El Salvador forced to choose between Bitcoin and an IMF loan

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Last Updated on 12 December 2024 by CryptoTips.eu

The International Monetary Fund, which acts as an international lender of last resort that ensures countries do not go bankrupt, will offer El Salvador a choice: they can get a loan of $ 1.3 billion to get their accounts in order but the local government will have to change the legislation which says Bitcoin is legal tender. Considering the big gains El Salvador made on their Bitcoin investment (which started in 2021), that’s not an easy choice.

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300 million dollars

Nayib Bukele, the president of the Central American country El Salvador, seemed likely to become the biggest loser of all world leaders back in 2022. He had ensured that Bitcoin was accepted as legal tender in his country and bought Bitcoins with the money from the treasury. On average, Bukele’s government paid $30,000 per Bitcoin. When FTX went bankrupt in November 2022 and the price of Bitcoin fell to $16,000, things looked very bad for El Salvador. The country’s treasury was empty and their Bitcoin investment was at a loss.

By the end of 2024, the poor country is looking at a profit of around 300 million dollars for that same Bitcoin investment. Just like the tiny Asian nation of Bhutan, El Salvador is now one of the top 5 largest Bitcoin governments.

But because El Salvador needs more than just Bitcoins, it recently approached the IMF to discuss a loan of more than a billion dollars. However, the international rescue bank from Washington DC, which is financed by the rich countries of the West (who prefer that other, usually poorer, countries do not go bankrupt so that they can continue to pay off their debt), demanded that El Salvador amend their constitution to get the loan approved. That constitution states that Bitcoin is a legal means of payment in the country, and that goes against the importance of the dollar, something that does not bode well for the IMF.

Bukele will probably give in and opt for the IMF money. Investors therefore expect that El Salvador will cash in on part of their Bitcoin profits next year.

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
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