Mainstream analysts criticize El Salvador’s intent and budget for Bitcoin bonds

Mainstream analysts have criticized El Salvador‘s budget for 2022 and its Bitcoin bond (BTC) ambitions.

Mainstream analysts criticize El Salvador’s intent and budget for Bitcoin bonds

A media company has indicated that international rating agencies are now lining up to target the country’s president, Nayib Bukele, and his Bitcoin plans.

According to El Diario de Hoy’s website ElSalvador.com, London-based financial services company EMFI Group has reiterated earlier warnings from the likes of Moody’s that the country is expecting 1.75 billion September to reach an agreement with the International Monetary Fund (IMF).

The group claims a strong economic recovery may be in sight, but El Salvador’s budget deficit and debt level will remain high.

A similar sentiment was on the recent agenda of the US brokerage firm Amherst Pierpont, owned by Santander, which the media reported suggesting “contradictions in economic policy” by Bukele and its decision on Bitcoin bonds.

The broker was quoted as saying:

“The official announcement of a BTC-related USD bond issue informally confirms the split from the IMF, along with an uncertain alternative financing / growth model.”

Amherst Pierpont added that the initial market reaction “skepticism about increased borrowing, lack of conditions for a coherent economic framework and potential skepticism about Bitcoin being a solution.” Was a positive growth substitute.

Rommel Rodríguez, researcher in the Development and Macroeconomics Department of the National Development Fund of El Salvador (finds), agrees. Rodríguez is quoted as saying he agrees that the 2022 budget, as outlined by government CFO Alejandro Zelaya, looks somewhat “optimistic”.

Rodríguez questioned whether “expected revenues” could “match the expected growth rate” – although he conceded that “forecasts” had been made “with a lower growth rate”.

Bukele seems to be hoping that an alternative economy will organically emerge in the BTC-bond-powered settlement “Bitcoin City” built at the foot of one of the country’s volcanoes. He has promised expedited residency permits to potential resident entrepreneurs, as well as virtually no taxes – only a single VAT is charged on the sale.

El Salvador’s initial difficulties in implementing the Bitcoin plan

But there could be more trouble for the BTC-interested Bukele. The same media also report that the sale of state-owned Chivo wallets currently “does not even account for 1% of transactions carried out by small and medium-sized businesses”.

She quoted the Association of Merchants and Industrialists of El Salvador’s advisor Ramón Rivera as saying that companies “continue to conduct transactions in dollars despite the government’s insistence that they use the Chivo mobile application that bitcoin is legally used for can be soft. “

The president of the same group, Luis Chevez, is quoted as saying:

“In our area [việc chấp nhận bitcoin] did not materialize. People don’t have all the options to use Bitcoin just yet. Everyone works with the US dollar and we don’t [thấy] the impact Bitcoin can have on the economy ”.

Last month, the IMF warned El Salvador of the need to address the risks associated with the use of bitcoin as legal tender as well as a “new payments ecosystem” and bitcoin transactions.

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