The International Monetary Fund (IMF) and El Salvador have reached an agreement on a $1.4 billion program aimed at sustaining economic stability and reforms, which includes changes to the Bitcoin policy.
Program Agreement and Its Implications
The IMF and El Salvador have agreed on a 40-month program aimed at addressing balance of payments issues and supporting economic reforms. This program is expected to unlock over $3.5 billion in additional financing from institutions such as the World Bank and the Inter-American Development Bank. It aims to strengthen economic stability and encourage inclusive growth.
Key Reforms in the Program
The program highlights key reforms including:
- Fiscal Policy: Efforts focus on reducing public debt from 85% of GDP by 2024 by improving fiscal balances by 3.5% of GDP over three years, optimizing public spending, and protecting vulnerable groups. - Transparency and Governance: Measures aim to enhance fiscal transparency, anti-corruption frameworks, and improve the business environment.
Changes in Bitcoin Policy
Revisions in El Salvador's Bitcoin policy make Bitcoin adoption voluntary for the private sector and reduce government involvement in Bitcoin activities. The Chivo e-wallet will be phased out gradually. These changes seek to ensure financial stability, consumer protection, and further regulatory oversight aligned with global standards.
The IMF program represents a significant step towards economic stability and long-term growth in El Salvador. Approval is expected by February 2025, which will contribute to further development of the Bitcoin policy and the nation's broader financial strategy.
