>> ...the government had purchased nearly $25 million worth of bitcoin...
> Dont think the losing of bitcoin value can be blamed in case of default
Volatility makes it difficult to represent the true economic impact of this situation. From scarce and needlessly secret information, their bitcoin holdings were worth over $100M earlier this year[0], a consequential portion of the repayment. More importantly, while they have historically claimed that they would always “buy the dip”, there is no indication of when they sold, and a few indications that they have turned a loss on the investment so far.
Meanwhile, the payments are due at fixed periods, which may force them to sell unfavourably. A year after the 2018 high, it was at a fourth of its high value. What they now consider “dips” may well be seen as highs then.
Plus, their policies have an effect on the rest. In short, they don’t have a strong case on finding financing apart from their crypto bet[1]:
> The downgrade of El Salvador's rating is driven in good part by the lack of a credible financing plan
which they would need, to cover their worsening position[2]:
> The government faces only USD305 million in external debt amortizations in 2022, but faces close to USD1.2 billion in 2023
> El Salvador will likely face a funding gap of about 1% of GDP
> Dont think the losing of bitcoin value can be blamed in case of default
Volatility makes it difficult to represent the true economic impact of this situation. From scarce and needlessly secret information, their bitcoin holdings were worth over $100M earlier this year[0], a consequential portion of the repayment. More importantly, while they have historically claimed that they would always “buy the dip”, there is no indication of when they sold, and a few indications that they have turned a loss on the investment so far.
Meanwhile, the payments are due at fixed periods, which may force them to sell unfavourably. A year after the 2018 high, it was at a fourth of its high value. What they now consider “dips” may well be seen as highs then.
Plus, their policies have an effect on the rest. In short, they don’t have a strong case on finding financing apart from their crypto bet[1]:
> The downgrade of El Salvador's rating is driven in good part by the lack of a credible financing plan
which they would need, to cover their worsening position[2]:
> The government faces only USD305 million in external debt amortizations in 2022, but faces close to USD1.2 billion in 2023
> El Salvador will likely face a funding gap of about 1% of GDP
[0]: https://www.bloomberg.com/news/articles/2022-01-12/bitcoin-t...
[1]: https://www.moodys.com/research/--PR_464838
[2]: https://www.fitchratings.com/research/sovereigns/fitch-downg...