El Salvador’s Fitch ratings go down after Bitcoin’s legalization

El Salvador’s Final Ratings fall to CCC category US-based credit rating agency Fitch Ratings. The legality of Bitcoin in the Central American country is one of the reasons why the economy has fallen on the Fitch scale this year. In September last year, El Salvador betrothed an acceptable bid alongside the US dollar. El Salvador President Naib Bukelle is a crypto supporter who plans to accelerate efforts to drive crypto adoption in the country.

El Salvador’s Long-Term Currency Default Rating (IDR) has been downgraded to B-grade, according to Fitch Ratings. The US Credit Agency is one of the top three alongside Moody & Standard and the S&P.

“Acceptance of Bitcoin as a legitimate bidder has raised doubts about the possibility of an IMF program to finance 2022-2023,” Fitch Rating said in a statement.

In November last year, the International Monetary Fund (IMF) expressed concern about El Salvador’s economic stability.

“Given the high volatility of Bitcoin, its use as a legal tender poses significant risks to consumer protection, financial integrity and financial stability. Its use results in fiscal consolidation. Bitcoin should not be used as a legal tender because of these risks, ”the IMF said at the time.

IMF opinion does not agree with El Salvador officials El Salvador’s Treasury Minister Alejandro Zelaya earlier this month angrily rejected the IMF’s proposal to allow Bitcoin to be auctioned off.

El Salvador, a 90-member member of the International Monetary Fund, has recommended that the $ 150 million (approximately $ 1,120 rail) trust fund be returned to the treasury through the use of legitimate Bitcoin.

The trust fund was designed to encourage people to accept the ever-changing digital currency, Bitcoin, automatically converting it into US dollars.

“El Salvador will face increasing risks in 2022-2023 with increasing and growing financial needs. Fitch by 2022 (approximately 36,575 Rs. 36,575 crore) total financial needs (16 out of GDP), to $ 5.4 billion (approximately Rs 40,720 crore) by 2023 (estimated 40,720 Rs. 40,720 crore).

The country can now hold more than 1,500 bitcoin in reserve, more than $ 65 million (approximately 490 rubles). The current Bitcoin exchange rate on CoinMarketCap is $ 43,415 (approximately Rs. 33 lakh).

From the establishment of Bitcoin Bitcoin ATM to the creation of a government-sponsored Bitcoin wallet called Chivo for the Salvadorans, Bukele has been pushing for increased crypto acceptance and use in the country.

Crypto Currency is an uncontrolled digital currency, not a legal tender, but a market risk. The information contained in this article is not intended to be construed as financial advice, business advice or any other advice or suggestion made or approved by NDTV. NDTV will not be liable for any losses incurred by any investment based on any intended decision, forecast or other information contained in this article.

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