The International Monetary Fund (IMF) is considering lending El Salvador $1.4 billion, but as a condition, they’re asking the Central American country to reevaluate its Bitcoin law.
El Salvador Loan Demands and IMF Demand
The loan negotiations between El Salvador and the IMF have been ongoing for an extended timeframe in order to enable El Salvador to address its immediate fiscal obligations and debt repayments. It’s important to note that during this period, the IMF has consistently urged El Salvador to amend its cryptocurrency legislation. Yet, President Nayib Bukele of El Salvador shows no intention of complying with this demand.
The International Monetary Fund (IMF) issued a cautionary statement regarding Bitcoin and El Salvador’s loan application just a few days ago. IMF spokesperson Julie Kozack addressed the potential hazards of Bitcoin in this context. If El Salvador fails to modify its Bitcoin law as suggested, the IMF will reportedly decline its $1.4 billion loan request.
It’s no shock that the IMF is making this demand, given their past opposition to El Salvador’s adoption of Bitcoin as legal tender. In the course of negotiating a loan, the IMF has taken the opportunity to encourage El Salvador to rethink its Bitcoin policy.
IMF Mounting Pressure on El Salvador Over Bitcoin Adoption
Starting from September 2021, the International Monetary Fund (IMF) has expressed concerns over El Salvador’s acceptance of Bitcoin as legal tender. According to the IMF, this popular cryptocurrency’s volatile character may jeopardize financial stability and economic well-being.
In 2022, the financial organization suggested to El Salvador that they stop using Bitcoin as a legal tender due to potential financial risks. This meant El Salvador needed to change their Bitcoin law. Since then, pressure from the IMF has increased, but El Salvador has remained dedicated to their Bitcoin plan.
Vice President Felix Ulloa of El Salvador strongly reiterated the government’s steadfast dedication towards cryptocurrency, even pointing to the SEC’s recent approval of a Bitcoin ETF in the US as a significant influence. Given the importance of the $1.4 billion loan for El Salvador and its determination to pursue its Bitcoin initiatives, it remains uncertain if the country will yield to the IMF’s demands.
Due to El Salvador’s substantial gains from their Bitcoin holdings during this year’s significant price surge, changing their laws concerning Bitcoin seems less probable at the moment. It remains to be seen if President Nayib Bukele will succumb to the pressure.
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2024-04-12 22:31