El Salvador met most IMF targets and will continue fiscal reform through spending restraint, civil service changes, and pension system updates.
The country will keep its Bitcoin holdings unchanged and exit Chivo wallet use by July, aligning with IMF-backed policy commitments.
Financial stability measures include boosting Central Bank reserves, raising bank liquidity standards, and enhancing cooperative sector oversight.
The International Monetary Fund and El Salvador agreed on the first review of the Extended Fund Facility (EFF) at the staff level, reaffirming the economic reform program of the country.
IMF Acknowledges Progress on Reform Plan and Fiscal Policy
In a recent joint statement, IMF staff members Rodrigo Cubeddu and Marlon Torres affirmed that El Salvador had achieved most of the program targets. The statement pointed out that "implementation of the structural benchmarks is making good progress," with the economy demonstrating its resilience in the face of external difficulties.
The IMF said the El Salvadoran economy is growing with the help of enhanced confidence and stable remittances. The decrease in inflation and the deficit in the current account was the result of prudent economic actions and favorable terms of trade..
As part of ongoing reforms, the government plans to maintain fiscal consolidation. This will be done through cuts in the public wage bill and restraint on current expenditures. The administration is preparing reforms for both civil service and pension systems to strengthen long-term fiscal stability. A new Fiscal Sustainability Law is expected to be enacted soon to support these adjustments.
Strengthening External Buffers and Financial Oversight
The agreement outlines strategies to build stronger external financial buffers. This includes increasing government deposits at the Central Bank, which will be supported by financing from international institutions and continued fiscal discipline.
Consistent with programme obligations, banking liquidity requirements will be increased. Financial oversight will also be strengthened, most notably over cooperative institutions. Both measures will help to increase confidence in the financial system and strengthen it against global economic uncertainty.
IMF staff expressed appreciation for El Salvador's collaborative approach and acknowledged the importance of agile policy execution. The joint focus remains on securing stability and promoting sustainable growth through the program’s duration.
Bitcoin Policy to Remain Consistent with IMF Agreement
A tweet by Cointelegraph on May 27, 2025, highlighted the IMF's acknowledgment of El Salvador's efforts regarding Bitcoin. The IMF confirmed that the total Bitcoin held across all government-owned wallets would remain unchanged, consistent with the current program commitments.
https://twitter.com/Cointelegraph/status/1927564314937811039
The government will also proceed with unwinding its participation in the Chivo wallet by the end of July. This step comes as part of an overall process to improve governance, transparency, and decrease direct government involvement in the management of digital assets.
Also, in light of the passing of the Anti-Corruption Law, the government intends to prioritize its timely and efficient enforcement.These steps aim to ensure continued accountability, especially within public sector financial accounts.
The agreement awaits final approval by the IMF Executive Board. This would confirm the next disbursement under the EFF, part of a broader US$1.4 billion facility, with additional international support totaling US$3.5 billion.
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