(Adds comments from IMF, background)

SAN SALVADOR, Jan 28 (Reuters) - The International Monetary Fund's (IMF) board on Friday said it continued to have strong engagement with El Salvador and that no determination had been made on whether it could lend to the country which has made the cryptocurrency bitcoin legal tender.

El Salvador became in September the first country to make bitcoin a legal tender, alongside the U.S. dollar.

The IMF has pressed El Salvador to backtrack on the bitcoin move, citing financial, economic and legal concerns.

On Tuesday, the IMF's board "urged" El Salvador to reverse its decision to make bitcoin legal tender https://www.reuters.com/article/imf-el-salvador-idUSL1N2U524W, while calling for strict regulation of the country's Chivo e-wallet.

In the near-term the costs of implementing Chivo and operationalizing the bitcoin law exceed potential benefits, as associated budgetary costs are forecast at 1% of gross domestic product 2021-2022, the IMF said in a report published on Friday.

The IMF said that crypto-technologies and digital payment systems like Chivo could potentially make payments more efficient, and enhance financial inclusion and support growth.

But bitcoin carries significant risks and "its price volatility makes it inefficient as means of payments, unit of account or store of value," said the IMF.

El Salvador's economy has been dollarized for two decades. (Reporting by Anthony Esposito and Nelson Renteria Editing by Drazen Jorgic and Nick Zieminski)