Salvadoran vice president slams market fears over constitutional reform plan

SAN SALVADOR (Reuters) – El Salvador’s vice president criticized international financial markets on Friday after government bonds took a tumble on the disclosure of a constitutional reform plan that includes extending the president’s term.

The prices of government bonds have fallen this week on investors’ concerns over the draft of a reform plan publicly released by a legal team led by Vice President Felix Ulloa.

The reform would add a year to the presidential term, taking it to six from five years, and included changes to the Supreme Electoral, the Constitutional Chamber of the Supreme Court and the general prosecutor’s office.

Investors were already on a knife edge over a pending agreement with the International Monetary Fund, which was put in doubt after President Nayib Bukele announced in June his plan to make Bitcoin legal tender in the country.

“What type of market can react against a reform that does not exist?” Ulloa said to journalists. “It really seems strange to me because there has been no presentation of any kind of reforms.”

The team of lawyers led by Ulloa have been working on the reform plan, which includes 215 constitutional changes, since October.

Bukele has so far not commented on the plan, but economic analysts have sounded alarm bells.

“The proposal creates a stir because it does propose changes to presidential terms, when the Bukele administration had hinted that this would not be the case,” Citigroup said in a note Friday.

The reform package would need to go to parliament, approved in one legislature and ratified by the other, before it could take effect.

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