IMF Executive Board Approves US$822 Million Arrangements Under the Extended Fund Facility and the Extended Credit Facility for Honduras and Concludes 2023 Article IV Consultation

September 21, 2023

  • The Executive Board of the International Monetary Fund (IMF) approved arrangements under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) for Honduras for a total of US$822 million.
  • These arrangements provide support for the Honduran government’s economic and institutional reform agenda over the next three years. The program also aims to support the authorities’ efforts to improve governance and transparency and fight corruption.
  • The program will advance policies needed to strengthen economic resilience and address structural bottlenecks to boost inclusive growth, including by increasing public investment while safeguarding macroeconomic stability.

Washington, DC : The Executive Board of the International Monetary Fund (IMF) approved today an SDR 416.3 million (about US$548 million) arrangement under the Extended Fund Facility (EFF) and an SDR 208.2 million (about US$274 million) Extended Credit Facility (ECF) for Honduras for a combined SDR 624.5 million (equivalent to US$822 million [1] or 250 percent of quota) and concluded the 2023 Article IV consultation. [2] The Executive Board’s decision allows the authorities an immediate disbursement of SDR 89 million, equivalent to about US$117 million. These arrangements will help address Honduras’ balance of payments needs and provide support for the Honduran government’s economic and institutional reform agenda over the next three years.

The authorities’ IMF-supported program includes economic and institutional reforms to support macroeconomic stability on a sustainable basis while creating fiscal space for much-needed productive investment and social spending. The program also aims at fostering durable and inclusive growth and enhancing climate resilience, while supporting the authorities’ efforts to improve governance and transparency.

Following the pandemic and tropical storms, the Honduran economy has rebounded, with economic output now around 6 percent above pre-pandemic levels. Economic growth is projected to moderate to around 3 percent in 2023, down from 4 percent in 2022. Over the medium term, growth is projected to increase to near 4 percent, supported by public investment and the authorities’ reform agenda. After peaking near 11 percent in 2022 in the aftermath of the global commodity price shock, inflation has declined significantly and is projected to moderate to near 5 percent by the end of 2023.

Following the Executive Board discussion, Mr. Kenji Okamura, Deputy Managing Director and Chair, made the following statement:

“The Honduran economy has shown remarkable resilience to recent domestic and external shocks. Still, Honduras faces long-standing social and structural challenges, including weak governance and limited economic opportunities, that hinder its development potential and fuel migration. Infrastructure and climate adaptation investment needs are also significant. The authorities’ economic program supported by a Fund arrangement seeks to preserve macroeconomic stability and begin to address these challenges to foster more robust and inclusive growth.

At the core of the authorities’ program is a medium-term fiscal framework that preserves debt sustainability while opening space to increase productive investment and social spending. Underpinning these efforts will be a far-reaching tax reform and measures to strengthen tax administration. The program will also support the authorities’ efforts to build a well-targeted and wide-reaching social safety net to reach the most vulnerable groups. Importantly, the authorities are also working on diversifying financing sources, including by developing domestic debt markets, which will be bolstered by a zero limit on central bank financing of the budget.

The authorities are committed to strengthening the frameworks for monetary and foreign exchange policies, supported by Fund technical assistance, with a view to preserving competitiveness and creating the necessary conditions to transition to a balanced, competitive, and efficient foreign exchange allocation system. Monetary policy should support the ongoing disinflation process and ensure that they are no undue pressures on the exchange rate.

Reforms in the energy sector will be essential to limit fiscal risks and improve the business environment. The authorities are implementing a comprehensive loss reduction plan to strengthen the financial position of the public electricity company and enhance the provision of electricity. In this context, the program also aims to support the authorities’ efforts to build resilience to climate change.

The authorities have prioritized enhancing governance and transparency and the fight against corruption. They have strengthened the Anti-Money Laundering framework and are eliminating trust funds, which created corruption risks in spending execution. To further strengthen governance, the authorities are taking steps to implement an electronic declaration system for public officials’ finances, create a comprehensive beneficial ownership registry, and establish an anti-corruption commission.”

Executive Board Assessment[3]

Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities’ implementation of prudent economic policies that underpinned macroeconomic stability and promoted resilience to recent shocks. Notwithstanding these achievements, Directors noted that poverty and inequality, corruption, and large investment needs remain major hindrances to sustained growth and development. In this context, they supported the new Fund arrangements to anchor the authorities’ reform agenda and catalyze additional external financing. Directors stressed the importance of maintaining strong ownership and commitment to reforms, continued capacity development support by the Fund and other IFIs, and adequate contingency planning.

Directors welcomed the program’s aim to create fiscal space for increased social spending and investment while preserving debt sustainability. To this end, they underscored the need to implement revenue mobilization policies, including the planned tax reform and strengthened tax administration. Directors noted the importance of mechanisms to enhance the targeting of social spending, including a planned social registry, and improvements to public investment efficiency, including through the upcoming PIMA. They also called for continued progress in the diversification of fiscal financing sources.

Directors emphasized the need to enhance monetary and exchange rate policies to support price stability and resilience to shocks. To this end, they underscored that the crawling band exchange rate regime should be managed with a view to preserving competitiveness, while the efficiency of foreign exchange market allocation should be improved. Directors also called for data-driven monetary policy, including active monitoring of developments in international interest rates. They also underscored the importance of enhancing the monetary policy framework and transmission and looked forward to the findings of the updated safeguards assessment.

Directors commended the authorities’ efforts to strengthen transparency and governance and reduce corruption risks, including the elimination of trust funds and the strengthening of the AML/CFT framework. They supported the authorities’ plans to increase financial transparency of public officials, simplify administrative procedures, and create an international corruption commission. Directors also stressed the need to accelerate energy sector reforms to limit fiscal risks, support growth, and improve the business environment.

Directors called on the authorities to increase preparedness and build resilience to the effects of climate change. In this context, they took note of the authorities’ interest on Fund financing under the Resilience and Sustainability Facility.

[1] U.S. dollar amounts have been calculated using today’s exchange rate: (SDR 0.759521/US$).

[2] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[3] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: .

Table 1. Honduras: Selected Economic Indicators, 2021–27









Activity and Prices

GDP (change in percent)








Inflation (percent)









End of period








Public Finances (percent of GDP)

Non-financial public sector overall balance








Non-financial public sector primary balance








Gross debt








Balance of Payments

Current account balance, percent of GDP








Gross international reserves (billions of US$)








Memorandum item:

Nominal GDP (billions of Lempiras)








Sources: Honduran authorities; and IMF staff calculations.

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