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IMF Deal ‘Dead’ and So Is Bitcoin Bond Issuance, Claim Bukele Critics

Tim Alper
Last updated: | 3 min read
Nayib Bukele. Source: A screenshot, Instagram/nayibbukele


The former Governor of the Salvadoran central bank, the Central Reserve Bank, claims that negotiations with the International Monetary Fund (IMF) are “practically dead” – and says investors are “not interested” in the delayed bitcoin (BTC) bonds issuance President Nayib Bukele wants to use to pay for his Bitcoin City project.

The comments came from Carlos Acevedo, who headed the central bank from 2009 to 2013. Bukele himself has had a confrontational relationship with organizations such as the IMF and the World Bank – as well as with Washington lawmakers. He has instead sided with bitcoiners who reject the relevance of traditional financial organizations.

This runs contrary to pre-Bukele economic policy in El Salvador, which relied heavily on IMF and World Bank support. Prior to the adoption of BTC as legal tender in September last year, El Salvador had been speaking to the IMF about a possible USD 1.3bn loan deal.

Speaking to the newspaper El Diario de Hoy’s website, Acevedo, who is an outspoken critic of the government on most matters, was quoted as stating:

“Negotiations with the [IMF] are practically dead. They would have to be revived.”

And Acevedo claimed separately that the issuance of the so-called “volcano bonds” (named for the fact that the city is to be built at the foot of a volcano that is being used to mine BTC) was “another issue that is complicating matters for the President.” The government is thought to be hoping to raise some USD 1bn from the bond issuance.

As reported, the bond issuance has been pushed back – and Acevedo claimed that this was mainly due to a lack of interest, although the government claims otherwise.

Acevedo stated:

“First the [government] said that [the bond issuance would take place] in January, then in March, then they said that the [relevant legislation] was not ready, then that pensions were a priority. Now it’s the issue of security. I believe that the government has realized that there is not enough interest in the markets to make the issuance.”

As reported in March, the crypto exchange Bitfinex, which will host the issuance of El Salvador’s BTC bonds, said that it already received “half a billion dollars” worth of interest in the offering from its customers.

Meanwhile, the economist Luis Membreño, who has been opposed to the adoption of BTC as legal tender since the outset, went a step further, claiming that the bond issuance itself was also “dead in the water.” He made reference to comments made on the matter by the CEO of the bitcoin-keen software firm MicroStrategy late last month.

“Michael Saylor, who is very knowledgeable on the subject, have been very clear in saying that the market is not ready [for] BTC bonds in Bitcoin. So it seems to me that the issuance of these bonds is dead,” he noted.

However, Saylor did not say this. As reported, Saylor, explained in a recent interview that although the market is not ready for a corporate bitcoin-backed bond, bitcoin bonds like the “volcano bond” planned by El Salvador could still be viable.

In either case, Membreño also hit out at the Minister of Finance, Alejandro Zelaya, who has previously stated that he would wait until “favorable conditions” presented themselves in the markets before making the issuance, saying:

“No one believes the Minister of Finance any more. He has said so many things that have not happened. He is no longer a reliable source of information. Therefore, I think the [likelihood] is that there is no chance of a Bitcoin Bonds issuance. I think the moment for this passed last year.”

Membreño concluded that “in the last six months, bitcoin has fallen by about 35% and that does not help to generate a favorable climate” for issuance.

Bukele, meanwhile, appears to have been preoccupied with the aforementioned “security” issue – a wide-ranging crackdown on the pandillas, the crime syndicates that have waged something close to open war on Salvadoran streets.

A number of international crypto-related firms have pledged their support for Bukele and his struggle against the gangs, although some American politicians have voiced human rights-related concerns.
Learn more: 
Bitfinex, Tether Launch Bitcoin, USDT Donation Funds for Victims of El Salvador Gang Crime
Financial Markets Not Ready for Bitcoin-Backed Bonds – MicroStrategy CEO

Game Theory of Bitcoin Adoption by Nation-States
Bitfinex Customers Wait for Details on El Salvador’s BTC Bonds with Potential USD 0.5bn Worth of Interest