El Salvador Adjusts Bitcoin Policies for $1.4 Billion IMF Loan
El Salvador has agreed to modify its Bitcoin policies as part of a $1.4 billion loan deal with the International Monetary Fund (IMF), according to a statement issued on December 18.
Details of the IMF Loan Agreement
The IMF has reached a staff-level agreement with El Salvador for a 40-month Extended Fund Facility (EFF). This loan is aimed at supporting the country’s economic reforms. The deal marks a major milestone, concluding almost four years of discussions.
To secure the agreement, El Salvador committed to implementing reforms, including improving its primary balance by 3.5% of GDP over the next three years. These reforms are expected to reduce the country’s public debt-to-GDP ratio, which is projected to peak at 85% in 2024.
Bitcoin Policy Reforms
As part of the agreement, El Salvador will scale back its Bitcoin-related activities. The government will make Bitcoin acceptance voluntary for private businesses, instead of mandatory. Additionally, public sector engagement in Bitcoin-related activities will be reduced. From now on, tax payments will only be accepted in U.S. dollars.
The IMF stated that legal reforms will make Bitcoin acceptance optional for the private sector. Public sector involvement in Bitcoin transactions and purchases will also be confined.
Chivo E-Wallet Reduction
The government will gradually phase out its involvement with the Chivo e-wallet, a cryptocurrency app launched in 2021. Chivo, which initially offered $30 in Bitcoin to new users, has seen a steady decline in adoption and usage.
Continued Commitment to Bitcoin Acquisitions
Despite these policy changes, El Salvador remains committed to acquiring Bitcoin. The National Bitcoin Office (ONBTC) confirmed on December 18 that the country continues to purchase one Bitcoin per day. This strategy, which President Nayib Bukele announced in November 2022, has already generated significant gains.
Bukele recently highlighted that the country’s Bitcoin holdings have resulted in an unrealized profit of $362 million, with over 6,000 BTC currently in possession. He reiterated that El Salvador would maintain its daily Bitcoin purchases until they become unaffordable with fiat currencies.
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