- The International Monetary Fund (IMF) says negotiations with El Salvador are ongoing, focusing on transparency, protection of public funds, and risks related to Bitcoin.
- Under the IMF lending arrangement, discussions over selling or winding down El Salvador’s Chivo Bitcoin wallet have progressed smoothly.
- Despite IMF pressure, El Salvador continues daily Bitcoin purchases, while GDP growth is projected near 4%.
The International Monetary Fund (IMF) reports that talks with El Salvador about Bitcoin-related policies are continuing, with primary objectives to improve transparency, safeguard public finances, and reduce financial risks tied to cryptocurrency exposure.
This update is part of the IMF staff review of El Salvador’s 40-month Extended Fund Facility (EFF), under which the country received a $1.4 billion loan in 2024 following prolonged negotiations connected to Bitcoin adoption.
The IMF says discussions about the future of the government-operated Chivo Bitcoin wallet have particularly advanced, including options to sell the platform or to discontinue it altogether.
Launched in September 2021 as part of El Salvador’s national Bitcoin promotion, Chivo has faced persistent criticism since its introduction, with allegations of identity theft, fraud, technical failures, and frozen user accounts.
Chivo wallet negotiations moving forward
The IMF confirmed that negotiations to sell Chivo are “progressing well,” signaling a meaningful step toward reducing direct government involvement in Bitcoin infrastructure.
One of the wallet’s designers publicly suggested last year that the application should be shut down due to controversies that surrounded its rollout.
Under commitments tied to the IMF arrangement, El Salvador agreed to reduce public sector involvement in Bitcoin-related activities.
In March, the IMF formally requested that the country cease accumulating Bitcoin through purchases and mining and to dismantle public structures used to acquire digital assets.
The Fund later said El Salvador has started to meet those commitments, including initiating a full phase-out of the Chivo wallet.
Despite these measures, several private-sector Bitcoin wallets are expected to continue operating within the country.
When the IMF loan was finalized, Stacy Herbert, director of El Salvador’s national Bitcoin office, said Chivo’s role would change, but private wallet providers would continue to serve users.
Bitcoin accumulation remains a point of tension
Bitcoin policy remains a central source of friction between El Salvador and the IMF.
The Fund has repeatedly warned that Bitcoin’s price volatility poses risks to public finances and has pushed for limits on government exposure.
Nonetheless, El Salvador continues to report ongoing Bitcoin purchases.
Official disclosures show the country added 1,098 Bitcoin last month, valued at nearly $100 million at the time.
Data published by El Salvador’s Bitcoin office indicate holdings of about 7,509 BTC, with purchases continuing on a daily basis even amid sharp market swings.
In May, the IMF reiterated that it would “continue to work” to ensure El Salvador does not accumulate additional Bitcoin reserves.
President Nayib Bukele has publicly refused to halt purchases, stating in March that the policy will continue regardless of external pressure.
IMF praises economic performance
Despite ongoing concerns about Bitcoin, the IMF maintains a positive view of El Salvador’s broader economic performance.
The Fund says economic expansion has exceeded expectations, with real GDP growth forecast at about 4% this year and strong prospects for the coming year.
The IMF also notes that fiscal targets remain on track, foreign exchange reserves continue to rise, and domestic borrowing has declined.
Structural reforms have advanced, including new bank stability legislation, adoption of Basel III standards, and updated anti-money laundering rules.
The IMF states it will keep working closely with Salvadoran authorities to secure a staff-level agreement to complete the second EFF review, underscoring that—even as macroeconomic prospects improve—Bitcoin-related risks will remain under close scrutiny.