The International Monetary Fund said on Thursday it had completed the second and third reviews of El Salvador's lending program, unlocking an immediate disbursement of about $138 million and praising progress on fiscal reforms.
- The IMF said El Salvador's economy was performing more strongly than expected, helped by improved security and rising investor confidence under President Nayib Bukele's government.
- In a sign that one of the program's most sensitive issues remains unresolved, the Fund said some performance criteria were missed, including on bitcoin accumulation, though waivers were granted after what it called strong corrective measures and renewed commitments from the authorities. It added that "no further Bitcoin accumulation is envisaged beyond the documented donations."
- El Salvador became the first country to adopt bitcoin as legal tender in 2021, but its Congress last year moved to scale back the policy under the IMF deal, making bitcoin acceptance voluntary and limiting the state's role in bitcoin-related activities.
- The issue resurfaced this year after Bukele and the government's Bitcoin Office continued to signal that the country was adding to its bitcoin reserves. In July, the IMF said the total amount of bitcoin held across government-owned wallets remained unchanged and was consistent with program commitments.
- In September, IMF staff said documentation provided by El Salvador showed that bitcoin accumulated since the first review reflected private donations rather than the use of public funds.
- The Fund said El Salvador had also made progress on anti-money laundering controls, fiscal transparency and the transfer of majority ownership and control of the state-backed Chivo e-wallet to a private operator.
- It said the program would now continue to focus on fiscal sustainability, external buffers, financial resilience and governance reforms, while delayed pension and civil service changes were to be pursued.