According to Bloomberg, progress has been made in the negotiations between the International Monetary Fund (IMF) and El Salvador toward a Fund-supported program. The discussions have focused on policies aimed at strengthening public finances, boosting bank reserve buffers, improving governance and transparency, and mitigating risks associated with Bitcoin. The IMF stated on Tuesday that understandings were reached on improving the primary balance by around 3.5 percent of GDP over a three-year period. This consolidation is expected to be achieved through measures such as rationalizing the public wage bill.
The IMF has consistently expressed concerns about El Salvador's adoption of Bitcoin as legal tender. While many of the risks have not yet materialized, both parties recognize the need for further efforts to enhance transparency and mitigate potential fiscal and financial stability risks from the Bitcoin project. Additionally, progress was made on a plan to strengthen reserve buffers in the financial system and on a strategy to enhance governance and transparency, according to the IMF.