El Salvador Agrees to Adjust Bitcoin Policies in $1.4 Billion IMF Loan Deal
El Salvador has reached a significant milestone in its economic journey by securing a $1.4 billion loan arrangement with the International Monetary Fund (IMF). The agreement, announced in a statement on Dec. 18, includes a 40-month Extended Fund Facility (EFF) aimed at supporting the country’s economic reforms.
After nearly four years of discussions, El Salvador has committed to implementing reforms to improve its primary balance by 3.5% of GDP over three years. This effort is expected to reduce the public debt-to-GDP ratio from its 2024 peak of 85%.
As part of the agreement, El Salvador has agreed to adjust its Bitcoin policies. Private businesses will now have the option to accept Bitcoin, as opposed to it being mandatory. The government’s involvement in Bitcoin-related activities will be scaled back, and tax payments will only be accepted in US dollars moving forward.
The IMF emphasized the need for legal reforms to ensure that Bitcoin acceptance by the private sector remains voluntary. Additionally, the public sector’s engagement in Bitcoin-related economic activities will be limited.
Despite these policy changes, El Salvador remains committed to acquiring Bitcoin. The National Bitcoin Office (ONBTC) confirmed on Dec. 18 that the country continues to purchase one Bitcoin daily, a strategy announced by President Nayib Bukele in November 2022. This approach has already yielded significant gains, with Bukele recently highlighting a $362 million unrealized profit from El Salvador’s Bitcoin holdings, which currently exceed 6,000 BTC.
While the government plans to wind down its involvement with the Chivo e-wallet, a crypto app launched in 2021, it remains focused on accumulating Bitcoin. President Bukele has reiterated the country’s commitment to daily Bitcoin purchases until they become unaffordable with fiat currencies.
Overall, the IMF loan deal represents a crucial step forward for El Salvador as it navigates the challenges of economic reform and Bitcoin integration. By adjusting its policies and continuing to stack BTC, the country is positioning itself at the forefront of the evolving digital economy.
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