The International Monetary Fund (IMF) has shared an update about its negotiations with the El Salvador government for the sale of its e-wallet, Chivo, which it claims are well advanced and its Bitcoin accumulation strategy. 

The international agency said that discussions with regards to the country’s Bitcoin project continue, centered on enhancing transparency, safeguarding public resources, and eliminating risks.

“Close engagement with the Salvadoran authorities is expected to continue in the period ahead with the objective of reaching a staff level agreement on all policies and reforms needed to complete the second review of the EFF program,” the statement read. 

The statement, issued by Mission Chief Mr. Torres, outlines the progress of the second review of the country’s 40-month Extended Fund Facility (EFF).

What’s the IMF’s assessment of El Salvador?

The statement follows in person and virtual discussions that have occurred over the past months with the Salvadoran authorities on the second review of the 40-month Extended Fund Facility (EFF) Arrangement.

According to the statement, El Salvador has enjoyed strong economic growth, growing faster than expected with a GDP that is expected to reach around 4% this year and with great prospects for next year. 

The IMF acknowledged the strong commitment of the country’s authorities to fiscal consolidation claiming the “end-2025 primary balance target is well on track to be met, and the recently approved 2026 Budget is consistent with a further reduction in the deficit along with an expansion in social spending.” 

It claims these efforts are supporting reserve accumulation and a reduction in domestic borrowing in line with program targets.

There was also talk about the country’s advancing structural agenda which has seen several major reforms recently completed or approved. Some of those reforms include, an actuarial pension study and a Medium-Term Fiscal Framework; New financial stability laws regarding bank resolution and crisis management; The adoption of “Basel III” regulations to make the banking system safer; and A new Anti-Money Laundering (AML/CFT) law, which aligns the legal framework with international standards.

Is El Salvador still buying Bitcoin? 

El Salvador was one of the first countries to start accumulating Bitcoin. However, that has not sat well with the IMF, and it has consistently expressed concerns about financial risks, volatility, and public sector exposure.

Its back-and-forth with El Salvador regarding its Bitcoin policies has been ongoing since the country made Bitcoin legal tender in 2021. In March, the International Monetary Fund published a new Staff Country Report related to El Salvador, in which it demanded that El Salvador stop its Bitcoin accumulation through both purchasing and mining. 

It also demanded that the country should liquidate the fund created to buy more BTC, among other essential changes, beyond the Bitcoin Law amendments passed by the national congress at the end of January.

The country’s President, Nayib Bukele, has shifted his stance on the IMF. In the past, he mocked the fund’s position on the Bitcoin Law, but has now reportedly made adjustments to the law and agreed to cease all public Bitcoin involvement.

That agreement was announced in 2024, but doubts lingered about the implementation of the changes. The updated report specified that El Salvador must fully comply by December 2025 and detail what the changes will look like. 

While the initial changes to the Bitcoin Law primarily concerned its legal tender status, the IMF has emphasized that the public sector must cease its “voluntary accumulation of BTC.”

As far as the IMF is concerned, El Salvador has complied; Bukele has shifted his stance, and a full phase-out of the Chivo e-wallet is underway. However, there are some contradictions regarding the country’s Bitcoin holdings. 

The government’s Bitcoin Office has claimed it is still stacking sats, with the latest purchase announced on December 22 when the country claimed it increased its holdings to 7509 BTC. It claims the milestone has only been possible via the purchase of one BTC per day. 

Despite the public announcements of the Bitcoin buying, an official IMF report from November alleged no accumulation is happening anymore and that increases in Bitcoin holdings in the reserve fund reflect the consolidation of Bitcoin across various government-owned wallets, rather than new purchases. 

The head of the Bitcoin Office, Stacy Herbert, has also previously stated that El Salvador has continued to buy Bitcoin in defiance of the IMF deal. “Some ‘bitcoiners’ trust the words of the IMF over the stacking actions of El Salvador recorded for eternity onto the Bitcoin blockchain,” Herbert wrote in March.

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