to materialize Year-to-Date liquidity constraints.