El Salvador minister says Bitcoin crash poses ‘extremely minimal’ fiscal risk

El Salvador’s Finance Minister Alejandro Zelaya on Monday dismissed concerns that a sharp drop in the value of bitcoin could hurt the Central American nation’s fiscal health.

El Salvador last September became the first country to make bitcoin a legal tender, alongside the US dollar, despite criticism by the International Monetary Fund and credit agencies.

“When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile,” Zelaya said at a press conference. “The fiscal risk is extremely minimal.”

Since last September, El Salvador’s government has purchased 2,301 units of the cryptocurrency, which fell on Monday to its lowest value since 2020.

Zelaya cited an earlier estimate from Deutsche Welles that the country’s bitcoin portfolio had lost some $40 million in value.

“Forty million dollars does not even represent 0.5 per cent of our national general budget,” he said.

Bitcoin’s value has dropped some 50 per cent since it became legal tender in the country.