El Salvador's GDP is estimated to grow by 4%! The IMF acknowledges the economic recovery but still questions the transparency of Bitcoin holdings.

IMF affirms El Salvador’s economic growth momentum, estimating a GDP growth of about 4% in 2025, but Bitcoin holdings and Chivo wallet reforms remain focal points in compliance and transparency negotiations.

El Salvador’s economic growth exceeds expectations, IMF praises 4% GDP growth

The International Monetary Fund (IMF) issued a recent statement on 12/23, highly affirming El Salvador’s unexpectedly strong economic performance.

IMF El Salvador delegation head Mr. Torres, after concluding on-site and virtual discussions with the country’s officials, pointed out that El Salvador’s economy is expanding faster than expected, mainly due to increased public confidence, record remittance inflows, and robust investment performance.

According to IMF’s latest forecast, El Salvador’s real GDP growth rate is expected to reach approximately 4% in 2025, with the economic outlook for 2026 also rated as “very good.” This growth momentum not only surpasses the previous forecast of 2.5% but also reflects initial success in El Salvador’s economic transition efforts.

IMF notes that the Salvadoran authorities have demonstrated strong commitment to fiscal consolidation. The report indicates that the country is on track to meet its primary balance target by the end of 2025, and the recently passed 2026 fiscal budget aligns with further deficit reduction goals while also expanding social spending.

These fiscal efforts are effectively supporting foreign exchange reserve accumulation and reducing government reliance on domestic borrowing, aligning with the objectives of the Extended Fund Facility (EFF) signed with IMF. As overall economic indicators improve, the relationship between El Salvador and international financial institutions has entered a delicate balancing period.

Bitcoin acquisition strategy raises compliance concerns, with discrepancies over holdings data

Despite notable economic growth, El Salvador’s Bitcoin ($BTC) strategy remains the core point of contention in negotiations with the IMF.

According to the agreement reached in 2024, El Salvador was to receive approximately US$1.4 billion (from the EFF plan). In exchange, the government agreed to suspend its Bitcoin accumulation strategy.

However, on-chain data and official announcements tell a different story. The National Bitcoin Office of El Salvador has recently continued to announce increased acquisitions, especially during the significant market volatility in November, purchasing 1,098 Bitcoins worth nearly US$100 million. As of December 23, 2025, the government’s Bitcoin reserves reached 7,509 coins, with a current market value of about US$653 million.

Image source: Bitcoin Office

President Nayib Bukele publicly stated in March that the country’s strategy of purchasing 1 Bitcoin daily “will not stop.” This ongoing accumulation clearly conflicts with IMF expectations.

Image source: X/@nayibbukele President Nayib Bukele publicly stated in March that the country’s strategy of purchasing 1 Bitcoin daily “will not stop.”

Interestingly, IMF in a November report noted that, based on its observations, the government has not made new purchases since December 2024, suggesting that the increase in reserves may be the result of consolidating assets from multiple government wallets rather than actual new acquisitions.

However, the Salvadoran official office has repeatedly emphasized that its blockchain acquisitions are “permanently recorded,” and questioned some observers’ willingness to believe IMF statements over on-chain records. This discrepancy in data perception has led to a stalemate in discussions on “enhancing transparency.”

Further reading

• Compromising with IMF for $3.5 billion! Salvadoran official wallets may be phased out, but Bitcoin buying continues
• Successful bottom-fishing? El Salvador spends $100 million to buy 1,090 Bitcoins, setting a record for the largest purchase in history
• Are Salvadoran Bitcoin purchases all scams? IMF report: It’s internal transfers, no actual increase in holdings

Major progress in Chivo wallet sale, private institutions to take over payment role

In the transition of the Bitcoin project, IMF revealed that negotiations for the sale of the government-operated electronic wallet Chivo have entered a “quite advanced stage.” Since its launch in 2021, Chivo has faced criticism over issues like identity theft, fraud, and technical vulnerabilities, with some project designers even suggesting the government should shut it down.

According to the agreement between IMF and El Salvador, the government will gradually reduce its participation in Bitcoin-related economic activities, shifting to voluntary acceptance of Bitcoin payments by the private sector. The sale or downsizing of Chivo is seen as a key step in El Salvador’s implementation of its agreement with IMF, aiming to reduce public resource exposure.

IMF emphasizes in its statement that current discussions focus on increasing transparency, protecting public resources, and mitigating fiscal risks associated with digital assets.

Although Bitcoin remains legal tender in El Salvador, its practical use is still limited, with most daily transactions relying on USD. The government plans to transfer Chivo’s infrastructure to private entities, reflecting a shift in the country’s crypto strategy, attempting to balance Bitcoin’s vision with governance issues caused by direct government involvement.

Stacy Herbert, Director of El Salvador’s Bitcoin Office, stated that several private wallets will continue to provide services domestically, with the government’s role shifting toward more regulatory and infrastructural support.

Fiscal consolidation and structural reforms show results, Basel III and AML laws implemented

Beyond digital assets, El Salvador has made significant progress in modernizing its financial system and legal framework.

IMF’s report mentions that the country is actively pushing forward a series of structural reforms, including releasing actuarial pension reports, establishing medium-term fiscal frameworks, and enacting financial stability reforms aligned with Basel III, aimed at strengthening banks’ capital adequacy and liquidity. Additionally, El Salvador has passed new anti-money laundering (AML) and counter-terrorist financing (CFT) laws, which are seen as bringing its financial regulation closer to global standards and helping repair its international image.

These reforms are prerequisites for El Salvador’s plan to secure a US$1.4 billion loan from IMF (disbursed over 40 months). Current discussions are moving toward a “Staff-level Agreement” to complete the second review of the EFF plan.

While Bitcoin’s fiscal volatility and governance risks are still viewed by IMF as “potential amplifiers,” the disciplined budget approach shown by El Salvador, such as the projected further deficit reduction in the 2026 budget, has strengthened its negotiating position.

IMF states that it will continue close engagement with El Salvador in the coming period to ensure all policies and reforms are implemented as scheduled, thereby rebuilding the country’s external and financial buffers.

Digital asset experiments and international aid tug-of-war, El Salvador’s next move draws global attention

El Salvador stands at a unique crossroads.

• On one hand, the country has built a distinctive innovative national brand through Bitcoin, attracting significant investment from digital nomads and tech entrepreneurs;
• On the other hand, as a highly dollarized economy, El Salvador heavily relies on the stability support of the international financial system.

The current 4% GDP growth and positive fiscal data show that the country is not, as some opponents claim, collapsing financially due to Bitcoin. On the contrary, this “sovereign-level dollar-cost averaging (DCA)” strategy, amid rising Bitcoin prices, has brought substantial unrealized gains to the treasury.

However, IMF’s demands reflect mainstream financial concerns over the opacity of cryptocurrencies. The standoff is not just about funds but also about the definition of financial sovereignty and international standards.

As the compliance deadline at the end of 2025 approaches, whether El Salvador can successfully complete the Chivo sale and balance “continuous stacking” with “transparency reporting” will serve as a key case for emerging economies considering digital asset integration.

If El Salvador can maintain its current economic growth momentum while optimizing governance structures, it could demonstrate to the world that, without abandoning its digital asset ambitions, it can still achieve mutually beneficial cooperation with traditional international financial institutions.