The International Monetary Fund (IMF) said in a recent statement that risks over El Salvador’s adoption of Bitcoin “have not materialized,” but that the use of the cryptocurrency still requires transparency and attention.
According to the IMF, due to legal risks, fiscal vulnerabilities and the largely speculative nature of the cryptocurrency market, authorities should reconsider their plans to expand government exposure to Bitcoin.
The annual visit of the IMF team took place following the payment of $600 million bail by El Salvador last monthcausing investors to worry about the country’s funding sources and fiscal policies.
In addition, El Salvador’s decision to make Bitcoin legal tender in September 2021 closed the door to IMF funding.
Full recovery of the economy
The IMF emphasized the “full recovery” of El Salvador’s economy to pre-pandemic levels, “Driven by the government’s effective response to the health crisis”, which also states that the country’s gross domestic product (GDP) should grow by 2.4% in 2023, above the historical average.
As the economy boomed, El Salvador’s president Nayib Bukele went on a lengthy diatribe against those who doubted the Central American country’s adoption of bitcoin.
“Last year almost all mainstream international media said that because of our “Bitcoin bet” El Salvador would default in January 2023 (since we had an $800 million bond maturing today). Literally hundreds of articles.”
Bukele made it clear that the adoption of bitcoin did no harm to the country. That is, despite the criticism, the government continued to work and paid what it owed with interest.
Before the president of El Salvador, many lied about the reality of their country, and now they do not announce that everything is fine.
“Well, we just paid the full amount, $800 million plus interest. But, of course, hardly anyone reports the story. I just found one, yes ONE, in Spanish, from Colombia. They lie and lie and lie, and when their lies are exposed, they remain silent.”
El Salvador and Bitcoin
El Salvador declared bitcoin legal tender in September 2021 and has been actively purchasing the digital currency ever since. El Salvador’s Congress recently passed a law to regulate the issuance of digital assets by both the state and private entities.
President Nayib Bukele also announced purchases of about 2,380 bitcoins by the Treasury, although the current value of that investment has since fallen by more than 50%.
The IMF stressed that “greater transparency about government Bitcoin transactions and the financial situation of the state Bitcoin wallet (Chivo) remains essential.
In addition, the IMF expressed its concern about the possible side effects of a recession in the United States. In short, while El Salvador’s adoption of Bitcoin has been successful so far, the IMF has not admitted it is wrong and has called for more transparency and consideration in using the cryptocurrency.
While the risks have not materialized due to Bitcoin’s limited use to date – as suggested by research and remittance data – its use could grow due to its legal status and new law reforms to encourage the use of crypto assets, including tokenized securities.(Digital) Wealth law)”, said the IMF.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
