IMF Lauds El Salvador Economy While Paring Bitcoin Role

The IMF commended El Salvador's economic progress while simultaneously criticizing its continued Bitcoin initiative.

Last Friday, the IMF announced it had cleared a $139 million payout to El Salvador, while at the same time seeking to "reduce the state’s involvement in Bitcoin-related activities."

El Salvador adopted bitcoin as legal tender in 2021, drawing strong criticism from the IMF and other major organizations. That year, the Central American nation was in talks with the fund for a development loan.

"El Salvador’s economy continues to perform strongly"

In September, the IMF stated that El Salvador had stopped purchasing bitcoin, although the nation's Bitcoin Office has consistently claimed otherwise.

The IMF noted that "economic activity has exceeded expectations, supported by sustained improvements in security and investor confidence, as macroeconomic imbalances continue to be addressed."

The fund added, "However, certain performance criteria were not met, including on the Bitcoin accumulation front, for which waivers were granted based on strong corrective measures and renewed commitments."

The IMF also said that the Salvadoran government's role in Bitcoin activities is being scaled back and that "no further bitcoin accumulation is envisaged beyond the documented donations."

In 2022, President Nayib Bukele announced that El Salvador would purchase one bitcoin daily, but the source of funds and whether actual purchases occurred remained unclear.

The IMF reported in September that El Salvador had temporarily stopped using public money for bitcoin accumulation, instead receiving bitcoin through private donations.

At the end of December, El Salvador and the IMF finalized a $1.4 billion loan deal, with the fund requiring the nation to reduce some parts of its bitcoin strategy.

In 2021, the Salvadoran government gave citizens free bitcoin and launched a digital wallet aimed at increasing cryptocurrency usage in the dollarized economy.

In 2024, President Bukele acknowledged that Salvadorans were not using bitcoin for purchases as anticipated, but he continued to claim that the government was still accumulating sats.