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Homepage > News > Business > El Salvador softens BTC stance as economic reality bites When BTC briefly passed $100k per coin recently, El Salvador’s President Nayib Bukele stood triumphant. As the nation’s BTC stash surpassed $600 million, the strongman chastised his political opponents, accusing them of causing many Salvadorans to miss out on an opportunity by opposing his plans in 2021. Yet, away from the spotlight and public bravado, Bukele’s government has agreed to walk back its hardline pro-BTC stance to secure a $1.3 billion loan from the International Monetary Fund (IMF). Among other things, it will make accepting BTC voluntary and will embrace fiscal reforms. What is the IMF asking El Salvador to do? The IMF has never been comfortable with El Salvador’s BTC gambit, urging it to discontinue BTC’s legal tender status in 2021, citing “large risks” to its economic stability. At the time, Bukele was defiant, much to the delight of BTC maximalists who framed the issue as the old system fighting against the inevitable new. However, only three years later, Bukele backed down, realizing that U.S. dollars were required to pay the bills. In addition to walking back its mandate that merchants must accept BTC as legal tender, Bukele’s government has agreed to reduce its deficit by 3.5% of GDP by increasing taxes and cutting spending. It has also agreed to various anti-corruption measures to enhance transparency and foster good governance. In other words, despite sitting on $300 million in paper gains on its BTC reserves, El Salvador’s current finances are unsustainable, and it needs a sizable loan to stabilize the situation. Unlike BTC’s loudest promoters, world economists and El Salvador’s creditors don’t share the unbridled enthusiasm for so-called digital gold and want to see an adjustment. Economists are not impressed Among the reforms the…

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Filed under: News - @ December 18, 2024 2:28 pm