Reports from El Salvador's central bank or international financial institutions

IMF Reaches $3.5 Billion Deal with El Salvador, Including $1.4 Billion Loan and Chivo Wallet Phase-Out

Dec 19, 2024, 03:41 AM

The International Monetary Fund (IMF) has reached a staff-level agreement with the government of El Salvador for a $3.5 billion financing package, following four years of negotiations influenced by the country's adoption of Bitcoin as legal tender. The agreement, which is subject to approval by the IMF Executive Board, includes a $1.4 billion initial loan as part of a broader 40-month Extended Fund Facility (EFF) arrangement aimed at supporting economic reforms. In exchange for the financial assistance, El Salvador has agreed to make the acceptance of Bitcoin voluntary for private sector businesses and to limit public sector involvement in Bitcoin-related activities. The government will also phase out its Chivo wallet, which was designed to facilitate Bitcoin transactions. This marks a significant shift in El Salvador's approach to Bitcoin, as the country had previously positioned it as an official currency.