Key Takeaways
- El Salvador expects to reach a $1.3 billion loan deal with the IMF.
- The deal follows intense criticism from the IMF over the country’s Bitcoin experiment.
- President Bukele previously claimed the Bitcoin experiment had fallen below initial expectations.
El Salvador’s controversial Bitcoin (BTC) experiment could soon be scaled back.
The country expects to reach an agreement on a $1.3 billion loan deal with the International Monetary Fund (IMF) in return for changes to its pro-Bitcoin legislation.
IMF Deal May Scale Back El Salvador’s Bitcoin Experiment
The landmark agreement between the IMF and El Salvador could be reached in the next two to three weeks, according to the Financial Times, citing two people familiar with the matter.
The deal is expected to provide the country with another $1 billion from the Inter-American Development Bank and the World Bank over several years.
If the IMF board approves the deal, it could mark the beginning of El Salvador’s return to the traditional finance world.
The agreement would require El Salvador to implement some changes to its Bitcoin policies, including no longer requiring all businesses to accept Bitcoin as payment.
El Salvador would also be contracted to pass new anti-corruption laws, increase the country’s total reserves by $4 billion, and commit to reducing its budget deficit, a source told the Financial Times.
Members from the IMF, a long-time critic of El Salvador’s move away from the global financial market, are reportedly in San Salvador to finalize the deal.
The Bitcoin Experiment
The move comes three years after El Salvador became the first country to adopt Bitcoin as legal tender in June 2021.
President Nayib Bukele was the driving force behind the experiment, which aimed to improve El Salvador’s financial inclusion and establish it as a progressive economy.
However, Bukele acknowledged to TIME Magazine that the daring adoption of Bitcoin “hasn’t had the widespread adoption we hoped for.”
“I wouldn’t consider it a resounding success,” Bukele admitted.
However, despite the comments, the country claims to hold 5,959.77 BTC and continues to purchase one Bitcoin daily under its “1 Bitcoin a Day program.”
With Bitcoin’s price surging recently, it has brought the country’s gains to well over $300 million.
The Future of El Salvador
Although Bitcoin and the rest of the crypto industry have seen gains recently, boosted by U.S. President-elect Donald Trump’s pro-crypto stance, the reality of El Salvador’s experiment has been tough.
The digital asset’s price volatility, which lost over 70% of its value during each bear market before rebounding, has posed a large obstacle to its adoption as stable legal tender.
Despite Bukele’s commitment to bolstering the country with Bitcoin, a large majority of its citizens still continue to ignore the asset in favor of the U.S. dollar.
This, combined with heavy scrutiny and isolation from international governments, has made the experiment harder for the country to harness.
With a potential deal on the horizon, El Salvador may be able to push forward with its crypto-powered plans while also reentering the international financial market.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
