The International Monetary Fund (IMF) has commended El Salvador for advances in economic stability while expressing renewed caution over the government’s continued embrace of Bitcoin.
IMF approves new funding
On Friday, the IMF authorized a $139 million disbursement to El Salvador. The approval is part of a broader $1.4 billion loan arrangement reached in December, intended to support economic reforms and fiscal consolidation in the country.
The disbursement comes with conditions. IMF officials confirmed efforts are underway to reduce the government’s exposure to Bitcoin-related activities, following concerns over the country’s Bitcoin strategy.
El Salvador, led by President Nayib Bukele, made headlines in 2021 by adopting Bitcoin as legal tender alongside the US dollar. The move, a first for any country, sparked unease among international financial institutions concerned about fiscal and monetary risks.
Ongoing Bitcoin debate
Despite the IMF’s reservations, Bukele’s administration has continued to promote Bitcoin. According to statements from the country’s Bitcoin Office, El Salvador still purchases the cryptocurrency, contradicting IMF reports from September which said government Bitcoin accumulation had stopped.
President Bukele previously announced plans in 2022 to buy one bitcoin daily, but questions have lingered regarding the source of funds and the veracity of the purchases.
In its Friday statement, the IMF acknowledged that “economic activity has exceeded expectations, supported by sustained improvements in security and investor confidence, as macroeconomic imbalances continue to be addressed.”
“However, certain performance criteria were not met, including on the Bitcoin accumulation front, for which waivers were granted based on strong corrective measures and renewed commitments,” the IMF noted.
The fund further said it expects the government to refrain from additional Bitcoin accumulation, clarifying that “no further bitcoin accumulation is envisaged beyond the documented donations.”
Mini dictionary: The International Monetary Fund (IMF) is a global financial institution headquartered in Washington, D.C., that offers monetary cooperation and financial assistance to its member countries, promoting global economic stability.
Mixed adoption and public skepticism
When Bitcoin was declared legal tender in El Salvador, citizens were given an initial allocation of the digital asset and access to a government-backed digital wallet. However, widespread everyday use of Bitcoin has not materialized, and uptake remains limited among the population.
President Bukele acknowledged in 2024 that most Salvadorans were not using Bitcoin for routine transactions but maintained that his administration stood by its investment approach, often noting the government’s ongoing accumulation of the crypto asset.
The IMF has cited these adoption trends and associated volatility as reasons for urging the Salvadoran government to scale back exposure to Bitcoin, emphasizing risk management and fiscal discipline as priorities.
| Year | IMF Announcement | El Salvador’s Bitcoin Activity |
|---|---|---|
| 2021 | Warned against Bitcoin legal tender plan | Adopted Bitcoin as legal tender |
| 2022 | Ongoing concern about Bitcoin risks | Bukele announced purchase of 1 BTC per day |
| 2024 | Praises economic security, warns on Bitcoin policy | Bukele admits limited population adoption |
| 2026 | Approves $139 million, urges reduced Bitcoin activities | Bitcoin accumulation to be limited to donations |
El Salvador’s approach to cryptocurrency policy remains unique among nations, as the government tries to balance international oversight with ongoing crypto initiatives.
El Salvador continues to receive international financial support even as the IMF encourages the government to limit Bitcoin endeavors to minimize macroeconomic risk.
