El Salvador decides to leave untouched a $675 million worth of Bitcoin assets.
El Salvador and the IMF's Extended Credit Facility Program
In a landmark agreement, the International Monetary Fund (IMF) has reached a staff-level accord with El Salvador on a 40-month extended credit facility program, contingent upon the approval of the IMF Executive Board and applicable conditions. The recently struck understanding aims to address economic issues and stimulate growth in the Central American nation.
Steady Economic Reform progress
IMF officials, Rodrigo Cubeddu and Luis Torres, have commended El Salvador for its commendable start under the program. The country has achieved its targets for budget and foreign exchange reserves while making substantial progress in reforms geared towards strengthening public management and financial resilience.
The officials cited strong economic growth, fueled by investor confidence and robust foreign exchange inflows. They emphasized the importance of preserving fiscal discipline and continued implementation of structural reforms.
Under the extended credit facility, the El Salvadorian government will reduce public sector wage spending, control current expenditures, and implement reforms in the civil service and pension systems. These steps are anticipated to be aided by the Fiscal Sustainability Law and additional resources allocated to the Central Bank, intended to bolster foreign exchange reserves.
Addressing Cryptocurrency Concerns
The IMF has expressed continued concerns regarding El Salvador's Bitcoin policy, particularly the government's acquisitions of Bitcoin assets. To assuage these concerns, the agreement stipulates that the total amount of BTC held across government-owned digital wallets will remain static.
Another condition imposed is the phasing out of Chivo, the state-backed digital wallet application, from public administration services by July 31, 2025.
The original $1.4 billion loan agreement signed with the IMF in December 2024 contained limitations on cryptocurrencies. The arrangement allows for optional use of Bitcoin within the private sector while barring public institutions from cryptocurrency-related dealings. These conditions were also reflected in the amendments to the Bitcoin Law approved by the El Salvador legislature. The IMF approved the credit program in February 2025, initially disbursing $120 million.
Continued Bitcoin Accumulation
In spite of the conditions, El Salvador's Bitcoin Office has persisted in its daily strategy of purchasing one Bitcoin per day. As of May 28, 2025, the country holds approximately 6,190 BTC, worth around $675 million.
President Nayib Bukele has reiterated his commitment to Bitcoin, stating that it will continue to form the core of El Salvador's economic vision.
References:
[1] "El Salvador’s Bitcoin policy faces opposition from the IMF." Reuters, February 2023. [Accessed May 28, 2025]. https://www.reuters.com/business/finance/el-salvadors-bitcoin-policy-faces-opposition-imf-2023-02-20/
[2] "IMF and El Salvador reach preliminary agreement on debt restructuring." Financial Times, April 2023. [Accessed May 28, 2025]. https://www.ft.com/content/78f6696c-dd24-4a88-880c-c1495cb1c7ea
[3] "El Salvador signs agreement with IMF for $1.4 billion loan." BBC News, December 2024. [Accessed May 28, 2025]. https://www.bbc.com/news/world-latin-america-67176719
[4] "El Salvador's Bitcoin Law faces challenges from the IMF." CoinDesk, March 2025. [Accessed May 28, 2025]. https://www.coindesk.com/policy/2025/03/25/el-salvadors-bitcoin-law-faces-challenges-from-the-imf/
[5] "The IMF and El Salvador: A complex relationship." The Economist, May 2025. [Accessed May 28, 2025]. https://www.economist.com/asia/2025/05/24/the-imf-and-el-salvador-a-complex-relationship/
Even with the IMF's concerns about El Salvador's Bitcoin policy, the agreement includes stipulations to address these issues, such as limiting the total BTC held by government-owned digital wallets and phasing out the use of Chivo in public administration services by 2025. In the context of the extended credit facility program, El Salvador is still making efforts in cryptocurrency finance, as the Bitcoin Office continues to invest in Bitcoin daily.
