El Salvador Defies IMF, Vows to Continue Bitcoin Purchases

El Salvador, under the leadership of President Nayib Bukele, has announced its intention to continue purchasing Bitcoin, despite recently finalizing a deal with the International Monetary Fund (IMF). This decision comes as a surprise, as the IMF deal was initially presumed to put a halt to the country's accumulation of the digital currency.

In a recent post on X, President Bukele made it clear that his government's commitment to Bitcoin is unwavering. He stated, "No, it’s not stopping," and added, "If it didn’t stop when the world ostracized us and most ’bitcoiners’ abandoned us, it won’t stop now, and it won’t stop in the future."

The IMF's recent country report on El Salvador highlighted the nation's recovery from the pandemic, supported by strong remittances and a resurgence in tourism. The report also noted a significant improvement in the country's security situation. Inflation has decreased, and external imbalances have recently narrowed, in line with a gradual improvement in public finances and favorable trade terms.

The report also pointed out that sovereign spreads in El Salvador have significantly reduced, aided by recent debt buyback operations, which have helped to alleviate near-term external financing needs. However, the report also warned of significant macroeconomic imbalances, primarily due to high fiscal deficits and debt, low external and financial buffers, and the country’s dollarization context.

Despite these challenges, the Bukele administration has expressed its intent to focus its second mandate on addressing these macroeconomic and structural issues, aiming to boost economic growth under an IMF-supported program. The administration’s continued commitment to Bitcoin forms part of this broader economic strategy.

Since the IMF announced the approval of the agreement last week, El Salvador has bought 12 bitcoins, adding to its strategic reserve. President Bukele has reiterated his commitment to continue purchasing Bitcoin, despite the IMF's demands. The country has been buying at least one Bitcoin a day, demonstrating its commitment to the cryptocurrency.

The IMF has outlined conditions for El Salvador to align with evolving global financial regulations. The country is barred from purchasing Bitcoin voluntarily, including through mining operations, except for Bitcoin obtained via seizures, forfeitures, or other legal enforcement actions. However, President Bukele has dismissed conjecture that the country would halt Bitcoin purchases and reaffirmed that El Salvador would continue acquiring BTC.