The IMF and El Salvador have agreed to release about US$140 million in lending, but the IMF board must approve the payout. The IMF confirms no public funds have gone into bitcoin since last summer, and that the Chivo wallet has been privatised.
In September 2021, El Salvador became the first country in the world to make bitcoin legal tender. When Nayib Bukele's government needed financing from the International Monetary Fund, it had to give much of that up. The US$1.4 billion, 40-month lending programme was approved by the IMF board on 26 February 2025, and has since tied the country's crypto policy to a series of conditions set in Washington. The parties have now agreed on the next disbursement.
The IMF and the Salvadoran authorities reached a staff-level agreement on Thursday on the combined second and third reviews of the programme. The agreement unlocks about US$140 million, equal to 101.96 million special drawing rights, the IMF's own unit of account.
The money has not been paid out. The agreement must first be formally approved by the IMF's executive board, and a set of prior actions must be completed. The programme has a total envelope of 1,033.92 million drawing rights, around US$1.4 billion, equal to 360 per cent of the country's quota at the fund. The first review was concluded on 27 June last year, and 172.32 million drawing rights have been disbursed so far, according to the IMF.
The condition that has drawn the most attention is that public funds must not be used to build the country's bitcoin reserve. The IMF says the authorities have provided documentation showing that all accumulation since the previous review comes from private donations, and that no public resources were used.
The fund adds that no further accumulation is expected beyond the documented donations. The parties have also agreed on steps to modernise the legal, regulatory and supervisory framework for digital assets, and to strengthen governance and risk management of public-sector crypto holdings.
The reserve can be tracked publicly. Bukele published the address of the strategic reserve in March 2024, and the holding is followed on the government portal bitcoin.gob.sv, which now tracks several addresses after the funds were split into wallets holding a maximum of 500 bitcoin each. The portal puts the holding at 7,764 bitcoin, worth around US$615 million, according to Cryptoast.
The second major concession concerns Chivo, the state wallet launched alongside the bitcoin law. Majority ownership and operational control have been transferred to a private operator, according to the IMF, while the state keeps a minority stake and responsibility for the custody of customer assets.
The IMF describes public participation in Chivo as substantially unwound, and says work is under way to improve transparency of the bitcoin holdings across the various wallets.
The law itself was amended by the legislative assembly on 29 January 2025, by 55 votes to 2. Bitcoin still has legal standing in El Salvador, but references to the cryptocurrency as legal tender have been removed. Shops that were previously required to accept bitcoin can now choose for themselves, while its use as a means of exchange remains unrestricted.
Articles 4, 8 and 9 of the original law were repealed. That removed the state's obligation to provide automatic and instant conversion into dollars, and bitcoin can no longer be used to pay taxes or debts to the government.
The IMF describes economic performance as strong. Growth last year came in above expectations, and the fund expects 4.5 per cent this year, driven by investment and private consumption, and by remittances, tourism and capital inflows. Better security and greater investor confidence are cited as the reasons.
The consolidation will continue. The public-sector primary balance, meaning the surplus before interest costs, is expected to strengthen from 2.9 per cent of gross domestic product this year to 3.7 per cent in 2027, according to the IMF. The aim is to bring public debt down to 80 per cent of GDP by 2030. On top of that come a pension reform next year, a civil service reform, tighter rules against money laundering and terrorist financing, and the publication of asset declarations by senior officials.
The cost has been felt in a country of six million people. Economists cited by AFP estimate that around 15,000 public employees have lost their jobs as a result of the austerity measures following the IMF agreement, according to Cryptoast.
Five years after bitcoin became legal tender, the status is gone, the wallet is privatised and the buying has been left to donors. The reserve is still growing, but no longer on the state's money.
Sources: IMF, Cryptoast
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