El Salvador’s exposure to bitcoin is minimal, says lenders’ chairman

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(Bloomberg) — El Salvador’s exposure to cryptocurrencies, including Bitcoin, is minimal, according to the president of the Central American Bank for Economic Integration, which provided most of the funds the country is expected to use to repay a bond next week.

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We have seen this exposure, and we consider it very small, not significant, said Dante Mossi, executive chairman of the multilateral lender, which provided $450 million in loans earlier this month. We want investors to know the real situation in El Salvador as well.

Uncertainty about El Salvador’s real exposure to Bitcoin, which has been falling in value in recent months, has been one of the factors weighing on nations’ access to capital markets. President Nayib Bukeles’ administration had purchased 2,381 bitcoins through June 2022, according to his announcements on Twitter. On November 16, he said the government would buy one bitcoin per day.

The International Monetary Fund is expected to carry out its so-called Article 4 mission in which it will provide a macroeconomic assessment and recommendations for El Salvador, Mossi said. CABEI is working with the government of El Salvador to compile debt sustainability information, which should include information on cryptocurrencies, for IMF review.

El Salvador’s finance ministry press officers did not immediately respond to an email request for comment. The country’s $347.9 million 5.875% bond due 2025 hit the highest price since November 2021 on Friday at 72.89 cents, according to Bloomberg prices.

The head of CABEI added that the covenants of the recently provided funding prohibit El Salvador from using it to purchase such assets.

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Use of the revenue will be checked in six months, Mossi said.

–With help from Sydney Maki.

(Add bond prices to 5th paragraph)

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