El Salvador needs more efforts to enhance Bitcoin transparency, mitigate risks: IMF

ISTANBUL

El Salvador needs to make more efforts to enhance Bitcoin transparency and mitigate its risks, the International Monetary Fund (IMF) said Wednesday in a report.

"On Bitcoin, while many of the risks have not yet materialized, there is joint recognition that further efforts are needed to enhance transparency and mitigate potential fiscal and financial stability risks from the Bitcoin project," it said Tuesday. "Additional discussions in this and other key areas remain necessary."

El Salvador became the first country in the world to accept Bitcoin as legal currency in September 2021.

The Central American country has made progress on developing a plan to gradually strengthen its financial system reserve buffers, in a manner that is consistent with continued private sector credit and growth, according to the report.

"This is also being supported by efforts to reduce the government’s reliance on domestic financing through the planned consolidation and potential support from the Fund and other multilateral development banks," it said.

The IMF said El Salvador aims to improve its primary fiscal balance by around 3.5% of GDP over a three-year period in order to place public debt on a sustainable path.