IMF Approves $1.4 Billion Loan to El Salvador with New Bitcoin Restrictions
The International Monetary Fund (IMF) has approved a $1.4 billion loan for El Salvador, with the condition that the country further restrict its Bitcoin-related economic activities. This deal imposes new limitations on government transactions and purchases of Bitcoin, marking a significant shift in El Salvador’s financial landscape.
Key Loan Conditions and Immediate Impact
El Salvador receives an immediate $113 million disbursement as part of the agreement.
The IMF expects this deal to attract additional multilateral support, totaling $3.5 billion in financing over the next 40 months.
New restrictions include further limiting government involvement with Bitcoin transactions and purchases.
“Going forward, program commitments will confine government engagement in Bitcoin-related economic activities, as well as government transactions in and purchases of Bitcoin,” the IMF stated in a blog post.
Changes to El Salvador’s Bitcoin Law
Last month, El Salvador’s Legislative Assembly amended the Bitcoin Law, resulting in:
Bitcoin no longer being recognized as legal currency but still holding “legal tender” status.
Accepting Bitcoin becoming voluntary for private businesses.
Restrictions on Bitcoin use for tax payments or government debt settlements.
Gradual reduction of government involvement with Chivo Wallet, the state-backed digital wallet.
IMF’s Position on Bitcoin in El Salvador
The IMF acknowledges that the risks of El Salvador’s Bitcoin project are being addressed through recent legal reforms.
It has praised steps taken to increase transparency of the public crypto e-wallet and limit Bitcoin’s role in government transactions.
Future IMF program commitments will include enhanced regulations for digital assets in line with international best practices.
El Salvador’s Ongoing Bitcoin Commitment
Despite IMF pressure, El Salvador remains committed to Bitcoin:
The country’s ambassador to the United States, Milena Mayorga, and Stacy Herbert from the Bitcoin Office continue to assert that El Salvador is a 'Bitcoin country'.
El Salvador has continued adding Bitcoin to its reserves, currently holding over 6,090 BTC valued at more than $500 million.
