LatinNews Daily - 28 May 2025

*Salvadorean authorities have reached a staff-level agreement on the first review of the 40-month arrangement under the Extended Fund Facility (EFF), which was agreed in December 2024 for a total of US$1.4bn after almost four years of negotiations, and following key concessions from the government led by President Nayib Bukele regarding cryptocurrency bitcoin, which it made legal tender in 2021. According to an IMF statement, subject to approval by the IMF’s executive board, El Salvador would receive nearly US$120m following the first review. According to the IMF the two sides also finalised discussion on the 2025 Article IV consultation focused on boosting El Salvador’s medium-term growth prospects. The IMF statement highlights that Salvadorean authorities have made “significant progress in implementing their economic reform plan” under the IMF-supported programme, noting most programme targets for the first review were “comfortably met”, and “implementation of the structural benchmarks is progressing well”.  It adds that “despite a more challenging external backdrop, El Salvador’s economy continues to expand supported by improved confidence and still robust remittances”. The IMF forecasts El Salvador’s economy will grow 2.5% in 2025, down from 2.6% in 2024. It highlights understandings reached on policies to continue to secure programme objectives, with fiscal consolidation to continue this year “through cuts in the wage bill and current spending restraint”, and a strengthening of external buffers through accumulation of government deposits at the central bank. The IMF also underlines efforts to enhance governance, accountability, and transparency, with the adoption of a new anti-corruption law (which was met with scepticism by civil society groups following its approval in February), and efforts to ensure that the total amount of bitcoin held across “all government-owned wallets remained unchanged”.

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