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JPMorgan: “El Salvador Reduces Fiscal Deficit, Despite Bitcoin”

El Salvador outperforms negative fiscal expectations predicted by credit rating agencies.

In Short

  • JPMorgan says El Salvador will have financing until at least 2024.
  • El Salvador announced a sovereign bond buyback before September 15.

El Salvador Reduces Fiscal Deficit. In a context where the world economy is facing significant obstacles, things seem to be going well in El Salvador, at least as far as the fiscal deficit is concerned, without giving up on its open arms policy to Bitcoin (BTC). 

The Central American nation presents a “near-term fiscal outlook that continues to improve,” said JPMorgan economist Steven Palacio, a clear sign that El Salvador will be able to “meet its financing needs at least until 2024,” the specialist explained to Reuters.

Palacio considers that the fiscal management by the Salvadoran government has been “outstanding and continued until June.” However, this could not be viable after 2024.

El Salvador partially dispels doubts about its economic stability, bolstering its confidence in adopting Bitcoin. So far, it holds 2,271 bitcoins as part of its national reserve. They made the last known Bitcoin purchase last July when the digital asset price fell below $20,000.


Default risk

several economic actors predicted the risk of a possible default with the arrival of Bitcoin in El Salvador at the beginning of the year. Among them are risk rating agencies and international financial institutions. 

The financial firm Moody warned of the risks if the government acquired more Bitcoin, especially its payment capacity and fiscal profile. The London-based institute’s School of Public Policy, LSE, believes the country has achieved meager economic growth, with a large fiscal deficit and almost 90% of gross domestic product (GDP) in public debt. 

However, El Salvador’s president, Nayib Bukele, responded to an analysis by The New York Times and those predicting economic catastrophe from debt default due to Bitcoin adoption.

Since the New York Times dedicated so much time and space to El Salvador’s economic initiatives? They are afraid bitcoin is inevitable,”


And to those who believe El Salvador heads for default, he asked, “Will they publish an apology once we pay everything on time?“.

In that sense, Alejandro Zelaya, Minister of Finance of the Central American nation, announced the repurchase of 2023 and 2025 bonds before September 15, for which they have $565 million. The bonds total $1.6 billion.

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