The International Monetary Fund (IMF) is in talks with the El Salvadoran government to support local policies that will address the country’s macroeconomic imbalances and enhance its medium-term growth prospects and resilience.
According to a recent statement from the Fund, a mission led by Raphael Espinoza has been engaged in talks with Salvadoran officials over the past months, both in person and virtually. The negotiations aim to create a program addressing various economic and administrative issues, including mitigating risks associated with Bitcoin and bolstering the nation’s central bank reserve buffers.
The IMF noted that the preliminary agreements aim to improve the primary balance by approximately 3.5 per cent of GDP over three years to ensure public debt sustainability. This fiscal consolidation will involve a balanced approach, rationalizing the public wage bill while maintaining essential social and infrastructure spending.
IMF noted that these agreements will be translated into a comprehensive multi-year strategy to enhance governance, transparency, and the country’s overall investment climate. It also noted that legislative proposals are being prepared to administrative issues like tackle corruption, money-laundering vulnerabilities, and weaknesses in procurement frameworks, supported by development partners to ensure alignment with international best practices.
Notably, in the buildup to the last elections earlier this year, Felix Ulloa, the country’s vice president, declared that Bitcoin will remain legal tender and would not change its position on the cryptocurrency despite the IMF’s appeal to reconsider it. He claimed that the U.S.’s approval of spot Bitcoin ETFs has only strengthened the government’s stance on the cryptocurrency.
However, in the statement, the IMF and Salvadoran authorities both recognize the need for further efforts to enhance transparency and mitigate potential risks associated with Bitcoin.
The IMF team expressed commitment to continued close engagement with Salvadoran authorities, aiming to reach agreements on policies that will ensure stability and prosperity for all Salvadoran citizens.
In a related development, Alexander Ilyukhin, a Russian diplomat, recently claimed that El Salvador had proposed using Bitcoin for trade with Russia to overcome sanctions-related financial transaction limitations. However, Ilyukhin noted that Russia is unlikely to accept this offer due to its ban on cryptocurrency as legal tender.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with Markets PRO, DeFi Planet’s suite of analytics tools.”
