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The International Monetary Fund (IMF) and El Salvador “have reached an agreement” for an Expanded Fund Facility (SAF) of about $1.4 billion to boost the economy.
The program, which will last 40 months, has the purpose of “strengthening fiscal and external stability. As well as helping to create the conditions for stronger and more inclusive growth.
In exchange, both parties agreed to mitigate “the risks related to Bitcoin”, a Cryptocurrency that in 2021 adopted legal status alongside the dollar in El Salvador.
The agreement with the IMF not only seeks to stabilize the Salvadoran economy, but also aims to attract investments from other international financial institutions. The World Bank, the Inter-American Development Bank, CABEI and CAF have shown interest in joining this effort, with the aim of putting together a financing package of more than $3.5 billion and thus supporting the country’s economic recovery.
El Salvador and the IMF reach an agreement, but is Bitcoin left in limbo?
Today, the agreement to reduce its use in the Central American country comes as the cryptocurrency reaches its highest value since it was created in 2009. Recall that, El Salvador began buying Bitcoin in 2021, and the Bitcoin Office tracker shows that He currently owns 5,968.77 BTC.
In fact, the agreement with the IMF forces El Salvador to make radical changes to its legal framework, especially regarding the Bitcoin Law. This Law, which made the adoption of cryptocurrency mandatory in all transactions, clashes head-on with the new conditions imposed by the Fund, which restrict its use, both in the private and public sectors.
Specifically, according to the statement, the IMF assured: “The acceptance of Bitcoin by the private sector will be voluntary and the participation of the public sector in activities related to Bitcoin will be delimited.”
Additionally, it was agreed that taxes will only be paid in US dollars and that the government’s participation in the Chivo Wallet, a Bitcoin wallet created by the government, will be gradually reduced.
The IMF noted: “Transparency, regulation and supervision of digital assets will be improved to safeguard financial stability, consumer and investor protection, and financial integrity.”
Now, the agreement still needs approval from the IMF Executive Board, but marks the end of several years of negotiations marked by President Nayib Bukele’s adoption of Bitcoin as legal tender.
Max Keizer harshly criticizes the agreement
Reacting to the IMF announcement, Max Keizer, Bukele’s Bitcoin advisor, stated on X about the IMF that: “No one pays attention to these morons.” In addition, he described the agreement as “bureaucratic, meaningless and absurd.”
Likewise, he stated: «The use of Bitcoin in El Salvador has always been voluntary, and its use has never been greater and continues to grow. The IMF point is dead from the start.
Bitcoin use in El Salvador was always voluntary and its usage has never been higher and continues to grow. The IMF’s point is DOA.
Chivo is one of dozens of wallets used in ES. Its presence or non-presence is meaningless. Again, DOA
Pay taxes in USD?
Yea, whatever dude.…
— Max Keizer (@maxkeiser) December 18, 2024
For his part, without giving further details, Bukele himself reacted on social networks by publishing parts of the agreement reached along with emojis about the achievement that has been in the making for more than 3 years.
I say goodbye with this phrase from Nayib Bukele: «In El Salvador, the future is now. And we can’t wait for the future. “We are building it.”
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