El Salvador has secured a $1.4b IMF loan by scaling back its controversial bitcoin policies. The international financial body highlighted on Wednesday the reduced risks from Bitcoin adoption as businesses in the country now have the option to decline it.
The global lender also praised the government for improving fiscal stability, stimulating the economy, lowering inflation and addressing short-term debt.
New legal reforms let the private sector decide whether to accept the cryptocurrency. As a result, the IMF stated that risks from El Salvador’s Bitcoin project have “diminished significantly.”
President Nayib Bukele’s government has eased its Bitcoin-related policies, a key hurdle in past negotiations.
The IMF has consistently raised concerns about the economic and legal challenges of adopting Bitcoin as a parallel legal tender, citing significant macroeconomic, financial and legal risks.
El Salvador’s relationship with the IMF became tense after Bukele made Bitcoin legal tender in Sept. 2021. By Nov. 2022, Bukele announced plans for the government to purchase 1 BTC daily.
He blamed political opponents for discouraging Salvadorans from benefiting from Bitcoin’s rise.
Earlier this month, as Bitcoin’s price crossed $100,000 for the first time, Bukele announced that El Salvador’s crypto holdings had more than doubled in value.
The board is expected to review and approve the program by early February, provided the agreed measures are implemented.
While the agreement still awaits approval from the IMF’s executive board, it addresses a major concern for investors in El Salvador’s bond markets.
