The International Monetary Fund (IMF) has approved a new arrangement of funds equivalent to $1.4 billion for El Salvador, which also includes restrictions regarding bitcoin, according to a statement on Thursday.
The arrangement has a 40-month duration, with an immediate disbursement equivalent to around $113 million.
"The IMF-supported program aims to ensure conditions are in place to boost El Salvador’s growth prospects and resilience by strengthening public finances, rebuilding external and financial buffers and improving governance and transparency. Bitcoin risks are also being addressed," it said.
The arrangement is also expected to catalyze additional multilateral financial support for a combined overall financing package of over $3.5 billion over the program period.
"The potential risks of the Bitcoin project are being addressed in line with Fund policies and with Fund advice to the authorities," said Nigel Clarke, the IMF's acting chair.
"Prior actions include legal reforms that have made acceptance of Bitcoin by the private sector voluntary and ensured that tax payments are made only in U.S. dollars.
"Transparency of the public crypto e-wallet has been strengthened, and the government plans to gradually unwind its participation in the e-wallet. In the future, program commitments will confine government engagement in Bitcoin-related economic activities, as well as government transactions in and purchases of Bitcoin," he added.
