Bitcoin is a thorny issue between IMF and El Salvador

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By LatAm Reports Editor

Bitcoin is one of the thorny issues in the negotiations between El Salvador and the International Monetary Fund (IMF), economists say today.

For three years, a negotiation has been planned between the financial entity and the local authorities of an Expanded Service Facility (SAF) programme, but neither the fund nor the Salvadoran government seems willing to give in on the “virtual” currency, said Carlos Acevedo, former president of the Central Reserve Bank (BCR).

After the process was paralyzed for a while, the parties returned to negotiation but now with “thorny aspects,” such as the adoption of bitcoin and governance.

Last week, Julie Kozack, a spokeswoman for the IMF, said that the Fund continues to work constructively with the Salvadoran authorities to achieve a program to strengthen fiscal sustainability, productivity growth and economic governance, as well as the risks arising from bitcoin. A topic considered “key.”

Despite claims by President Nayib Bukele that an agreement would be reached in 2024, this is not seen in the short term. “The bottom line, if you ask him, he’s always going to tell you,” we’re talking to the authorities, whether North Korea or the Devil himself, he’s going to tell you that we’re in dialogue, said Acevedo, also a former representative to the IMF.

Virtual tocken causes rescheduling in international financiers who call for the removal or abolition of the legal tender currency provision, while the Executive interpreted as interference and continued its policy creating even a program to attract bitcoiners investors.

Quoted by the El Mundo Diary, Rommel Rodriguez, coordinator of the Macroeconomic Area of the National Development Foundation (Funde), considered that it is difficult for the IMF or the government to give in for an issue of honor.

It seems to be a point of honor. “If it is, nothing will happen,” the economist added, explaining that for the IMF to accept adoption as a legal tender would give a sign that other nations also adopt that policy at the expense of banking risks and illicit finance, he said.

This article has been translated from the original which first appeared in El Pais