On August 31, El Salvador’s Ministry of Economy and the Investment and Export Promotion Agency (“Invest In El Salvador”) announced on the social media platform X that a Salvadoran delegation had met with its Chinese counterpart in the first round of talks aimed at signing a bilateral free trade agreement (FTA). The Salvadoran delegation was led by Raymond Villalta, executive director of the company Chivo S.A de C.V, which manages the Salvadoran government’s eponymous cryptocurrency wallet. He was joined by Óscar Mauricio Figueroa Torres, who until December 2023 had served as deputy director of Chivo S.A. de C.V.
“This week I had the opportunity to participate in the first round of FTA negotiations between China and El Salvador,” tweeted Villalta, whose X profile described him as “Advisor to the Government of Nayib Bukele and a specialist in Psychology and Public Project Management. “I was joined by an important delegation from the finance cabinet of President @nayibbukele,” he added.
Villalta mentioned that among the topics included in the trade agreement discussion were the protection of intellectual property, exchange of services, recognition of legal frameworks, and access to new markets and digital economies. “This is how we concluded the first round of negotiations and we will be in touch again very soon,” Villalta wrote.
The Chinese government has made important investments in El Salvador in the interests of the Bukele administration: It built a library in the Historic Center of San Salvador, it renovated the pier at the Port of La Libertad, and it has promised to construct a new soccer stadium in the capital. Bukele has said that China is providing El Salvador with $500 million in investments.
The Central Reserve Bank of El Salvador (BCR) has classified all information on the use of Bitcoin for sending remittances as confidential, but when this information was still available, data showed that 98 percent of remittances were still being sent as they had been before the passage of the Bitcoin Law. There is no public data available on the opening of crypto startups or whether this sector has created any jobs. A survey conducted in 2023 by Central American University’s Institute of Public Opinion (IUDOP) showed that 88 percent of El Salvador’s population never used Bitcoin for any financial transactions.
The Macroeconomics and Development Area Coordinator for El Salvador’s National Development Foundation (FUNDE), Rommel Rodríguez, says that a treaty with China would put certain sectors of the Salvadoran economy to the test. “China can compete in all areas of our economy. It can potentially affect local production,” he said, pointing to the risk that some sectors will not be able to compete with Chinese companies, while adding that there are also some export products from El Salvador that could find markets in China. “There’s also the possibility of making inroads into certain niche markets, such as coffee,” he said.
Rodríguez says there are also potential advantages for the financial sector, given that the trade agreement could lower capital costs. “Local banks do not handle the same volumes as Chinese banks, which are very large, and public banks may be making inroads,” he said, referring to the possibility of Chinese banks opening lines of credit for El Salvador. He also highlighted some challenges in the digital economy: “We have an FTA with the United States and they have their standards, and we want to establish an agreement with China: Take the case of TikTok, for example, where there has been a difference in the approach of both countries, and with the security of devices such as cell phones.” In March 2024, the U.S. Senate discussed banning TikTok in the country if the app’s owners do not sell it to a non-Chinese company, due to concerns that the Chinese government could request the personal information of U.S. citizens that the app collects. Controversy has surrounded the two countries in light of U.S. accusations against Chinese phone makers for their weak personal data protection policies.
Despite completing his first term as president, Bukele never made his economic plan public. So far, he has also neglected to provide details during his second five-year term, though he did outline the plan on July 16, promising to create “farmer’s markets” and “tech parks.” But to date the government has not released any document detailing the strategic steps of that plan, nor a timetable to set and track goals. During his first five years as president, Bukele had promised to use international creditors to prioritize the completion of “Plan Cuscatlán” —his national development plan launched before the 2019 presidential election— and other sector-specific plans. Although Bukele received and spent $7.769 billion in credit disbursements during his first five-year term, the President failed to comply with three quarters of the campaign promises included in Plan Cuscatlán. The destination of the funds received through these disbursements remains confidential. The announcement of the negotiations for a free trade agreement is the first official event in which Bukele has outlined some of the priorities of his economic cabinet for his second five-year term.
Chivo Wallet managers
Villalta is an owner and manager of the company Chivo S.A de CV, which, since Aug. 24, 2021, has managed the operations of the government’s cryptocurrency wallet. The name of the company prior to that date was Inversiones El Salvador No. 1. The Bukele government’s crypto wallet, managed by Chivo, was created using an initial capitalization of $60 million in public funds taken from the Development Bank of El Salvador (BANDESAL) — a withdrawal intended exclusively for the purchase of bitcoins.
The implementation of this policy cost at least $203 million in the last quarter of 2021, according to the legislative decree approved on August 31 of that same year, which brought the Bitcoin Law into force. From that moment on, all information regarding purchases from digital service providers, contracts with software development companies, and the purchase of Bitcoin ATMs has been shrouded in secrecy. Some information has been made available thanks to companies that won contracts and then made the information public. For example, in financial statements released in 2023, Athena Holdings El Salvador reported that it had received a $1,500,000 loan (disbursed on September 15, 2021) and that it had used this credit to comply with commitments made to the Ministry of Finance, which had awarded the company a contract. The contract (CD 04/2021) is described as “ATM services for financial operations of the Bitcoin cryptocurrency at the national level.” Athena Holdings El Salvador provided 200 ATMs as collateral for the loan.
Villalta was deputy manager of Citizen Participation, a division of the San Salvador Mayor’s Office, when Bukele served as mayor of the city under the banner of the FMLN (from 2015 to 2018). Villalta is a member of the ruling Nuevas Ideas party and has participated in zoning projects in Santa Ana with members of the Bukele clan.
Óscar Figueroa, who served as Chivo’s second-in-command from its founding until December 2023, when he was removed from the position and replaced by Luis Alejandro Pineda Flores, also appears in some of the photographs of the meetings with Chinese officials.
Figueroa’s father is Jaime Mauricio Figueroa Ibarra, who during El Salvador’s armed conflict was a member of the Fuerzas Armadas de Liberación, the armed wing of the Communist Party. Figueroa’s father is popularly known by his nom de guerre: Comandante Chepón, and is a loyal ally of José Luis Merino, one of the three most powerful men in the FMLN, the party that governed the country for ten years (2009-2019). Comandante Chepón also owns a gas station that got its start as a fuel importer thanks to an $80 million-dollar contract awarded by Inversiones Energéticas (INE).
The government owns a stake in INE through the Hydroelectric Executive Commission of Río Lempa (CEL), the public energy commission that manages hydroelectric dams in El Salvador. Between 2009 and 2010, INE paid Figueroa’s parents’ company (Infitorr) $34 million. Eleven days after INE made its last disbursement to Infitorr, the Salvadoran oil company Alba Petróleos requested the “seizure of the company’s own assets”, according to case file 4-4CM-13-A, from the Second Civil Chamber of the First Section Center Court. Alba Petróleos is a Salvadoran private petroleum conglomerate run by FMLN leaders and funded by FMLN mayor’s offices and the Venezuelan government.
The free trade talks with China are taking place while the government of El Salvador awaits a response from the International Monetary Fund regarding the possible signing of an agreement that would give the country access to $1.3 billion in credit — talks that have been stalled in part due to concerns over a law that establishes Bitcoin as legal tender in El Salvador.
In March 2022, the U.S. Senate Foreign Relations Committee asked the Biden administration to look into the implications of El Salvador’s adoption of the Bitcoin Law, in the framework of the “Accountability for Cryptocurrency in El Salvador Act,” or “ACES Act.” Republican Senator Jim Risch warned that the adoption of Bitcoin had the potential to weaken U.S. sanctions policy and pointed to the empowerment of actors such as China and organized crime organizations as potential risks.
*Translated by Max Granger
