{"code":"25826","sect":"El Salvador","sect_slug":"el-salvador","hits":"1211","link":"https:\/\/elfaro.net\/en\/202111\/el_salvador\/25826","link_edit":"","name":"Decisive Loan for the Bitcoin Country","slug":"decisive-loan-for-the-bitcoin-country","info":"El Salvador, in Brief: Two months after the rollout of the Bitcoin Law, the Salvadoran government presents it as a success while independent economists, environmentalists, and hardcore bitcoiners still express major concerns and have identified drawbacks of the law. The negotiations for a massive International Monetary Fund (IMF) loan next week could also be affected by Bukele\u2019s wager. Subscribe to our newsletter","mtag":"Newsletter","noun":{"html":"El Faro English","data":{"el-faro-english":{"sort":"","slug":"el-faro-english","path":"el_faro_english","name":"El Faro English","edge":"0","init":"0"}}},"view":"1211","pict":{"cms-image-000036601-jpg":{"feat":"1","sort":"36601","name":"cms-image-000036601.JPG","link":"https:\/\/elfaro.net\/images\/cms-image-000036601.JPG","path":"https:\/\/elfaro.net\/images\/cms-image-000036601.JPG","back":"","slug":"cms-image-000036601-jpg","text":"<p>A Salvadoran soldier stands watch over a government bitcoin ATM in Santa Tecla, La Libertad. Photo: V\u00edctor Pe\u00f1a\/El Faro<\/p>","capt":"\u003Cp\u003EA Salvadoran soldier stands watch over a government bitcoin ATM in Santa Tecla, La Libertad. Photo: V\u00edctor Pe\u00f1a\/El Faro\u003C\/p\u003E"},"cms-image-000036365-jpg":{"feat":"0","sort":"36365","name":"cms-image-000036365.jpg","link":"https:\/\/elfaro.net\/images\/cms-image-000036365.jpg","path":"https:\/\/elfaro.net\/images\/cms-image-000036365.jpg","back":"","slug":"cms-image-000036365-jpg","text":"","capt":""}},"pict_main__sort":36601,"date":{"live":"2021\/11\/05"},"data_post_dateLive_YY":"2021","data_post_dateLive_MM":"11","data_post_dateLive_DD":"05","text":"\u003Cp dir=\"ltr\"\u003EFor El Salvador to receive a $1 billion IMF loan, it will \u201crequire some recalibration of policies,\u201d IMF spokesperson Gerry Rice \u003Ca href=\"https:\/\/www.imf.org\/en\/News\/Articles\/2021\/11\/04\/tr110421-transcript-of-imf-press-briefing\"\u003Esaid at a press conference\u003C\/a\u003E on Thursday.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe statement comes days before\u003Cstrong\u003E a delegation of Salvadoran officials\u003C\/strong\u003E \u2014 including Treasury Minister Alejandro Zelaya, Central Bank President Douglas Rodr\u00edguez and Vice President Hazel Gonz\u00e1lez, and Commerce Secretary Jorge Miguel Katt\u00e1n \u2014\u003Cstrong\u003E will meet with the IMF in Washington on Nov. 8 and 9,\u003C\/strong\u003E according to sources in Washington who confirmed the existence of the meeting to El Faro English.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe Salvadoran government, which has taken on debt that is close to equalling the size of the country\u2019s annual GDP, says it has gained millions of dollars through its bitcoin gamble, and this week it \u003Cstrong\u003Estarted to build a $4-million veterinary hospital with these profits\u003C\/strong\u003E, but has admitted that it needs the IMF loan to be able to fund next year\u2019s federal budget.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ESources in the Salvadoran administration confirm that to facilitate the agreement with the financial institution, \u003Cstrong\u003EBukele\u2019s government made important cuts in October to the 2022 budget at the last minute\u003C\/strong\u003E. \u201cProgress has been made,\u201d Rice said Thursday, referring to ongoing discussions with the Salvadoran government since April, when the almost done deal fell through after Bukele\u2019s party illegally ousted top judges and the Attorney General on May 1.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\t\t\u003Cfigure class=\"pict pict_land pict_move_posc 0 cs_img cs_img--curr rule--ss_c\" data-shot=\"pict\" data-hint=\"pict\"\u003E\u003Cdiv class=\"pict__pobj text-overflow\"\u003E\u003Cimg src=\"https:\/\/elfaro.net\/get_img?ImageWidth=2000&ImageHeight=1328&ImageId=36601\" class=\"pobj\" style=\"max-width: 100%\" rel=\"resizable\" alt=\"A Salvadoran soldier stands watch over a government bitcoin ATM in Santa Tecla, La Libertad. Photo: V\u00edctor Pe\u00f1a\/El Faro\" \/\u003E\u003C\/div\u003E\u003Cdiv class=\"pict__line block edge--ss_lax edge--ss_rax padd--ss_l0x padd--ss_r0x line--ss_s0b lineh rule--ss_c\"\u003E\u003Cspan class=\"block-inline full-width align-middle lineh__rect tint-back--nake\"\u003E\u003Cspan\u003E\u00a0\u003C\/span\u003E\u003C\/span\u003E\u003C\/div\u003E\u003Cfigcaption class=\"pict__text cs_img_caption folk_content typo_buttons line--ss_s0c line--ss_s0c--auto block full-width text-overflow rule--ss_l relative\"\u003E\u003Cdiv class=\"__content block-inline full-width align-top tint-text--idle relative\"\u003EA Salvadoran soldier stands watch over a government bitcoin ATM in Santa Tecla, La Libertad. Photo: V\u00edctor Pe\u00f1a\/El Faro\u003Cdiv class=\"photographer text_italic rule--ss_l tint-text--idle\"\u003E\u003C\/div\u003E\u003C\/div\u003E\u003C\/figcaption\u003E\u003C\/figure\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ECentral Bank President Rodr\u00edguez \u003Ca href=\"https:\/\/fortune.com\/2021\/10\/19\/el-salvador-bitcoin-imf-loan\/\"\u003E\u003Cspan style=\"text-decoration: underline;\"\u003Etold Bloomberg\u003C\/span\u003E\u003C\/a\u003E in October that he doesn\u2019t believe the adoption of bitcoin as legal tender last September will affect IMF negotiations. But the IMF has previously indicated otherwise. \"It raises a number of macroeconomic, financial and legal issues that require very careful analysis,\" Rice said in June.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp\u003EAlthough Rice did not directly mention bitcoin in his comments Thursday,\u003Cstrong\u003E the Bitcoin Law will likely be a major topic of discussion during the meetings next week in Washington.\u003C\/strong\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ECivil society organizations in El Salvador and the United States have also pressured the IMF in recent months to condition the agreement on the Salvadoran government\u2019s commitment to transparency and democratic guarantees. It\u2019s still to be seen \u003Cstrong\u003Ethe level of pressure that the Biden Administration, whose relations with Bukele grow tenser every day, decides to exert on the IMF\u003C\/strong\u003E to underwrite these conditions.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cspan style=\"font-size: medium;\"\u003E\u003Cstrong\u003EDivide of the Bitcoin Bros\u003C\/strong\u003E\u003C\/span\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe Bitcoin Law has also sparked debate within the bitcoin community. Alex Gladstein, Chief Strategy Officer of the Human Rights Foundation, believes \u003Cstrong\u003Ebitcoin is an \u201canti-authoritarian technology\u201d\u003C\/strong\u003E but told \u003Ca href=\"\/en\/202111\/el_salvador\/25822\/Dismantling-democracy-is-antithetical-to-bitcoin.htm\"\u003E\u003Cspan style=\"text-decoration: underline;\"\u003EEl Faro\u003C\/span\u003E\u003C\/a\u003E that he is anti-Chivo, referring to the government-developed bitcoin wallet, because the government controls it.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cWith bitcoin your phone is your bank,\u201d he said. \u201cYou don't need to go to a bank, you don't need to deal with the government. You can earn and save by yourself without an ID and you can connect with anyone in the world.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\t\t\u003Cfigure class=\"pict pict_land pict_move_posc 0 cs_img cs_img--curr rule--ss_c\" data-shot=\"pict\" data-hint=\"pict\"\u003E\u003Cdiv class=\"pict__pobj text-overflow\"\u003E\u003Cimg src=\"https:\/\/elfaro.net\/get_img?ImageWidth=1440&ImageHeight=380&ImageId=36365\" class=\"pobj\" style=\"max-width: 100%\" rel=\"resizable\" alt=\"\" \/\u003E\u003C\/div\u003E\u003Cdiv class=\"pict__line block edge--ss_lax edge--ss_rax padd--ss_l0x padd--ss_r0x line--ss_s0b lineh rule--ss_c\"\u003E\u003Cspan class=\"block-inline full-width align-middle lineh__rect tint-back--nake\"\u003E\u003Cspan\u003E\u00a0\u003C\/span\u003E\u003C\/span\u003E\u003C\/div\u003E\u003Cfigcaption class=\"pict__text cs_img_caption folk_content typo_buttons line--ss_s0c line--ss_s0c--auto block full-width text-overflow rule--ss_l relative\"\u003E\u003Cdiv class=\"__content block-inline full-width align-top tint-text--idle relative\"\u003E\u003Cdiv class=\"photographer text_italic rule--ss_l tint-text--idle\"\u003E\u003C\/div\u003E\u003C\/div\u003E\u003C\/figcaption\u003E\u003C\/figure\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EHe \u003Cstrong\u003Esupports the voluntary adoption of bitcoin in places like India, Nigeria, and Russia, but made a distinction with El Salvador\u2019s forced adoption.\u003C\/strong\u003E His perspective represents a clear break with the bitcoin influencers allied with Bukele who have blindly promoted the president\u2019s bitcoin experiment.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cIf you actually want to be your own bank, you need to withdraw to your own control. I think the campaign needs to be \u2018no to Chivo\u2019 [because] Chivo is contradictory to bitcoin,\u201d he said. \u201cChivo is not bitcoin. I think protesting Chivo is a great way of expressing displeasure and fighting the government.\u201d In September, opposition to the \u003Cstrong\u003EBitcoin Law was one of the major triggers for mass anti-Bukele street protests\u003C\/strong\u003E in San Salvador.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ERead more of Gladstein\u2019s comments on El Salvador\u2019s bitcoin adoption and Bukele\u2019s authoritarian tendencies in Nelson Rauda\u2019s interview for \u003Ca href=\"\/en\/202111\/el_salvador\/25822\/Dismantling-democracy-is-antithetical-to-bitcoin.htm\"\u003E\u003Cspan style=\"text-decoration: underline;\"\u003EEl Faro.\u003C\/span\u003E\u003C\/a\u003E\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cspan style=\"font-size: medium;\"\u003E\u003Cstrong\u003EWater Impact\u003C\/strong\u003E\u003C\/span\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe bitcoin debate in El Salvador has also extended to the environment. El Salvador is already one of the most water-stressed countries in the region. \u003Cstrong\u003EOne of these water-scarce communities is Berl\u00edn, in eastern Usulut\u00e1n, near a volcano where the country harnesses geothermal energy.\u003C\/strong\u003E Bukele has started using this energy for bitcoin mining, an energy-intensive process.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ERapidly expanding the country\u2019s geothermal energy supply could disrupt the natural water ecosystem, increase seismic activity, or contaminate the soil and water, Mauricio Serme\u00f1o, president of an environmental NGO in El Salvador, \u003Ca href=\"\/en\/202110\/el_salvador\/25808\/Bitcoin-but-no-water-for-this-Salvadoran-town.htm\"\u003E\u003Cspan style=\"text-decoration: underline;\"\u003Etold El Faro\u003C\/span\u003E\u003C\/a\u003E.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cIf additional production capacity for bitcoin mining is needed, as President Bukele announced, \u003Cstrong\u003Ethis may require the development of more geothermal energy infrastructure, which could have an impact on the aquifers\u003C\/strong\u003E that supply these communities,\u201d writes El Faro's Julia Gavarrete.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cThe rumors that their water supply could diminish are enough to put drought-weary Berl\u00edn communities on high alert.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EExpanding geothermal energy for bitcoin mining \u201coffers little for the Salvadoran people,\u201d writes Jorge Cuellar, assistant professor at Dartmouth College, in a column for \u003Ca href=\"\/en\/202111\/columns\/25816\/The-Value-of-a-Volcano.htm\"\u003E\u003Cspan style=\"text-decoration: underline;\"\u003EEl Faro\u003C\/span\u003E\u003C\/a\u003E. \u201cIn its best iteration, it will yield a temporary bump in people\u2019s Chivo Wallets, the government\u2019s official bitcoin wallet, or \u003Cstrong\u003Eoffer employment to small numbers who will maintain the mining operations \u2014 custodians, electricians, computer technicians\u003C\/strong\u003E.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cAt worst,\u201d he continues, \u201cthe plan will prove to be public money already wasted, with generational consequences and enormous environmental losses \u2014 all for a speculative financial experiment that mainly benefits bitcoin whales and those who do business with them.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ERead more about the bitcoin industry\u2019s potential role in the Salvadoran town Berl\u00edn in \u003Ca href=\"\/en\/202110\/el_salvador\/25808\/Bitcoin-but-no-water-for-this-Salvadoran-town.htm\"\u003E\u003Cspan style=\"text-decoration: underline;\"\u003EEl Faro\u003C\/span\u003E\u003C\/a\u003E.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThanks for reading. \u003Cstrong\u003EIf you\u2019ve benefited from our reporting, please share\u003C\/strong\u003E. You can also fund independent journalism in Central America, for the price of a coffee a month, at \u003Ca href=\"https:\/\/support.elfaro.net\"\u003E\u003Cspan style=\"text-decoration: underline;\"\u003Esupport.elfaro.net\u003C\/span\u003E\u003C\/a\u003E.\u003C\/p\u003E"}