El Salvador Politicians Criticize Bukele for Buying Bitcoin, Warn of Closer Monitoring from IMF
The largest opposition party in El Salvador, ARENA, has criticized President Nayib Bukele for failing to comply with the terms of his deal with the International Monetary Fund (IMF). Under the deal, in exchange for a $1.4 billion loan, Bukele pledged to stop using public money to buy more Bitcoin, but he has insisted that he will not stop buying the digital asset.
ARENA warned that continuing to buy Bitcoin could jeopardize the IMF deal and put the country's economic stability at risk. However, given recent poor election results, the opposition party does not currently have enough influence to change Bukele's policies.
El Salvador Heads to Confrontation with IMF
Since El Salvador adopted Bitcoin as a legal means of payment, the country has become one of the world's largest Bitcoin holders. This has opened up new economic opportunities and spurred the growth of crypto-related industries. However, ARENA remains concerned about the use of Bitcoin in the context of IMF loans.
"El Salvador's economy is currently in a very fragile state, which requires a responsible and clear fiscal policy," ARENA said in a statement. They believe that continuing to buy Bitcoin despite the IMF's objections could have serious consequences for the country.
The IMF has been strongly opposed to El Salvador's use of Bitcoin
For years, the IMF has been strongly opposed to El Salvador's move to Bitcoin. President Bukele sees the country's growing Bitcoin reserves as a guarantee of economic independence. Before Bukele took office, the US dollar was the only currency used in the country. However, in October last year, the IMF gradually loosened its stance.
Specifically, the IMF announced that El Salvador could receive large loans if it cut its support for Bitcoin. Under the agreement, the country would not have to sell its Bitcoin reserves, but would not be allowed to buy more with the state budget, and Bitcoin would no longer be a legal means of payment. El Salvador accepted the agreement in December last year and amended its Bitcoin Law in January this year.
Bukele continues to defy the IMF
Despite receiving a $1.4 billion loan from the IMF, El Salvador has continued to buy more Bitcoin. President Bukele has publicly stated that he will not stop doing so, regardless of the conditions of the agreement with the IMF. This means that he is openly challenging the international financial institution.
Since then, El Salvador has continued to buy Bitcoin on a daily basis, and crypto advocates are unclear about whether there is a “loophole” in the deal between the two parties. However, Bukele has made his stance on the matter clear.
ARENA Concerned About Economic Consequences
ARENA has expressed concern about this, calling on Bukele to respect the agreement with the IMF to ensure the country’s economic stability. They say that if there is any secret clause allowing Bukele to buy more Bitcoin for a limited time, the party is completely unaware of it.
However, while ARENA has strongly opposed the plan, the opposition party does not have the political strength to stop it. In the recent election, ARENA won just 5.5% of the vote and only two seats in the 60-seat Legislative Assembly.
Meanwhile, Bukele’s party controls 54 seats on the Council, not counting its coalition partners. This makes any policy changes unlikely.
Still, the issue is worrying. If El Salvador continues to openly buy Bitcoin, the IMF could retaliate, potentially leading to unprecedented conflicts between the two sides. The future of the relationship remains unclear and difficult to predict.