IMF Urges El Salvador to Halt Bitcoin Purchases Amid Financial Framework Negotiations

The International Monetary Fund (IMF) will make efforts to ensure the «guarantees» for maintaining El Salvador’s Bitcoin reserves without any changes.

The organization announced that staff-level agreements were reached concerning expanded financing for the country. The IMF’s stance contradicts President Nayib Bukele’s ambitions to increase the amount of Bitcoin held by the government.

In 2024, the two parties entered into an agreement that limited El Salvador’s acquisition of the digital currency in exchange for a 40-month loan valued at $1.4 billion. Other institutions, including the World Bank, may also provide additional support, resulting in an overall package of approximately $3.5 billion.

A preliminary step toward approval involved amendments to the Bitcoin law, which removed the obligation for private entities to accept cryptocurrency and revoked its status as a legal tender.

The Fund’s program aims to address the macroeconomic and structural issues faced by El Salvador. The IMF believes that the reserves of the primary cryptocurrency in the country pose a potential risk that «has not yet materialized.»

Despite the formal restrictions, El Salvador has continued to steadily increase its Bitcoin holdings, totaling 6,190 BTC, with the latest acquisition recorded on May 28. In March, Bukele promised that the purchases of the digital currency would not cease.

Recall that in September 2021, El Salvador became the first country in the world to recognize Bitcoin as legal tender. Service providers and merchants were required to accept the cryptocurrency.

The government encouraged residents to utilize the Chivo wallet by offering $30 in digital currency for registering in the app. The state consistently bought Bitcoins and engaged in mining activities.