- The IMF reports that talks with El Salvador continue with a focus on transparency, protection of public funds and the financial risks associated with Bitcoin.
- Negotiations over selling or winding down El Salvador’s Chivo Bitcoin wallet have advanced significantly under the IMF loan program.
- Despite IMF pressure, El Salvador continues making daily Bitcoin purchases, while GDP growth is forecast at around 4%.
The International Monetary Fund (IMF) said discussions with El Salvador about its Bitcoin-related policies are ongoing, concentrating on improving transparency, safeguarding public resources and limiting financial risks tied to the digital asset.
This update appeared as part of the IMF’s second review of El Salvador’s 40-month Extended Fund Facility (EFF), under which the country secured a $1.4 billion loan in 2024 after prolonged negotiations that were strained by the nation’s Bitcoin adoption.
According to the IMF, talks are particularly advanced regarding the future of the state-run Chivo Bitcoin wallet, including options to sell or wind down the platform.
Launched in September 2021 as part of El Salvador’s nationwide Bitcoin rollout, Chivo has faced extensive criticism since its debut, including accusations of identity theft, fraud, technical failures and frozen user accounts.
Chivo wallet under negotiation
The IMF confirmed negotiations over the sale of the Chivo wallet are “well advanced,” marking a significant step toward reducing the government’s direct involvement in Bitcoin infrastructure.
One of the wallet’s original architects said last year the application should be shut down because of the controversy it has generated since launch.
As part of the EFF arrangement, El Salvador committed to scaling back the public sector’s participation in Bitcoin-related activities.
In March, the IMF formally requested that the country halt further Bitcoin accumulation through purchases and mining, and dismantle public structures used to acquire the digital asset.
The Fund later stated that El Salvador has complied with these commitments, including initiating a full phase-out of the Chivo wallet.
Despite these measures, several private Bitcoin wallet providers are expected to continue operating in the country.
When the IMF loan was approved, 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 flashpoint
Bitcoin policy continues to be a source of tension between El Salvador and the IMF.
The Fund has repeatedly warned that Bitcoin’s price volatility creates risks for public finances and has pushed for limits on state exposure.
Nevertheless, El Salvador continues to report ongoing Bitcoin purchases.
Last month the country added 1,098 BTC to its national reserves, reportedly worth nearly $100 million at the time.
Data published by El Salvador’s Bitcoin office shows the country holds about 7,509 BTC, and purchases continue daily, even during periods of high market volatility.
In May the IMF reiterated that “efforts will continue” to ensure El Salvador does not further accumulate Bitcoin.
President Nayib Bukele has publicly rejected the idea of stopping purchases and stated in March that the policy will continue despite external pressure.
IMF praises economic performance
While the IMF highlighted ongoing concerns about Bitcoin, it struck a positive tone regarding El Salvador’s broader economic progress.
The Fund said the economy is growing faster than expected, with real GDP growth projected at around 4% this year and a strong outlook for the next year.
The IMF also noted that fiscal targets remain on track, foreign exchange reserves are increasing and domestic borrowing has declined.
Structural reforms have been implemented, including new banking stability legislation, adoption of Basel III standards and updated anti-money laundering regulations.
The IMF said it will maintain close cooperation with Salvadoran authorities as it works toward a staff-level agreement to complete the second EFF review, stressing that Bitcoin-related risks will continue to be monitored while the country’s macroeconomic outlook improves.