IMF, El Salvador Advance EFF Talks as Bitcoin Policy Debated
- El Salvador and the IMF continue EFF talks on fiscal reforms, growth outlook, and stability.
- IMF projects 4% GDP growth as fiscal consolidation, banking reforms, and AML rules advance.
- IMF says Chivo sale talks and Bitcoin policy issues remain central to the second EFF review.
The International Monetary Fund and El Salvador continue negotiations on the second review of the country’s Extended Fund Facility program. The talks cover fiscal reforms, financial stability, the future of Chivo, and ongoing discussions around the Bitcoin project.
IMF Mission Chief Mr. Torres issued the update after months of in-person and virtual meetings. He said progress continues toward reaching a staff-level agreement under the 40-month EFF arrangement. The IMF confirmed that discussions will continue in the coming period. The goal remains agreement on all policies and reforms needed to complete the second program review.
IMF Sees Faster Growth and Strong Fiscal Progress
According to the IMF, El Salvador’s economy is expanding faster than expected. Improved confidence, strong remittances, and higher investment continue to support growth. The Fund projects real GDP growth of around 4% this year. It also sees favorable prospects for economic expansion next year.
IMF officials said the government remains committed to fiscal consolidation. The end-2025 primary balance target remains on track under the program. The recently approved 2026 budget aligns with IMF targets. It reduces the fiscal deficit while expanding social spending.
These measures support reserve accumulation. They also reduce domestic borrowing in line with program commitments. The IMF highlighted progress across the country’s structural reform agenda. Several policy measures reached completion or received approval.
Authorities published an actuarial pension study to support long-term sustainability. They also released a Medium-Term Fiscal Framework. Financial stability reforms advanced through new legislation. These measures strengthen bank resolution, crisis management, and deposit insurance systems.
El Salvador adopted Basel III regulations to improve liquidity and funding resilience. According to the IMF, these actions improve the stability of the banking system as a whole. A new AML and counterterrorism financing law was also approved by lawmakers. The IMF said the framework better aligns with international standards.
Bitcoin, Chivo, and Ongoing Policy Discussions
The IMF confirmed that negotiations for selling the government’s Chivo e-wallet have advanced. Officials continue discussions with Salvadoran authorities on the transition process. The Fund said talks around the Bitcoin project also continue. These discussions focus on transparency, public resource protection, and risk mitigation.
The IMF has long expressed concerns about Bitcoin-related volatility and fiscal exposure. Those concerns remain part of the ongoing dialogue. Following its adoption as legal tender, El Salvador started accumulating Bitcoin. The strategy drew repeated warnings from the IMF over financial risks.
According to the IMF, El Salvador has complied with key program commitments. The government has moved toward a full phase-out of the Chivo e-wallet. However, uncertainty persists around the country’s Bitcoin accumulation status. Public statements and IMF reporting present differing accounts.
Related: IMF Warns Stablecoins Could Shift Emerging Market Currency Power
El Salvador’s Bitcoin Office recently claimed continued daily purchases. It said total holdings reached 7,509 BTC following a December 22 update. Officials attributed the increase to buying one Bitcoin per day. They described the strategy as ongoing.
In contrast, an IMF report from November presented a different assessment. It said El Salvador no longer accumulates new Bitcoin. The report stated that reserve increases reflect wallet consolidation. It said transfers between government-owned wallets explain the higher balances.
Negotiations will continue as discussions move toward a staff-level agreement. The IMF said it will maintain close coordination with Salvadoran authorities. The outcome will determine whether the second EFF review is completed. Further updates are expected as talks progress.
