IMF backs $140m payout to El Salvador, clears Bitcoin concerns

The IMF said Thursday it had reached a preliminary deal with El Salvador that would unlock some $140 million in fresh funding as part of the country's austerity reform program.

The decision came after the government satisfied the Washington-based lender that its continued bitcoin purchases were financed by private donations rather than public money.

The staff-level agreement covers the combined second and third reviews of a 40-month loan program, and still requires sign-off from the IMF's executive board as well as the completion of agreed prior actions.

The bitcoin question has been the most closely watched element of the arrangement since President Nayib Bukele signed up to the $1.4 billion facility. The IMF plan required El Salvador to scale back the cryptocurrency experiment that made it a favorite of the crypto industry and a curiosity in global finance.

"Going forward, no further Bitcoin accumulation beyond the documented donations is expected," the fund said in a statement. Beyond the crypto issue, the IMF was positive on the broader economy that has been sluggish for years.

"El Salvador's economy continues to perform strongly," the fund said, pointing to growth that beat forecasts last year and is projected at 4.5 percent in 2026. This would come on the back of investment, consumer spending, remittances, tourism and capital inflows, the IMF said.

The IMF credited improved security and greater investor confidence, and said the program was helping drive a significant fall in poverty. Around 30 percent of Salvadorans live in poverty, and the country has been posting the slowest growth rates in Central America. The austerity attached to the IMF program has fallen heavily on public employees.

Economists estimate around 15,000 state workers have been laid off since 2024 in the country of 6 million, while labor unions put job losses at 47,000 since Bukele took office in 2019.