By Brendan O’Boyle
(Reuters) – Risks of El Salvador embracing bitcoin ‘not yet a reality,’ but use of cryptocurrencies still needs transparency, attention, IMF The organization (International Monetary Fund) said in a statement on Friday after a visit to the Central American country.
“Given the legal risks, fiscal fragility and speculative nature of the crypto market, authorities should reconsider their plans to increase the government’s exposure to Bitcoin,” the IMF said in a statement .
The IMF staff’s annual visit comes after El Salvador paid 470 million in bonds last month as investors financed its sources and fiscal policy concerns.
The IMF’s so-called “Article IV” visits have drawn sharp criticism in the past. El Salvador’s move to make bitcoin a legal tender in September 2021 effectively closed the door on IMF funding.
While the lender points to risks “due to the limited use of bitcoin so far,” it says the cryptocurrency’s “use is likely to increase as its legal tender status and new legislative reforms encourage Use of encrypted assets, including tokenized bonds.”
El Salvador’s Congress last month passed a law regulating the issuance of digital assets by the state and private entities.
President Nayib Bukele announced on Twitter a series of purchases of 2,106 Bitcoin before mid-November when he said that the Treasury would Buy one bitcoin.
If these purchases were made, the government would hold nearly 2, 470 coins for approximately $106.4 million. The current value of the investment is $50.$2 million, with a paper loss of more than %.
These figures are Reuters estimates because the government does not officially disclose where the coins are bought, held or stored.
“Governments more transparent in bitcoin transactions The financial health of state-owned bitcoin wallet (Chivo) remains critical,” IMF says. “Inspired by effective government response to health crisis promotion.
Real GDP is expected to grow 2.4% at , above the historical average, the IMF said.
However, the lender also expressed concern over rising current account deficits and possible spillover effects from a U.S. recession.
