Fitch downgrades El Salvador's credit rating to 'junk' over risk of bitcoin as fiat currency

Fitch Ratings, the U.S. credit rating agency, on Wednesday downgraded El Salvador’s credit rating to “junk” (CCC), citing risks in the country’s adoption of bitcoin as legal tender last year. Fitch also said El Salvador's country rating was downgraded from B- to CCC due to "increased reliance on short-term debt leading to elevated funding risks" ahead of the payment of $800 million in global bonds due in January. "Weakening institutions and the concentration of presidential power have increased policy unpredictability, and the adoption of bitcoin as legal tender has increased uncertainty about IMF-funded programs," Fitch said in a statement. El Salvador's economic growth will slow to 3.5% this year from 10.5% last year. Last year, Moody's Investors Service, another major U.S. credit rating agency, downgraded the country for similar reasons.