IMF Executive Board Completes Third Reviews Under the Extended Fund Facility and Extended Credit Facility Arrangements for Honduras
IMF News, June 11, 2025
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- Published: June 11, 2025
Review completion and disbursement
- The Executive Board completed the Third Reviews under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements for Honduras on June 11, 2025.
- Completion of the reviews enables a disbursement of about US$160 million (SDR 117.6 million).
- Total disbursements under the programs so far amount to about US$485 million (SDR 356 million).
- Honduras’ 36-month arrangements total about US$850 million (SDR 624.5 million) and were approved on September 21, 2023.
- U.S. dollar amounts have been calculated using today’s exchange rate: (SDR 0.735050/US$).
Program performance and structural benchmarks
- Program performance for the third reviews has been strong.
- All quantitative performance targets for end-December 2024 were met.
- Through end-May 2025, three structural benchmarks were met:
- Adoption of a manual for budget execution programming.
- Launch of a digital investment portal.
- Completion of a diagnostic study of the foreign exchange allocation system.
- Progress has been made on the implementation of three additional structural benchmarks.
Macroeconomic performance and projections
- Growth:
- 2024: 3.6 percent.
- 2025 (projected): 3.5 percent, supported by a rebalancing of the economy, normalizing weather conditions, and favorable terms of trade.
- Inflation:
- Has declined close to the 4 percent objective.
- Fiscal performance:
- Fiscal deficit in 2024: 1.0 percent of GDP (outperforming the program target).
- Fiscal deficit projected in 2025: 1.5 percent of GDP.
- External position and reserves:
- International reserve coverage has strengthened since late 2024.
- Strengthening supported by external market access, exchange rate and monetary policy adjustments, and favorable foreign exchange inflows in the context of high remittances and coffee prices.
Policy assessment and recommendations (statements by Ms. Gita Gopinath, First Deputy Managing Director and Acting Chair)
- Macroeconomic stability:
- “The Honduran economy remains resilient in the face of a challenging economic landscape. Policies under the program have bolstered macroeconomic stability and contributed to a rebalancing of the economy, including a marked strengthening of the external position. That said, policy agility and steadfast program implementation are essential amid heightened external risks. The authorities’ commitment to the Fund-supported economic program is strong.”
- Fiscal policy:
- “Fiscal prudence continues to be a pillar of the authorities’ agenda and is key to creating fiscal space for public investment and social spending while preserving debt sustainability. Importantly, containing non-productive spending is key to anchor stability this election year. Targeted efforts are underway to strengthen the social safety net and protect the most vulnerable. Continued progress on structural fiscal reforms is essential to improve public investment and strengthen budget execution.”
- Monetary and exchange rate policy:
- “The authorities’ decisive recalibration of monetary and exchange rate policies has been instrumental to support low inflation, improve external competitiveness and international reserve buffers, and strengthen conditions in FX markets. Amid ongoing global uncertainty, including related to migration and trade policies, the authorities’ readiness to adjust monetary and exchange rate policies as needed is essential to safeguard stability. The authorities also remain committed to improving the efficiency of the current system of foreign exchange allocation.”
- Energy sector and fiscal risks:
- “Significant progress is being achieved in the energy sector. The authorities’ initiatives to reduce energy losses, including investments in energy transmission and distribution, are delivering positive results, while stronger coordination across government institutions is facilitating the reduction of arrears with private generators. These measures are contributing to a stronger financial position for the state-owned utility company, helping to reduce related fiscal risks and supporting medium-term economic growth.”
- Structural reforms and governance:
- “Structural reforms are the cornerstone of the authorities’ agenda to spur private sector investment and job creation. Advancements in public financial management, procurement modernization, and institutional transparency are strengthening governance. Concurrent efforts to improve the business environment, combat corruption, and reinforce the AML/CFT framework are also progressing.”
Policy priorities highlighted
- Strengthen budget execution.
- Sustain and target social spending to protect the most vulnerable.
- Maintain policy agility in monetary and exchange rate settings to respond to external risks.
- Deepen energy sector reforms to reduce losses, resolve arrears with private generators, and lower fiscal risks.
- Continue structural fiscal reforms to improve public investment and budget execution.
- Advance reforms to improve the business environment, combat corruption, and reinforce the AML/CFT framework.
Press Release No. 25195, June 11, 2025.