The International Monetary Fund (IMF) has opposed the Central African Republic (CAR)’s BTC Law since it came into effect exactly a year ago. In its latest report, the IMF has called on the country to drop BTC as legal tender, even as it projected CAR’s economy to grow by 2.2% this year.
IMF approved a $191.4 million extended credit facility arrangement with CAR last month. The facility will go to basic public services in health and education and advance key reforms, the Washington-based organization said at the time.
In a follow-up to the credit facility, IMF has published a report on the country’s economy, a year since it accorded BTC legal tender status. It noted that the repercussions of COVID-19, internal security upheavals, and food insecurity have greatly affected the country’s economy. Global challenges have also been felt in the tiny country home to 5 million people, including Russia’s invasion of Ukraine.
Despite all the challenges, the IMF expects CAR’s economy to record a 2.2% increase this year and 3.0% next year. The organization expects this growth rate to continue for the next five years. Inflation is expected to hit 6.3%, above the target of 3%, but is expected to come down to 2.5% by 2026.
However, the IMF maintains that CAR’s progress depends on how fast it repeals its BTC Law.
“Remove legal tender and guaranteed convertibility for crypto assets,” the organization states under key policy recommendations.
The April 2022 legislation granting legal tender status to digital currencies and guaranteed convertibility has raised multiple risks and legal challenges, including significant macro-fiscal, financial stability, and financial integrity risks.
IMF also aimed Sango, the digital currency President Faustin-Archange Touadéra launched to tokenize national resources. The project has been a spectacular failure, and CAR is only estimated to have sold less than $2 million worth of the token (0.2% of the planned sales). Touadéra’s promises of citizenship and e-residence purchase through Sango were dismissed by the Constitutional Court, dealing yet another blow to the flailing project.
The IMF has proven to be massively influential in digital asset regulations globally. Argentina is now cracking down on digital assets after signing a $45 billion bailout with the organization, which included a stipulation that the Latin American country would clamp down on the sector.
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