Press Release No. 15/579

Press Release: IMF Completes Second Reviews Under the Stand-By Arrangement and arrangement under the Stand-By Credit Facility for Honduras

December 18, 2015

The Executive Board of the International Monetary Fund (IMF) completed the second review of Honduras’s performance under an economic program supported by a three-year Stand-By Arrangement (SBA) and a two-year arrangement under the Stand-By Credit Facility (SCF). This blended program was approved on December 3, 2014 in the amount of SDR 129.5 million (then about US$188.6 million), the equivalent of 100 percent of Honduras’ quota in the IMF (see Press Release No. 14/545). With the completion of the review, the authorities have access to resources in the total amount of SDR 51.8 million (about US$71.2 million); however the authorities plan to continue treating the arrangements as precautionary. The Board decision was taken on a lapse of time basis (a process where the Board agrees that a proposal can be approved without convening formal discussions) on December 17, 2015.¹

Macroeconomic performance continues to be better than envisaged in the program. In 2015, real GDP growth is projected at 3.5 percent, led by a broad expansion across sectors and supported by favorable terms of trade, growth in trading partners and strong capital inflows. Inflation through October remained low at 2.5 percent, owing to a better monetary and fiscal policy mix as well as the effects of lower fuels prices. In addition, overall investor confidence, as measured by declining spreads on external debt, has improved. For 2016, the outlook remains just as positive, with inflation low at about 5 percent and real GDP growth projected at 3.5 percent.

Program implementation for the second review has been strong. All 2015 end-June performance criteria and indicative targets were met, most with significant margins. On the structural side, June and September 2015 benchmarks were broadly observed. The authorities are pressing ahead with structural reforms, including the introduction of a Fiscal Responsibility Law (FRL), and an overhaul of tax administration.

¹ The Executive Board takes decisions under its lapse-of-time procedures when it is agreed by the Board that a proposal can be considered without convening formal discussions.