El Salvador`s financial analysis by Nayib Bukele

• A financial analysis of El Salvador’s economy has been done by Bank of America.
• President Bukele has emphasized the study.
• El Salvador’s tax revenues are up 2.7pp of GDP.

The President of the Republic of El-Salvador, Nayib Bukele, emphasized the financial study conducted by Bank of America, which, in the president’s perspective, is the only one most closely tied to El Salvador’s reality.

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According to a recent assessment by Bank of America, the world’s second-largest bank holding corporation, the Salvadoran government has proved its ability to manage in the next years without going bankrupt.

“The government appears to be able to scrape by for a few more years, even in the absence of a deal with the International Monetary Fund (IMF),” a study notes.

“El Salvador’s tax collections increase by 2.7 percentage points of GDP, which is comparable to a big tax reform.” “Without raising taxes,” stated the Bank of America institution.

President Bukele, for his part, expressed his thoughts on the situation and urged investors to invest in El Salvador “before it is too late.”

Meanwhile, El Salvador has experienced strong criticism over its intention to accept bitcoin as legal cash in June 2021. Some have however congratulated Bitcoin for the part it has played together with the leadership in making sure its market value stays in place.

As previously reported, institutions such as the International Monetary Fund (IMF) have condemned the adoption action, claiming that it jeopardizes financial stability. The Bukele administration, however, refused the IMF’s following proposal for El Salvador to repeal the bitcoin law. 

Instead of caving into increasing pressure from the IMF and others, the government of El Salvador started measures to educate residents about bitcoin. It also sent bitcoins to residents using the official wallet app, Chivo.

El Salvador, the first country to recognize bitcoin as legal cash, recently hosted a bitcoin conference attended by 44 central banks. However, the country’s much-touted bitcoin volcano bonds have failed to materialize. 

According to our report, El Salvador’s treasury authorities earlier blamed the current delay in the issue of the bonds on the Ukraine-Russia crisis. It is yet to be seen how the current GDP shapes El Salvador`s economy keeping in mind the cryptocurrency adoption measures. Will it reform?

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