IMF Warns El Salvador Government to Halt Bitcoin Purchases Amid Financial Agreement

The International Monetary Fund (IMF) will make efforts to ensure the «guarantees» of preserving the Bitcoin reserve of the Salvadoran government remain unchanged.

The organization announced that it has reached staff-level agreements on extended funding for the state. The IMF’s stance conflicts with the ambition of the country’s president, Nayib Bukele, to increase the amount of Bitcoin held.

In 2024, the parties entered into an agreement that limited El Salvador’s acquisition of digital gold in exchange for a $1.4 billion credit over 40 months. Other institutions, including the World Bank, may also provide additional support, bringing the total package to approximately $3.5 billion.

A preliminary step for the fund’s approval involved amending the Bitcoin law to remove the mandatory acceptance of coins by private entities and rescind its status as legal tender.

The fund’s program aims to address the macroeconomic and structural challenges faced by El Salvador. The IMF believes that the reserves of the first cryptocurrency in the country pose a potential risk that has «yet to materialize.»

Despite the formal restrictions, El Salvador has continued to steadily accumulate its Bitcoin holdings, reaching 6,190 BTC. The latest purchase was recorded on May 28. In March, Bukele promised that the acquisition of digital gold would not cease.

It’s worth noting that in September 2021, El Salvador became the first country in the world to recognize Bitcoin as legal tender, mandating that services and merchants accept the cryptocurrency.

The government encouraged residents to use the Chivo wallet by offering $30 in digital gold for signing up for the app. The state regularly purchased coins and engaged in mining activities.