El Salvador’s dollar bonds rose the most in emerging markets Thursday after lawmakers approved changes to the nation’s Bitcoin law that were needed to secure an International Monetary Fund loan, Bloomberg News reported. Government debt gained across the curve, with notes due in 2054 rising 2.7 cents on the dollar to 107 cents, according to indicative pricing data compiled by Bloomberg. The jump signaled investor optimism that the Central American country is close to cinching the $1.4 billion deal with the IMF.
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El Salvador reached a deal with the International Monetary Fund after four years of negotiations that were strained by the country’s adoption of Bitcoin as a legal tender, Bloomberg News reported. The Central American nation and the Washington-based lender agreed on a $1.4 billion loan program to be disbursed over 40 months, according to a statement by the IMF. In exchange, El Salvador had agreed to adopt measures that will improve its primary balance and help cut its debt-to-GDP ratio.
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El Salvador has a high chance of striking a staff-level agreement with the International Monetary Fund next month for about $1.4 billion, Bloomberg News reported. President Nayib Bukele is seeking to finalize terms for the three-year program after staff from the Washington-based lender visits the country in December. The nation’s dollar bonds edged higher on the news, with notes due in 2041 rising 0.2 cents to 89.8 cents on the dollar, the highest since 2021, according to indicative pricing compiled by Bloomberg.
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Program talks between the International Monetary Fund and El Salvador focus on strengthening reforms, while addressing risks arising from the use of bitcoin remains a key element of the discussions, the IMF said on Thursday, Reuters reported. "What we have recommended is a narrowing of the scope of the bitcoin law, strengthening the regulatory framework and oversight of the bitcoin ecosystem, and limiting public sector exposure to bitcoin," IMF spokesperson Julie Kozack said in a scheduled press conference.
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The Central American country of El Salvador, the first country in the world to declare bitcoin legal tender, now has more than $340 million in bitcoin, according to Arkham Intelligence, TheStreet.com reported. The country has been gradually accumulating new bitcoin at a rate of approximately one bitcoin a day since March, indicating the country may scoop up over 100 bitcoins by the close of 2024. The country’s current bitcoin reserves stand at 5,856 bitcoin, reflecting holdings of $344 million in cryptocurrency based on current bitcoin prices.
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