El Salvador has made significant headway in its ongoing discussions with the International Monetary Fund (IMF) regarding Bitcoin policies and necessary economic reforms. This comes as the country seeks to unlock a $1.4 billion loan package.
An official statement released on December 23 highlighted that negotiations concerning the divestment of the government-run Chivo wallet have progressed well, alongside broader discussions aimed at enhancing transparency and mitigating risks related to the Bitcoin initiative.
The IMF”s Mission Chief for El Salvador noted that these negotiations are crucial for accessing additional funding to stabilize the nation”s economy. El Salvador”s path to an Extended Fund Facility from the IMF began in early 2021, but discussions stalled when the country adopted Bitcoin as legal tender later that same year.
At that time, the IMF expressed concerns that using such a volatile asset as an official currency could jeopardize financial stability, fiscal health, and consumer protection. Over the years, the organization has repeatedly urged the Bukele administration to abandon Bitcoin”s legal tender designation as a prerequisite for advancing funding negotiations.
After nearly four years of discussions, a staff-level agreement was reached in late 2024, allowing El Salvador to recalibrate its Bitcoin strategy in exchange for the vital loan. As part of this agreement, the country committed to making Bitcoin acceptance voluntary for businesses, reducing direct involvement in the cryptocurrency sector, including tax payments and public-sector roles.
In a recent statement, the IMF acknowledged that El Salvador is taking steps to mitigate Bitcoin-related risks. Furthermore, the organization praised the country”s reform commitments, projecting a 4% growth in GDP for the year. The IMF noted, “The economy is expanding at a faster than anticipated pace on the back of improved confidence, record remittances, and buoyant investment.”
Despite the ongoing negotiations with the IMF, El Salvador remains committed to its pro-Bitcoin stance. The government recently made its largest Bitcoin acquisition to date, purchasing 1,090 BTC in a single transaction, bringing its total holdings to 7,475.4 BTC, valued at approximately $653.38 million based on current market prices.
Additionally, in August, El Salvador enacted a new Investment Banking Law that allows specialized firms to offer Bitcoin and other digital assets as core financial services. The government continues to position the country as a global hub for cryptocurrency, attracting firms such as Tether, which recently moved its headquarters to San Salvador.
