El Salvador’s $1.4 billion IMF loan program came with a condition: the public sector could not voluntarily accumulate bitcoin. No government purchases, no mining. This week, the IMF acknowledged that its bitcoin-accumulation condition had been missed, granted a waiver and approved another $138 million for disbursement.
The IMF says the additional bitcoin came from documented private donations, with no public money spent. Yet El Salvador’s public treasury tracker shows one bitcoin arriving day after day. Whatever the funding source, the treasury continues to accumulate bitcoin.
The IMF wants El Salvador to reduce the state’s involvement with bitcoin. El Salvador keeps adding bitcoin to its public treasury. The Fund reviewed the donation documentation, waived the missed condition and released the money anyway. My read is that the IMF has decided it would rather live with that arrangement than blow up the broader financing relationship over bitcoin. I think the IMF has an ugly history of claiming to help developing countries while using debt and its conditions to keep them dependent. El Salvador has decided accumulating bitcoin matters more than appeasing the IMF overlords. Bitcoin gives borrowers another asset and another option, shifting some power away from those who wield debt over them.