> In a statement, Fitch explained: “The downgrade reflects heightened financing risks stemming from increased reliance on short-term debt, a $800 million Eurobond repayment due in January 2023, a still-high fiscal deficit, limited scope for additional local market financing, uncertain access to additional multilateral funding and external market financing given high borrowing costs.”
Following through to the linked statement:
> In Fitch's view, weakening of institutions and concentration of power in the presidency have increased policy unpredictability, and the adoption of bitcoin as legal tender has added uncertainty about the potential for an IMF program that would unlock financing for 2022-2023.
So it's not just the exchange rate volatility that's at issue, but the possibility that the IMF will make good on its warnings and not backstop the country until its bitcoin venture ends. That, and the other political stuff, combine to make the country look more risky to creditors.
Later in the Fitch article:
> The recently published IMF Article IV recommends a fiscal adjustment of 4pp of GDP to put the debt burden on a steady downward path, strengthening the medium-term fiscal framework, improvements in governance in reporting and audits, implementing revised anti- money laundering laws, and removing bitcoin as legal tender while improving regulation and oversight of the virtual currency system.
Following through to the linked statement:
> In Fitch's view, weakening of institutions and concentration of power in the presidency have increased policy unpredictability, and the adoption of bitcoin as legal tender has added uncertainty about the potential for an IMF program that would unlock financing for 2022-2023.
https://www.fitchratings.com/research/sovereigns/fitch-downg...
So it's not just the exchange rate volatility that's at issue, but the possibility that the IMF will make good on its warnings and not backstop the country until its bitcoin venture ends. That, and the other political stuff, combine to make the country look more risky to creditors.
Later in the Fitch article:
> The recently published IMF Article IV recommends a fiscal adjustment of 4pp of GDP to put the debt burden on a steady downward path, strengthening the medium-term fiscal framework, improvements in governance in reporting and audits, implementing revised anti- money laundering laws, and removing bitcoin as legal tender while improving regulation and oversight of the virtual currency system.