El Salvador did not use public funds to accumulate bitcoin after the first review of its International Monetary Fund (IMF) loan programme, according to the IMF, which said documentation provided by Salvadoran authorities showed that the additional bitcoin came from private donations.
The disclosure offers an explanation for the continued growth of El Salvador’s bitcoin holdings despite the IMF’s first review calling for the public sector’s bitcoin balance to remain unchanged. The IMF said no further accumulation beyond the documented donations is expected.
According to the country’s official bitcoin tracker, El Salvador’s holdings have risen to 7,764.37 BTC. The balance had jumped by more than 1,000 BTC in November and subsequently continued receiving one bitcoin a day, adding to scrutiny over how the government was complying with the conditions attached to its IMF programme.
The IMF statement did not identify the donors or disclose how much bitcoin each contributed. The explanation nevertheless distinguishes the newly added holdings from purchases made using public funds, addressing a key issue surrounding the country’s bitcoin policy and its agreement with the international lender.
The issue has been particularly significant because bitcoin policy has formed an important part of discussions between El Salvador and the IMF. El Salvador became the first country to make bitcoin legal tender in 2021. Under the original IMF agreement, however, private-sector acceptance of bitcoin was made voluntary, taxes were required to be paid in US dollars and public-sector purchases of bitcoin were limited.
The disclosures also come against the backdrop of President Nayib Bukele’s previous position on the country’s bitcoin strategy. In March last year, Bukele had said that El Salvador’s bitcoin purchases would not stop because of the IMF deal.
The government has since transferred majority ownership and operational control of its Chivo crypto wallet to a private operator, while retaining a minority stake and responsibility for the custody of customer assets. The IMF did not identify the operator.
Alongside the arrangements concerning bitcoin holdings and the Chivo wallet, El Salvador and IMF staff agreed on measures to strengthen the legal and supervisory framework governing crypto assets and improve oversight of bitcoin held by the public sector.
The latest disclosure came as El Salvador and IMF staff reached a staff-level agreement on the combined second and third reviews of the country’s 40-month Extended Fund Facility.
The explanation over the source of the additional bitcoin provides an important clarification of how El Salvador’s holdings could continue to increase while the IMF’s programme imposed limits on public-sector accumulation. According to the IMF, the bitcoin added since its review was obtained through private donations rather than public funds, with no further accumulation beyond those documented donations expected.
