- The IMF says talks with El Salvador are ongoing, focusing on transparency, protection of public funds, and risks related to Bitcoin
- Negotiations to sell or wind down El Salvador’s government-run Chivo Bitcoin wallet have made significant progress under the IMF loan program
- Despite pressure from the IMF, El Salvador continues daily Bitcoin purchases while GDP growth is expected to be near 4%
The International Monetary Fund (IMF) said discussions with El Salvador concerning policies related to Bitcoin are continuing, with a clear emphasis on improving transparency, safeguarding public finances, and reducing financial risks.
This update is part of the IMF’s second 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 and tense negotiations around the adoption of Bitcoin.
According to the IMF, talks have made particularly notable progress regarding the future of the government-operated Chivo Bitcoin wallet, including potential sale or orderly winding down of the platform.
Launched in September 2021 as part of El Salvador’s Bitcoin rollout, Chivo faced widespread criticism from the outset, including allegations of identity data breaches, fraud, technical failures, and account suspensions.
Chivo wallet negotiations under way
The IMF confirmed that negotiations to sell the Chivo wallet are “well advanced,” a development seen as a key step toward reducing the government’s direct involvement in Bitcoin infrastructure.
One of the wallet’s architects suggested last year that the application should be shut down amid controversies that followed its launch.
Under the EFF agreement, El Salvador committed to reducing public sector engagement in activities related to Bitcoin.
In March, the IMF requested that the country halt official accumulation of Bitcoin through purchases and mining, and to restructure the public infrastructure used to acquire digital assets.
The Fund later reported that El Salvador had complied with those commitments, including starting a full phase-out of the Chivo wallet.
Despite these steps, private Bitcoin wallet providers are expected to continue operating in the country.
When the IMF loan terms were agreed, Stacy Herbert, director of El Salvador’s National Bitcoin Office, said that while Chivo’s role would change, private wallet operators would continue serving users.
Bitcoin accumulation remains a tension point
Bitcoin policy continues to be a major 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 measures to limit the government’s exposure.
Nevertheless, El Salvador has continued to report ongoing Bitcoin purchases.
Last month, the country added 1,098 BTC to its national reserves, valued at nearly $100 million at the time, according to official disclosures.
Data published by El Salvador’s Bitcoin Office show the country holds roughly 7,509 BTC and has continued daily purchases even during periods of high market volatility.
In May, the IMF reiterated that efforts would continue to ensure El Salvador does not accumulate additional Bitcoin.
President Nayib Bukele has publicly rejected calls to halt purchases, stating in March that the policy would continue regardless of external pressure.
IMF praises economic performance
While maintaining ongoing concerns about Bitcoin, the IMF noted positive developments in El Salvador’s broader economic performance.
The Fund said the economy is growing faster than anticipated, with real GDP growth estimated to be around 4% this year and strong momentum expected for the following year.
The IMF also pointed out that fiscal targets remain on track, foreign exchange reserves have risen, and domestic borrowing has declined.
Structural reforms have progressed, including a new bank stability law, adoption of Basel III standards, and strengthened anti-money laundering rules.
The IMF said it will remain closely engaged with Salvadoran authorities as it works toward a staff-level agreement to complete the second EFF review, stressing that Bitcoin-related risks remain under scrutiny even as the country’s macroeconomic outlook improves.