A. M. The International Monetary Fund (IMF) warned that Bitcoin remains highly volatile and that confidence in the technology is low. Although tax payments with this cryptocurrency have been negligible, the financial sector is not exposed to its risks. As part of the agreed reforms, the use of Bitcoin as a payment method will be prohibited. Meanwhile, the salvadoran government holds some 6,070 Bitcoins, valued at approximately US$600 million, but under the new program it will no longer be able to acquire cryptocurrencies on a voluntary basis.
The IMF highlighted that remittances will continue to be a key source of income for the country. However, their share of GDP will gradually decline from 24% in 2023 to 20% in 2030, reflecting changes in the salvadoran labor market. On the macroeconomic front, inflation is expected to remain low at around 1.75%, while the current account deficit is expected to remain below 1% of GDP, driven by fiscal consolidation and a strengthening export sector.
IMF agreement and economic reforms
The IMF made official on monday an agreement with El Salvador that commits the government to implement a series of economic and fiscal reforms. As part of this agreement, the country will receive a loan of US$1.4 billion, of which 60% will go to budget support and 40% to the Banco Central de Reserva (BCR) to strengthen international reserves.
The agency highlighted the economic recovery driven by tourism and remittances, as well as the improvement in security. However, it warned about challenges such as the high level of debt and low productivity, which limit investment and sustainable growth.
Agreed measures include:
Tax reforms: Revenue adjustment will be based on improving revenue collection, broadening the tax base, and reducing tax evasion.
Transparency: Greater oversight will be required in public procurement, including the publication of contracts and beneficiaries.
Financial system: Basel III standards will be adopted and stricter rules will be established for the Instituto Salvadoreño de Pensiones (ISP).
Accountability: The oversight of the Court of Accounts and the regulation of cryptoassets will be strengthened.
Additionally, the Government must present a comprehensive reform of the pension system no later than february 2026. The liquidation of the Fidebitcóin trust and the disclosure of all public sector digital wallet addresses are also contemplated.
The IMF says that loan disbursements will depend on the fulfillment of these reforms, so El Salvador’s economic stability will be linked to the effective implementation of these changes.
