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Bitcoin Is Part of Plan to Get IMF-Approved $1.3 Billion for El Salvador: Bloomberg

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Tue, 10/19/2021 - 12:13
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Yuri Molchan
Here's how Bitcoin may help El Salvador to receive a $1.3 billion loan from the IMF
Bitcoin Is Part of Plan to Get IMF-Approved $1.3 Billion for El Salvador: Bloomberg
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According to a Bloomberg article, the International Monetary Fund has approved a $1.3 billion loan for El Salvador. Bitcoin adoption was one of the things that persuaded the IMF to provide a loan to this Central American country.

IMF considers lending El Salvador $1.3 billion

The president of the country's central bank, Douglas Rodriguez, stated in an interview that the government had stressed to the IMF that Bitcoin adoption is likely to be more beneficial for the country than they had initially planned for.

The reason for this is that Rodriguez reckons that Bitcoin's volatile price—on the rise at the moment—can help the country's economy to rise this year higher than forecasts expect it to, more than 9%.

He added that the only risks he sees for the economy are upside risks. This was one of the arguments El Salvador gave to the IMF when discussing a $1.3 billion loan for the country.

In November, the IMF will come up with a recent review of the country's economics and finances and will return to a discussion regarding the loan.

In June, the IMF warned that Bitcoin adoption may cause financial and regulatory issues for El Salvador. Moody's Investor Service warned that using BTC as a legal tender may preclude getting loans from the IMF.

Starbucks and McDonald's start accepting Bitcoin

By adopting Bitcoin as a legal means of payment, the government of El Salvador intended to help the three-quarters of the country's population that is unbanked to gain access to banking services and include them in the financial system.

Salvadorans are now using a government-built Chivo wallet that comes with $30 in Bitcoin for everyone. Businesses such as McDonald's, Starbucks and local stores have begun selling their goods and services for BTC.

The government also plans to use Bitcoin as a platform for remittances to give up leveraging such giants as Western Union and MoneyGram. These payment giants have been withdrawing $400 million from El Salvador's economy in remittance fees every year. That is 1.5% of El Salvador's GDP.

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DOGE Has Allowed Lots of People to Get into Bitcoin: David Gokhshtein

Bitcoin spikes above $62,000

On Oct. 15, the flagship cryptocurrency soared above the $62,000 level for the first time since April, when the all-time high of $63,850 was reached.

The rally took place on the expectations of the SEC approving a Bitcoin futures ETF at the end of October. Indeed, today a ProShares Bitcoin ETF will start trading on the New York Stock Exchange under the BITO ticker.

Thus, the price remains at $62,075. Many are expecting the world's leading crypto to surpass the April all-time high soon and step well above the $64,000 level.

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About the author

Yuri is a crypto journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future in many of its aspects. ‘Hodls’ major cryptocurrencies and has written for multiple crypto media outlets. 

His articles have been quoted by such crypto influencers as Tyler Winklevoss, John McAfee, CZ Binance, Max Keiser, etc.

Currently Yuri is a news writer at U.Today and can be contacted at yuri.molchan@u.today.