IMF Calls For Addressing of Risks Post Assessment of El Salvador

• The IMF warns that “risks should be addressed” as it relates to bitcoin adoption.
• The government has been consistently investing in bitcoin and adding to its national wealth.

The International Monetary Fund (IMF) issued a final report on the economy of El Salvador on February 10, 2023. From January 30th to February 8th, the IMF conducted an Article IV consultation with the government of El Salvador. The IMF warns that “risks should be addressed” as it relates to bitcoin adoption in El Salvador. The IMF now believes that the threats it foresaw in 2021 have been mostly averted.

Growth has been slow since September 2021, when El Salvador recognized bitcoin as legal money. The government has been consistently investing in bitcoin and adding to its national wealth. The Chivo wallet is controlled by the government. Although the IMF has called for more openness around the government’s bitcoin acquisitions.

Economy Increased Strongly in 2022

Moreover, with regard to assessing intrinsic fiscal contingencies and counterparties’ concerns. The agency stressed the need of having more information on the government’s bitcoin transactions. And the financial health of the state-owned bitcoin wallet, Chivo.

The IMF reports that the Salvadoran economy increased strongly in 2022, despite the risks associated with bitcoin, the delayed rate of its adoption, and unfavorable economic shocks. According to the International Monetary Fund, economic growth hit 2.8% in 2022. The IMF claims that the Salvadoran Treasury still does not have access to foreign financial markets in 2022, despite rising economic risks.

Furthermore, over the weekend, Bitcoin climbed closer to $22,000 as traders and experts warned against too pessimistic emotions in the crypto market. According to on-chain analytics platform Material Indicators, opportunistic whales pounced on Bitcoin after its price reached a three-week low the previous week.