El Salvador, the world’s first country to adopt bitcoin (BTC) as legal tender, has agreed to amend its stance on Bitcoin payments as part of a $1.4 billion loan agreement with the International Monetary Fund (IMF).
A $1.4 Billion Deal
According to an official report, the Central American country is set to receive $1.4 billion from the IMF within the next 40 months after committing to actions designed to reduce its debt-to-GDP percentage.
“The Salvadoran authorities and a staff team from the IMF have reached staff-level agreement on a 40-month extended arrangement under the Extended Fund Facility (EFF) for about US$ 1.4 billion (equivalent SDR 1,033.9 million, or 360 percent of quota) to address the balance of payment needs and support the government’s economic reforms,” the Salvadoran team said.
Furthermore, the team added that the agreement is subject to approval by the Fund’s Executive Board and contingent on the implementation of the agreed prior actions.
The IMF also noted that the process will minimize the potential risks and challenges associated with the Bitcoin initiative by the Fund’s policies. Legal changes will ensure that the private sector’s adoption of BTC remains optional. This adjustment is designed to alleviate concerns over forced adoption while maintaining Bitcoin’s legal tender status.
The $1.4 billion loan from the IMF is expected to provide much-needed fiscal support to El Salvador, which has faced mounting economic pressures, including high debt levels and a struggling economy. The funds will support public finances, support social programs, and stimulate economic growth. In return, the government has agreed to implement fiscal reforms, including the voluntary BTC policy.
El Salvador Boosts Bitcoin Adoption
El Salvador started purchasing BTC in 2021, and according to the National Bitcoin Office’s tracker, the country now owns 5,968.8 bitcoins, valued at approximately $602 million.
With recent progress in the country, American broadcaster Max Keiser said El Salvador is living America’s dream through BTC.
Keiser further noted that El Salvador’s president, Niyab Bukele, is one of the most popular leaders in the world and that, under his bitcoin strategy, the country has become one of the safest in the Western Hemisphere.
On October 28, 2024, the country marked three years of BTC Acquisition and held nearly 6,000 BTC. At the time, El Salvador’s total Bitcoin holdings, comprising both mined and purchased units, exceeded $400 million, with a balance of 5,917 BTC.
