“Further discussions remain necessary in this and other key areas,” stated IMF staff regarding the use of the popular cryptocurrency in the Central American country.

The International Monetary Fund (IMF) has made progress in negotiations with El Salvador to close a policy-focused program to strengthen public finances, increase banks' reserve buffers, improve governance and transparency, and mitigate Bitcoin risks.

In the case of bitcoin, while many of the risks have not yet materialized, there is a common recognition that more efforts are needed to improve transparency and mitigate the potential fiscal and financial stability risks posed by the bitcoin project.

"Additional discussions remain necessary in this and other key areas," IMF staff have noted.

At the fiscal level, the agency has reached a preliminary agreement with the Central American country to improve the primary balance by around 3.5% of GDP over a three-year period, in order to place public debt on a sustainable path.

Consolidation is expected to be achieved through a balanced set of measures, with an initial focus on rationalizing the public wage bill, while creating room for crucial social and infrastructure spending.

Progress has also been made in the development of a plan to gradually strengthen the reserve mechanisms of the financial system in a manner compatible with the growth and credit of the private sector.

This is also being supported by efforts to reduce the government's dependence on domestic financing through planned consolidation and possible support from the Fund and other multilateral development banks.

At the structural level, they have reached preliminary agreements on a comprehensive multi-year strategy to improve governance, transparency and the overall investment climate.

Authorities are well advanced in preparing legislative proposals to address corruption, money laundering vulnerabilities and weaknesses in procurement frameworks, the IMF has maintained.