## Press Release: IMF Approves Emergency Assistance for Honduras

_IMF News, December 7, 1998_

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## Bibliographic details
- Published: December 7, 1998

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### Emergency assistance approved
- The International Monetary Fund (IMF) approved Honduras’ request for emergency financial assistance related to natural disasters.
- The assistance is equivalent to SDR 47.5 million (about US$66 million).
- Purpose: to support the government’s economic recovery program and associated relief and rehabilitation efforts in the aftermath of Hurricane Mitch.

### Economic context on the eve of Hurricane Mitch
- Progress over the past two years included:
  - Faster real GDP growth.
  - Lowering inflation.
  - Reducing fiscal imbalances.
- Private sector confidence was on the upswing due to:
  - Achievements noted above.
  - Advances in privatization.
  - Reforms in the tax system and the financial sector.
- A new program of stabilization and broad-based reforms supported under the Enhanced Structural Adjustment Facility (ESAF) was close to agreement, which would:
  - Facilitate additional concessional loans from the World Bank and the Inter American Development Bank (IADB).
  - Normalize relations with creditors.

### Devastation and economic impact of Hurricane Mitch
- Human and social impact estimates:
  - Deaths close to 5,500.
  - About 8,000 people missing.
  - Nearly 2 million people displaced.
  - Several towns and villages destroyed.
- Infrastructure and public services:
  - Several roads and bridges made impassable.
  - Most schools and several hospitals and administrative centers closed.
  - Basic public services devastated.
- Economic losses and growth outlook:
  - Authorities’ first approximations indicate losses of inventories and fixed assets--including infrastructure--amounting to about 40 percent of GDP.
  - Real GDP is estimated to fall to 3 percent in 1998 and turn negative in 1999, compared with pre-hurricane projections of real GDP growth of about 5-6 percent a year.

### Authorities’ response and near-term policy actions
- Immediate priorities addressed with substantial international help:
  - Providing food, shelter, and health care to the homeless and displaced persons.
  - Taking measures to preserve public health.
  - Repairing essential infrastructure and beginning clean-up and reconstruction work.
- Measures to limit macroeconomic disruption:
  - Adopting measures aimed at limiting the effects of the disaster on inflation and interest rates.
  - Formulating a revised central government budget for 1999 to account for changed revenue outlook and new spending requirements.
  - Efforts to limit domestic financing in part by reallocating spending to emergency needs.

### Medium-term program intentions and IMF facilities
- Once immediate priorities are addressed, authorities intend to resume discussions to finalize an economic program to be supported under the ESAF focused on:
  - Consolidation of macroeconomic stability.
  - Increasing prospects for private investment.
  - Deepening structural reforms to address constraints to growth.
- ESAF details provided:
  - The ESAF is a concessional IMF facility for assisting eligible members undertaking economic reform programs to strengthen their balance of payments and improve their growth prospects.
  - ESAF loans carry an interest rate of 0.5 percent a year and are repayable over 10 years with a 5½-year grace period.

### IMF membership and financing position of Honduras
- Honduras joined the IMF on December 27, 1945.
- Honduras’ quota is SDR 95.0 million (about US$133 million).
- Honduras’ outstanding use of IMF financing currently totals SDR 33 million (about US$45 million).

*Source: Press Release No. 98/60, "Press Release: IMF Approves Emergency Assistance for Honduras" (December 7, 1998).*

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## References

- [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)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9860_