IMF: Donations Funded El Salvador’s Bitcoin Purchases

The International Monetary Fund’s staff assessment says donations were used to finance some of El Salvador’s bitcoin purchases made after the country adopted bitcoin as legal tender in 2021. The review was published as part of routine monitoring of the Salvadoran economy.

The IMF’s assessment states that certain purchases were financed with donations rather than directly from the central government budget. The report adds that the use of donations has not been described in sufficient detail to allow outside reviewers to assess potential fiscal implications.

IMF staff highlighted unclear accounting for bitcoin holdings, limited public information on the source and governance of donations used for acquisitions, and the risk that volatile crypto positions could create contingent liabilities for the state. The fund urged authorities to clarify financing arrangements and to strengthen financial reporting.

The IMF did not quantify how much of the purchases were financed by donations in its public summary. The report recommended publishing clearer data on wallet balances, transaction flows and the accounting treatment of crypto holdings so those assets and any related liabilities appear transparently in public accounts.

The assessment also addressed market risk. It noted that swings in bitcoin’s price have affected the valuation of the government’s holdings and warned that rapid price movements could translate into fiscal stress if state finances are exposed. The fund advised that volatile crypto assets should not be used as reserve buffers and that any government exposure be subject to strict risk management and disclosure standards.

El Salvador’s government has defended its bitcoin policy as a way to attract investment and reduce remittance costs, and the administration has maintained some purchases were backed by private donations and a public trust intended to support adoption. International institutions and credit-rating agencies have raised concerns about macroeconomic and governance risks tied to the policy, prompting calls for clearer rules and greater transparency.