The International Monetary Fund (IMF) announced on Thursday that it has reached an agreement with El Salvador to release a $140 million loan. This comes after the IMF secured assurances regarding the country’s use of bitcoin, which El Salvador made legal tender in September 2021, placing it on equal footing with the U.S. dollar. As part of a larger agreement reached in December 2024, the IMF had required that bitcoin lose its legal tender status by January 2025. In exchange, the IMF will provide El Salvador with $1.4 billion in loans over 40 months. On Thursday, the IMF said it had reached a principle agreement to disburse the first $140 million under the “second and third reviews” of the agreement. The IMF also noted that the management of the country’s electronic bitcoin portfolio has been handed over to a private operator, and no public funds have been used to accumulate bitcoins. The organization highlighted that El Salvador’s economy has shown “solid performance,” with growth surpassing expectations in 2023 and projected to reach 4.5% in 2026. This progress is attributed to increased investments, consumption, remittances, tourism, and capital inflows, which the IMF says reflect improved security and growing investor confidence. However, the $140 million payment still needs formal approval from the IMF’s board of directors before it can be released. President Nayib Bukele, who took office in 2019, has implemented policies aimed at reducing crime and improving security. His administration has significantly lowered homicide rates by mass incarcerating alleged gang members. However, as part of the December 2024 agreement with the IMF, Bukele also introduced a strict austerity plan. Economists estimate that about 15,000 government workers were laid off since he came to power, and unions report that 47,000 jobs have been eliminated in total. Despite these efforts, around 30% of El Salvador’s population still lives in poverty, and the country continues to have the lowest economic growth rate in Central America.