El Salvador and the IMF have made progress in Discussions to improve state financesincrease banks' reserve buffers and improve governance and transparency, especially with regard to the risks associated with bitcoin, according to several news reports on Wednesday.
“Progress has been made in negotiations towards a Program supported by funds“focused on policies to strengthen public finances, increase banks’ reserve buffers, improve governance and transparency, and mitigate bitcoin risks,” the IMF said Tuesday.
As of August 6, 2024, the IMF has reached an agreement with El Salvador to increase its primary balance by 3.5% of GDP over three years to maintain sustainable public debt levels.
With the help of development partners and by looking at what other countries are doing and what works, the government of El Salvador is also drafting laws. bitcoin-policy-shift-in-new-el-salvador-might-statement/” target=”_blank” rel=”noopener nofollow”>rules that will improve governance and make it more difficult for people to commit crimes such as corruption and money laundering.
bitcoin Risk Management
The dialogue between the IMF and Salvadoran officials is focused primarily on mitigating potential dangers related to bitcoin, which was formally recognized as a legitimate form of money in El Salvador in 2021.
Since adopting bitcoin in 2021, the Central American nation has aggressively accumulated 5,834 btc worth $323 million. Only 12% of the population uses bitcoin for everyday expenses, despite assurances from President Nayib Bukele that bitcoin investments in the country are successful.
x/bHdj30z0/” width=”2475″ height=”1163″/>
The total cryptocurrency market cap is $1.9 trillion on the daily chart: TradingView.com
bitcoin-transparency-mitigate-risks-imf/3297911″ target=”_blank” rel=”noopener nofollow”>The IMF Highlights the need for improved governance and transparency in bitcoin transactions, reflecting current concerns about financial stability
The implementation of the IMF plan is expected to improve El Salvador's public finances and fiscal situation. The government is also seeking to progressively strengthen its reserves, decreasing its dependence on domestic financing and remaining receptive to various forms of assistance from the IMF and other development organizations.
Improving governance and fiscal outlook
Another central point of the discussions is the improvement of openness and governability. The legislative initiatives of the Salvadoran government seek to reach the best global standards and resolve the concerns expressed by the IMF regarding the risks of corruption and money laundering.
Investors have welcomed progress in talks between the IMF and El Salvador, with the country's bonds leading gains in developing markets on Wednesday. The IMF has stressed, however, that there are still some issues, especially regarding the acceptance of bitcoin in the country.
The financial institution has said it will continue to work closely with the Salvadoran government to reach an agreement that will help the country become stable and prosperous. The implementation of the IMF program and the reduction of risks associated with bitcoin must be carried out smoothly for El Salvador's economic future to be secure.
Featured image from Interesting Engineering, chart from TradingView
