El Salvador and the International Monetary Fund have made notable progress in their ongoing negotiations over Bitcoin policy and economic reforms, as the country looks to access a $1.4 billion loan package.
Summary
- El Salvador and the IMF say negotiations over the sale of the state-run Chivo wallet have advanced.
- The talks are tied to unlocking further funding under a $1.4 billion IMF program that required El Salvador to scale back public sector involvement in Bitcoin.
According to an official statement published on Dec. 23, El Salvador and the IMF’s negotiations regarding the divestment of the government-run Chivo wallet, along with broader discussions on the Bitcoin initiative, have “well advanced.”
“Negotiations for the sale of the government e-wallet Chivo are well advanced, and discussions with regard to the Bitcoin project continue, centered on enhancing transparency, safeguarding public resources, and mitigating risks,” IMF’s Mission Chief for El Salvador was quoted as saying.
The negotiations in question have been ongoing for months as El Salvador hopes to unlock the next tranche of funding under the IMF program to support its economy.
For those unaware, El Salvador initially sought a multi-billion-dollar Extended Fund Facility from the IMF back in early 2021, but talks soon came to a standstill after the country made Bitcoin legal tender later that year.
The IMF immediately warned that adopting a volatile crypto asset as official currency posed significant risks to financial stability, fiscal health, and consumer protection. Over the next few years, the institution consistently urged the Bukele administration to drop Bitcoin’s legal tender status as a condition for further funding talks.
After nearly four years of negotiations, El Salvador and the IMF reached a staff-level agreement in late 2024 that allowed the country to scale back its Bitcoin strategy in exchange for access to the $1.4 billion loan.
As part of the deal, El Salvador agreed to make Bitcoin acceptance voluntary for businesses and to roll back its direct public-sector involvement, including in areas such as tax payments and the government’s role in crypto infrastructure.
In a separate statement released last week, the IMF confirmed that Bitcoin-related risks were being mitigated. Meanwhile, in the latest report, the IMF praised the country’s reform commitments and projected that El Salvador’s GDP is expected to grow by 4% this year.
“The economy is expanding at a faster than anticipated pace on the back of improved confidence, record remittances, and buoyant investment. Real GDP growth is projected to reach around 4 percent this year and with very good prospects for next year,” the IMF said.
In the meantime, El Salvador has continued to add to its Bitcoin stash. The government recently completed its largest purchase to date, acquiring 1,090 Bitcoin in a single day.
At press time, the country’s total holdings amount to 7,475.4 BTC, valued at approximately $653.38 million based on current market prices, according to data from Bitbo.
Back in August, El Salvador passed a new Investment Banking Law, opening the door for specialized firms to offer Bitcoin and other digital assets as part of their core financial services.
Meanwhile, the government has continued to promote the country as a global crypto hub, attracting firms like USDT issuer Tether, which recently relocated its headquarters to San Salvador, El Salvador.
