The International Monetary Fund has indicated that negotiations with El Salvador are advancing steadily, as the country shows stronger-than-expected economic performance and continued alignment with key reform targets under its financing program.
After months of in-person and virtual discussions, the IMF mission chief for El Salvador said progress is being made toward a staff-level agreement on the second review of the 40-month Extended Fund Facility.
Key Takeaways
IMF says talks with El Salvador are advancing toward a staff-level agreement
Economic growth is beating expectations, with GDP seen around 4% this year
Fiscal targets remain on track as the 2026 budget cuts the deficit and boosts social spending
El Salvador holds about 5,700 BTC and continues buying Bitcoin daily
Economic Momentum Beats Expectations
The IMF noted that El Salvador’s economy is expanding at a faster pace than previously projected, driven by improved investor confidence, record remittance inflows, and resilient private investment. Real GDP growth is now expected to reach around 4% this year, with the Fund describing prospects for 2026 as “very good.”
According to the IMF, this momentum is helping stabilize macroeconomic conditions and reinforce confidence in the country’s medium-term outlook.
Fiscal Targets Remain on Track
Authorities remain committed to fiscal consolidation, a central pillar of the IMF-supported program. The Fund said El Salvador is on course to meet its end-2025 primary balance target, while the recently approved 2026 budget signals further deficit reduction alongside increased social spending.
These measures are supporting reserve accumulation and reducing domestic borrowing, aligning closely with the objectives set under the Extended Fund Facility.
Structural and Financial Reforms Move Forward
Progress has also been recorded on structural reforms. The government has published an actuarial pension study and a medium-term fiscal framework aimed at underpinning long-term consolidation.
In the financial sector, reforms have been approved to strengthen bank resolution mechanisms, crisis management tools, and deposit insurance frameworks. The adoption of Basel III standards is expected to improve liquidity coverage and funding stability across the banking system. In parallel, a new AML/CFT law has been passed, bringing the country’s regulatory framework closer to international best practices.
Bitcoin Strategy Remains Under IMF Review
The IMF confirmed that discussions related to El Salvador’s digital asset strategy are ongoing. Talks are centered on transparency, safeguarding public resources, and mitigating fiscal and financial risks linked to the country’s Bitcoin policy.
El Salvador currently holds roughly 5,700 BTC, according to public blockchain tracking data, with the government continuing its long-standing policy of purchasing one Bitcoin per day. Based on current market prices, the country’s Bitcoin reserves are valued at over $650 million, reinforcing their growing relevance within the broader fiscal picture.
Negotiations regarding the potential sale of the government-backed Chivo e-wallet are also described as well advanced.
Next Steps Toward a Staff-Level Agreement
The IMF said close engagement with Salvadoran authorities will continue in the period ahead, with the objective of finalizing all policy commitments and reforms needed to complete the second review of the EFF program with the International Monetary Fund.
