El Salvador says it paid maturing $800 million bond

SAN SALVADOR, El Salvador (AP) — El Salvador has repaid one of two outstanding $800 million bonds, the country’s treasury minister announced, pushing back worries the government could default amid its decision to make the volatile cryptocurrency bitcoin legal tender.

Treasury Minister Alejandro Zelaya tweeted on Monday night that the government had completed payment on a bond that was due to mature this week. “El Salvador meets its debt obligations,” he wrote.

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The government still owes $367 million plus interest on an $800 million bond maturing in January 2025.

Concerns had grown that the government would default on this year’s debt as President Nayib Bukele made a gamble on bitcoin, making El Salvador the first country to declare it legal tender. Zelaya called out the doubters in a tweet announcing that the 2023 bond had been paid off.

The treasury minister said his office paid back $196 million of the debt last year through the partial buyback of the bond maturing this week. The debt was issued by previous administrations in 1999 and 2004.

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Earlier this month, El Salvador reached a deal with the Central American Bank for Economic Integration for a $350 million loan. It wasn’t clear if that loan helped the government pay off the bond.

In a Jan. 5 statement, the bank said it was “to strengthen the administration of government revenues and expenses through measures to reduce the tax gap and increase tax collection, as well as reduce smuggling and tax evasion.”

In January of last year, the International Monetary Fund asked the government to reverse its decision to make bitcoin legal tender. Bukele refused and the government has invested more than $106 million in the cryptocurrency, whose value plunged last year.

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