Security
IMF Approves $140M Aid for El Salvador Amid Economic Growth
El Salvador has cleared a significant hurdle in its relationship with the International Monetary Fund (IMF), as staff have reached a staff-level agreement on the country’s second and third reviews under its 40-month Extended Fund Facility (EFF). This agreement is set to unlock approximately $140 million in additional funds, pending approval from the Executive Board.
Details of the Agreement
The EFF arrangement, approved in early 2025, has a total value of $1.4 billion, equivalent to SDR 1,033.92 million, or 360% of El Salvador’s IMF quota. The first review was successfully completed, resulting in an initial disbursement of around $113 million to $120 million. However, subsequent reviews faced delays due to unresolved issues such as pension reform and structural benchmarks.
Economic Performance
The IMF has reported better-than-anticipated economic growth for El Salvador, projecting a real GDP growth of 4.5% for 2026, following a 3.9% growth in 2025. This positive shift is attributed to increased private consumption, investment, robust remittance flows, and a recovering tourism sector. Security improvements have also enhanced the investment climate, making El Salvador a more attractive destination for foreign capital.
Bitcoin and Fiscal Reforms
Under the EFF terms, El Salvador has made Bitcoin acceptance voluntary, moving away from the earlier mandate requiring merchants to accept it. The government has also begun to wind down the Chivo Wallet, its state-backed digital wallet. As of early September 2026, El Salvador’s treasury held 7,762 BTC, accumulated through a strategy of daily purchases.
Future Implications
The $140 million disbursement, if approved, will not only provide immediate fiscal support but also signal credibility to international markets. Compliance with the IMF program is viewed as a seal of approval that can influence other creditors and investors. The simultaneous clearance of multiple program reviews indicates that El Salvador's reform agenda is progressing, with positive outcomes in public service efficiency and poverty reduction.
FAQ
What is the total value of the IMF's Extended Fund Facility (EFF) arrangement for El Salvador?
The total value of the IMF's Extended Fund Facility (EFF) arrangement for El Salvador is $1.4 billion, equivalent to SDR 1,033.92 million, or 360% of El Salvador’s IMF quota.
How much funding is El Salvador set to receive from the IMF following the recent agreement?
El Salvador is set to receive approximately $140 million in additional funds, pending approval from the Executive Board.
What factors have contributed to the improved economic growth projections for El Salvador?
The improved economic growth projections for El Salvador are attributed to increased private consumption, investment, robust remittance flows, a recovering tourism sector, and security improvements that have enhanced the investment climate.
What changes have been made regarding Bitcoin acceptance in El Salvador?
Under the EFF terms, El Salvador has made Bitcoin acceptance voluntary, moving away from the earlier mandate that required merchants to accept it.
What are the potential implications of the $140 million disbursement for El Salvador?
The $140 million disbursement, if approved, will provide immediate fiscal support and signal credibility to international markets, influencing other creditors and investors. It also indicates progress in El Salvador's reform agenda.