In a move to comply with its $1.4 billion loan agreement, El Salvador has ceased public sector purchases of Bitcoin, as confirmed by the International Monetary Fund (IMF). This decision aligns with the IMF’s stipulations but does not mark the end of the country’s Bitcoin strategy.
Bitcoin Accumulation Pauses, Compliance Ensured
El Salvador’s government has halted Bitcoin acquisitions with public funds as part of its obligations under the IMF loan terms. Rodrigo Valdes, the IMF’s Director for the Western Hemisphere, confirmed that the country is meeting its commitment to cease Bitcoin accumulation by the fiscal sector. The move is a significant shift, following initial resistance from President Nayib Bukele.
The loan agreement, which amounts to $1.4 billion, required El Salvador to stop using public sector funds for Bitcoin investments. Despite earlier opposition from Bukele, the government is now fully adhering to the IMF’s fiscal criteria, including the cessation of Bitcoin purchases with public money. Valdes noted, “I can confirm that they continue to comply with their commitment of non-accumulation of bitcoin by the overall fiscal sector.”
While the public sector is no longer adding Bitcoin to its reserves, the government’s broader fiscal reforms and transparency efforts remain on track, according to the IMF.
Bitcoin Strategy Continues Through Alternative Channels
Despite halting public sector acquisitions, El Salvador is not abandoning its Bitcoin strategy. President Bukele continues to push for Bitcoin accumulation, exploring non-public sector avenues to fund daily Bitcoin purchases. According to the National Bitcoin Office, the country is acquiring one Bitcoin per day, though it has not revealed the specific funding sources.
Speculation suggests that the country may be using profits from its Strategic Bitcoin Reserve to finance these daily purchases, with an average purchase price of around $44,000 per Bitcoin. While the details remain unclear, some analysts believe that non-governmental entities are being leveraged to keep the country’s Bitcoin momentum intact.
Economic Vision Behind the Bitcoin Strategy
El Salvador’s continued investment in Bitcoin aligns with Bukele’s vision for economic benefits, including financial inclusion and reduced reliance on the U.S. dollar. With Bitcoin’s price recently approaching $100,000, the value of El Salvador’s 6,158 Bitcoin holdings stands at approximately $583 million.
Experts like Cathie Wood of Ark Invest predict that Bitcoin could reach $1.5 million per coin by 2030, which would significantly increase the value of El Salvador’s holdings. As other countries show interest in adopting similar strategies, El Salvador’s approach remains a point of global attention.
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