El Salvador Plans to Compromise Bitcoin Policy for IMF Loan Agreement
El Salvador has moved a step closer to securing a billion-dollar financing from the International Monetary Fund (IMF). However, the country may need to make some changes to its controversial Bitcoin law.
According to reports, the El Salvador government aims to secure a $1.3 billion loan from the IMF within the next two to three weeks. In return for this agreement, the El Salvador administration plans to eliminate the requirement for businesses to accept Bitcoin as a payment method. This would mean that Bitcoin will transition from a mandatory payment method to an optional one. If finalized, this agreement would pave the way for a total of $3.3 billion in loans from the World Bank and the Inter-American Development Bank, aimed at supporting macroeconomic adjustments and structural reforms.
El Salvador made history in 2021 as the first country in the world to accept Bitcoin as legal tender. It imposed an obligation on technology-enabled businesses to accept Bitcoin. On September 6, 2021, El Salvador made its first acquisition of 200 BTC and has continued to purchase Bitcoin since then.
Under the leadership of President Nayib Bukele, the government committed to acquiring 1 BTC daily. By November 2024, the country’s total Bitcoin holdings had reached 5,932 BTC. This month, as Bitcoin prices neared $100,000, Bukele announced that this Bitcoin reserve is valued at approximately $600 million, representing a 126% increase.
However, the IMF has expressed criticism over this approach and issued various warnings over the years. The organization condemned the practices due to "a series of macroeconomic, financial, and legal issues." In October, the IMF reiterated its recommendations to El Salvador to limit the scope of the Bitcoin law.
It is believed that changes to the law would not have a significant impact on Bitcoin acceptance. In August, Bukele acknowledged that the country's Bitcoin experience has led to complex outcomes and noted that the cryptocurrency has seen limited local adoption.