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Key Takeaways: IMF agrees to release nearly $120 million to El Salvador, contingent on Bitcoin-related reforms and fiscal discipline. El Salvador must halt expansion of government-held Bitcoin and unwind public sector’s Chivo wallet involvement by July. Despite IMF conditions, El Salvador continues purchasing Bitcoin daily, raising questions about compliance and crypto governance. The International Monetary Fund (IMF) has reached a key point with the government of El Salvador. They have agreed in principle to give them $120 million as part of a larger $1.4 billion Extended Fund Facility (EFF) credit program. This is the first time the 40-month loan agreement to help El Salvador’s economic reforms has been looked at. But Bitcoin is at the center of this deal, and that’s a problem. El Salvador’s decision to make Bitcoin legal tender in 2021 was the first of its kind in the world and has been heavily criticized. The IMF’s recent conditional clearance shows how hard it is to find a balance between fiscal discipline and crypto innovation. It also shows how tensions are still high between international financial institutions and sovereign crypto goals. Read More: El Salvador Halts Public Bitcoin Purchases To Meet IMF Loan Terms While Private Accumulation Continues IMF’s First Review: A Tightrope Walk Between Reform and Crypto Ambitions After months of talks and economic evaluations, IMF personnel and Salvadoran officials came to a staff-level agreement on the first review of the country’s EFF loan. The IMF Executive Board must approve it first, but El Salvador will get about $120 million right away, which will be a big boost to the country’s finances. El Salvador must satisfy a number of performance targets for this agreement to work. These include structural adjustments and fiscal cuts that are meant to make the financial system more resilient, improve governance, and make…

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Filed under: News - @ May 28, 2025 4:22 pm