The government has spent some $104.2 million on 2,301 coins that are now worth just $67.9 million using Wednesday’s volume-weighted average price.
The country has to pay $329 million in interest due on its international bonds this year, as well as $800 million on a bond due in January.
ICEFI’s Castaneda listed financing options that include Central and Latin American development banks —BCIE and CAF, respectively— as possible patches to finance the $800 million payment due in January.
Another option, he said, is to nationalize the country’s pension fund to cover the fiscal deficit, which could be done by transferring the public’s savings to a government account.
A restructuring of El Salvador’s debt is “inevitable” if the country continues with the “current policy mix,” said Polina Kurdyavko, director of emerging markets at BlueBay Asset Management.
“The debt in El Salvador could be sustainable with the right program (IMF). But they have to act now,” he added.
The country’s finance minister, Zelaya, declined to comment for this story.
Salvadoran bonds are trading between 43.5 cents and 34 cents on the dollar except for the January maturity SV015690909= at 75 cents, reflecting cautious optimism that the country could make that payment.
The cost of insuring investors against a Salvadoran sovereign default over the next five years hit its highest level since 2020 on Wednesday, according to data from S&P Global.