El Salvador's Bukele starts second term amid economic test

El Salvador's President Nayib Bukele is set to be inaugurated for a second term on Saturday, as his sky-high approval rating for a fierce crackdown on crime faces fresh challenges to rejuvenate a stagnant economy and tackle poverty in the Central American country.

The 42-year-old former nightclub manager, reelected in a landslide victory with more than 80% of the vote in February, will be sworn in for another five years following a court decision that paved the way for his re-election even though the country's constitution prohibits it.

Saturday's swearing in ceremony in the capital San Salvador takes place amid security concerns after police said they had thwarted a bomb threat.

Seven people were arrested for plotting to detonate explosives at locations across the country, police said on Thursday adding that the suspects were part of the so-called Salvadoran Insurrection Brigade.

Among the expected attendees at the ceremony are Argentina's libertarian President Javier Milei and Donald Trump Jr, the son of the former U.S. president, Donald Trump, who arrived in El Salvador on Friday. His father earlier this week became the first former U.S. president to be convicted of a felony.

Bukele won re-election in February after garnering massive popularity in his first term for transforming security in the country of 6.3 million people that was once one of the world's most dangerous.

Authorities under his watch have suspended civil liberties to arrest more than 80,000 Salvadorans without charge which has drawn criticism from human rights groups but won him a devoted following domestically and across the region for bringing safety to the streets.

With safer neighborhoods, public concern has now turned to the economy which will likely be Bukele's biggest challenge in his second term. More than a quarter of Salvadorans live in poverty and unemployment is on the rise.

The president's highly publicized plans for Bitcoin City, a tax-free crypto haven powered by geothermal energy from a volcano, have failed to gain momentum and private investment has tumbled. El Salvador's public debt meanwhile has skyrocketed on Bukele's watch to more than $30 billion, or 84% of GDP.

Economists said that the government faced a difficult balancing act to reduce national debt without cutting much needed social benefits to the country's poorest. "They could end up generating a critical situation for women and households in rural areas," economist Julia Evelyn Martínez based in San Salvador said.