By: Staff Writer
September 20, 2024
El Salvador only made $235 from Bitcoin between January to July of this year according to the country’s Bitcoin Fund Management Agency (AAB), the target was $7.4 million.
As reported by La Prensa, the yearly budget for AAB was $13 million, with $1 million planned to come from El Salvador’s general fund and $12 million from the agency’s own income.
El Salvador continues to add more Bitcoins to its portfolio, raising the total to $349 million. President Nayib Bukele’s government has been buying one bitcoin every day since November 2022. This strategy has given a 49 percent return with an unrealized profit of $ 13.26 million, despite this year’s weak performance.
Some analysts have called Bukele’s Bitcoin investment strategy “good public relations.”
In a recent interview, Vera Bergengruen claimed that Bukele and his top officials regarded Bitcoin purely as a rebranding event and a “complete PR move.” According to Vera, Bukele has always been big on the image of his administration, owing to his background in public relations. She stated:
“I think the most important thing is his past as a publicist. It’s important to understand from Bitcoin to the war on the gangs, everything he does he’s kind of ‘image first, results later’ oriented.”
Now, Bukele is stating that he intends to fund the upcoming fiscal year without looking for “even a cent of debt.”
Bukele revealed that he would present a self-financed budget proposal to the Legislative Assembly of El Salvador, meaning that the government will not issue debt to pay for its operations in 2025. Bukele stressed that this would be the first time this happened in decades, highlighting the relevance of independence and self-sufficiency for the country.
With the Bitcoin portfolio’s floundering, which is an indication of the financial mismanagement of the country’s resources, and last year’s budget deficit being over $760 million USD, it will be nothing short of a miracle for Bukele’s government to pull this off.
Fitch Ratings Agency reported in August that El Salvador was looking for International Monetary Fund (IMF) funding but “significant obstacles remain to securing IMF funding.”
Fitch also said: “El Salvador’s ‘CCC+’ sovereign rating, affirmed on April 30, is constrained by persistent fiscal deficits and limited funding capacity, among other factors. Progress in unlocking additional funding sources, such as an IMF program, which would likely be accompanied by other multilateral funding and could underpin market access, is a positive rating sensitivity.”