El Salvador: 2025 Article IV Consultation, First Review Under the Extended Fund Facility, and Request for Waivers of Nonobservance of Performance Criteria, and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for El Salvador

This paper presents El Salvador’s 2025 Article IV Consultation and First Review under the Extended Fund Facility, and Requests for Waivers of Nonobservance of Performance Criteria, and Modification of Performance Criteria. El Salvador’s economic program, supported by the Extended Fund Facility arrangement, had an auspicious start. Notably, the economy continues to expand, inflation has further moderated, and the current account deficit has narrowed amid efforts to address macroeconomic imbalances. Sustained efforts are needed to rebuild financial sector buffers and enhance oversight and regulation. The steady implementation of the planned increases in banks’ reserve requirements and liquidity buffers is critical to enhancing resilience and preserving financial stability. Bitcoin risks should continue to be mitigated. An early unwinding of the public sector’s participation in the government’s e-wallet (Chivo) remains critical, and efforts should continue to keep the public sector’s holdings of Bitcoin unchanged, and to improve the oversight of crypto assets to enhance consumer and investor protection.