By: Economic & Finance Report
Nine months into El Salvador’s bitcoin utilization of the asset. The results are not proving to bring the economic advancement to the Central American nation as the country had hoped for. The country’s crypto infrastructure has depleted by 50% and the use of the cryptocurrency has not fully gotten off the ground; the way the country would have liked it to.
El Salvador has debt payments coming up within the next year, of over $1 billion in debt. The country needs finances and needs it quickly. Bitcoin has dropped over 70% from its peak in November 2021. The crypto market continues to fluctuate, making for inconsistent progress and expansion. This has caused stress to many economies such as El Salvador, who has indicated that bitcoin and cryptocurrency was the new monetary policy of reckoning globally. El Salvador insisted they were ahead of the curve on the cryptocurrency’s aspect; and proclaimed to be the global leader in advocating for crypto.
El Salvador deficit is seen to be very high, and fear has amounted that the country will not be able to meet it debt obligations in the future. Some experts believe El Salvador is on the brink of economic and financial collapse, and they do not necessarily blame cryptocurrencies such as bitcoin; for El Salvador’s economic woes. International lenders have stopped negotiating with the Bukele led government because they believe the government is wasting taxpayers’ money on investments in bitcoin and cryptocurrencies. The lenders are nervous and intimated by the wild volatility cryptocurrency brings to the open marketplace; it is the volatile nature the asset brings with it, that makes it highly unstable and speculative.
When President Nayib Bukele made bitcoin a legal and tradeable financial asset class, it caused the country to be more expensive in raising needed cash. The international rating agency Fitch, downgraded El Salvador’s credit score, which also made it harder and more expensive for the nation to borrow from global lenders also. El Salvador’s economic and financial situation seems to be difficult, but the country remains in its footing; that they believe they are in the right direction long term, with the bitcoin crypto investment. -SB
Image Source: BeInCrypto
El Salvador bitcoin experiment not saving country’s finances (cnbc.com)
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