The International Monetary Fund (IMF) is seeking to limit Bitcoin purchases by El Salvador as part of an expanded $1.4 billion financial agreement with the country.
On March 3, the IMF formally requested an extension of its funding arrangement with El Salvador, submitting several new documents, including updates to the staff statement and a new declaration from its executive director for the country.
The technical memorandum of understanding specified a condition to prevent the public sector in El Salvador from voluntarily accumulating Bitcoin.
Furthermore, the memorandum called for a restriction on public sector issuance of “any form of debt or tokenized asset tied to or denominated in Bitcoin that would create a liability for the public sector.”
IMF’s Méndez Bertolo: “Risks related to Bitcoin are being addressed”
In a statement from February 26, Méndez Bertolo, the IMF’s executive director for El Salvador, stressed that the extended agreement is designed to foster “improvements in governance, transparency, and resilience to enhance confidence and support the country’s growth prospects.”
“Simultaneously, risks tied to Bitcoin are being mitigated,” Bertolo remarked, adding:
“The authorities have modified the Bitcoin Law to clarify Bitcoin’s legal status and remove its designation as legal tender. Bitcoin acceptance will be optional, tax payments will be made in U.S. dollars, and the government’s role in the Bitcoin initiative will be limited.”
Bertolo also noted that the IMF’s program is expected to secure “significant additional financial support” from institutions like the World Bank, the Inter-American Development Bank, and other regional development banks.
IMF continues to limit public sector Bitcoin purchases
The latest loan terms from the IMF reaffirm the Salvadoran government’s previous pledges to scale back its involvement in Bitcoin-related economic activities.
The statement emphasized that the agreement aims to address potential risks from El Salvador’s Bitcoin venture in alignment with “fund policies and recommendations to the authorities.”
It further stated, “Going forward, program commitments will restrict government participation in Bitcoin-related economic activities, as well as any government transactions involving Bitcoin purchases.”
The IMF also pointed out that El Salvador will strengthen regulations and oversight of digital assets “to keep pace with evolving global standards.”
This marks another step in the IMF’s ongoing effort to curtail El Salvador’s Bitcoin adoption. The country secured the $1.4 billion deal in December 2024, with the understanding that it would scale back its Bitcoin-related projects.
In mid-February, Samson Mow, CEO of Jan3 and a supporter of Bitcoin adoption by nation-states, criticized the IMF’s unclear stance on whether it would allow El Salvador to continue acquiring Bitcoin.
Despite the IMF’s position, President Nayib Bukele has persisted in adding to the country’s Bitcoin reserves. On March 3, he revealed a new purchase, bringing El Salvador’s total holdings to 6,100 BTC.
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