El Salvador to Scale Back Bitcoin Policies for $1.4 Billion IMF Loan Deal
El Salvador finalized a four-year $1.4bn IMF deal strained by its Bitcoin adoption. It makes bitcoin use voluntary for the private sector, limits public sector bitcoin activities, and phases out government involvement in the Chivo wallet. It may also unlock extra $3.5bn in development bank funds.
- "The Salvadoran authorities and a staff team from the IMF have reached staff-level agreement on a 40-month extended arrangement under the Extended Fund Facility (EFF) for about US$ 1.4 billion (equivalent SDR 1,033.9 million, or 360 percent of quota) to address balance of payment needs and support the government’s economic reforms," announced the IMF.
- The IMF’s Executive Board needs to endorse the agreement in early February of 2025, and its finalization depends on completing the previously agreed-upon actions.
"The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies. Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined," was stated in the press release.
- The program is expected to stimulate additional financial support from the World Bank, the Inter-American Development Bank, and other regional development banks, including the Central American Bank for Economic Integration (CABEI) and the Development Bank of Latin America and the Caribbean (CAF). Together, these institutions are projected to provide a combined financing package exceeding US$ 3.5 billion over the duration of the program.
"Taxes will only be paid in U.S. dollars and the government’s participation in the crypto e-wallet (Chivo) will be gradually unwound. Transparency, regulation, and supervision of digital assets will be enhanced to safeguard financial stability, consumer and investor protection, and financial integrity," added the IMF.
- In 2021, El Salvador became the first nation worldwide to adopt bitcoin as legal tender.
IMF Press Release / Archive
WSJ Article / Archive
Bloomberg Article / Archive
- Do you want more? Subscribe and get No Bullshit GM report straight to your mailbox.
- Follow No Bullshit Bitcoin on Nostr.
- Feedback or news tips? Drop it here.
