El Salvador’s Minister of Tourism, Morena Valdez, has said that the implementation of the Bitcoin law has led to a 30% increase in the number of tourists visiting the Central American country.
More Tourists Coming From the United States
In an interview with local news agency El Salvador English, Valdez claimed that visitors to the country had surpassed government estimates, reaching 1.4 million tourists instead of the 1.1 million that had been projected.
“We did a poll to check the activity according to the before and after Bitcoin. The tourism sector increased in November and December. This increased by more than 30%,” the minister said.
Valdez also noted that while traditionally most visitors to El Salvador came from neighboring countries in the Central American isthmus, the enactment of the Bitcoin law had led to a massive increase in the number of visitors from the United States. According to the minister, 60% of the 1.4 million tourists that have trooped into El Salvador since Bitcoin became legal tender came from the U.S.
This massive influx of visitors into the country also led to an increase in El Salvador’s foreign exchange earnings. The government had planned to make about $800,000 in foreign exchange but instead received more than $1.4 million in foreign currency.
El Salvador Becomes the First Country to Make Bitcoin Legal Tender
On June 9th, 2021, El Salvador’s government officially gazetted legislation making Bitcoin legal tender in the country. The legislation went into effect later in September that year, amid a mix of excitement from Salvadorians and apprehension from global monetary authorities.
According to the government, Bitcoin was made legal tender in order to increase efficiency in international remittances, which make up more than 20% of El Salvador’s GDP. Before the use of Bitcoin, transferring money from the United States into El Salvador could cost up to 30%-50% of the value of the transfer. Bitcoin was also intended to decrease the percentage of El Salvador’s unbanked population and to reduce the country’s reliance on the U.S. dollar.
El Salvador is Thriving Despite Warnings Against Legalizing Bitcoin
While the move to make Bitcoin legal tender was met with sharp criticism from institutions such as the International Monetary Fund (IMF), El Salvador’s economy has only grown since then. According to President Nayib Bukele, El Salvador’s GDP grew by over 10% in 2021, the first time the country has recorded double-digit GDP growth in its history. The country’s export sector also registered a 13% year-over-year increase in January this year.
And in a tweet posted on February 20th, President Bukele announced that his administration was in the process of introducing a plethora of reforms that he hoped would attract even more non-traditional capital to El Salvador and further build on the gains made in the tourism sector. Key among those proposed reforms were the creation of tax incentives and the offering of citizenship to foreign nationals in exchange for investments.