Relations between El Salvador and the IMF are heating up because of Bitcoin

Liputan6.com, Jakarta – Bitcoin has become a new geoeconomic issue in El Salvador, as it is currently part of the debate between the country's government and the International Monetary Fund (IMF).

Reportedly, negotiations between El Salvador and the IMF will stall as the financial body demands a change in the country's attitude towards Bitcoin and cryptocurrencies.

Launch News.bitcoin, Sunday (14/4/2024) talks had stalled two years ago when El Salvador President Nayib Bukele did not agree to review the Bitcoin Law, which stipulates Bitcoin as legal tender in the country in 2021.

Bukele's government aims to secure a credit line of USD 1.4 billion to help speed up debt payments and other obligations.

Nevertheless, the IMF has sent a clear message on this matter. IMF Communications Director Julie Kozack stated that the risks associated with Bitcoin were a “key element” in discussions with El Salvador authorities.

However, even as the agency has expressed concerns about Bitcoin to El Salvador authorities, Bukele has doubled down on his crypto policy since he was re-elected as president in February 2024.

Then in March, Bukele stated that El Salvador would continue buying 1 BTC per day until the price became unaffordable in fiat currency.

Other funding alternatives based on Bitcoin, such as the Volcano bond announced in November 2021, have been postponed several times.

This idea may be repeated, as reports suggest that Bukele is seeking funding by issuing a similar instrument targeting the US banking sector, capitalizing on Bitcoin's price recovery.

Negotiations between El Salvador authorities and the IMF will restart on April 15, with Ibrajim Bukele, President Bukele's brother, as head of the Salvadoran mission.

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