El Salvador Advances IMF Negotiations as Bitcoin Project Faces Restructuring

TLDR:

• El Salvador’s economy projects 4% GDP growth driven by record remittances and increased investment activity. 
• IMF negotiations advance on a $1.14B loan as the government meets fiscal consolidation targets under the EFF program review. 
• Chivo wallet sale reaches advanced stages while Bitcoin project discussions focus on transparency and risk measures. 
• New AML/CFT legislation and Basel III adoption align El Salvador’s framework with international best practices.

El Salvador continues discussions with the International Monetary Fund regarding its $1.14 billion loan request under the Extended Fund Facility program. 

The negotiations center on the country’s Bitcoin initiatives and the planned sale of its government-backed digital wallet, Chivo.

IMF Mission Chief Mr. Torres confirmed steady progress toward a staff-level agreement during recent talks with Salvadoran authorities.

Economic Growth Supports Fiscal Targets

The Salvadoran economy demonstrates stronger performance than initial forecasts predicted. “The economy is expanding at a faster than anticipated pace on the back of improved confidence, record remittances, and buoyant investment,” according to an official statement from Mr. Torres. 

Real GDP growth is expected to reach approximately 4 percent this year. Business confidence has improved significantly across multiple sectors.

The government maintains its commitment to fiscal consolidation despite external pressures. “The authorities’ commitment to fiscal consolidation remains strong—the end-2025 primary balance target is well on track to be met,” Mr. Torres stated. 

The recently approved 2026 Budget allocates increased resources toward social spending programs. These fiscal measures support reserve accumulation while reducing domestic borrowing requirements.

Budget management efforts align with program targets set by international financial institutions. The administration has published an actuarial pension study alongside a Medium-Term Fiscal Framework. 

These documents provide transparency regarding long-term fiscal sustainability. Meanwhile, authorities continue implementing structural reforms across various government departments.

Financial Reforms Progress Amid Bitcoin Discussions

Financial stability reforms received legislative approval to strengthen banking sector oversight. The new framework enhances bank resolution procedures and crisis management protocols. 

Deposit insurance schemes now operate under improved regulatory standards. Basel III regulations were recently adopted to ensure adequate liquidity coverage ratios.

The Legislative Assembly approved new Anti-Money Laundering and Combating the Financing of Terrorism legislation. 

This law brings the country’s legal framework closer to international best practices. Compliance with global standards remains a priority for ongoing IMF negotiations. These reforms address concerns raised by international financial oversight bodies.

Negotiations for selling the Chivo wallet have reached advanced stages. “Negotiations for the sale of the government e-wallet Chivo are well advanced, and discussions with regards to the Bitcoin project continue,” Mr. Torres confirmed. 

The talks focus on enhancing transparency, safeguarding public resources, and mitigating risks. Risk mitigation strategies are being developed to protect government finances.

The IMF expects continued engagement with Salvadoran authorities in coming months. “Progress continues in the negotiations toward a staff level agreement on the second review of the EFF program,” the mission chief noted. 

Completion of the second review depends on satisfactory resolution of outstanding issues. The government remains optimistic about securing the Extended Fund Facility arrangement.

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