International Monetary Fund funding plan for El Salvador still under discussion
The recent adoption of Bitcoin by the Latin American country El Salvador as legal tender has not been good news for global financial authorities like the IMF. With the Latin American nation struggling to weather the economic downturn caused by the COVID-19 pandemic, a $ 1 billion International Monetary Fund funding plan for El Salvador remains inconclusive.
The plan to finance $ 1 billion from the International Monetary Fund for El Salvador is still under discussion
IMF and El Salvador officials have consulted for the past few weeks since the Latin American country passed the controversial law. Earlier this month, IMF spokesman Gerry Rice said:
“The acceptance of Bitcoin as legal tender raises a number of macroeconomic, financial and regulatory issues that require very careful analysis. We are closely monitoring developments and will continue to consult with the authorities. “
On Wednesday June 30, US Undersecretary for Political Affairs Victoria Nuland held talks with the President of El Salvador, Nayib Bukele, as part of her regional tour. According to Reuters, the diplomat hopes the IMF and El Salvador will solve the problem related to bitcoin goods.
With the IMF raising concerns about the introduction of Bitcoin in El Salvador, the $ 1 billion financing deal is still being debated and debated.
Bitcoin Deployment Challenges in El Salvador
The historic passage of the Bitcoin law by El Salvador has set new priorities in the global financial world. The prosecution will take place nationwide until September 7th.
With this law, Bitcoin becomes legal tender, which means that merchants who sell their goods and services must accept payments in Bitcoin. Bitcoin is on par with the country’s other legal currency, the US dollar.
However, President Bukele does not receive absolute support and there is still much discussion among financial institutions and experts. The World Bank has denied El Salvador any help with the legal implementation of Bitcoin as a currency in the country. However, the Central American Bank for Economic Integration (CABEI) came to the rescue of El Salvador and was ready to help the country.
Even the media do not support the president with the legal offer for Bitcoin. Oppenheimer, a journalist, said Bukele’s move “would potentially attract drug dealers, not digital investors.”
On the same page, a professor of electrical engineering at the University of El Salvador by the name of Carlos Martínez by the name of Carlos Martínez claimed that the country was “incapable” of a mining project of the size Bukele had mentioned and that the move “will raise electricity prices for Salvadorans” .
Martínez also said the utility charged with the project has been underfunded for five years, which, according to the professor, means such an operation – which is geared towards harnessing geothermal energy from a volcano – would not be completed.
Also, amid ongoing friction with the IMF, Bitcoin evangelist Max Keizer has proposed that El Salvador release Bitcoin ‘volcano bonds’ to cancel IMF loans. The bonds will be tied to El Salvador’s excess geothermal energy production.
President Bukele is interested in building bitcoin mining facilities with clean energy in El Salvador.
Meanwhile, others argue that Bukele’s BTC geothermal mining plan is impractical. Renowned Salvadoran geophysicist José Antonio Rodríguez wrote that he considers the idea of ”using geothermal energy to attract investment from Bitcoin miners” to be “too far-fetched”. He added that politicians in general “do not understand geothermal energy, nor do they take the time to understand it,” but rather dictate engineers to make their wishes come true.
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