El Salvador became the nation with the third-lowest inflation in the region in April. Meanwhile, bitcoin is still far from El Salvador’s purchase price.
While inflation is expanding its tentacles worldwide, El Salvador handled it and managed to slow down its rate between March and April. It even reached one position among the area’s nations regarding low inflation rates.
Salvadoran’s year-on-year inflation rate went from 6.7% to 6.5% from one month to the next, as observed in comparing the reports for both months from the Central American Monetary Council. This information got highlighted by the central banks of the Central American nations, in parallel work with the Institute of Statistics and Census of Panama.
According to this information, no other nation in the area achieved to minimize the inflation rate. However, two stood at levels lower than El Salvador’s: Guatemala and Panama, with 4.6% and 3.7%, respectively in the April period.
This situation makes El Salvador rank as the third economic system with April’s lowest year-on-year inflation rate in Central America. The country rose to one place by overtaking Costa Rica, which reached the third spot in March and had a sudden relapse in inflation in April.
President Nayib Bukele revealed through Twitter that an opposition media outlet in his country confirmed the situation through the news. He labeled the event a sign that the Salvadoran response to a worldwide crisis was more significant than expected.
Criticism of Bukele abounds in the press and among local economists, particularly economically and with greater emphasis since the adoption of bitcoin as a legal tender a few months ago.
Bitcoin Would be a Problem
Ricardo Castaneda, the coordinator of the Central American Institute for Fiscal Studies (ICEFI) study center for El Salvador and Honduras, is part of this trend that criticizes the adoption of bitcoin as legal tender.
Quoted by First Report, Castaneda explained that, although the country’s financial struggles didn’t get caused by the adoption of bitcoin, the digital asset became part of the problem. Indeed, bitcoin’s drop from its all-time highs last year (now more than 50% off the $69,000 mark) has affected the country’s investment in digital assets.
Bukele’s bitcoin portfolio is experiencing many unexpected losses. However, it cannot get labeled a loss until those bitcoins get revealed as being sold below their purchase cost.
Furthermore, criticism of bitcoin adoption has come from everywhere, regardless of the cryptocurrency’s performance in the market space. The International Monetary Fund and other entities have stood against the procedure of the Salvadoran government, although the latter has remained firm in its commitment.
By: Jenson Nuñez
