Fitch Ratings, which makes financial ratings for countries, made a decision last year about El Salvador, which started to use Bitcoin as its official currency. In the statements made by Fitch Ratings, it was stated that it was decided to downgrade El Salvador’s credit rating to CCC. This level is described as “garbage” in the industry. The general meaning of CCC is “Investment advantage is weak at the moment. It varies according to economic conditions.” means.
Fitch Ratings explained that there is still a big risk for El Salvador to start using Bitcoin as its official currency. Fitch Ratings officials also cited the country’s increase in short-term debt dependency as the reason, and reminded that El Salvador will make a global bond payment of $800 million in January 2023.
Nayib Bukele criticism
El Salvador report prepared by Fitch Ratings included evaluations about President Nayib Bukele. “The concentration of power in the presidency and the weakening of institutions increase the unpredictability in the country’s policies,” the statement said. The announcement of Bitcoin as legal currency also creates uncertainty regarding the launch of the IMF’s financial program in the 2022-2023 period.” expressions were used. However, let us remind you that Bukele sees himself as the CEO of the country.
To be frank, El Salvador is trying to do the untested and go against the traditional financial order. As soon as the end of this is known, we can easily say that the negative attitudes of rating agencies such as Fitch Ratings towards El Salvador are not something strange.
This content cannot be considered as investment advice.
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