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Nayib Bukele to Serve Second Term as El Salvador President: Here’s What He’s Done for Bitcoin

Last Updated February 5, 2024 2:56 PM
Teuta Franjkovic
Last Updated February 5, 2024 2:56 PM

Key Takeaways

  • President Nayib Bukele secures a decisive second term with a majority of votes.
  • Bukele’s popularity, built on TikTok savvy and tough-on-crime policies, overshados worries about his ‘dictatorship’.
  • Bukele’s bold adoption of Bitcoin faces IMF scrutiny and limited impact.

In a pivotal election, El Salvador’s populace seems to have resoundingly endorsed Nayib Bukele for a second presidential term , signaling a landslide triumph.

The electoral decision largely reflects the nation’s willingness to exchange certain civil liberties for enhanced security, a critical issue in a country historically plagued by gang violence .

Bukele Poised for Decisive Victory in El Salvador Election

Late on Sunday, the Supreme Electoral Tribunal released preliminary results, revealing that with 31% of polling stations reporting, Bukele had secured a commanding 83% of the vote .

This figure significantly outpaces the 7% garnered by the closest contender from the leftist Farabundo Martí National Liberation Front.

Notably, the electoral website tasked with updating the vote count experienced a crash just before the stroke of midnight.

High Approval and Social Media Presence

Nayib Bukele, at 42, is enjoying one of the loftiest approval ratings globally, largely attributed to his stringent measures against gangs in El Salvador,  which have notably curtailed homicide rates through the detainment of over 76,000 individuals.

Bukele took to the social media platform X on Sunday to proclaim  his substantial lead in the presidential race, boasting more than 85% of the vote as per his “numbers,” and stating that his party, Nuevas Ideas, is set to secure at least 58 out of 60 congressional seats.

Additionally, an independent exit poll conducted by CID Gallup  suggested an even higher approval, estimating that 87% of Salvadoreans voted for the incumbent.

These results are poised to establish Bukele, known for his adeptness on TikTok and his appeal as a millennial leader, as the first president of El Salvador to be re-elected since the 1930s. This follows a controversial decision by judges aligned with his party to overturn a ban on consecutive terms—a move that has sparked concerns about the nation’s democratic health.

Bukele’s Victory Heralds Transformative Shift for El Salvador

In a speech  to a vast crowd of supporters in downtown San Salvador, Nayib Bukele declared, “Here there is no polarisation,” emphasizing that “85 per cent of Salvadoreans have voted to continue the path we’re on in full freedom and full democracy.”

Striving to reshape the international perception of El Salvador, often associated with poverty and violence, Bukele has initiated bold measures, notably the adoption of Bitcoin as legal tender  in 2021. His anticipated victory, if validated, is set to virtually dissolve the already weakened opposition in the legislature, thereby solidifying his influence, which already extends over the judiciary and the military.

Despite this consolidation of power, academics and civil society advocates express apprehension that Bukele might seek to alter the constitution to permit indefinite re-election —a notion he has refuted. However, his supporters argue that the people of El Salvador desire his prolonged leadership.

El Salvador’s Bitcoin Gamble: Tourism Boom or IMF Bust?

In September 2021, Nayib Bukele officially introduced Bitcoin as legal tender  in El Salvador, a move accompanied by a series of supportive measures for digital assets, including the innovative introduction of ‘Volcano bonds‘.

Per data from Nayib Tracker , El Salvador’s Bitcoin treasury presently holds 2,825 BTC, an investment with an approximate value of $120 million.

Credit: Nayib Tracker

Bukele’s Bitcoin Holdings Recover in Market Uptick

Following an extended period of downturn in the bear market, Nayib Bukele’s Bitcoin holdings have finally seen a resurgence, edging into profitable territory at current market values. The average cost of acquisition per Bitcoin, standing at $42,443, is now marginally (0.3%) above the prevailing market rates, marking a cautious yet notable recovery.

The daring move, not only captured global headlines but also ignited a niche trend of crypto tourism. However, the cryptocurrency initiative, while ambitious, elicited reservations from the IMF and saw limited adoption among the Salvadoran populace.

During Bukele’s initial term, El Salvador’s economy has grappled with modest growth and limited foreign investment, further exacerbated by the steep costs associated with borrowing from international debt markets. These economic hurdles have intensified the need for a successful negotiation  with the IMF regarding a potential loan facility.

However, insiders familiar with the discussions suggest that the IMF is poised to advocate for the revocation of Bitcoin’s status as legal tender within the country. The outcome of these negotiations remains uncertain, particularly given the Salvadoran government’s substantial investment of approximately $120 million in the cryptocurrency. It remains to be seen whether Bukele would concede to such a condition.

Bukele’s Victory Garners International Attention Amid Economic Hopes

Leaders from various Latin American countries, along with China —a nation Bukele has actively engaged for foreign investment  amidst strained relations with the US—were quick to extend their congratulations even before the official announcement of the election results.

However, Bukele has been reticent about his specific plans for his upcoming second five-year term, set to commence in June. While the electorate endorses his stringent measures against gangs, there is a growing demand for enhanced economic opportunities, especially in light of projections indicating a modest 2% growth in the nation’s gross domestic product this year.

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