El Salvador to Receive $120 Million from IMF Despite Bitcoin Disagreement

El Salvador has reached an agreement with the International Monetary Fund (IMF) to receive a $120 million payment as part of a $1.4 billion, 40-month loan deal. This agreement, announced on May 27, includes conditions that El Salvador must fulfill its prior obligations to limit further government involvement in Bitcoin and cease its involvement in the Chivo wallet by the end of July. The IMF emphasized that efforts will continue to ensure that the total amount of Bitcoin held across all government-owned wallets remains unchanged.

Despite the IMF's conditions, El Salvador's president, Nayib Bukele, has stated that his government will continue to acquire one Bitcoin per day as part of the nation’s Bitcoin treasury strategy. This stance was reinforced shortly after the IMF’s announcement, as El Salvador’s Bitcoin Office posted on social media that the country had purchased more Bitcoin. The country’s official Bitcoin tracker shows that El Salvador has accumulated 30 Bitcoin in the past 30 days, bringing its total reserve to 6,190.18 Bitcoin.

The IMF's request for El Salvador to stop accumulating Bitcoin and refrain from other Bitcoin-related activities was reiterated on March 3. However, Bukele's continued acquisition of Bitcoin suggests a potential conflict between the government's policies and the IMF's conditions. The IMF's director of the Western Hemisphere Department had previously stated that the country is complying with the IMF’s performance criteria. This compliance could be maintained through technical means, such as purchasing Bitcoin through non-government entities, as suggested by an intergovernmental blockchain adviser.

The IMF's agreement with El Salvador includes a planned payout of $120 million, subject to the approval of the IMF executive board. This payment is part of the broader loan agreement, which aims to support El Salvador's economic stability while limiting its involvement in Bitcoin. The IMF's conditions reflect its concerns about the volatility and risks associated with cryptocurrencies, particularly in the context of a country's financial stability. El Salvador's continued acquisition of Bitcoin, despite these concerns, highlights the complex interplay between national policies and international financial regulations.