It’s a shame that President Nayib Bukele had to yield to the IMF. He has been very vocal in the past about his opposition to the IMF and their loans.

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• In December 2024, El Salvador reached a staff-level agreement with the International Monetary Fund (IMF) for a $1.4 billion loan under an Extended Fund Facility. This agreement aims to strengthen the country’s fiscal sustainability.

• As part of the agreement, El Salvador committed to several policy adjustments, particularly concerning its use of Bitcoin. The government agreed to make Bitcoin acceptance voluntary for businesses, limit public sector involvement in Bitcoin-related activities, and reduce the number of bitcoins it holds. Additionally, Bitcoin will no longer be accepted for tax payments.

• Following the announcement of the IMF loan program, Fitch Ratings upgraded El Salvador’s credit rating from CCC+ to B- with a stable outlook, citing reduced financing needs and improved access to funding.

• President Nayib Bukele of El Salvador has historically been critical of the International Monetary Fund (IMF) and its lending conditions, particularly during the country’s adoption of Bitcoin as legal tender in 2021. However, recent developments pushed his administration to seek IMF support. Here are the main reasons behind this shift:

Debt and Fiscal Pressure

El Salvador faced significant fiscal challenges, including large debt obligations and high public spending. Without external financing, the government risked defaulting on its debt.

In 2025, El Salvador faces bond payments totaling nearly $1 billion, making the need for liquidity urgent. The IMF loan provides much-needed financial breathing room.

Limited Access to Other Funding Sources

The global economic environment, including rising interest rates, has made it difficult for El Salvador to secure affordable financing on international markets.

Rating agencies had downgraded El Salvador’s credit rating due to concerns over its financial stability, further restricting access to capital.

Concessions on Bitcoin Policy

The IMF has long expressed concerns over El Salvador’s use of Bitcoin as legal tender, citing risks to financial stability. To secure the loan, Bukele’s government agreed to scale back its Bitcoin-related activities, including limiting its official use and holdings.

This shift suggests a more pragmatic approach by Bukele’s administration to address the country’s immediate financial needs.

Political Considerations

While Bukele has been critical of international institutions, securing the loan helps him manage economic challenges domestically, ensuring continued political stability and support for his administration.

His popularity allows him to navigate potential criticism for engaging with the IMF, as many Salvadorans view his leadership as effective despite ideological shifts.

In essence, while Bukele previously opposed IMF involvement due to ideological differences, the country’s pressing financial situation made it a pragmatic choice to stabilize the economy and secure international credibility.

Despite securing a $1.4 billion loan from the International Monetary Fund (IMF), El Salvador continues to purchase Bitcoin. The agreement with the IMF includes provisions to scale back certain Bitcoin-related policies, such as making its acceptance by the private sector voluntary and limiting public sector involvement in Bitcoin-related activities.

However, the government remains committed to accumulating Bitcoin. Stacy Herbert, director of El Salvador’s National Bitcoin Office, stated that the country “will keep buying one Bitcoin a day (likely even more in the future), and we will not sell any of our current holdings.”  This indicates that President Nayib Bukele’s administration intends to continue its Bitcoin acquisition strategy, even in the context of the IMF loan agreement.