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The International Monetary Fund approved an immediate $139 million disbursement to El Salvador after granting the government a waiver for breaching program restrictions on further Bitcoin accumulation. The disbursement completes the second and third reviews under El Salvador's $1.4 billion Extended Fund Facility, a 40-month arrangement signed in late 2024.
The fund simultaneously forecast stronger-than-expected economic activity, projecting 4.5% growth this year and 4% in 2027, but paired the disbursement with a public push to unwind the state's Bitcoin footprint.
Why it matters
El Salvador is the only country to adopt Bitcoin as legal tender, and the waiver is the first formal acknowledgment that Bukele's government has been buying BTC against explicit IMF terms. The fund's language is direct: halt further accumulation, reduce state involvement in crypto, and fully transfer the Chivo wallet's residual exposure to the private sector. That is a public repudiation of the sovereign adoption model, even as the money flows.
Bukele's administration continued adding Bitcoin to state reserves through 2024 and into 2025, betting price action would justify the defiance. The IMF's public demands now put a price on that bet: program access versus further accumulation.
Market impact
For the sovereign Bitcoin adoption thesis, the read is bearish. The poster child for the model is now being structurally walked back by its largest creditor, and the Chivo wallet, the operational artifact of the 2021 law, is being asked to leave the public balance sheet. Other sovereigns watching the experiment now have a documented case of how a multilateral lender responds to defiance: not by pulling the plug, but by tying the next tranche to a public unwind.
Frequently asked questions
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Why did El Salvador need an IMF waiver?
El Salvador breached program restrictions on further Bitcoin accumulation under its $1.4 billion Extended Fund Facility, so the IMF granted a waiver to release the $139 million disbursement.
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What is the Chivo wallet and what is the IMF asking for it?
Chivo is the state-issued Bitcoin wallet El Salvador launched with its 2021 legal-tender law. The IMF is demanding the government fully transfer its residual exposure in Chivo to the private sector.
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Did the IMF cut El Salvador off over Bitcoin?
No. The IMF approved the $139M disbursement and granted a waiver for the accumulation breach, completing the second and third reviews under the $1.4B Extended Fund Facility.
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What is the IMF forecasting for El Salvador's economy?
The IMF projected 4.5% growth this year and 4% in 2027, calling El Salvador's economic activity stronger than previously expected even as it pressed the country to unwind state crypto involvement.
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What does this mean for other countries weighing sovereign Bitcoin adoption?
The case is now documented: a sovereign that defies a multilateral lender's terms gets the next tranche tied to a public unwind of its Bitcoin program, not an immediate cutoff. The money flows; the policy is forced to retreat.
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