TLDR
- The IMF has reached a preliminary $1.4 billion loan agreement with El Salvador.
- El Salvador must stop all government Bitcoin purchases to qualify for the funding.
- The government must also discontinue public access to the Chivo wallet by July 1, 2025.
- The IMF will only approve future disbursements if these and other conditions are fully met.
- President Nayib Bukele has insisted that El Salvador will continue its Bitcoin strategy.
El Salvador and the International Monetary Fund have reached a preliminary agreement on a $1.4 billion extended loan program. However, the IMF has attached strict conditions, particularly concerning El Salvador’s use and acquisition of Bitcoin (BTC). The deal, which could unlock up to $3.5 billion from various creditors, hinges on meeting key economic and crypto-related conditions.
El Salvador Ordered to Halt Bitcoin Purchases
The IMF has instructed El Salvador to stop purchasing additional Bitcoin using state funds immediately. Furthermore, the government must freeze the current level of Bitcoin holdings across all its wallets. The IMF has made this condition non-negotiable as part of its extended fund facility agreement.
Currently, El Salvador holds around 6,190.18 Bitcoin, valued at approximately $675 million. Due to Bitcoin’s rise, these assets have gained over $350 million in unrealized profits. Despite these gains, the IMF requires a complete halt to future state-sponsored purchases.
President Nayib Bukele confirmed El Salvador’s Bitcoin strategy remains active despite international pressure. He stated the country would not alter its course under external demands. However, the IMF has tied further disbursements to full compliance with this policy restriction.
Chivo Wallet Access to End by July 1, 2025
In addition to halting Bitcoin purchases, the IMF demands El Salvador discontinue public access to the state-run Chivo wallet. This condition must be met by July 1, 2025, to qualify for further disbursements. The IMF believes ending public access will reduce fiscal risk and enforce monetary discipline.
The Chivo wallet was introduced to boost Bitcoin use and digital payments across El Salvador. However, the IMF now considers it a liability under its economic oversight. Therefore, the government is expected to phase out the wallet’s public functions in the coming months.
The IMF also requested transparency regarding the wallet’s infrastructure and usage metrics. The fund emphasized accountability as a key requirement for sustained support. Government cooperation will be closely monitored during the next stages of the loan program.
$3.5 Billion Tied to Reform Success
The $1.4 billion extended fund facility requires El Salvador to implement comprehensive fiscal reforms and policy adjustments. These include enhancing banking liquidity, restructuring civil service, and revising pension systems. Achieving these policy benchmarks is required for the next $120 million tranche.
Luis Cubeddu and Iván Luis Torres confirmed the IMF’s executive board would assess compliance before releasing additional funds. The review will also consider adherence to all crypto-related and public finance conditions. Board approval remains essential for the continuation of the extended loan.
Other creditors have pledged an additional $2.1 billion in financial backing. However, those funds also depend on the successful implementation of IMF-led reforms. El Salvador must balance its fiscal goals while aligning with international funding conditions.
