El Salvador is facing new conditions from the International Monetary Fund (IMF) for a $1.4 billion line of credit. The institution is demanding changes to the country’s Bitcoin law, which established BTC as a legal currency in 2021, in order to unlock this important funding.
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IMF forces El Salvador to renounce Bitcoin for $1.4 billion loan
Since the president Nayib Bukele made bitcoin legal tender in 2021, El Salvador is in conflict with IMF about it. Although the country has managed to repay its $800 million in debts without IMF assistance, the institution remains concerned about the potential risks associated with the adoption of bitcoin.
Despite these concerns, President Nayib Bukele has stepped up pro-bitcoin policies since his re-election in February. In particular, he announced that the country would continue to buy 1 BTC per day, until bitcoin became unaffordable for fiat currencies. This determination is put to the test by the condition of the International Monetary Fund to give the country a loan.
The government of El Salvador is reportedly in talks with IMF to obtain a new credit line of $1.4 billion to accelerate payment of its public debt.
However, a report reveals that the monetary institution has emphasized that obtaining this loan would only be possible with changes in the law of the country accepting bitcoin as legal tender.
The IMF recognizes the benefits of Bitcoin in El Salvador, but demands its disappearance for a loan!
In a press release dated February 10, 2023, the IMF nonetheless acknowledged that bitcoin had not destroyed El Salvador.
However, the IMF Communications Director, Julie Kosack said that the risks associated with bitcoin were a “key element” in discussions with Salvadoran authorities.
These negotiations between El Salvador and IMF are currently at a standstill, as the president Bukele has not agreed to revise the bitcoin law during previous discussions two years ago.
The Salvadorian delegation will this time be led by Ibrajim Bukele the president’s brother, at the new negotiations scheduled for April 15, in his umpteenth attempt to bring the talks to a successful conclusion.
El Salvador once again faces IMF demands regarding its bitcoin policy. Although the country has managed to repay its debts without external aid, the institution is refusing to grant a $1.4 billion loan until the Bitcoin law is amended. The outcome of these negotiations remains to be seen.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
