{
  "title": "Press Release: IMF Executive Board Approves US$113.2 Million Stand-By Arrangement and US$75.4 Million Stand-By Credit Facility for Honduras",
  "publication": "IMF News, December 4, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14545",
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  "summary": "The Executive Board approved a US$113.2 Stand-By Arrangement and a US$75.4 arrangement under the Stand-By Credit Facility (SBA/SCF) for Honduras for a combined SDR 129.5 million (about US$188.6 million or 100 percent of Honduras’s quota).",
  "authors": [
    "Arrangement"
  ],
  "publishDate": "2014-12-04",
  "sections": [
    {
      "heading": "Approval and financing terms",
      "content": "- The Executive Board approved a US$113.2 Stand-By Arrangement and a US$75.4 arrangement under the Stand-By Credit Facility (SBA/SCF) for Honduras for a combined SDR 129.5 million (about US$188.6 million or 100 percent of Honduras’s quota).\n- Immediate access made available: SDR 38.85 million (about US$56.6 million).\n- Remainder disbursed in six varying tranches upon completion of semi-annual program reviews.\n- The Honduran authorities plan to treat the arrangements as precautionary.\n- Honduras has an IMF quota of SDR 129.5 million (about US$188.6 million)."
    },
    {
      "heading": "Statement by Mr. Min Zhu, Deputy Managing Director and Acting Chair — program goals and key policy directions",
      "content": "- Program objectives:\n  - Preserve macroeconomic stability by further strengthening fiscal and external positions.\n  - Improve conditions for sustainable and inclusive growth.\n- Fiscal policy:\n  - Sustained fiscal consolidation necessary to reduce large fiscal deficit and contain public debt.\n  - Authorities have implemented tax policy measures and expenditure reductions; steps taken to improve financial position of the state electricity company.\n  - Recommended focus: further reducing current expenditure, improving tax administration, and strengthening the electricity company’s finances.\n  - Protect social spending and public investment by shifting composition of public expenditure away from inefficient current outlays.\n- Monetary and external sector policy:\n  - Sound monetary policy and exchange rate flexibility to keep inflation in check and protect international reserves.\n  - Exchange rate flexibility to protect competitiveness and ease fiscal adjustment.\n  - Presence of currency mismatches among borrowers calls for more stringent macroprudential measures to reduce banking sector risks.\n- Structural reforms:\n  - Key reforms in the electricity sector, pensions, and public-private partnership framework.\n  - Expansion of the social safety net to support poverty reduction efforts."
    },
    {
      "heading": "Recent economic developments (2014 context and near-term outlook)",
      "content": "- Political and policy context:\n  - New government took office January 2014 with commitments to reduce macroeconomic imbalances, promote inclusive growth, and improve domestic security.\n- 2014 performance indicators:\n  - Real economic activity rose by 2.6 percent from January–August (compared with 2.1 percent in the same period last year).\n  - Combined public sector deficit declined to 1 percent of GDP in January–August, from 3.3 percent of GDP in the same period last year.\n  - Inflation increased to about 6.3 percent in October (4.6 percent in the previous year), driven by December 2013 fiscal measures and weather-related factors.\n  - Balance of payments: improving trade balance, solid remittance growth, and higher international reserves.\n- Monetary conditions:\n  - Central bank kept policy rate and reserve requirements unchanged, withdrew liquidity through open market operations, and helped keep credit growth at about 10 percent.\n  - In the year ending September, the lempira depreciated by about 3 percent, resulting in a small appreciation in real effective terms.\n- 2015 projections:\n  - Real GDP growth expected to remain at 3 percent.\n  - Inflation projected to fall to 5.8 percent in 2015.\n  - External current account deficit expected to decline to about 7 percent of GDP.\n  - International reserve coverage expected to rise slightly to 3.8 months of imports.\n  - Combined public sector deficit expected to continue to decline, falling to somewhat above 3 percent of GDP in 2015."
    },
    {
      "heading": "Program summary — fiscal, monetary, and structural pillars",
      "content": "- Fiscal objectives and measures:\n  - Restore discipline and contain public debt growth.\n  - Target: reduce overall balance of combined public sector from around 7½ percent of GDP in 2013 to about 2 percent of GDP in 2017.\n  - Plan to reduce ratio of wage bill to GDP over next three years while protecting key social programs.\n  - Consolidate social programs under Vida Mejor, using part of wage-bill savings to improve housing for low-income families; Vida Mejor will consolidate existing programs, notably Bono 10 mil.\n- Monetary policy actions:\n  - Proactive management to keep inflation in check and strengthen external position.\n  - Central bank plan to modernize policy framework: improve short-term liquidity management and enhance reporting of monetary and economic data for the open market operations commission.\n- Structural reforms and capacity building:\n  - Reforms in electricity sector, including ENEE; telecommunications company HONDUTEL; and the Social Security Institute.\n  - With IMF technical assistance, the National Tax Directorate (DEI) to implement a program to strengthen tax administration.\n- Expected program effects:\n  - Preserve macroeconomic stability, bolster investor confidence, and catalyze resources from multilateral institutions and donors."
    },
    {
      "heading": "Selected economic indicators (highlights and exact figures)",
      "content": "- National income and prices (annual percentage change unless otherwise indicated):\n  - GDP at constant prices: 2010: 3.7; 2011: 3.8; 2012: 4.1; 2013: 2.6; 2014: 3.0; 2015: (Proj.) 3.0\n  - GDP deflator: 2010: 4.7; 2011: 7.8; 2012: 3.6; 2013: 1.5; 2014: 5.3; 2015: 5.7\n  - Consumer prices (eop): 2010: 6.5; 2011: 5.6; 2012: 5.4; 2013: 4.9; 2014: 5.8\n- Exchange rate and competitiveness:\n  - Lempiras per U.S. dollar (eop) 1/: 2010: 19.0; 2011: 19.5; 2012: 20.4; 2013: 21.0; 2014: ...\n  - Real effective rate 2/: 2010: 4.3; 2011: 1.8; 2012: -1.7; 2013: 0.4; 2014: 1.2\n- Money and credit:\n  - Private sector credit: 2010: 3.5; 2011: 9.6; 2012: 16.9; 2013: 11.2; 2014: 9.9; 2015: 10.5\n  - Broad money: 2010: 9.4; 2011: 12.7; 2012: 6.6; 2013: 8.4; 2014: 10.2; 2015: 10.6\n- Combined public sector (percent of GDP):\n  - Noninterest revenue and grants: 2010: 22.7; 2011: 21.8; 2012: 21.1; 2013: 21.3; 2014: 22.8; 2015: 22.9\n  - Noninterest expenditure: 2010: 26.1; 2011: 24.8; 2012: 25.4; 2013: 28.4; 2014: 28.0; 2015: 25.0\n  - Primary balance: 2010: -3.4; 2011: -3.0; 2012: -4.3; 2013: -7.1; 2014: -5.2; 2015: -2.1\n  - Capital expenditure: 2010: 5.5; 2011: 6.4; 2012: 6.2; 2013: 4.5; 2014: (not listed)\n  - Overall balance: 2010: -2.8; 2011: -4.2; 2012: -7.6; 2013: -5.9; 2014: -3.2\n  - Public sector debt 3/: 2010: 29.8; 2011: 32.1; 2012: 34.4; 2013: 45.1; 2014: 47.8; 2015: 49.4\n  - Of which: External debt: 2010: 18.0; 2011: 18.1; 2012: 19.7; 2013: 28.1; 2014: 29.7; 2015: 31.8\n  - Public sector external debt service (in percent of nonmaquila exports): 2010: 3.9; 2011: 4.4; 2012: 2.8; 2013: 7.3; 2014: 7.9\n- Savings and investment:\n  - Gross fixed capital formation: 2010: 21.6; 2011: 24.4; 2012: 25.6; 2013: 25.3; 2014: (not listed)\n  - Gross national savings: 2010: 17.2; 2011: 16.5; 2012: 15.8; 2013: 16.0; 2014: 17.7; 2015: 18.2\n- External sector:\n  - Gross international reserves (millions of dollars): 2010: 2,921; 2011: 3,043; 2012: 2,778; 2013: 3,255; 2014: 3,329; 2015: 3,507\n  - GIR (In months of imports) 4/: 2010: 3.3\n  - External current account balance (percent of GDP): 2010: -8.0; 2011: -8.5; 2012: -9.5; 2013: -7.8; 2014: (not listed)\n  - Exports, f.o.b. (annual percentage change): 2010: 27.3; 2011: 4.8; 2012: -6.6; 2013: (not listed)\n  - Imports, f.o.b. (annual percentage change): 2010: 20.8; 2011: 24.9; 2012: 2.2; 2013: -3.7; 2014: 3.2; 2015: 3.4\n\nPress Release No. 14/545 — December 4, 2014. IMF Communications Department.\n\n---\n\n\n References\n\n- Honduras and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14545"
    }
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    "Authors: Arrangement",
    "Published: December 4, 2014",
    "The Executive Board approved a US$113.2 Stand-By Arrangement and a US$75.4 arrangement under the Stand-By Credit Facility (SBA/SCF) for Honduras for a combined SDR 129.5 million (about US$188.6 million or 100 percent of Honduras’s quota).",
    "Immediate access made available: SDR 38.85 million (about US$56.6 million).",
    "Remainder disbursed in six varying tranches upon completion of semi-annual program reviews.",
    "The Honduran authorities plan to treat the arrangements as precautionary.",
    "Honduras has an IMF quota of SDR 129.5 million (about US$188.6 million).",
    "Program objectives:",
    "Fiscal policy:",
    "Monetary and external sector policy:",
    "Structural reforms:",
    "Political and policy context:",
    "2014 performance indicators:",
    "Monetary conditions:",
    "2015 projections:",
    "Fiscal objectives and measures:",
    "Monetary policy actions:",
    "Structural reforms and capacity building:",
    "Expected program effects:",
    "National income and prices (annual percentage change unless otherwise indicated):",
    "Exchange rate and competitiveness:",
    "Money and credit:",
    "Combined public sector (percent of GDP):",
    "Savings and investment:",
    "External sector:",
    "[Honduras and the IMF](http://www.imf.org/external/country/HND/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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