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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El Salvador
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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El Salvador returned to global debt markets with an offering that will pay investors a higher interest rate if the government fails to win credit upgrades or a deal with the International Monetary Fund, Bloomberg News reported. The Central American nation priced $1 billion in debt due in 2030 at 89.923 cents on the dollar to yield 12%, according to people familiar with the matter. The coupon is 9.25%, they said, and the note amortizes starting in 2028. The deal includes an additional interest-only security tied to nation’s credit score or an IMF deal.
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James and Nicki Malcolm moved to El Salvador from New Zealand to be part of a bitcoin dream sold by President Nayib Bukele in 2021 when he made the Central American nation the first in the world to accept the cryptocurrency as legal tender, Reuters reported. Months later Bukele sketched his plans for Bitcoin City, a tax-free crypto haven powered by geothermal energy from a volcano, to a sea of enthusiasts at a beach club presentation that included an avatar of himself on a spaceship.
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El Salvador’s credit rating was upgraded by S&P Global Ratings, which cited the government’s effort to rework its short-term, local debt obligations, Bloomberg reported. S&P raised the Central American nation’s debt rating to B- from CCC+ on Tuesday, putting it six levels into junk and on par with Ecuador and Nigeria. The outlook is stable. “The government’s recent program to gradually refinance its short-term debt with local banks will reduce rollover needs and mitigate the risk of a default over the next two years,” analysts led by Patricio Vimberg wrote.