Fitch Ratings downgrades El Salvador, citing risks from adopting Bitcoin (BTC) as its legal currency.
Fitch stated that “increased financing risks arising from increased reliance on short-term debt” before the $800 million global bond payment in January 2023 influenced the decision to downgrade the country’s credit rating from B- to CCC.
Fitch said in a statement:
increased uncertainty about the potential of an IMF program.”
Downgrade on Fith, increased reliance on short-term debt, $800 million of bonds due January 2023, high fiscal deficit, limited scope for additional local market financing, lots of additional It reflects increased financing risks resulting from uncertain access to biased funds and the external market. In Fitch’s view, the weakening of institutions and the concentration of power in the presidency have increased policy unpredictability. Also, the legal adoption of Bitcoin has increased uncertainty about the potential of an IMF financing program for 2022-2023, according to the agency.
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