Why does the IMF limit a government's bitcoin purchases, and what does a waived breach mean?

The IMF pays out a loan in tranches and checks the program conditions before each payment. One of El Salvador's conditions limits bitcoin accumulation by the state, which keeps a risk tied to the coin's price out of the budget. On October 1, 2026 the Executive Board found the condition breached and still released SDR 101.96 million (about $138 million), because the new coins came from private donations and the government agreed to corrective measures.

What did the IMF decide on October 1, 2026?#

The Executive Board completed the second and third reviews of the Extended Fund Facility (EFF). The program is worth about $1.4 billion (SDR 1,033.92 million) and runs for 40 months. The decision is set out in IMF Press Release No. 26/316. El Salvador received SDR 101.96 million, and total disbursements under the program reached SDR 274.28 million, about $369 million, according to TFTC.

In the same decision the Board approved a waiver for the bitcoin accumulation criterion. A waiver is a formal agreement to set aside the consequences of a breach.

How do IMF loan conditions work, and what is a waiver?#

An IMF program is split into tranches. Each one is tied to quantitative criteria: a ceiling on the budget deficit, a floor on reserves, and sometimes specific commitments such as El Salvador's bitcoin condition. If a criterion is missed, the payment does not go ahead by default.

For the tranche to be released anyway, the Executive Board has to approve a waiver. That usually happens when the deviation is small or the country has already taken steps to correct it. A waiver covers one review. The condition stays in the program and is tested again at the next review.

Why did the Fund waive the breach?#

IMF staff reviewed the government's documentation and concluded that the bitcoin added since the first review came from private donations and that no public money was spent on it. The donor has not been officially named.

The second reason concerns the state Chivo wallet: majority ownership and operational control moved to a private operator. IMF First Deputy Managing Director Dan Katz put it this way: "The state's involvement in Bitcoin-related activities is being unwound while related regulations are enhanced." The program now assumes no further government bitcoin accumulation beyond documented donations.

What does this mean for the bitcoin market?#

According to the government tracker, El Salvador holds about 7,792 BTC. That is roughly 0.037% of the 21 million maximum supply and about $660 million at a price near $84,600 on the morning of October 3. For comparison, US spot bitcoin ETFs took in $2.7 billion in September alone, according to The Block.

Purchases of this size have little effect on the price. The decision matters as a precedent. It shows the terms on which a lender will tolerate bitcoin on a borrowing country's balance sheet: the coins were acquired without budget money, and the payment wallet is no longer owned by the state.

What are the limits and risks of this conclusion?#

• The press release does not give the exact wording of the criterion. It reports only the outcome of the review.
• The donor has not been named, so there is no way to check how independent the donations are from the state.
• The waiver covers one review. The criterion will be tested again, and a new breach could delay a tranche.
• Countries without an IMF program have no such condition, and El Salvador's experience does not transfer to them directly.
• Dollar figures depend on the SDR rate and the bitcoin price on the day of the calculation.