The International Monetary Fund (IMF) formalized the Financing Agreement with El Salvador on Monday (3), after its Executive Board reviewed it on February 26. With this approval, the Salvadoran government undertakes to comply with the conditions established in the document.

As part of this agreement, the IMF seeks to reinforce restrictions on the purchase of bitcoin by the Salvadoran government. The financing, in the amount of $ 1.4 billion, is subject to various conditions, including limitations to state participation in activities related to crypto.

The document detailing this agreement exceeds 100 pages and explains how funds will be distributed. According to the agreement, most of the financing will go to the country’s budget support.

The international financial organization highlights in its report that El Salvador reached a remarkable economic recovery after the pandemic, mainly due to the strong flow of shipments and the dynamism of the tourism sector. It also highlights substantial improvements in terms of security in the country.

On March 3, the IMF formalized a new request extended under its financing mechanism to El Salvador. On this occasion, the team incorporated additional documents, including an update of the team’s statement and an official statement by the Central American Executive Director.

One of the key points of this agreement is the implementation of a gradual fiscal adjustment that will extend for three years. In addition, El Salvador’s government must comply with the ban on new purchases of Bitcoin and advance in the progressive elimination of the Chivo Wallet state portfolio.

In the future, the program’s commitments will limit government participation in Bitcoin -related economic activities, as well as Bitcoin’s transactions and purchases by the government, says the IMF document.

This statement, issued by the organization’s executive board, marks a point in the financial strategy of the administration of Nayib Bukele.

On the other hand, the memorandum establishes additional restrictions on the issuance of financial instruments linked to Bitcoin. In particular, it prohibits the public sector from generating debt or any type of tokenized assets that is indexed or called Bitcoin and which represents a financial burden on the state.

At the time of publication, Nayib Bukele’s government has 6,100.18 BTC valued at $ 511.25 million. Yesterday, the government of El Salvador bought 6 BTC for $ 506,000.

“I would have preferred to hear from Bukele administration,” laments Samson Mow

The IMF has established a monitoring mechanism to ensure compliance with agreed conditions. According to the document, program progress will be monitored with semiannual revisions.

However, the team will hold the first two reviews quarterly to reinforce the implementation of measures since the beginning of the agreement.

With this agreement, El Salvador faces a significant change in his economic and financial policy. Although the country has promoted the adoption of Bitcoin as a legal currency since 2021, the conditions imposed by the IMF substantially limit the government’s ability to continue this strategy.

Now we know what ‘confined’ means. No longer purchases of #Bitcoin to El Salvador. I would have preferred to hear this from Bukele administration and not from the IMF, Samson Mow said at X.

In the coming months, compliance with these conditions will be crucial to define the country’s economic direction and its relationship with international markets.