El Salvador expects to complete a $1.3 billion IMF Loan Agreement in the next weeks. The country will adjust its legal treatment for Bitcoin and align its fiscal policies to ensure international financing.
Financial Times reports that an IMF delegation is currently in San Salvador, negotiating terms to remove any requirement on businesses to accept Bitcoin. This would make adoption optional. According to the Financial Times, an IMF mission is in San Salvador to negotiate terms that would likely remove the requirement for businesses accepting Bitcoin, making adoption voluntary.
This approach marks a shift in the country’s pioneering stance on Bitcoin as legal tender, introduced in 2021. The IMF consistently opposed mandatory acceptance of the digital asset, citing risks to financial stability, and previously urged President Nayib Bukele’s administration to scale back crypto-related policies. Matthew Sigel commented as the head of Van Eck’s Digital Assets Research.
“Even if El Salvador makes Bitcoin acceptance voluntary, it remains legal tender—like the Euro in Montenegro, currencies in British Overseas Territories, and Canadian dollars, which merchants can refuse in large amounts.
Such flexibility is a common global practice.”
El Salvador’s new terms will reportedly include a commitment to reduce budget deficits by around 3.5 percentage points of GDP over three years through a mix of spending cuts and tax measures. Planned measures include the passing of a new anti-corruption bill and increasing reserves from $11 to $15 billion.
Bukele, who was re-elected this year with a broad mandate, has worked to shift international perceptions of El Salvador’s economic management. The dramatic crackdown on violent gangs had dominated the country’s image, now coupled with efforts to attract foreign investment and reposition its financial status.
According to The Financial Times, according to officials involved in the negotiations the new agreement signals a return of more traditional lending relationships between the IMF and the IMF.
Despite the fact that the government claims to be a pioneer in Bitcoin adoption, many Salvadorans still use the US Dollar for their transactions, and only 12% are using Bitcoin. Bukele’s attempt to promote Bitcoin as a cornerstone of growth, including announcements of a “Bitcoin City”The use of geothermal power has attracted widespread interest.
The IMF’s proposed deal does include a voluntary acceptance clause that acknowledges the low level of interest in Bitcoin among the local population. El Salvador’s Bitcoin reserves are worth more than $600,000,000, demonstrating the efforts made to link national economic policies to Bitcoin returns.
A formal announcement of the IMF package in the coming weeks would represent a significant change in El Salvador’s unwavering Bitcoin support to this point. However, with the potential for the US to also create a strategic Bitcoin reserve following Trump’s inauguration, it will be interesting to observe the IMF’s response to such legislation by a global powerhouse like the United States.
Bukele said that in addition to the IMF announcement, they plan to aggressively market gold so as to lower its price and promote Bitcoin. On the other hand, speaking on “trillions”Bukele reported that El Salvador had gold reserves.
“We’ll dilute that thing like there’s no tomorrow 😂”
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