The International Monetary Fund (IMF) said Wednesday it had reached an agreement on a $1.4 billion loan deal with the government of El Salvador to strengthen the Central American country's economy as it agrees to scale down its crypto-related policies.

"The program aims to strengthen fiscal and external sustainability through implementing an ambitious and growth-friendly fiscal consolidation plan," Washington-based IMF said in a statement announcing the deal, adding it should help "enhance" reserve buffers.

The 40-month agreement, which also addresses the Salvadorian government's controversial use of the cryptocurrency bitcoin as legal tender, must now be confirmed by the IMF's executive board, which is due to meet in the coming weeks.

The program is also expected to "catalyze" more financial support from the World Bank and several regional development banks to the tune of more than $3.5 billion over the period of the loan, IMF mission chief Raphael Espinoza and the Fund's deputy director for the Americas, Luis Cubeddu, said in a statement.

The Salvadoran government, which was the first to recognize bitcoin as an official currency alongside the dollar in 2021, has agreed that the cryptocurrency will only be accepted by the private sector on a "voluntary" basis, the IMF said, adding that bitcoin-related risks "are being mitigated."

The public sector's "participation in Bitcoin-related activities will be confined," it announced.