El Salvador’s Bitcoin Policy Shift to Secure $1.3 Billion IMF Loan
El Salvador, the first country to adopt Bitcoin as legal tender, is preparing to scale back its cryptocurrency policy to secure a $1.3 billion loan deal with the International Monetary Fund (IMF).
The country made it mandatory in 2021 for businesses to accept Bitcoin as a payment method.
El Salvador changes Bitcoin policy under pressure from IMF
according to Report The deal is expected to be completed in the coming weeks, according to the Financial Times. It will reportedly remove legal requirements for businesses to accept Bitcoin as a payment methodmaking it optional.
This shift will significantly change the country’s Bitcoin laws. El Salvador and its President Nayib Bukele continue to face criticism from international financial institutions including the International Monetary Fund.
In addition to the IMF loan, the agreement could secure $1 billion in financing from the World Bank and another $1 billion from the Inter-American Development Bank over the next few years.
Travis Kling said: “With 50 million ounces of gold discovered in El Salvador, worth $131 billion at current prices, Bukele will absolutely rush to mine all this gold and sell it as quickly as possible to buy BTC.” wrote on X (formerly Twitter).
As part of the loan conditions, the El Salvadoran government also agreed to implement broader fiscal reforms. These include reducing the budget deficit by 3.5% of GDP over three years, implementing spending cuts and tax increases, and improving anti-corruption legislation.
The country also plans to increase fiscal reserves from $11 billion to $15 billion. Currently, El Salvador holds approximately $556.7 million in BTC as part of its reserves, representing 118% of unrealized profits.
Despite scrutiny from the International Monetary Fund, Bukele’s government has benefited significantly from Bitcoin investments. Earlier this year, BTC reaches all-time high helped the country Buy back more debt and boost its economy. El Salvador too Plans to build a Bitcoin city Funded by BTC bonds issued by the government.
Meanwhile, more countries are following El Salvador’s Bitcoin reserve strategy. As BeInCrypto reported earlier, Bhutan currently holds over $1 billion in BTCbecoming the fifth largest government Digital asset holders.
The United States may also establish a National Bitcoin Reserve under the incoming administration of Donald Trump. Just last month, Pennsylvania has introduced a bill Dedicate state funds to Bitcoin reserves.
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