El Salvador’s opposition party, ARENA, is expressing serious concerns about President Nayib Bukele‘s ongoing Bitcoin purchases. They warn that these actions could threaten a $1.4 billion loan agreement with the International Monetary Fund (IMF). Despite the opposition’s warnings, Bukele shows no signs of stopping the country’s Bitcoin acquisitions.
Since Bitcoin became legal tender in El Salvador, the government has increased its Bitcoin holdings significantly. Bukele claims this strategy will enhance financial independence. However, critics, including the IMF, have raised alarms about the economic risks associated with this approach.
ARENA’s recent statements emphasize the potential dangers of ignoring the IMF’s guidelines. The loan agreement with the IMF required El Salvador to cease using public funds for Bitcoin purchases, although it could keep its existing holdings. Nevertheless, the government has continued to buy Bitcoin daily, seemingly disregarding the agreement.
The IMF has a history of opposing Bitcoin in El Salvador. Initially, it criticized the country’s decision to adopt Bitcoin as legal tender. However, last year, the IMF softened its stance and offered financial assistance, provided the government reduced its Bitcoin activities. The main condition was to stop investing state funds into Bitcoin while keeping current holdings.
Bukele has publicly declared he will not stop Bitcoin purchases, and his administration has continued to acquire more BTC since the IMF deal. Analysts have struggled to find a way for the government to justify these purchases under the agreement, raising questions about Bukele’s compliance with the IMF.
ARENA leaders argue that ignoring the IMF could lead to severe economic repercussions. They stress that following the agreement is vital for El Salvador’s financial stability and international support. However, ARENA lacks the political power to challenge Bukele, as his party holds a significant majority in the Legislative Assembly.
This situation leaves uncertainty about the IMF’s potential response if El Salvador continues its Bitcoin purchases. If violations occur, the IMF might withhold future assistance, risking broader economic instability. El Salvador is navigating a complex financial landscape, with its commitment to Bitcoin creating unpredictability.
