After completing the second and third reviews of a $1.4 billion project in El Salvador, the International Monetary Fund ( IMF ) approved the immediate disbursement of approximately $138 million and granted exemptions for several non-compliance conditions, including restrictions on Bitcoin accumulation.

• After exempting El Salvador from Bitcoin accumulation restrictions on Thursday, IMF approved the allocation of approximately $138 million.
• El Salvador has recorded the recent addition of Bitcoin as a private donation, without directly using public resources.
• IMF It is anticipated that, under the current loan plan commitments, there will be no further accumulation of Bitcoin beyond the donations that have already been disclosed.
• According to IMF, the majority of the equity and operational control of the Chivo wallet have been transferred to a private operator.
• IMF Estimates that El Salvador's economy will grow by 4.5% in 2026 and 4% in 2027.

IMF indicates that its Executive Board completed the second and third reviews under the 40-month extension of the fund arrangement for El Salvador ( Extended Fund Facility ) on October 1st, releasing 101.96 million Special Drawing Rights ( SDR ), which is approximately equivalent to 138 million US dollars at the exchange rate provided by the fund. Bloomberg reported the amount as 139 million US dollars.

The board of directors determined that several performance criteria were not met, including those related to Bitcoin accumulation. IMF stated that after corrective measures were taken and new commitments were obtained from the Salvadoran authorities, the relevant exemptions were approved.

Why is IMF exempting El Salvador from Bitcoin default?

El proyecto inicial de IMF en El Salvador impuso limitaciones continuas al acopilamiento voluntario de Bitcoin por parte del sector público. En los documentos del proyecto anteriores, el acopilamiento voluntario se definía como la compra o minería, pero no incluía los Bitcoins obtenidos a través de incautaciones, confiscaciones y acciones similares de aplicación de la ley.

However, by September, IMF and the Salvadoran authorities had reached an agreement regarding the bitcoins that appeared in the government-controlled wallets since the initial review. IMF stated that documents submitted by El Salvador indicated that these funds came from private donations and did not utilize public resources.

This conclusion clarifies the previous doubts regarding the changes to the wallet. Previous changes seemed to indicate that, even after agreeing to limit national accumulation, El Salvador continued to increase its holdings of Bitcoin. El Salvador claims that these Bitcoins came from private donations. IMF has received documents that trace these newly added assets back to the donors, but the identities of the donors and the amount of each donation have not been made public.

The decision made by the board of directors on October 1st did not authorize the government to resume using public funds to purchase Bitcoin. IMF indicates that "it is not expected to there will be any further accumulation of Bitcoin beyond the donations that have already been disclosed," which is a forward-looking projection related to the current agreement.

IMF The file has previously recorded small-scale technical breaches related to Bitcoin conditions, as the balances held by Chivo customers may fluctuate, even though the holding volume of the public sector has not changed. The latest disclosures do not indicate whether these earlier technical issues constitute a new basis for exemption on their own.

El Salvador still needs to continue reducing its role in the field of cryptography

Bitcoin is just part of the conditions outlined in IMF. This project requires El Salvador to reduce the government's direct involvement with Chivo wallets, and Chivo is part of that country's Bitcoin promotion plan.

In September, it was confirmed that the majority of the equity and operational control of Chivo had been transferred to a private operator. At that time, the government still retained a minority stake as well as the responsibility for managing customer assets.

The Executive Board now wishes to clear the remaining national exposures. IMF The First Vice President and Chairman of the Board Discussions, Dan Katz, stated that the remaining participation of the public sector 'should be completely eliminated'.

El Salvador has amended its Bitcoin law in 2025, abolishing the requirement for private businesses to accept Bitcoin obligatorily and stipulating that taxes must be paid in US dollars. These changes are part of the measures to support the IMF project. Previous reports regarding El Salvador's end to the mandatory acceptance of Bitcoin detailed the legal changes as well as the government's plans to reduce its involvement in Chivo.

Negotiations surrounding Chivo continued until 2026. By September, the transfer of majority equity and operational control had been completed, but the latest statement from IMF indicates that the government has not yet fully eliminated its remaining exposure.

IMF raises El Salvador's growth forecast to 4.5%

While approving the funding, IMF indicated that El Salvador's economic activity was stronger than previously anticipated. The fund expects that El Salvador's actual GDP will grow by 4.5% in 2026, higher than the estimated 3.9% growth rate for 2025; the growth rate for 2027 is expected to be 4%.

IMF Officials attribute the stronger activity to investment and private consumption, as well as remittances, tourism, and capital inflows. IMF It is also mentioned that factors such as improved security conditions and increased investor confidence have supported economic activity.

The board of directors' review indicates that both the reserve and liquidity targets have been easily achieved. It is estimated that the total international reserves will be $5.35 billion in 2026 and $6.17 billion in 2027. The primary fiscal balance is expected to have a surplus of GDP 2.9% this year and 3.7% next year.

However, IMF still hopes that El Salvador will continue to advance fiscal reforms. There have been delays in measures related to the pension and civil service systems, while IMF calls for strengthened expenditure control, improved income management, and enhanced public financial management.

What will be the next step in El Salvador's Bitcoin policy?

Under the IMF project, Bitcoin holders will still face higher information disclosure requirements. It is expected that authorities will improve the reporting of crypto assets controlled by public institutions and continuously update information on government-controlled wallets.

IMF hopes that the public Bitcoin exposure will be maintained within the scope of verified donations and will not expand further. The agreement reached in September stated that the authorities have submitted documents regarding the accumulated tokens and promised not to accumulate any more beyond these disclosed transfers.

El Salvador's public Bitcoin strategy has previously caused confusion, as government channels continuously showed an increase in holdings, while the IMF document claimed that no public resources were used. Previous reports on the differences between the "daily Bitcoin statements" and the IMF records discussed the discrepancies between wallet activities and official project accounting.

In the next phase of this project, IMF hopes to establish stricter regulations for digital asset companies, public crypto holdings, and financial sector supervision. Katz states that authorities should improve national crypto asset disclosure and strengthen regulatory, supervisory, and governance rules for crypto service providers.

IMF also specifically requires the revision of El Salvador's "Digital Assets Issuance Law" as part of the related regulatory efforts; at the same time, the government expects to complete the elimination of the remaining exposures in the public sector for Chivo.