September 30, 2022

Bukele Doesn’t Care About El Salvador’s Downgraded Sovereign Debt

2 min read

Moody’s Investors Service just recently claimed that El Salvador’s Bitcoin trading activity is enhancing the country’s risk of default. Like most other groups to speak out versus the experiment, President Nayib Bukele publicly overlooked their viewpoint.

Moody’s Take On El Salvador

The ratings firm talked about El Salvador’s Bitcoin-related risks in conversation with Bloomberg last Wednesday. Analyst Jaime Reusche declared the nation’s Bitcoin holdings “definitely contribute to the danger portfolio,” particularly for a government that has encountered liquidity concerns prior to.

El Salvador has been increasing its Bitcoin position at every offered opportunity given that making it legal tender in September. Based upon the president’s Twitter updates, the country is estimated to hold 1391 Bitcoin at present, worth about $58 million at the time of writing.

However, based upon Moody’s estimates, the nation is down $10-20 million on that position since buying.

“If it gets much greater, then that represents an even higher threat to repayment capacity and the fiscal profile of the provider,” said Reusche.

The expert said that El Salvador’s absence of a deal with the International Monetary Fund has actually further increased its threat of default. The IMF itself spoke up versus utilizing cryptocurrency as legal tender in July, due to its rate volatility.

Bukele: “El Salvador DGAF”

Moody’s cynical take on El Salvador’s financial obligation is absolutely nothing new. Last July, the firm reduced El Salvador’s sovereign debt to “Caal”, showing “very high credit threat”, due to a “deterioration in the quality of policymaking”.

As constantly, President Bukele cares little about the firm’s examination, remaining completely devoted to Bitcoin. In a current tweet responding to Moody’s declarations, he stated that El Salvador “DGAF”.

Bukele has revealed indifference to other companies’ comparable cautions also. When the Bank of England revealed concern over the nation’s Bitcoin adoption in November, he recommended that their ‘stress’ was disingenuous.

In the replies, Bitcoiners were quick to explain that Moody’s was the very same company that offered inflated claims to dangerous home loan investment prior to the 2008 monetary crisis– which Bitcoin’s advancement was mainly influenced by.