Bitcoin Breaking new ground by accepting it as a legal currency, El Salvador continues to struggle with the difficulties created by this decision.
In the past few weeks, the IMF bitcoin he wants to reverse his decision El Salvador now he is facing the sanction of Fitch.
El Salvador’s Credit Rating Downgraded to “Trash”!
American credit rating agency Fitch In its report, the long-term foreign currency issuer downgraded its Default Rating from B- to CCC.
In the financial sector, this level means “investment advantage is currently weak” and is considered “garbage”.
He stated that policy unpredictability, the adoption of Bitcoin as a legal currency and the country’s high fiscal deficit were effective in the downgrade of Fitch credit rating.
Pointing out that El Salvador’s short-term debt is gradually increasing, Fitch said that these debts reduce the country’s general solvency.
Fitch also pointed out that El Salvador is faced with a foreign debt of approximately 1.2 billion dollars in 2023, and 800 million dollars of this debt must be paid in January. .
Criticism of Nayip Bukele from Fitch!
Noting that El Salvador’s use of Bitcoin as the official currency is still a great risk, Fitch also criticized the country’s president, Nayip Bukele.
“The weakening of institutions and the concentration of power in the country in the head of state made the forward forecasts unpredictable.
Also, the adoption of Bitcoin as legal tender has increased uncertainty about the potential for an IMF program to unlock financing for 2022-2023.”
Another rating agency, Moody’s, downgraded El Salvador’s rating last year.
El Salvador’s Minister of Finance, Alejandro Zelaya, who received constant reactions from international organizations with the Bitcoin decision, said in a statement recently that the probability of the country not being able to pay its debt is 0 percent.
*Not investment advice.