Key Insights
- IMF and El Salvador reached a staff-level agreement under a $1.4 billion deal, requiring the country to halt further government bitcoin purchases and exit the Chivo wallet by July.
- Despite this, President Nayib Bukele continues acquiring bitcoin, with El Salvador adding 30 BTC in the past 30 days, bringing total holdings to 6,190.18 BTC.
- The IMF aims to keep El Salvador’s bitcoin reserves unchanged, while Bukele claims the nation’s holdings have gained $386 million in unrealized profit.
SAN SALVADOR (MarketsXplora) — The International Monetary Fund (IMF) announced Tuesday that it will work to ensure El Salvador’s government does not increase its bitcoin holdings, a move that underscores ongoing tensions with President Nayib Bukele, who has continued to champion the cryptocurrency despite prior commitments to the global lender.
The statement follows a staff-level agreement reached between the IMF and El Salvador as part of the first review of a 40-month Extended Fund Facility deal worth $1.4 billion.
The agreement, initially struck in December, aims to address the Central American nation’s macroeconomic and structural challenges. Total external support could rise to approximately $3.5 billion with anticipated contributions from other financial institutions, including the World Bank.
Will El Salvador’s Bitcoin Strategy Jeopardize Its $1.4 Billion IMF Deal?
In exchange for the loan, El Salvador agreed to limit government involvement in bitcoin-related activities. Amendments aligned with the IMF’s recommendations were passed by Congress, notably making private sector acceptance of bitcoin voluntary under the country’s Bitcoin Law. The IMF Executive Board approved the financing package in February, with the first disbursement of $120 million pending final board approval.
As part of the conditions, the IMF stated that El Salvador must “cease its involvement in the Chivo wallet by the end of July” and that “efforts will continue to ensure that the total amount of Bitcoin held across all government-owned wallets remains unchanged.” The Fund has repeatedly warned that the country’s bitcoin reserves present risks, although these have not yet materialized.
Despite this, President Bukele has shown no signs of backing down from his pro-bitcoin stance. In a March post on social media platform X, Bukele declared,
“No, it’s not stopping. If it didn’t stop when the world ostracized us and most ‘bitcoiners’ abandoned us, it won’t stop now, and it won’t stop in the future.”
Is Bukele Using a Legal Loophole to Keep Buying Bitcoin?
In line with that commitment, El Salvador’s Bitcoin Office announced on X shortly after the IMF’s latest statement that the government had acquired an additional 8 BTC, raising the nation’s total holdings to 6,190.18 BTC. Over the past 30 days, the Bitcoin Office has accumulated 30 BTC, defying IMF expectations.
As of last week, Bukele reported an unrealized profit of $386 million on the country’s bitcoin investment, reflecting a 132% gain. Earlier reports had pegged the unrealized gains at over $357 million, highlighting continued volatility and the stakes of El Salvador’s controversial bitcoin experiment.
While Rodrigo Valdes, director of the IMF’s Western Hemisphere Department, said in April that El Salvador is complying with the Fund’s performance criteria, questions remain over whether recent bitcoin purchases might breach the spirit—if not the letter—of the agreement.
Neither the IMF nor President Bukele has provided additional comments following the latest announcements. The IMF’s call to freeze bitcoin reserves, and El Salvador’s continued purchases, underline a growing rift over the country’s financial strategy and the role of cryptocurrency in its economic future.