El Salvador Secures $3.5 Billion IMF Financing Package, Including $1.4 Billion Loan Over 40 Months, Amid Bitcoin Policy Adjustments

Dec 18, 2024, 09:47 PM

El Salvador has secured a $3.5 billion financing package from the International Monetary Fund (IMF) after four years of negotiations, which were complicated by the country's adoption of Bitcoin as legal tender. The agreement includes a $1.4 billion loan under a 40-month program and measures to mitigate Bitcoin-related risks, making its acceptance by the private sector voluntary and limiting public sector involvement in Bitcoin activities. The deal also involves phasing out the government's Chivo wallet and requiring taxes to be paid in dollars. The IMF's stance on El Salvador's Bitcoin policy has softened, with the fund noting that the risks associated with the country's Bitcoin project will decrease in line with its policies. This agreement marks a significant shift in El Salvador's financial strategy, aiming to improve its fiscal situation, grow the economy, reduce inflation, and manage short-term debt obligations.