The IMF has approved a $1.4 billion credit facility for El Salvador, conditional upon limiting government-related bitcoin transactions. This financial support aims to improve the country’s economic situation, with the first disbursement of $113 million provided immediately. Despite reforms acknowledging bitcoin’s voluntary acceptance, President Bukele’s administration continues engaging in bitcoin purchases.
The International Monetary Fund (IMF) has officially approved a $1.4 billion credit facility for El Salvador, a deal initially granted informal approval last year. This financial support seeks to enhance the country’s fiscal situation and growth prospects, conditional on the government imposing restrictions on its bitcoin transactions and purchases. The approval also includes the immediate disbursement of $113 million, with further allocations planned over the next 40 months.
The IMF anticipates that this agreement will encourage additional financial backing from other organizations, estimating total assistance could surpass $3.5 billion. Nigel Clarke, IMF’s deputy managing director and acting chair, acknowledged El Salvador’s advancements in tourism and personal security, while also noting the significant challenges posed by high debt levels and fragile financial conditions.
Clarke emphasized that the risks associated with the adoption of bitcoin must be managed, stating, “Going forward, program commitments will confine government engagement in Bitcoin-related economic activities, as well as government transactions in and purchases of Bitcoin.” The implications of this statement suggest that El Salvador will be required to limit bitcoin purchases significantly or potentially cease them altogether.
In alignment with the terms of this agreement, President Bukele has already enacted reforms to change the status of bitcoin in the country. The recent legislation establishes bitcoin’s acceptance as voluntary and abolishes the previous provisions that allowed for its use in tax payments. Nevertheless, President Bukele has continued to engage in bitcoin acquisitions, as evidenced by his recent social media post announcing the purchase of 7 BTC after a week-long pause.
In summary, the IMF has approved a $1.4 billion credit facility for El Salvador with stipulations to limit bitcoin activities by the government. This funding aims to stabilize the country’s finances and attract further support, despite ongoing debt challenges. The administration’s recent reforms signify an effort to comply with the IMF’s conditions, while bitcoin continues to play a role in national purchases.
Original Source: news.bitcoin.com
