El Salvador and its President Nayib Bukele is stirring the pot, playing against the IMF Bitcoin ban

This saga has been a rollercoaster. In 2021, El Salvador made Bitcoin legal tender, a world first. The IMF, unimpressed, suspended the loan cash and put on strict crypto curbs.

El Salvador is a small nation in Central America, currently facing difficulties and striving to improve its economic situation. In an effort to secure a loan of $1.4 billion from the International Monetary Fund (IMF), El Salvador has agreed to comply with certain conditions imposed by the lending institution.

However, one particular aspect of the country's economic strategy appears to be a point of contention between El Salvador and the IMF. The Central American republic has made the bold move of adopting Bitcoin as legal tender, a decision that the IMF is not keen on.

As part of its lending agreement with El Salvador, the IMF is reviewing the nation's economic performance and keeps track of its key macroeconomic indicators.

The Avellaneda-led government is also expected to halt any new purchases of the cryptocurrency and remove the Chivo bitcoin wallet app, which was created by the administration and serves as a gateway for citizens to buy and sell the cryptocurrency.

As a result, the macroeconomic program will no longer include direct use of bitcoin by merchants, rendering it an optional payment method in the country.

The government will still be able to use bitcoin treasury holdings to intervene in the market if necessary, and the Central Bank will continue to monitor and manage cryptocurrency-related risks.

The new legal framework for bitcoin, which was introduced in 2021, will be adjusted to align with the macroeconomic program.

The IMF's involvement in El Salvador comes amid a broader push by the lending institution to restrict the use of cryptocurrencies by countries that it provides assistance to.

Earlier in 2023, the IMF reached a staff-level agreement with Argentina on a new four-year program, which includes advice for the South American nation to phase out its bitcoin mining activity.

The move by the lending institution was met with criticism from members of the Argentine government, who pointed out that the IMF's involvement in the country's economic affairs has not yielded positive results in the past.

The article continues: "Despite the setbacks, Bukele’s fans on X, formerly Twitter, are celebrating his win over the IMF and seeing it as a middle finger to global finance for not stopping Bukele’s Bitcoin dream."

The post concludes: "For now, the world is watching as El Salvador continues its journey with Bitcoin. Only time will tell if Bukele’s bold vision for a crypto-powered El Salvador will come to pass or if he will be met with failure in his attempt to outwit the IMF and code a new destiny for his nation."

You can follow Sam Callahan on X: @sam_callahanthe