Nikolas Sargeant
The International Monetary Fund (IMF) has issued new conditions for El Salvador’s extended $1.4 billion funding deal, which includes a restriction on Bitcoin purchases by the public sector. In a statement released on March 3, the IMF outlined its latest technical memorandum, which explicitly prohibits the voluntary accumulation of Bitcoin by the Salvadoran government. This move marks another step in the IMF’s efforts to curb the country’s Bitcoin-related activities following its controversial Bitcoin adoption in 2021.
The new memorandum also calls for a restriction on the public sector’s issuance of any debt or tokenized instruments denominated in Bitcoin. This request is aimed at limiting the country’s financial exposure to the cryptocurrency, which has been a focal point of both support and concern. The IMF has expressed that its role is to ensure the country’s economic stability, and these measures are in line with broader international efforts to mitigate potential risks posed by the cryptocurrency.
IMF’s executive director for El Salvador, Méndez Bertolo, emphasized that the new loan agreement focuses on improving governance, transparency, and resilience within the country. He also highlighted that Bitcoin-related risks are being managed, with amendments to the Bitcoin Law clarifying that Bitcoin is no longer considered legal tender. These adjustments aim to limit the public sector’s involvement with Bitcoin, and ensure that tax payments will continue to be made in US dollars.
El Salvador Buys More Bitcoin Despite IMF Restrictions
In addition to these regulatory developments, El Salvador’s Bitcoin reserve continues to grow. In since the IMF deal that eliminated Bitcoin as an official currency in El Salvador, they have nonetheless increased their Bitcoin reserve more than once. This marks another significant addition to El Salvador’s Bitcoin reserve, reinforcing the government's commitment to its cryptocurrency strategy.
In fact, El Salvador’s President Nayib Bukele remains committed to Bitcoin, continuing to increase the country’s holdings. On March 3, Bukele announced an additional Bitcoin purchase, bringing the nation’s total holdings to 6,100 BTC. This ongoing accumulation contrasts with the IMF’s push for greater restrictions, adding complexity to the relationship between El Salvador and global financial institutions.
