Credit rating agency Standard and Poor (S&P) Global believes the state of El Salvador has severely harmed its credit rating afterwards enacting its Bitcoin Law recognizing Bitcoin (BTC) as legal tender nationwide on Sept. 7.

Co-ordinate to a report from Reuters Thursday, El Salvador's Bitcoin embrace exposes its economy to pregnant financial risks and could pose challenges for the country'southward lending industry.

The credit agency too believes the move could also dampen El Salvador's chances of securing a $1-billion loan understanding information technology is seeking from the International Monetary Fund (Imf).

"The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits," S&P said, emphasizing the "immediate negative implications" of the Bitcoin Police force for the land'southward credit rating.

International credit rating agencies offer a grim outlook for Republic of el salvador'due south ranking amid the lead-up to the BTC adoption.

Prior to Salvadoran President Nayib Bukele announcing his intention for the country to recognize BTC equally legal tender in June of this yr, Fitch had stamped El Salvador with a B- in April 2022 — assessing the state as high adventure with a negative outlook.

S&P's terminal assessed Republic of el salvador's credit score as being a B- equally of Dec. 28, 2022, suggesting it may be due for an update, given the dramatic shift in the nation's monetary policy.

While President Bukele maintains high approving ratings amid the Salvadoran populace, his leadership and regime have faced backlash for enacting the Bitcoin Law despite the country's low rates of crypto literacy.

Related: Protesters burn Bitcoin ATM equally part of demonstration against El Salvador president

At that place also appears to exist push button back away from fiscal agencies, such as the World Bank and IMF, which have both reiterated cautious sentiments this calendar month regarding the adoption of BTC equally legal tender.

IMF spokesperson Gerry Rice stated in a press briefing on Thursday that while the fund is still in discussions with El Salvador over a potential back up program, it hasn't inverse its opinion that the consequences of BTC adoption could be "dire."

"The potential of an International monetary fund program for El Salvador is under discussion. Over again the objectives of that are clear: growth, financial stability and then on. On the specific Bitcoin issue, I think we've been fairly clear in our public statements," Rice said.

On Sept. vii, a World Bank spokesperson told Reuters that "while the authorities did arroyo us for aid on Bitcoin, this is not something the Globe Depository financial institution tin support given the environmental and transparency shortcomings."