El Salvador's Bonds Skyrocket Amid Bitcoin Policy Controversy

El Salvador's bonds skyrocketed amid the controversy over Bitcoin (Photo; Doc. Palmer Foundation) policy.

JAKARTA - In the midst of sharp criticism and global doubts about El Salvador's controversial Bitcoin policy, it has recorded a significant spike in the value of its bonds. President Nayib Bukele, who is often seen as eccentric because of his unorthodox financial approach, is now starting to reap the rewards of his innovative steps. This raises optimism among foreign investors towards this small country in Central America, although many still doubt the feasibility of the policy.

According to data from Bloomberg, El Salvador's bonds jumped sharply after the country's government offered to buy back maturing bonds from 2027 to 2052. This move is part of a debt restructuring aimed at saving costs and encouraging conservation and sustainability initiatives.

Bukele officially announced the offer to purchase the external debt last Friday through its social media, inviting bond holders to participate voluntarily in the process. "Today we are launching our external debt purchase offer due from 2027 to 2052," Bukele wrote on his official Twitter account. With this step, the government of El Salvador hopes to reorganize their debt burden and improve the country's economic image in the eyes of the world.

Quoted from Decrypt, James Bosworth, founder of political risk analysis firm Hxagon, said, "El Salvador is a high-risk investment, but the expected yield is also high. Many investors believe that Bukele has enough funds to repay debt, as well as political support to pass the necessary budget to maintain the country's financial stability. This is a big gamble for Bukele and his team in maintaining fragile economic stability.

Meski begitu, kritik tetap datang dari lembaga internasional seperti Dana Moneter Internasional (IMF), yang berulang kali mengecamkan kurangan transparansi dalam pengelolaan anggaran negara, dengan kebijakan Bitcoin sebagai bukti utama dari ketidakprofesionalan tersebut. Lembaga ini menegaskan bahwa kedependungan pada aset kripto yang sangat fluktuat dapat menimbulkan risiko besar bagi stabilitas ekonomi jangka panjang El Salvador.

Since 2021, under Bukele's leadership, El Salvador has taken a bold step by making Bitcoin a legal tender, alongside the US dollar. This policy forced businesses in the country to accept Bitcoin, provided they had supporting technology infrastructure. This move sparked mixed reactions, with some calling it a revolutionary move, while others considered it a reckless gambling.

Criticism also came from various academics and international politicians, including members of the United States parliament, who accused Bukele of ignoring great risks by putting confidence in highly volatile crypto assets. They highlighted that Bitcoin price volatility could disrupt the country's financial stability and add to the economic burden on its citizens.