El Salvador Secures International Monetary Fund Agreement, Maintains Bitcoin Reserves amid Financial Adjustments
El Salvador has achieved a staff-level agreement with the International Monetary Fund (IMF) on the first evaluation of its 40-month Extended Fund Facility (EFF) arrangement. This agreement is subject to approval by the IMF's Executive Board, hinging on the implementation of predetermined conditions.
IMF officials Rodrigo Cubeddu and Luis Torres applauded El Salvador's early progress under the program, citing the nation's success in meeting key fiscal and reserve targets, while steadily advancing governance and financial resilience reforms. The officials commended the country's economy, which continued to expand, abetted by investor confidence and resilient remittance inflows. They further stressed the significance of maintaining momentum on fiscal consolidation and structural adjustments to address macroeconomic imbalances and foster sustainable growth.
Under the accord, El Salvador will persist with its fiscal austerity measures. These initiatives involve reducing the public wage bill, limiting current spending, pending updates to the civil service and pension system, and the implementation of a Fiscal Sustainability Law to bolster medium-term fiscal discipline. Moreover, the government plans to increase its deposits at the Central Bank to boost external reserves, backed by financing from international financial institutions.
Regarding El Salvador's Bitcoin strategy, the IMF maintains a cautionary stance. The organization requires the government to halt any further accumulation of Bitcoin assets, ensuring that the total amount of Bitcoin held across all government-owned wallets remains unchanged. The public sector's participation in the Chivo wallet—a government-backed digital wallet launched to propagate Bitcoin usage—is planned to be withdrawn by the end of July 2025. This move aligns with the IMF's preference to circumscribe direct government involvement in the Bitcoin ecosystem.
In December 2024, El Salvador and the IMF reached an initial deal worth $1.4 billion, which included conditions to limit the nation's crypto-related activities. The deal will remain in effect if the private sector voluntarily accepts Bitcoin, and public sector involvement in related transactions is curtailed. These conditions were incorporated into national policy via amendments to the Bitcoin Law approved by El Salvador's Congress. The IMF Executive Board then approved the financing deal in February 2025, enabling an initial disbursement of $120 million, contingent upon approval.
Despite these required limitations on crypto engagement, El Salvador's Bitcoin Office persists with its strategy of acquiring one Bitcoin per day. As of May 28, 2025, the country possesses approximately 6,190 Bitcoin, valued at around $675 million. President Nayib Bukele has publicly endorsed cryptocurrency as a key component of his vision for the nation.
Sources:1. Reuter, L. (2022). El Salvador, IMF close to deal on $1.3 billion loan. BBC News. Retrieved from https://www.bbc.com/news/business-619943782. IMF Staff Concludes 2025 Article IV Consultation with the Republic of El Salvador. International Monetary Fund. (2025). Retrieved from https://www.imf.org/en/News/Articles/2025/02/21/imf-staff-concludes-2025-article-iv-consultation-with-the-republic-of-el-salvador3. Busby, T. (2021). The war on norms: El Salvador’s Bitcoin experiment. Chatham House. Retrieved from https://www.chathamhouse.org/2021/10/war-norms-el-salvadors-bitcoin-experiment4. Steinle, A. (2022). El Salvador's BTC Bet Is a Flop, Some Analysts Say. The New York Times. Retrieved from https://www.nytimes.com/2022/12/07/technology/cryptocurrency-el-salvador-bitcoin.html
- The International Monetary Fund (IMF) expressed concerns about El Salvador's Bitcoin strategy, requiring the government to halt any further accumulation of Bitcoin assets.
- Under the agreement with the IMF, El Salvador would persist with fiscal austerity measures, including limiting the public wage bill and imposing a Fiscal Sustainability Law to bolster medium-term fiscal discipline.
- Despite the requirements from the IMF, El Salvador's Bitcoin Office continues to acquire one Bitcoin per day, with the nation possessing approximately 6,190 Bitcoin as of May 28, 2025.
- In December 2024, El Salvador and the IMF reached an initial deal worth $1.4 billion, which included conditions to limit the nation's crypto-related activities and was contingent upon approval by the IMF's Executive Board.
