In exchange for a $1.4 billion loan, El Salvador has agreed to restrict a variety of bitcoin-related activities with the IMF.
El Salvador and the International Monetary Fund have reached an agreement under which the country will restrict domestic bitcoin-related activities in exchange for a financing package.
The IMF’s Extended Fund Facility, which is anticipated to be extended for a period of 40 months, comprises a $1.4 billion loan to support El Salvador’s reform agenda and resolve the country’s balance of payment requirements.
The IMF anticipates that the total financing package will exceed $3.5 billion, with the World Bank, the Inter-American Development Bank, and other regional development institutions providing additional financial support.
“The IMF-supported program seeks to enhance fiscal and external stability and facilitate the establishment of more inclusive and robust development conditions in El Salvador, recognising the country’s imminent macroeconomic and structural challenges,” the IMF stated in its announcement.
In an effort to advance financial inclusion, El Salvador became the first nation to officially recognise bitcoin as legal tender in June 2021, as per the proposal of its president, Nayib Bukele.
El Salvador’s most recent agreement with the International Monetary Fund (IMF) targets the implementation of policies that substantially mitigate the potential hazards associated with its bitcoin initiative. They encompass the voluntary adoption of bitcoin by the private sector.
This is in contrast to the requirements of Article 7 of the 2021 Bitcoin Law in El Salvador, which states that “Every economic agent must receive bitcoin as payment when proposed to him by whoever acquires a product or service.”
The International Monetary Fund (IMF) has implemented restrictions on bitcoin-related activities, bitcoin purchases, and bitcoin transactions in the public sector. Nevertheless, the agency did not supply any information regarding the new restrictions on bitcoin activities.
Furthermore, the IMF fund will instruct citizens of El Salvador to pay taxes exclusively in U.S. dollars and progressively reduce the government’s involvement in Chivo, the government-provided bitcoin wallet.
The IMF stated that the enhancement of transparency, regulation, and supervision of digital assets will ensure the preservation of financial integrity, consumer and investor rights, and financial stability.
The IMF’s agreement with El Salvador also includes fiscal policies that aim to increase fiscal transparency, strengthen fiscal and financial reserves, and reduce public debt.
Also Read: Binance.US intends to re-establish USD services by the beginning of 2025
Wallets