IMF Board Approves $1.4Bn Loan to El Salvador with Further Bitcoin Restrictions
The International Monetary Fund’s (IMF) executive board approved a $1.4 billion loan for El Salvador with a condition that the country will further restrict the government's Bitcoin-related economic activities, including transactions and purchases of bitcoin.
- The approval grants El Salvador an immediate $113 million disbursement. The IMF says the deal will attract more multilateral support, totaling $3.5 billion in financing over the next 40 months.
- Last month, El Salvador's Legislative Assembly amended the Bitcoin Law, removing Bitcoin's status as legal currency while retaining the words "legal tender." As a result, accepting bitcoin by private businesses is now voluntary, and it cannot be used to settle taxes or government debts. Additionally, the government has been reducing its involvement with Chivo Wallet, the state-backed digital wallet.
"The potential risks of the Bitcoin project are being addressed in line with Fund policies and with Fund advice to the authorities. Prior actions include legal reforms that have made acceptance of Bitcoin by the private sector voluntary and ensured that tax payments are made only in U.S. dollars. Transparency of the public crypto e-wallet has been strengthened, and the government plans to gradually unwind its participation in the e-wallet," the IMF acknowledged in a press release.
- Despite these changes, El Salvador's administration seems committed to Bitcoin. The country's ambassador to the United States, Milena Mayorga, and Stacy Herbert from the Bitcoin Office, continue to affirm that El Salvador is a 'Bitcoin country'.
- Besides, El Salvador has continued adding Bitcoin to its reserves and is currently holding over 6,090 BTC, valued at more than $500 million.
- However, the IMF now claims that further program commitments will limit government engagement in Bitcoin-related economic activities, including the purchase of bitcoin.
"Going forward, program commitments will confine government engagement in Bitcoin-related economic activities, as well as government transactions in and purchases of Bitcoin," was stated in a blog post.
- The IMF also noted that further steps include enhancing the regulation of the country's digital assets industry in line with "international best practices."
"Regulation and supervision of digital assets will be enhanced in line with evolving international best practices," the IMF said.
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