How IMF’s $1.4B Deal With El Salvador, If Approved, Could Jeopardize Bitcoin’s Role as Legal Tender
2024-12-19
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The International Monetary Fund (IMF) announced on December 18, 2024, that it has reached a staff-level agreement with El Salvador for a $1.4 billion loan under its Extended Fund Facility (EFF). 
The agreement is currently at the staff-level stage and requires formal approval by the IMF’s Executive Board, expected by early February 2025. Approval hinges on El Salvador implementing agreed prior actions, such as fiscal reforms, enhanced governance, and measures to limit Bitcoin’s role in the economy. If approved, the program would unlock $1.4 billion in IMF financing and potentially catalyze over $3.5 billion in additional funding from international financial institutions.
The agreement outlines a multi-faceted reform plan to improve El Salvador’s fiscal and economic stability:
The IMF agreement directly addresses Bitcoin-related risks, proposing significant changes to its role in El Salvador’s economy:
While Bitcoin will technically remain legal tender, the proposed changes significantly weaken its practical utility in both private and public sectors. The requirement for businesses to accept Bitcoin is being removed, and the government’s involvement is being scaled back. 
These shifts suggest that Bitcoin’s legal tender status may become largely symbolic, as its use will be voluntary and its integration into public finance will be minimal. Critics argue that this undermines the original vision of making Bitcoin a cornerstone of El Salvador’s economy, while proponents see it as a pragmatic step to balance innovation with financial stability.
Bukele has effectively agreed with the @IMF to make #Bitcoin non-legal tender, meaning creditors are no longer legally bound to accept it. El Salvador becomes the first country in the world to disadopt #Bitcoin as legal tender. Haciendo Historia https://t.co/QpET3hDNTY
El Salvador has received a $3.5 billion financing package from the IMF. 
The agreement? Ditch Bitcoin. Reverse having Bitcoin as legal tender and delete their Chivo Bitcoin wallet. 
The maxis always say “fiat is trash”, but look how quick Bukele got bought out by the globalist… pic.twitter.com/qGGlrOc351
Beyond Bitcoin, the agreement aims to stabilize El Salvador’s economy and restore investor confidence. Measures to reduce public debt, enhance fiscal transparency, and build financial resilience are expected to attract additional international funding. The IMF projects that these reforms will help El Salvador maintain steady economic growth, which has been bolstered by robust remittances and tourism despite temporary climate shocks. Inflation is declining, and the fiscal situation is gradually improving, supported by liability management operations that have lowered near-term financing needs.