Fitch Ratings on Thursday cut El Salvador further into junk territory, citing risks from last year's move to adopt bitcoin (BTC-USD) as legal tender, along with other BTC-related initiatives. Specifically, the adoption of BTC as legal tender had added uncertainty about the potential for an International Monetary Fund ("IMF") program that would unlock financing for this year and the next, according to the report. In January, the IMF urged El Salvador's government to remove BTC's status as legal tender. Fitch also cited a "high degree of uncertainty" for external financing options surrounding the capacity to issue bitcoin (BTC-USD) backed bonds through new distribution channels. Recall at the beginning of January when El Salvador prepared 20 bills to provide a legal foundation for issuing bitcoin bonds. The basis of the downgrade also reflects the country's increased "reliance on short-term debt, an USD800 million Eurobond repayment due in January 2023, a still-high fiscal
