Moody’s downgrades El Salvador issuer’s long-term currency rating and has link to bitcoin

Moody’s, a popular financial ratings agency, has downgraded El Salvador’s long-term ratings of its currency issuer and its B3 and top unsecured Caa1 ratings. The ratings group also lowered El Salvador’s currency ceiling from B1 to B2. He said the current outlook remained negative towards the small Central American nation.

Moody’s first cited two main reasons for the downgrade, which has disrupted the country’s policymaking and an upcoming program to pay off its debt from 2023. Check the official reasons,

Government access to markets will remain limited before a complex debt repayment program begins in 2023.
Deteriorating quality of policy development has increased the risks of officials implementing budget plans and increased uncertainty over funding prospects.

The agency thinks the budget situation is still undecided and sensitive to financial turmoil that could pose problems for El Salvador’s ability to repay loans. The report also notes that uncertainty about the IMF’s financial support could lead to a liquidity crisis in the country.

Moody’s agency calls bitcoin adoption in el Salvador “controversial” ”
The Moody report shed light on management problems in the country that have undermined relations with international partners. The report calls the country’s decision to accept bitcoin as legal tender “controversial” and something that has raised tensions with international partners. Threatening tensions with the IMF raise the risk that El Salvador will have access to adequate external financing by the maturity of the bonds from January 2023.

El Salvador created a story on June 9 after passing a BTC bitcoin bill to become legal tender. However, the adoption of such volatile assets did not comply with the will of the IMF and the World Bank. The International Finance Agency believes Bitcoin poses a major financial risk to the Latin American country.

So does Moody

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