IMF continues consultations on El Salvador's Bitcoin policy…progress in talks over Chivo wallet

The International Monetary Fund (IMF) has continued consultations with the government of El Salvador on overall Bitcoin (BTC) policy. The core of the discussions is scaling back government-led Bitcoin infrastructure and protecting public funds, with the future handling of the state-owned Bitcoin wallet 'Chivo' emerging as a major issue.

According to crypto-focused media CoinJournal on the 23rd, the IMF presented management of fiscal risks related to Bitcoin and strengthening transparency as key priorities during the second review of the 40-month Extended Fund Facility (EFF) program provided to El Salvador. In this process, it was reported that discussions over adjustments to the future operation of the Chivo wallet, which had been operated directly by the government, have advanced considerably.

The IMF pointed out that the Chivo wallet has repeatedly experienced technical problems and operational controversies since its introduction, and has maintained the position that direct government involvement should be reduced. In fact, the EFF agreement includes provisions to reduce the role of the public sector related to Bitcoin and to limit government-level Bitcoin acquisition activities.

However, differences in views over the Bitcoin purchase policy remain. While the IMF has warned that expanding El Salvador's Bitcoin holdings could burden fiscal stability, the El Salvadoran government is reported to be maintaining a policy of daily Bitcoin purchases.

Meanwhile, separate from Bitcoin policy, the IMF gave a relatively positive assessment of El Salvador's macroeconomic conditions. The IMF forecast that El Salvador's real gross domestic product (GDP) growth rate this year would reach about 4%, and stated that compliance with fiscal targets and increases in foreign exchange reserves are also proceeding smoothly.