4th October 2024 > > The IMF & El Salvador.

tl;dr

The IMF is squaring up to El Salvador again, a fight it will not win.

Market Snap

Market Wrap

The US warns of “uncontrollable escalation” in the Middle East, and risk assets firmly ignore this warning, which would have been a surprise in the past. Markets have learnt that central banks’ response to any market disruption is to ride to the rescue with any number of ways of adding dollar liquidity to the financial system. The bigger the crisis, the bigger the stimulus. Not the way it is supposed to work, but this is the new reality.

Occasional Series – Just sayin’ is all

I am sure you all join me in wishing a speedy recovery for this unfortunate individual.

Might I gently suggest that perhaps a career in politics is better suited to someone with a rather more robust disposition.

Curious Cryptos’ Commentary – The IMF (International Monetary Fund) & El Salvador

As a general rule, it is best to steer clear of anything that gets the approval of the IMF, and to go all-in on anything of which it disapproves.

El Salvador has long been a target for the IMF because of its policy of buying one BTC every day. It is fair to say that the government could be a little more transparent about the exact situation, but an unofficial tracker can be found here:

https://nayibtracker.com/

The IMF has once again called upon El Salvador to rein in its enthusiasm for BTC. Spokesperson Julie Kozack explains:

"What we have recommended is a narrowing of the scope of the bitcoin law, strengthening the regulatory framework and oversight of the bitcoin ecosystem, and limiting public sector exposure to bitcoin."

It’s been a while since I last had a chat with President of El Salvador Nayib Bukele (Nibby to his mates), but I am fairly confident that I know what his private response to this suggestion by the IMF would be. Pretty is not an adjective that would describe it.

Organisations like the IMF rightly see cryptos as an existential threat to their very existence. The very last thing it needs is a successful country adopting BTC.

Now, in many respects El Salvador continues to have lots of problems. For example, Nayib’s crackdown on the endemic gang problem has drawn criticism from human rights advocates, who stayed silent on the gang’s own activities. The gangsters have no truck with the concept of human rights. There are plenty of other social issues that could be improved.

But that is none of the IMF’s business. The IMF’s mission statement says:

“The IMF is a global organization that works to achieve sustainable growth and prosperity for all of its 190 member countries. It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being.”

Hot on the heels of the latest criticism of El Salvador by the IMF comes Nayib’s budget proposal for 2025 which shows no deficit at all. Let me repeat that, for nowadays it is a strange concept.

The government of El Salvador plans to bring in more revenues in 2025 than it spends. It will have a zero deficit.

Of the IMF’s other 189 member countries, I am highly doubtful that any of them could make the same claim.

In truth, the IMF should be lauding El Salvador for its monetary and fiscal restraint. By not doing so, it makes plain its deep-seated fear of the crypto revolution. Its pronouncements on the topic of cryptos arise from this fear and are deserving of total disregard at all times, void as they are of any honesty, integrity, or value.