By Jorgelina do Rosario

LONDON (Reuters] – El Salvador has a lack of credibility when managing its finances. A program with the International Monetary Fund would be beneficial to El Salvador, a Moody’s official said Thursday.

Ariane Ortiz-Bollin is vice president at Moody’s and senior credit officer. However, she said to Reuters that Salvador’s economy is performing well. Revenues have risen, but it’s about “the certainty that comes with IMF agreements on policy predictability, which is something that is very much lacking in the country right now.”

As the Central American nation with 6.5 million inhabitants continues to be closed off from global financing markets, Salvadoran foreign bond yield spreads to U.S. Treasuries reached a new record of 2,600 basis point on Thursday.

Moody’s cut El Salvador’s key rating by two points to Caa3, its third lowest rating. They cited “an increased likelihood of a credit events” earlier in the month.

Graphic: El Salvador sovereign bond spreads to U.S. Treasuries – https://graphics.reuters.com/ELSALVADOR-DEBT/SPREADS/lgvdwgrbrpo/chart.png

On Thursday, the IMF stated that it was in discussions with Salvadoran officials about issues such as the pace of consolidation and anti-money laundering, transparency fiscally and accountability for the use public funds.

They also spoke out about the possibility of using bitcoin. El Salvador granted it legal tender status last September. The IMF criticized the move. But the Fund has not mentioned any plans to resume talks that could lead to a new program.

Ortiz Bollin stated that it was a surprise for them that they were not ready to take this route. He added that a new IMF program would “unlock additional multilateral financing, and possibly market financing that is urgently needed.”

El Salvador has lost 40% on its bitcoin bet since Salvadoran adoption. This increased risk has shut down all other financing options.