El Salvador says it is not ready to issue Bitcoin bonds in the near term

Conditions are not yet favourable for El Salvador to issue $1 billion in Bitcoin bonds. This was stated by the country’s finance minister, Alejandro Zelaya, The Block reports.

El Salvador was planning to issue the first Bitcoin bonds worth $1 billion by 15–20 March. If successful, authorities were prepared to issue a further $500 million.

On 22 March the Salvadoran Ministry of Finance postponed the issue owing to a deteriorating market environment and the need to refine the legislation.

Economists fear that the country could declare a default in January 2023, when it must redeem fiat-denominated bonds worth $800 million.

Economist at the Central American Institute of Financial Studies (ICEFI), Ricardo Castaneda, estimated El Salvador’s liquidity needs through 2024 at $3 billion.

Zelaya, in his address to the nation, said that negotiations with the IMF are ongoing.

The finance minister also said that authorities sold a portion of the bitcoins it had acquired to fund a veterinary hospital. The $4 million required for the project was obtained “as a result of the rise in the price of the first cryptocurrency.” The official stressed that the department is not selling the accumulated coins.

On 9 May, El Salvador bought 500 BTC at an average price of about $30,744, bringing its reserves to 2,301 BTC.

Earlier, the IMF expressed concerns about the risks associated with El Salvador’s Bitcoin bonds. The organisation has repeatedly urged the government to abandon the first cryptocurrency as a means of payment.

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