Honduras and the IMF
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Honduras' New Three Year Economic Program |
Remarks by Anoop Singh
Director, Western Hemisphere Department
International Monetary Fund
February 2, 2004
I am very grateful to President Maduro and his economic team for inviting me to Honduras. Although this is my first visit, the IMF is proud of its long association with Honduras, and I am looking forward to exchanging views with many sections of society.
I have had initial meetings with the President and his economic team, continuing the dialogue held with the President recently in Monterrey. In the short period since then, the economic team has been able to finalize a medium term program—under the framework of the IMF's Poverty Reduction and Growth Facility (PRGF)—that has been under discussion for some time. This program aims to entrench macroeconomic stability in Honduras, while ensuring that Honduras' considerable potential is used to raise growth, improve living standards, and create new jobs.
President Maduro has told us that the medium term program reflects the government's careful and comprehensive discussions with civil society in recent months. As such, the program carefully balances a strengthening of macroeconomic policies and institutions with much greater attention to poverty and equity issues. As all the details in the government's letter of intent will soon become available, I can be brief in pointing to the main planks:
With these three pillars, supported by other structural reforms aimed at increasing trade integration and competitiveness, the program has high potential for success. Its resolute implementation should allow real growth to jump from its recent average of 2- 2 ½ percent to around 4½ percent by 2006, while keeping inflation low and steadily improving social indicators. It helps, of course, that the program comes at a time of a much-improved external environment—both regional and international—and positions Honduras to benefit fully from the ongoing global upturn.
In addition to the IMF, the program is being supported by the World Bank and the IDB, our close partners in the region. The letter of intent has been approved by IMF management, opening the door for an Executive Board meeting in the coming weeks. Board approval of the program will make available a first disbursement from the Fund (from a total access of close to about US$ 100 million), additional financial support from the international community, and access to debt relief under the enhanced HIPC Initiative.
In concluding, let me say that Honduras' program is another key step to building a strong growth momentum with improving equity within the Central American region. We remain in close touch with other countries in this region as they implement growth-enhancing agendas carefully tailored to their individual circumstances. There are many common elements in the individual policy agendas and that is why we are further enhancing our regional surveillance with increased emphasis on the sharing of cross-country experiences, supported by our financial assistance where necessary.
IMF EXTERNAL RELATIONS DEPARTMENT