El Salvador has clinched a pivotal $1.4 billion agreement with the International Monetary Fund (IMF), marking a major move toward fiscal stability—but at a cost: stricter limits on the country’s use of Bitcoin.The deal, announced after months of negotiation, falls under the IMF’s Extended Fund Facility (EFF), spanning 40 months and providing access to up to $3.5 billion in support from the IMF and other international lenders.While the agreement includes an immediate $120 million disbursement, it also imposes new restrictions on El Salvador’s Bitcoin strategy, which has been a key part of President Nayib Bukele’s financial agenda since the country made Bitcoin legal tender in 2021.
Bitcoin Clampdown Under IMF Terms
The IMF has long viewed Bitcoin as a threat to macroeconomic stability due to its volatility. As part of the new agreement, El Salvador must:
Stop all publicly funded Bitcoin purchases
Freeze existing Bitcoin reserves in state-owned wallets
Close public access to the government-run Chivo wallet by July 1, 2025
Despite current holdings of 6,190.18 BTC valued at approximately $675 million, with unrealized gains of $350 million, the IMF insists that further crypto accumulation could endanger long-term economic goals.
President Bukele responded defiantly, saying, “If it didn’t stop when the world ostracized us… it won’t stop now.” While El Salvador will retain its Bitcoin identity, it will now operate under tighter financial discipline.
Conditions for Future Tranches
To access the full $3.5 billion package, El Salvador must meet several economic reform benchmarks, including:
Fiscal restructuring
Enhancing banking sector liquidity
Civil service reform
Pension system modernization
These steps are critical for unlocking future tranches of IMF funding and attracting additional support from global creditors.
A Balancing Act Ahead
The IMF reiterated in its statement:
“EFF approved with SDR 1033.92 million (about $1.4B)… Other creditors will add about $2.1B more.”
El Salvador now faces the challenge of balancing its Bitcoin-first national image with structural reform mandates from its international partners. The agreement is pending final approval from the IMF Executive Board, which is expected to greenlight the package soon.
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