IMF Review Signals Progress on El Salvador's Chivo Wallet, Yet Policy Execution Remains Contested

The International Monetary Fund’s second review of El Salvador’s 40-month extended funding arrangement has revealed a complex picture: while negotiations regarding the government’s Chivo e-wallet and broader Bitcoin initiatives are reportedly moving forward positively, significant discrepancies have emerged between official policy statements and actual implementation on the ground.

Fiscal Consolidation and Improved Macroeconomic Outlook

According to the IMF’s latest assessment, El Salvador’s economic trajectory appears broadly positive. The country’s GDP is projected to expand by approximately 4% this year, with fiscal consolidation proceeding as planned. The fund particularly emphasized the government’s commitment to transparency improvements and measures aimed at reducing public sector exposure to cryptocurrency risk. The 2026 budget framework reflects these priorities, incorporating provisions for deficit reduction alongside enhanced social security expenditures—a balance the IMF views as supporting long-term economic stability.

The Chivo Project Under IMF Scrutiny

The negotiations surrounding the Chivo digital wallet have become a focal point in IMF discussions with El Salvador’s authorities. The fund has explicitly called on the public sector to suspend additional voluntary Bitcoin purchases and to gradually withdraw from direct involvement in Chivo operations. This recommendation reflects broader concerns about government exposure to cryptocurrency volatility and the need for institutional boundaries in asset management.

Growing Disconnect Between Statements and Reality

However, a troubling inconsistency has surfaced regarding actual Bitcoin holdings and policy commitments. While official government reports claim that no further BTC purchases have been executed—ostensibly aligning with IMF recommendations—Stacy Herbert and the El Salvador Bitcoin Office have repeatedly asserted that acquisitions continue at a rate of approximately one Bitcoin daily. This discrepancy has resulted in holdings reaching 7,509 BTC, creating a credibility gap that complicates the IMF’s ability to assess whether policy directives are genuinely being implemented.

Implications for Future Engagement

The contradiction between stated policy and reported actions raises questions about the effectiveness of IMF oversight and the government’s commitment to the fund’s governance recommendations. As negotiations on the Chivo wallet continue, this divergence between official positions and on-ground realities will likely remain a critical issue demanding resolution before achieving the institutional clarity that the IMF seeks.