IMF Completes Two El Salvador Program Reviews and Clears $138 Million

The Executive Board of the International Monetary Fund completed the Second and Third Reviews under El Salvador’s Extended Fund Facility arrangement, allowing an immediate disbursement of SDR 101.96 million (about US$138 million), the Fund said in Press Release No. 26/316 on October 1, 2026.

El Salvador’s 40-month EFF arrangement was approved on February 26, 2025, with total access equivalent to SDR 1,033.92 million (about US$1.4 billion). The Salvadorean authorities have consented to publication of the Staff Report.

Program Performance and Bitcoin Waivers

The IMF said economic activity has exceeded expectations, supported by sustained improvements in security and rising investor confidence, as macroeconomic imbalances continue to be addressed. Fiscal consolidation has advanced broadly in line with program objectives, and reserve and liquidity targets were comfortably met, according to the Fund. It cited important progress in financial sector reforms, fiscal transparency, and AML/CFT reforms, as well as the transfer of majority ownership and control of the government e-wallet Chivo to a private operator.

Certain performance criteria were not met, including on Bitcoin accumulation. The Board granted waivers for the missed criteria based on strong corrective measures and renewed commitments from the authorities. The Fund said no further Bitcoin accumulation is envisaged beyond documented donations.

Going forward, the program will continue to focus on strengthening fiscal sustainability, rebuilding external buffers, enhancing financial sector resilience, advancing governance and transparency reforms, and supporting stronger and more inclusive growth. Pension and civil service reforms will be pursued following earlier delays, and efforts will continue to reduce the state’s involvement in Bitcoin-related activities, strengthen crypto-asset regulation and governance, and enhance transparency regarding public-sector crypto-asset holdings.

Katz Statement on Fiscal and Financial Priorities

Dan Katz, First Deputy Managing Director and Chair of the Board discussion, said the program “has been delivering tangible benefits,” with real GDP growth exceeding expectations, social outcomes improving, fiscal and external buffers strengthening, and sovereign spreads declining markedly. He said implementation challenges remain in some areas and that decisive program implementation and strong contingency planning remain essential amid heightened external uncertainty.

Katz said sustained fiscal consolidation remains essential to place public debt firmly on a downward trajectory and safeguard the debt anchor. Achieving higher primary surpluses will require further enhancements in revenue administration, continued expenditure restraint, and timely pension and civil service reforms, he said. He added that efforts should continue to strengthen public financial management, rebuild government liquidity buffers, and improve treasury and debt-management operations to avoid future slippages, and that protecting priority social spending remains essential to support a further reduction in poverty.

On external and financial-sector resilience, Katz said reserve accumulation should continue alongside efforts to sustain adequate bank liquidity buffers. Oversight and regulation of financial institutions should be strengthened, including for cooperatives and public financial institutions, to allow a prudent expansion of private credit, he said. Financial stability will also be supported by further reductions in the sovereign-bank nexus and implementation of the remaining safeguards assessment recommendations, including modernization of the central bank’s organic law, according to the statement, which also cited the need to improve the quality and timeliness of external sector statistics.

On governance, Katz said priorities should center on enhancing fiscal and public-sector reporting, strengthening beneficial ownership transparency, enhancing asset-declaration disclosures, and improving the effectiveness of anti-corruption and AML/CFT frameworks. Those efforts should be complemented by measures to address infrastructure and skills gaps, attract investment, and sustain private sector-led growth, he said.

“The state’s involvement in Bitcoin-related activities is being unwound while related regulations are enhanced,” Katz said. He called the transfer of majority ownership and control of Chivo to a private operator a welcome step and said the residual public-sector exposure should be fully unwound. Priority should be given to enhancing the transparency and disclosure of public-sector crypto-asset holdings and to improving the regulatory, supervisory, and governance frameworks for crypto asset providers, including through amendments to the Digital Asset Issuance Law, he said.

Program History and Economic Indicators

The February 26, 2025 approval allowed an initial disbursement of SDR 86.16 million (around US$113 million), with access equal to 360 percent of quota. The arrangement was expected to catalyze additional multilateral financial support for a combined overall financing package of over US$3.5 billion over the program period. Under the program, the primary balance was set to improve by 3½ percent of GDP over three years, underpinned initially by a rationalization of the wage bill while protecting priority social and infrastructure spending. The program also addressed risks arising from the Bitcoin project, including by making acceptance of Bitcoin voluntary and confining public-sector engagement in Bitcoin-related activities, transactions, and purchases.

The Board completed the first review on June 27, 2025, allowing a disbursement of SDR 86.16 million (about US$118 million) and bringing total disbursements under the arrangement to SDR 172.32 million (about US$231 million). In the context of that review, a new Fiscal Sustainability Law was enacted, a presidential decree limiting exceptions to the Procurement Law was issued, financial information on the largest state-owned enterprises was published, and information on public contracts was made more accessible.

Selected economic indicators published with the review materials estimate real GDP growth of 3.9 percent in 2025, with projections of 4.5 percent in 2026 and 4.0 percent in 2027. Average consumer price inflation is estimated at 0.3 percent in 2025 and projected at 2.7 percent in 2026 and 2.1 percent in 2027. Gross international reserves are estimated at US$4,814 million in 2025 and projected at US$5,346 million in 2026 and US$6,172 million in 2027.

Nonfinancial public sector gross debt is estimated at 87.6 percent of GDP in 2025 and projected at 85.0 percent in 2026 and 89.2 percent in 2027, with the table noting that 2027 figures include the recognition of accrued but unpaid interest to private pension funds of US$2.3 billion. The primary balance is estimated at a surplus of 1.9 percent of GDP in 2025, with projections of 2.9 percent in 2026 and 3.7 percent in 2027. The current account balance is estimated at a deficit of 3.5 percent of GDP in 2025, with a projected deficit of 4.8 percent in 2026. The table lists the Central Reserve Bank of El Salvador, the Ministry of Finance, and IMF staff estimates as its sources.