- El Salvador might receive a $1.4 billion credit line from the USA.
- The country has an IMF bailout following a Balance of Payment Crisis.
- El Salvador’s Bitcoin policy has been under attack as a result of its 40-month-long IMF plan.
Donald Trump has met El Salvador President Nayib Bukele, one of the most pro-crypto world leaders who pioneered state-funded Bitcoin purchase back in 2022.
The agenda of the meeting might have included a possible credit line from the USA which could help El Salvador end its reliance on the IMF and follow a pro-crypto policy. The IMF had previously asked El Salvador to stop buying Bitcoins in exchange for $1.4 billion worth of loans. IMF had previously tried this anti-crypto agenda with Argentina.
El Salvador needs the money to support its government’s finances as the country has been seeing some tough times since 2024.
At present, El Salvador is expected to own roughly 6000 Bitcoins valued at approximately $5.1 billion at the current market price ($85k) and is one of the largest Bitcoin holders.
Please note that officially no demand for a loan has been raised.
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Bukele in Financial Crisis
El Salvador needs money to reform its government structure and to make it efficient.
Last year, the Latin American country reached an agreement with the IMF that it would receive a loan of $1.4 billion over a period of 40 months to strengthen the balance of payment crisis in the country which is a way of saying that the country needs US Dollars for external trade, mostly imports.
The two parties reached an agreement on 15 Dec 2024 and a joint press statement was issued on 18 Dec 2024 that El Salvador will agree to the guidelines of IMF and strengthen its economy.
IMF’s Anti-Crypto Deal with El Salvador After Argentina
For the IMF, however, strengthening the economy means moving away from crypto investments. It had warned El Salvador to stop its Bitcoin purchases and has gone to the extent of demanding the country stop buying Bitcoin via any method.
El Salvador has been a Bitcoin pioneer among countries buying Bitcoin since March 2022 when it bought Bitcoin during the crypto winter. The Bitcoin purchases total roughly 6000 BTC worth around $550 million at the current price (i.e., $85k at press time). Despite warnings from the IMF, El Salvador purchased 12 Bitcoins in the first week of February with a sum of roughly $1.1 million.
The IMF had previously asked the Argentinian government to curb its pro-crypto policies in exchange for sanctioning a $20 billion loan.
Will Trump Save the Day?
Clearly, the IMF has been discouraging multiple countries from purchasing Bitcoin which then undermines Donald Trump’s pro-Bitcoin efforts.
Further, the sum of $1.4 billion is not a big amount for the US and if Donald Trump signs up with the deal, it could discourage the IMF from taking unnecessary anti-crypto steps.
Previously, the IMF had gone soft on Bitcoin, calling it an “asset” following Donald Trump’s announcement of Bitcoin Reserves and the White House Crypto Summit.
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