Bitcoin Versus The IMF

Abstract: In the post Bitcoin world, we briefly cover the history of the IMF. We note how the IMF’s significance has been waning in recent years, with China taking over as the primary funder of infrastructure projects in developing countries. We explain how the IMF is both obsessed with Bitcoin and vehemently anti-Bitcoin. In the El Salvador IMF country reports, Bitcoin is the second most non-trivial common word in most sections. Bitcoin is mentioned 319 times in two reports. We discuss how Bitcoin can help countries remain independent from the Jackals at the IMF and talk about how a small group of countries, including Bhutan, could be key strategic winners from Bitcoin.

IMF March 2025 El Salvador Report – Word Cloud

Note: The “POLICIES UNDER THE EXTENDED FUND FACILITY ARRANGEMENT” section of the 111 page March 2025 IMF country report for El Salvador being put through a word cloud generator

The IMF

Several years before Bitcoin was released, in 2004, author John Perkins published an influential book entitled “Confessions of an Economic Hit Man”. The book is semi-autobiographical and follows the career of John Perkins, as an economic hitman, as he travels around emerging market countries encouraging governments to take International Monetary Fund (IMF) and World Bank loans, often with notoriously detrimental conditions, using highly nefarious tactics. Perkins repeatedly refers to the economic hitmen as Jackals. In our view, this book should be considered as part of a very exclusive list, part of the pre-Bitcoin required reading list, if one is trying to understand the economic and libertarian political climate in which Bitcoin grew and what Bitcoin may be able to achieve. For us, John’s work made us more susceptible to understanding Bitcoin and its potential benefits, when it launched. With this book in mind, along with many other Bitcoiners, we are not exactly the biggest fans of the IMF. In general, Bitcoiners oppose central banks and they dislike multinational governmental financial organisations, such as the IMF, the World Bank and the Bank of International Settlements even more. And conversely, perhaps understandably, many in the IMF are not likely to be the biggest fans of Bitcoin either.

A couple of years after Bitcoin launched, in May 2011, the managing director of the IMF at the time, Dominique Strauss-Kahn (DSK), who was perhaps the frontrunner in the upcoming French presidential election, was alleged to have sexually assaulted a hotel maid in New York. The maid was an immigrant from Guinea, a country which has received many IMF loans and still has a $472m loan outstanding to the IMF to this day, quite a significant amount with a GDP of c$30 billion. Many who had read John Perkin’s book, including some Bitcoiners, immediately thought that this alleged sexual misconduct encapsulated the narcissistic and predatory nature of the IMF’s financial policies towards developing countries. From the maid’s point of view, she may have left her home country due to economic pressures, imposed on her by the predatory IMF, only to become victim again, this time more directly from the predator in chief himself. Although this sexual assault story had widespread coverage at the time, this apparent dark ironic angle was mostly lost on the “mainstream media”, who, with the exception of this sexual assault allegation, respected the IMF.

DSK was then forced to resign and was replaced by Christine Lagarde, who now runs the European Central Bank (ECB). Christine Lagarde, a convicted criminal, has repeatedly expressed negative views on Bitcoin. For instance in January 2025, Laggard acted to prevent the Czech Republic from holding Bitcoin as part of its official FX reserves.

I am confident that … bitcoins won’t enter the reserves of any of the central banks of the General Council

Source: https://www.reuters.com/markets/europe/ecbs-lagarde-slaps-down-czech-proposal-bitcoin-reserves-2025-01-30/

Laggard’s term as ECB governor expires in 2027 and there is already speculation she could replace Klaus Schwab as head of the World Economic Forum. This would be the second time Laggard would have replaced the head of a major international economic organisation, where the previous head resigned in the midst of allegations of sexual assault.

The IMF currently has $173 billion in loans outstanding, to 86 countries, mostly relatively poor countries, and it has the capacity to lend up to $1 trillion, using its Special Drawing Rights (SDR) system. The SDR is a “global reserve asset” pegged to a basket of national currencies and it is essentially created out of nothing or out of debt. Although the IMF has 191 members, The US and European nations have outsized voting power. The US has 16.49% of the votes (giving it veto power over some new loans, where an 85% majority approval is required), while most large European countries have a vote of between 3% to 5%. China only has a 6.1% IMF vote share. This is after the voting forum, prior to that China famously had around the same voting rights as Belgium. The head of the IMF is traditionally European, while the head of the World Bank is normally American.

Source: IMF (As at 2022)

Despite the large IMF capacity for more loans, in the last 15 years or so, since DSK was arrested (We are not implying causation) the relative significance of the IMF and World Bank has declined, with only moderate loan balance growth. China has now become the main financial backer of infrastructure projects in developing countries. This may be a positive for the smaller developing countries, giving them better negotiating power and perhaps avoiding onerous loan terms the IMF typically has, which often forces countries to cede control of critical national assets to foreign corporations. However, they may now be giving away too much influence to China instead of the IMF. Being dependent on other countries for financing, can place a country in a weak position and some smaller countries may look to something else for the answer. China can be seen as a major competitor of the IMF, and as the chart below illustrates, in recent years, China has been winning. In contrast, the US has spent hundreds of billions of dollars invading countries like Iraq and Afghanistan.

Total outstanding loan balances

Source: https://cepr.org/voxeu/columns/rise-china-international-lender

The balance sheet of the IMF is now quite small by modern standards, it is in the same order of magnitude as the market capitalisation of Strategy [MSTR US] and around 6% of Bitcoin’s market capitalisation. Bitcoin has enjoyed tremendous growth since DSK’s arrest, we will not put the price chart here, but it has exceeded the growth rate of the IMF balance sheet by quite a margin. Bitcoin can be thought of as somewhat of a competitor to the IMF, both in terms of trying to obtain global reserve asset status and as a means for smaller emerging market countries to finance infrastructure investments. However, the SDR never really emerged as a rival and final boss for Bitcoin to defeat, which is what some may have expected in 2011.

In the rest of this article, we will talk about two very different countries, El Salvador and Bhutan. We want to caveat this by mentioning that we have never visited either country. Political commentator Douglas Murray is unlikely to be a fan of the rest of this article, as unfortunately, we are talking about countries to which we have never been.

El Salvador

On June 5, 2021, at the Bitcoin Miami conference, Jack Mallers introduced the President of El Salvador Nayib Bukele. Bukele announced a new Bitcoin legal tender law. El Salvador has also engaged in other pro-Bitcoin policies, such as building a strategic Bitcoin reserve, which at the time of writing holds 6,234.18 BTC and is worth $735m.

The IMF has a long history of involvement in El Salvador, 23 funding packages from 1959 to April 2020. The last loan before the Bitcoin policy, was a $389m loan related to the COVID-19 pandemic, announced in April 2020. Then in February 2025, in the first new agreement since the Bitcoin policy was announced, the IMF board approved a new $1.4bn 40 month extended fund facility. As at 27 June 2025, total disbursements under this facility have been $231m.

The full loan agreements between El Salvador and the IMF are kept secret and therefore we cannot see the terms and conditions. Quite why this is the case is unclear to us, as one would think governmental organisations should make contracts with other governmental organisations public. However, the IMF has published a large amount of material in relation to the loans. There are two main documents we have reviewed, a 111 page document published on 3 March 2025 and a 98 page document published on 19 March 2025. It is quite astonishing to learn just how obsessed the IMF is with Bitcoin. The two documents mention Bitcoin a total of 319 times. To illustrate just how obsessed the report writers are with Bitcoin, as the image for this piece, we have produced a word cloud. After excluding generic words like “the”, in the default word cloud generator settings, it shows that Bitcoin was the second most popular word in a critical section of the report talking about the policies of the credit facility, right behind the relatively generic word “financial”. It is as if, from the IMFs point of view, Bitcoin is the primary risk associated with El Salvador.

Pretty much every mention of Bitcoin is negative. The reports assume that anything Bitcoin is bad and risky, without explaining why. There is of course no serious mention whatsoever of any positives about Bitcoin, other than to provide context for the criticisms of Bitcoin. The reports talk about how crypto-assets “widespread adoption could threaten macroeconomic stability and raise fiscal risks”. The report also talks about how low Bitcoin usage, due to “Bitcoin’s high price volatility and limited trust in the technology”, is a positive, because lower usage equals lower risk, in the IMFs mind. The IMF reports contain various sections on addressing the Bitcoin risks and mention the following policies:

1. Legal reform – Removing in law the concept that Bitcoin is a currency
2. Legal Tender – Eliminating the obligation for the public and private sector to accept Bitcoin in transactions
3. Tax – Clarify that tax obligations are to be paid only in US$
4. Government payments – Ensured that monetary obligations of the state are not paid in Bitcoins
5. Chivo Wallet – Publish audited financial statements for Chivo and to end the use of government participation in Chivo by July 2025
6. Regulation –  Regulate crypto-assets, with emphasis on Money Laundering risks and FATF recommendations
7. Capping the government exposure to Bitcoin

Some of the above loan conditions seem onerous and unreasonable. Removing the obligation of private companies to accept Bitcoin as a form of payment, is probably a good policy, since in our view merchants should be free to accept whatever form of payment they like. However, persuading a sovereign country to change the law, by using loan conditions, a loan given with other people’s money, may not be especially ethical or appropriate either. However, this is what the IMF does.

The limit on government exposure to Bitcoin has attracted the most attention. Not least because the government keeps buying Bitcoin and makes a lot of noise about it. The two quotes from the reports that have the most clarity on the subject are below:

Over the course of the program, the authorities have committed not to accumulate Bitcoins

There will be no voluntary accumulation of Bitcoins by the public sector in the context of the program

Of course, we do not have access to the actual loan agreements, so we cannot see what the government has committed to. However, the statements seem reasonably clear. Nevertheless, the country purchased a large amount of Bitcoin in 2024 and continues to slowly accumulate every day, at a slow rate of 1 BTC per day. When a Forbes journalist, Javier Bastardo, questioned the IMF about this inconsistency, they responded as follows:

The government under the program has committed not to accumulate further Bitcoins at the level of the overall public sector. We consulted with the authorities, and they have assured us that the recent increase in Bitcoin holdings in the Strategic Bitcoin Reserve Fund is consistent with agreed program conditionality

Source: https://www.forbes.com/sites/digital-assets/2025/03/05/imf-restrictions-on-bitcoin-purchases-why-el-salvadors-reserves-grew/

Therefore, who knows how El Salvador is compliant? Perhaps the cap is a limit of the value invested in Bitcoin as a percentage of the GDP, and with the GDP growing, more purchases can occur. Or perhaps the Bitcoin are held outside of the “public sector” somehow. Anyway, while the IMF is staunchly opposed to Bitcoin, the government of El Salvador clearly favours a more balanced approach. The country wants good relations with the IMF and is therefore willing to limit the scope of its Bitcoin policies, however the country still sees a pathway towards greater sovereignty and independence with Bitcoin.

Bhutan

Bhutan is in a very small group of countries, quite a fortunate group, with perhaps two other countries: Paraguay and Laos. These countries typically have more hydropower electricity generation capacity than their local grid demands and they therefore have significant surplus electricity. Therefore the electricity can be exported, in Bhutan’s case to India, in Paraguay’s case to Brazil and in Laos’s case to Thailand and Vietnam. These power importing countries are in a relatively strong negotiating position, as they are the only realistic way the exporter can use the energy, therefore they have strong pricing power. There is an alternative use case of course, the power can be used to mine Bitcoin and Bhutan has chosen this path. Bhutan can therefore then realise more value from its natural resources. In theory, Bhutan, Paraguay and Laos could be winners from Bitcoin, while the countries that import electricity from them could be relative losers.

Bhutan is a very unique, beautiful and deeply spiritual country, high up in the Himalayas. The GDP is around $3.3bn per annum, while the government targets gross national happiness growth and sustainability, rather than GDP growth. Tourism is a key part of the economy, making up around 15% of the GDP, even though outsiders were banned until 1974. The economy was therefore hit hard during COVID-19. The country is also suffering from a brain drain and in 2023 announced large public sector pay increases to mitigate the problem, standard increases of 50% across the public sector.

Bhutan has not been acquiring Bitcoin in the open market like El Salvador, instead it has been mining it, using its surplus hydropower. The country has accumulated 11,611 BTC, worth almost $1.4bn. This is around 42% of the country’s GDP. Bitcoin therefore puts Bhutan in a much stronger strategic position. The country is less dependent on external sources of funding, like the IMF and can invest in its own infrastructure and public sector.

The country does not have any IMF loans, but it does receive some support from the World Bank. The World Bank recently published a 125 page country partnership report, which did mention Bitcoin and talk about the risks, however Bitcoin was only briefly mentioned three times and the World Bank does not seem obsessed with Bitcoin, like the IMF. However, the World Bank did criticise the country for a lack of transparency in its Bitcoin mining operations. If it were not for Bitcoin, the country may well have had to ask the IMF if it could borrow money.

Bhutan has announced plans to build a ‘mindfulness city’, with separate laws to the rest of the country (watch the video). While the “special economic zone” idea is common across the world, this city seems truly different, with a focus on sustainability, a more natural approach to flood risks, key cultural buildings as bridges on top of flowing rivers and temples inside colourful hydropower dams. It is likely this project is funded to some extent via Bitcoin, if it ever happens. Bhutan is already a big winner from Bitcoin. Partly due to Bitcoin, the country is able to invest in its infrastructure, in its unique sustainable way, while increasing public sector pay. Bhutan can do this while retaining independence and avoiding the Jackals.

If Bitcoin continues to grow, if Bhutan has good governance and plays its political cards right, the country and its people could be massive winners. The land of the thunder dragon could be the first major strategic winner from Bitcoin.

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