Nouriel Roubini, a Nobel laureate, has increased his criticism on El Salvador President Nayib Bukele, arguing that the latter deserved to be impeached for “bankrupting” the country with his Bitcoin gamble.
Moody’s cut El Salvador’s sovereign credit rating earlier this month, citing fears that the country’s bold Bitcoin gamble may prevent it from obtaining a much-needed $1.3 billion loan from the International Monetary Fund (IMF).
According to Moody’s analyst Jaime Reusche, El Salvador’s fiscal profile would deteriorate further if the government increased its exposure to Bitcoin: If it rises significantly, it poses a much bigger danger to the issuer’s repayment capabilities and fiscal profile.
El Salvador currently has $800 million in dollar-denominated debt maturing in January 2023. As a result of financial issues and the uncertainty around Bitcoin, the yield on those bonds jumped to 34% early this month. They had the poorest performance in the whole globe in 2021.
El Salvador, which has some of the world’s most troubled sovereign debt, is now planning to issue Bitcoin-denominated “volcano bonds” in collaboration with blockchain firm Blockstream and iFinex, the parent company of Tether and Bitfinex. A portion of the monies generated will be utilised to build “Bitcoin City,” a libertarian utopia.
According to a report, Bukele experienced blowback after Saturday’s huge Bitcoin sell-off. The “coolest dictator” is alleged to have lost more than $20 million by acquiring Bitcoin using the country’s treasury cash. Despite the backlash, the “CEO of El Salvador” resumed his Bitcoin purchasing binge.
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