u.today
Nobel Prize laureate Nouriel Roubini has doubled down on his criticism of El Salvador President Nayib Bukele, claiming that the latter deserves to be impeached for “bankrupting” the country with his Bitcoin gambit.
Earlier this month, financial services company Moody's downgraded El Salvador's sovereign credit rating due to concerns that the country’s audacious Bitcoin bet to prevent it from securing a much-needed $1.3 billion loan from the International Monetary Fund (IMF).
Moody’s analyst Jaime Reusche told Bloomberg that El Salvador’s fiscal profile would only get worse if the government were to increase its exposure to Bitcoin:
If it gets much higher, then that represents an even greater risk to repayment capacity and the fiscal profile of the issuer.
El Salvador has $800 million worth of dollar-denominated bonds that are due in January 2023. Due to debt problems and uncertainly surrounding Bitcoin, the yield on those bonds spiked to 34% earlier this month. In 2021, they showed the worst performance in the entire world.
Plagued by the most distressed sovereign debt around the globe, El Salvador now plans to issue Bitcoin-denominated "volcano bonds" in partnership with blockchain developer Blockstream and iFinex, the parent company of Tether and Bitfinex. Part of the raised funds will be used for constructing a libertarian mecca called “Bitcoin City.”
As reported by U.Today, Bukele faced backlash during a dramatic Bitcoin sell-off that took place on Saturday. It has been estimated that the “coolest dictator” has lost over $20 million by purchasing Bitcoin with the country’s treasury funds.
The “CEO of El Salvador,” however, continued his Bitcoin buying spree despite pushback.