IMF Acknowledges Progress On El Salvador Reforms, Cites Stronger Growth

bitcoinistPublished on 2025-12-24Last updated on 2025-12-24

Abstract

The IMF acknowledges El Salvador's progress on its reform program and stronger-than-expected economic growth under its $1.4 billion Extended Fund Facility. Real GDP growth is now projected near 4% for 2025, driven by construction, remittances, and investment. The country has enacted a new fiscal law, improved transparency, and advanced governance reforms. The IMF approved a $118 million disbursement and continues to link financial support to further policy steps, including meeting fiscal targets and limiting public sector exposure to Bitcoin. While Salvadoran officials maintain Bitcoin as part of their strategy, the IMF insists on capping government holdings and reducing state involvement in crypto activities to mitigate fiscal risks.

According to an IMF staff statement released on December 22, 2025, El Salvador has made measurable progress on its reform program and is seeing faster economic growth than earlier expected.

The IMF said discussions on the second review of the country’s 40-month Extended Fund Facility program are ongoing as authorities work to meet agreed benchmarks. Growth forecasts were revised upward, and the fund signaled continued financial support tied to further policy steps.

IMF Notes Faster Growth

Reports note that growth is running above earlier forecasts. The IMF now sees real GDP growth near 4% for 2025. Local data show the economy expanded 5.1% in the third quarter of 2025 compared with the same quarter a year earlier, led by construction and remittance-driven consumption.

Remittances and stronger investment flows were cited as key drivers. The fund said higher confidence and improved fiscal numbers have helped create space for short-term rebuilding of reserves.

A Program Backed By Clear Conditions

Based on IMF releases, a staff-level agreement was reached with El Salvador in December 2024 for a program worth about $1.4 billion. That arrangement sets fiscal targets and governance measures meant to restore sustainability.

Earlier, when the IMF completed the first review and Article IV consultation in June 2025, a disbursement equivalent to roughly $118 million in SDRs was approved. Reports added that authorities have enacted a new fiscal law, strengthened public procurement transparency, and advanced governance measures for state firms.

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Key Reforms And Conditions

An actuarial study on pensions has been published, and steps to tighten anti-money-laundering rules were discussed with IMF staff. The fund has also pressed for limits on public sector exposure to cryptocurrencies; according to international coverage, measures to reduce that exposure and to make private crypto use voluntary are under consideration.

What Comes Next For The Program

According to IMF briefings, the second review will require follow-through on prior actions and the meeting of fiscal targets. Continued disbursements depend on progress, and IMF teams remain in contact with Salvadoran authorities to work through outstanding issues.

In parallel, the IMF has reiterated its position on El Salvador’s Bitcoin policy. According to recent IMF statements, the fund wants the country’s public sector Bitcoin holdings to remain capped, with no additional purchases made under the current loan program.

The IMF has also pushed for a reduced state role in crypto-related activities, including changes tied to the Chivo wallet, arguing that limits are needed to contain fiscal and financial risks. Salvadoran officials have said Bitcoin remains part of their strategy, though IMF documents show no confirmed increase in government-held Bitcoin since early 2025.

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Related Questions

QWhat is the IMF's updated real GDP growth forecast for El Salvador in 2025, and what were the key drivers of this growth?

AThe IMF's updated real GDP growth forecast for El Salvador in 2025 is near 4%. The key drivers of this growth were remittances and stronger investment flows, with construction and remittance-driven consumption leading to a 5.1% expansion in the third quarter of 2025.

QWhat was the value and purpose of the Extended Fund Facility program agreed upon between the IMF and El Salvador in December 2024?

AThe Extended Fund Facility program agreed upon in December 2024 was worth about $1.4 billion. Its purpose was to set fiscal targets and governance measures meant to restore economic sustainability.

QWhat specific governance and fiscal reforms has El Salvador enacted as part of its agreement with the IMF?

AEl Salvador has enacted a new fiscal law, strengthened public procurement transparency, advanced governance measures for state firms, published an actuarial study on pensions, and discussed steps to tighten anti-money-laundering rules.

QWhat is the IMF's specific position regarding El Salvador's public sector involvement with Bitcoin, as stated in the article?

AThe IMF's position is that El Salvador's public sector Bitcoin should remain capped with no additional purchases made under the current loan program. The fund has pushed for a reduced state role in crypto-related activities, including changes to the Chivo wallet, to contain fiscal and financial risks.

QWhat is the next step in the IMF program for El Salvador, and what does it depend on?

AThe next step is the completion of the second review of the program. This requires follow-through on prior actions and the meeting of fiscal targets. Continued disbursements of funds depend on this progress.

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