Following the IMF’s decision to overlook Bitcoin rule violation, El Salvador secures $138M.
El Salvador has successfully obtained an immediate disbursement of approximately $138 million from the IMF after the organization finalized two reviews of its $1.4 billion lending program and issued waivers for unmet conditions, including one related to Bitcoin holdings.
Summary
- The IMF granted approximately $138 million after overlooking El Salvador’s violation of Bitcoin accumulation limits on Thursday.
- El Salvador reported new Bitcoin holdings as private donations, ensuring no public funds were utilized directly.
- According to the IMF, no further Bitcoin accumulation is expected beyond the documented donations included in the current lending program commitments.
- The majority ownership and operational control of Chivo have transitioned to a private entity, as noted by the IMF.
- The IMF anticipates that El Salvador’s economy will grow by 4.5% in 2026 and 4% in 2027.
The IMF announced that its Executive Board completed the second and third reviews under El Salvador’s 40-month Extended Fund Facility on October 1, leading to the release of SDR 101.96 million, which is approximately $138 million at the Fund’s prevailing exchange rate. Bloomberg reported the amount as $139 million.
The board noted that several performance criteria had not been satisfied, including the stipulation related to Bitcoin accumulation. Waivers were granted following what the IMF referred to as corrective actions and renewed commitments from authorities in El Salvador.
Why did the IMF waive El Salvador’s Bitcoin breach?
El Salvador’s initial IMF program included a continuous prohibition on voluntary Bitcoin acquisition by the public sector. Initial documents categorized voluntary accumulation as purchases or mining, explicitly excluding Bitcoin obtained through seizures or law enforcement actions.
By September, however, an understanding had been established between the IMF and Salvadoran authorities regarding Bitcoin that had been reflected in government-controlled wallets since the first evaluation. The IMF indicated that documentation from El Salvador confirmed that the accumulation stemmed from private donations, and that public resources were not utilized.
This clarification addressed prior concerns regarding wallet activities suggesting El Salvador continued to augment its Bitcoin holdings despite agreeing to restrict state acquisition. The IMF accepted the documentation linking the additions to donations, even though the identities of the donors and the amounts donated were not disclosed.
The board’s decision on October 1 does not permit a resumption of government-funded Bitcoin purchases. The IMF affirmed, “no further Bitcoin accumulation is expected beyond documented donations,” which indicates a forward-looking expectation related to the current agreement.
Earlier IMF reports had noted minor technical breaches regarding the Bitcoin condition due to fluctuations in balances held for Chivo customers, despite public-sector holdings remaining stable. The most recent release does not claim that these earlier technical issues solely warrant the new waiver.
El Salvador must keep reducing the state’s crypto role
Bitcoin is just one aspect of the IMF’s conditions. The program mandates El Salvador to diminish direct government involvement in the Chivo wallet, which was established as part of the country’s Bitcoin initiative.
In September, the Fund verified that majority ownership and operational control of Chivo had shifted to a private operator, while the government retained a minority stake and custodial duties for customer assets at that moment.
The Executive Board is now seeking to eliminate any remaining state exposure. Dan Katz, the IMF’s First Deputy Managing Director and chair of the board discussion, indicated that the remaining public-sector role “should be fully unwound.”
El Salvador had modified its Bitcoin Law in 2025, abolishing mandatory Bitcoin acceptance for private businesses and stipulating that taxes must be settled in U.S. dollars. These changes were part of the measures supporting the IMF program. Previous reports on El Salvador’s cessation of mandatory Bitcoin acceptance highlighted the legal changes and the planned reduction of government involvement in Chivo.
Discussions surrounding Chivo extended into 2026. By September, the transition of majority ownership and operational control was finalized, although the IMF’s latest communication indicates that the government had not completely removed its residual exposure.
IMF raises El Salvador growth prediction to 4.5%
The disbursement was authorized as the IMF reported stronger economic activity than anticipated. The Fund projects El Salvador’s real GDP to increase by 4.5% in 2026, following an estimated growth of 3.9% in 2025. A growth rate of 4% is forecasted for 2027.
The IMF’s staff attributed the heightened activity to augmented investment and private consumption, along with remittances, tourism, and capital inflows. Factors such as improved security and investor confidence were highlighted as supporting elements for this activity.
According to the board review, reserve and liquidity targets were comfortably met. Gross international reserves are expected to reach $5.35 billion in 2026 and $6.17 billion in 2027. The primary fiscal balance is projected to have a surplus of 2.9% of GDP this year and 3.7% next year.
The Fund continues to urge El Salvador to proceed with its fiscal reforms. Reforms concerning pensions and civil-service measures have faced delays, while the IMF has called for stricter expenditure controls, enhanced revenue administration, and improved public financial management.
What lies ahead for El Salvador’s Bitcoin policy?
Bitcoin holdings will continue to be subject to increased transparency requirements under the IMF program. Authorities are expected to enhance reporting for crypto assets held by public entities and maintain up-to-date information on government-controlled wallets.
The Fund insists that public Bitcoin exposure must not grow beyond verified donations. The agreement reached in September mandated that authorities provided documentation for accumulated coins and pledged to avoid new acquisitions beyond those documented transfers.
El Salvador’s public-facing Bitcoin strategy has previously generated confusion, as government-linked channels continued to indicate rising holdings while IMF documents stated that no public funds were being utilized. Previous articles on the discrepancy between daily Bitcoin declarations and IMF records explored the inconsistency between wallet activities and official program accounting.
In the next phase of the program, the IMF desires stronger regulations regarding digital-asset firms, public crypto holdings, and financial-sector oversight. Katz indicated that authorities should enhance the disclosure of state crypto assets and bolster regulatory, supervisory, and governance standards for crypto service providers.
The IMF specifically requested amendments to El Salvador’s Digital Asset Issuance Law as part of this regulatory initiative, while the government is expected to complete the process of unwinding its remaining public-sector involvement in Chivo.