El Salvador’s president, Nayib Bukele, has rejected a new request from the International Monetary Fund (IMF) regarding the country’s Bitcoin purchases.
He stated that El Salvador will continue to buy Bitcoin regardless of outside pressure. Bukele expressed his determination on social media, saying that the country’s Bitcoin strategy will not change, even after facing challenges and criticism.
The IMF’s request is part of a $1.4 billion loan deal with El Salvador. The IMF has set new rules that prohibit the government from voluntarily buying Bitcoin. This includes any purchases or mining of Bitcoin. The IMF has also established a limit of zero on government Bitcoin purchases.
El Salvador currently holds over 6,100 Bitcoins, valued at more than $527 million. Michael Saylor, CEO of Strategy, supported Bukele’s stance, claiming that Bitcoin adoption is unstoppable.
In January, El Salvador approved a bill to modify its Bitcoin law to align with the IMF’s loan conditions. This change made it optional for businesses to accept Bitcoin as payment, rather than mandatory. The government also plans to reduce its budget deficit by 3.5% of GDP over three years through spending cuts and tax increases while increasing its reserves from $11 billion to $15 billion.
El Salvador was the first country to recognize Bitcoin as legal tender in 2021. Initially, all businesses were required to accept Bitcoin, which drew the attention of the IMF. The IMF has repeatedly advised El Salvador to limit its Bitcoin exposure and reconsider its legal tender status.
In November 2021, the IMF suggested narrowing the Bitcoin law and improving regulation. This advice was reiterated in January 2022, emphasizing the need for caution regarding Bitcoin’s role in the economy.
