El Salvador, the first country in the world to make bitcoin an official currency, was able to fully repay a large debt due on January 24, 2023. Last year, the crash in the price of bitcoin cast doubt on this possibility.
2022 has not been a good year for cryptocurrencies, and especially for bitcoin. Due to a global bear market which saw prices fall very sharply, bitcoin fell at the beginning of 2022 from a value of nearly 47,300 dollars to 16,500 dollars on December 31, 2022. of 65% of the price of the currency, which had many consequences and damaged the entire cryptocurrency industry.
It is not just companies in the sector that have been affected by this decline. El Salvador, the first country in the world to make bitcoin an official currency alongside the US dollar, has come under scrutiny from many international observers. According to them, the bitcoin bet of the country was not going to be able to hold on any longer, between the decline in the value of the digital currency and the height of the country’s debt. Yet, as Nayib Bukele, the President of El Salvador, announced on January 24, 2023, the country has not been lacking.
$800 million debt repaid
In a lengthy Twitter thread, the rather annoyed president explained that, in 2022, “ almost all the international press said that because of our ‘bitcoin bet‘, El Salvador was going to default on its debt “. The country had, in fact, a debt to pay of 800 million dollars, plus interest. ” They [les journaux] said that if we did not make a new agreement with the IMF, we would not be able to repay our obligations because of our bitcoin losses “, he continues.
As proof, he points to the large number of articles on this subject that have appeared in newspapers such as the New York Times, the Washington Post, and in numerous Spanish-language titles. The New York newspaper indicated that the ” poor country was getting closer and closer to defaulting on cryptocurrency.
Numerama, a month before the New York Times article cited by Nayib Bukele, had also echoed the country’s problems because of the price of bitcoin. We thus explained that El Salvador, which had “ drawn from its reserves to buy bitcoins, now gone “, would have ” less funds available which could have caused him to default. Other media, like El Pais, took less chopsticks, and simply headlined that he was ” expected that El Salvador defaults “.
Today, Nayib Bukele said via Twitter, the country was able to pay off its $800 million debt in full, including interest — and that’s reassuring news for the country. If the media were right to be skeptical and to evoke the hypothesis of bankruptcy, today we have to recognize that El Salvador got out of it, without needing help. However, it is important to clarify that, according to Bloomberg, ” the Central American nation will manage to pay its debts thanks to a last-minute loan, and after undertaking the redemption of two bonds “.
What will this change? Right now, absolutely nothing. The political and economic life of the country will remain the same, and this should not affect the price of bitcoin. But the experience of El Salvador, which is going reasonably well so far, despite a still fairly low bitcoin adoption rate, will perhaps motivate other countries to do the same. After El Salvador and the Central African Republic, perhaps 2023 will see new nations make bitcoin their official currency.
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