El Salvador is on the verge of reaching a big financial agreement with the International Monetary Fund (IMF), with plans to finish a $1.3 billion loan program within the next two to three weeks. The country will change its use of Bitcoin (BTC) as legal tender and take steps to lower its government deficit.

According to a Financial Times report, individuals familiar with the negotiations said an IMF mission has already arrived in San Salvador to finalize the specifics with President Nayib Bukele’s administration.

El Salvador To Modify Bitcoin Policy

The proposed pact is expected to result in an additional $1 billion in funding from the World Bank and another $1 billion from the Inter-American Development Bank in the following years.

This originates from the country’s decision in June 2021 to become the first government in the world to accept Bitcoin as legal money, a move that the IMF has long opposed owing to worries about supposed “financial stability and integrity.”

Under the present conditions of talks, El Salvador would remove the legal obligation for businesses to accept Bitcoin, making such transactions voluntary.

Furthermore, the government would pledge to decrease its budget deficit by 3.5 percentage points of gross domestic product (GDP) over the next three years, using a combination of spending cutbacks and tax increases. 

Other obligations may include enacting anti-corruption legislation and increasing the country’s reserves from $11 billion to $15 billion. 

Bukele’s Leadership Under Scrutiny

President Bukele’s administration has been under international scrutiny and criticism, particularly from the Biden administration, which had sanctioned several of

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Author: Ronaldo Marquez