El Salvador Agrees to Bitcoin Policy Adjustments for IMF Loan
El Salvador has recently made changes to its Bitcoin policies in order to secure a $1.4 billion loan from the International Monetary Fund (IMF), as stated in a Dec. 18 announcement.
IMF Loan Agreement
- The IMF and El Salvador reached a staff-level agreement on a 40-month Extended Fund Facility (EFF) to support economic reforms.
- The agreement includes commitments to improve the country’s primary balance by 3.5% of GDP over three years.
- This effort aims to reduce the public debt-to-GDP ratio from its 2024 peak of 85%.
Reforms in Bitcoin Policies
The IMF stipulated that El Salvador must make changes to its Bitcoin-related activities as part of the loan agreement.
- Private businesses can now choose to accept Bitcoin voluntarily, rather than it being mandatory.
- The public sector’s involvement in Bitcoin-related activities will be limited, and tax payments will only be accepted in US dollars moving forward.
The government is also expected to phase out its involvement with the Chivo e-wallet, a crypto app that has seen declining adoption rates.
Continued Bitcoin Acquisition
Despite the policy adjustments, El Salvador remains dedicated to acquiring Bitcoin.
- The National Bitcoin Office (ONBTC) confirmed that the country continues to purchase one Bitcoin daily.
- President Nayib Bukele announced this strategy in November 2022, leading to significant gains including a $362 million unrealized profit from Bitcoin holdings.
Bukele has reiterated the country’s commitment to daily Bitcoin purchases until they become unaffordable with fiat currencies.
