According to News.Bitcoin.com, the International Monetary Fund (IMF) has confirmed that El Salvador meets the conditions to continue receiving loans and has affirmed the country’s strong performance in implementing its economic reform plan. It is worth noting that despite El Salvador’s continuous purchase of Bitcoin, the IMF still decided to issue the next loan of 120 million US dollars.
Luis Cubeddu, deputy director of the IMF’s Western Hemisphere Division, and Ivan Torres, head of the El Salvador mission, said: “Most of the project goals set in the first review have been easily achieved, and the implementation of the structural benchmark has also been progressing very smoothly.” This positive evaluation means that El Salvador has achieved remarkable results in the process of economic reform.
Since El Salvador announced Bitcoin as legal tender in 2021, its economic policies have been closely linked to Bitcoin, a move that has drawn widespread attention worldwide. During this period, El Salvador continuously purchased Bitcoin and kept increasing the country’s Bitcoin reserves. However, the market price of Bitcoin fluctuates sharply. Its stability as a legal tender and the potential risks it poses to a country’s economy have always been the focus of international attention, which has also led the IMF to be cautious about providing economic aid to El Salvador.
In February this year, the IMF approved a 40-month, $1.4 billion Extended Fund Arrangement (EFF) aimed at helping El Salvador improve its public finances, rebuild external and financial buffers, enhance governance and transparency, and address risks related to Bitcoin. The 120 million US dollars to be distributed this time is part of this plan.
In the latest assessment, the IMF believes that El Salvador has achieved remarkable results in economic reform. Although the risks related to Bitcoin still need attention, this has not affected its issuance of the next loan to El Salvador. The IMF pointed out that El Salvador has made positive progress in fiscal policy adjustments and financial sector stability. For instance, by reasonably controlling wage expenditures and optimizing investment in public services and infrastructure, it has improved its fiscal balance to a certain extent. Meanwhile, the financial sector has also made achievements in strengthening the liquidity management of banks and improving the regulatory framework.
For El Salvador, this $120 million loan is undoubtedly a piece of good news. The country can utilize this fund to further promote economic reform, relieve fiscal pressure and boost economic growth. However, while continuously holding Bitcoin, how to balance the relationship between Bitcoin assets and the stable development of the national economy remains a major challenge for El Salvador. In the future, El Salvador needs to explore an economic development path suitable for its national conditions on the basis of following the relevant suggestions of the IMF. It should not only be able to explore opportunities in emerging fields such as Bitcoin, but also effectively prevent and control risks to ensure the stable progress of the economy.
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