Bukele’s move aims to reduce the government’s debt positions as some speculate El Salvador is near default.
El Salvador recognizes bitcoin as legal tender, and Bukele made waves the past year tweeting about his ill-timed bitcoin purchases using El Salvador’s sovereign wealth.
The bills would finance El Salvador’s debt buyback through a $200 million loan from the Central American Bank for Economic Integration and reserve assets from the International Monetary Fund (IMF).
For what it’s worth, IMF researchers previously outlined three “core objectives” behind sovereign debt buybacks: reducing debt payments, minimizing sovereign risk and adding liquidity to domestic markets.
Still, past debt buybacks have been mostly unsuccessful in significantly reducing debt payments.
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