The global organization looked into El Salvador early this year. The IMF staff visited the country early February to see how things are going. This mission was part of the regular Article IV consultation that takes place annually. They investigated El Salvador to see whether the country would be able to apply for an IMF loan or not. In order to assess it, the IMF consultants looked into several aspects of the economy.
Economic Boom
The IMF staff was surprised to find that the country has been doing very well despite the current global economic situation. According to the report the Salvadoran economy showed a steady and strong growth during 2022. The growth rate of the economy reached 2.8% last year. This is an exceptionally good result for a country that was hit extremely hard by the Covid restrictions. El Salvador lost most of its income from tourism during the lockdowns. However, the country has made an incredible recovery after the restrictions were lifted and saw a boom in tourism after the lockdowns ended.
Bitcoin Is Still a Threat
This does not soothe the suspicion the IMF has for the country due to its bitcoin adoption. The organization has been voicing its doubts regarding this step and it is still not happy with how El Salvador is integrating it. On the other hand, the IMF had to admit that the country has averted most of the threats the IMF warned about in 2021.
The organization still opines that “risks should be addressed” and that the country’s government should provide more information on its finances. This is especially true for the Salvadoran bitcoin wallet which is controlled by the government. The transactions on the wallet, called Chivo, have not been handed over to the IMF for assessment. This makes the organization question the financial health of the bitcoin wallet.
This content was originally published here.
