According to Cointelegraph, El Salvador is set to make significant changes to its Bitcoin policies as part of a $1.4 billion loan agreement with the International Monetary Fund (IMF). The Central American nation will receive the funds over the next 40 months, following its commitment to measures aimed at reducing its debt-to-GDP ratio. The IMF announced on December 18 that the potential risks associated with El Salvador's Bitcoin project will be significantly reduced in accordance with the Fund's policies. Legal reforms will ensure that Bitcoin acceptance by the private sector becomes voluntary, while public sector involvement in Bitcoin-related economic activities will be limited.
El Salvador initially began purchasing Bitcoin in 2021, and according to the Bitcoin Office's tracker, the country currently holds 5,968.8 Bitcoin, valued at approximately $602 million. Despite reaching out for comments, Cointelegraph did not receive an immediate response from El Salvador’s National Bitcoin Office. The IMF also stated that taxes in the country will continue to be paid in US dollars, which remains the official currency, and that government involvement in the state-backed crypto wallet Chivo will be gradually reduced.
The agreement, which still requires approval from the IMF Executive Board, concludes four years of negotiations that were complicated by President Nayib Bukele's decision to adopt Bitcoin as legal tender in June 2021, making El Salvador the first country to do so. The IMF has consistently urged Bukele to abandon his Bitcoin plans, citing the speculative nature of the cryptocurrency as a potential risk to the country's economy. The agreement will also facilitate additional loans from other global financial institutions, including the World Bank, bringing the total financing package to over $3.5 billion.
In response to the IMF's announcement, Max Keiser, a Bitcoin adviser to President Bukele, dismissed the agreement as "bureaucratic, meaningless nonsense" on social media platform X. He emphasized that Bitcoin usage in El Salvador has always been voluntary and continues to grow. However, a recent survey conducted in October revealed that 92% of Salvadorans do not use Bitcoin for transactions, an increase from a 2023 survey where 88% reported not using the cryptocurrency for transactions.
