El Salvador Bitcoin Policy Secures $1.4B IMF Financing

Key Points:

• El Salvador secures a $1.4 billion financing package from the IMF to support economic reforms, boosting growth and stability.
• IMF backs significant changes to the country’s Bitcoin policy, making private sector adoption voluntary and scaling back government involvement.
• The program unlocks over $3.5 billion in combined financing from global institutions to strengthen El Salvador’s fiscal and economic future.

According to Mirage, IMF conducted discussions in San Salvador that resulted in a staff-level agreement on a 40-month Extended Fund Facility (EFF) for $1.4 billion, addressing the balance of payment challenges and advancing economic reforms, including updates to the El Salvador Bitcoin policy.

IMF Agreement Strengthens El Salvador’s Economic Outlook

The program, subject to IMF Executive Board approval, is expected to unlock over $3.5 billion in additional financing from institutions like the World Bank, the Inter-American Development Bank, and regional development banks, aiming to strengthen economic stability and foster inclusive growth.

El Salvador’s economy has shown resilience, supported by robust remittances, increased tourism, and improved security. Inflation has eased with lower global commodity prices, while the fiscal situation continues to improve gradually.

Read more: El Salvador Bitcoin Policy Faces Shift for $1.3B IMF Deal

Key Reforms in El Salvador’s Economic Program

The program highlights key reforms:

• Fiscal Policy: Efforts include reducing public debt from 85% of GDP in 2024 by improving fiscal balances by 3.5% of GDP over three years, optimizing public spending, and protecting vulnerable groups.

• Transparency and Governance: Measures focus on enhancing fiscal transparency, anti-corruption frameworks, and improving the business environment.

• Digital Assets: Revisions to the El Salvador Bitcoin policy will make Bitcoin acceptance voluntary for private entities, limit government involvement in Bitcoin activities, and phase out the Chivo e-wallet. This will ensure financial stability, consumer protection, and further regulatory oversight aligned with global standards for El Salvador Bitcoin policy and digital assets.

IMF staff praised Salvadoran authorities for their commitment to economic reform, noting the program aims to enhance stability and long-term growth. Approval is expected by February 2025, paving the way for further alignment with the El Salvador Bitcoin policy and its broader financial strategy.