El Salvador IMF deal could unlock $140mn payout

The IMF said Thursday it had reached a preliminary deal with El Salvador that could unlock about $140 million in fresh funding under the country's austerity reform programme.

The staff-level agreement covers the combined second and third reviews of a 40-month loan programme. It still requires approval from the IMF's executive board and completion of agreed prior actions.

The decision followed IMF satisfaction that El Salvador's continued bitcoin purchases were financed by private donations rather than public money. Bitcoin policy has been a central issue in the arrangement since President Nayib Bukele agreed to a $1.4 billion facility with the lender.

The IMF programme required El Salvador to scale back its cryptocurrency experiment. “Going forward, no further Bitcoin accumulation beyond the documented donations is expected,” the fund said.

The IMF also gave a positive assessment of the broader economy, saying El Salvador's economy “continues to perform strongly”. It said growth beat forecasts last year and is projected at 4.5 percent in 2026, supported by investment, consumer spending, remittances, tourism and capital inflows.

The lender credited improved security and greater investor confidence, and said the programme was helping drive a significant fall in poverty.

About 30 percent of Salvadorans live in poverty, and the country has had the slowest growth rates in Central America. The austerity measures linked to the IMF programme have affected public employees. Economists estimate about 15,000 state workers have been laid off since 2024, while labour unions put job losses at 47,000 since Bukele took office in 2019.