El Salvador has reached a staff-level agreement with the International Monetary Fund (IMF) for a $1.4 billion Extended Fund Facility (EFF) arrangement.
The 40-month deal aims to address the country's fiscal challenges while supporting economic reforms and long-term growth.
El Salvador’s IMF deal includes Bitcoin, taxes and fiscal reforms
As part of the deal, El Salvador will amend its Bitcoin Law to make acceptance of the cryptocurrency voluntary rather than mandatory for merchants. Taxes will be paid exclusively in dollars, and the government plans to reduce its involvement with the state-owned wallet, Chivo.
The IMF basically went from, “remove the Bitcoin Law or else,” to “make the use of your already optional currency officially optional and shut down your app that no one likes anyway.” El Salvador made the IMF surrender to its Bitcoin Law, one user commented.
These adjustments reflect efforts to address the IMF’s concerns about Bitcoin’s volatility and risks.
The country has also committed to significant fiscal reforms. It plans to reduce the fiscal deficit by 3.5 percent of GDP over three years through spending cuts and tax increases. In addition, El Salvador intends to increase foreign reserves from $11 billion to $15 billion, ensuring greater financial stability.
The IMF acknowledged the country's steady economic growth, driven by strong remittances and a surge in tourism. The agreement seeks to improve public finances, promote sustainable development and maintain financial stability.
Bitcoin usage in El Salvador has always been voluntary, and its usage has never been higher and continues to grow. The IMF point is dead on arrival. Chivo is one of dozens of wallets used in El Salvador. Its presence or absence is negligible. Again, paying taxes in US$? Yeah, whatever. Bitcoin savings rates and the use of Bitcoin as collateral to buy property are exploding in ES. El Salvador’s success is due to Bitcoin, not failed IMF policies, Max Keiser added.
By securing this arrangement, El Salvador’s law paves the way for additional loans from other international financial institutions, potentially increasing total financing to more than $3.5 billion.
This agreement concludes four years of negotiations with the IMF, during which the role of BTC in the economy was a key concern. The IMF Executive Board is expected to review and approve the agreement in the coming weeks. This development represents a critical step for El Salvador in balancing economic modernization with financial stability.
The article El Salvador makes agreement with IMF and changes Bitcoin Law was first seen on BeInCrypto Brazil.
