The International Monetary Fund (IMF) issued a statement after visiting the Central American country on Friday (10th), saying that the risk of El Salvador’s move to list Bitcoin as a legal tender “has not materialized”, attributing the government’s good response, but also emphasizing encryption The usage status of the currency still requires transparency and attention.
“Given the legal risks, fiscal fragility, and speculative nature of the crypto market, authorities should reconsider their plans to expand exposure to bitcoin,” the IMF statement said.
El Salvador is heading for an annual IMF staff visit after paying a $600 million bond amount last month as investors fret over its funding sources and fiscal policy.
El Salvador’s move to make bitcoin legal tender in September 2021 effectively shuts the door to IMF lending. Although the IMF said that due to the limited use of Bitcoin in Saxony, the risk has not yet emerged, but because Bitcoin has legal tender status in Saxony, and new legislative reforms encourage the use of encrypted assets, such as encrypted bonds, the use of Bitcoin The degree may increase,
The parliament of the country last month passed a regulation for the issuance of digital assets by the state and private entities.
Nayib Bukele, President of Saxony, announced on Twitter that he planned to purchase 2,380 bitcoins before mid-November. At that time, he said that the Ministry of Finance would buy one bitcoin a day. Indeed, the Sarawakian government will hold nearly 2,470 bitcoins so far. Bitcoin, worth about $106.4 million.
According to Reuters estimates, the current value of the investment is 52.2 million US dollars, with a book loss of more than 50%. (It is only estimated by the media, and the country has not officially announced the purchase, holding or storage of Bitcoin information)
The IMF emphasized that improving the transparency of government Bitcoin transactions and the financial status of the state-owned Bitcoin wallet (Chivo) remains the most fundamental priority.
The IMF praised the country’s economic recovery to the level before the new crown epidemic, “thanks to the government’s effective response to the health crisis.” The IMF estimates that the country’s real GDP will grow by 2.4% in 2023, which is higher than the historical average.
However, the IMF remained concerned about its rising current account deficit and possible spillover effects from a U.S. recession.