IMF Completes Fifth and Sixth Reviews Under SBA with Honduras
October 27, 2017
- IMF Board completes fifth and sixth reviews of the economic program supported by a three-year SBA.
- The Honduran authorities have expressed their intention to continue to treat the arrangements as precautionary.
On October 26, 2016, the Executive Board of the International Monetary Fund (IMF) completed the combined fifth and sixth reviews of Honduras’ performance under an economic program supported by a Stand-By Arrangement (SBA). On December 4, 2014, the Executive Board approved a program supported by a two-year Stand-By Credit Facility (SCF) and three-year Stand-By Arrangement (SBA) (see Press Release No. 14/545 ). The SCF expired in December 4, 2016.
The completion of the reviews enables the authorities to access resources in the total amount of about US$109.64 million (SDR 77.70 million). The authorities have expressed their intention to continue to treat the arrangement as precautionary.
Following the Executive Board’s discussion of the reviews, Mr. Zhang, Acting Chair and Deputy Managing Director, said:
“The authorities’ commitment to their reform agenda has remained strong during the program, which has successfully stabilized the economy, restored confidence, and paved the way for accelerating growth and reducing poverty. The program is on track and reforms are progressing as expected.
“The macroeconomic outlook is positive, requiring a continued effort to improve social indicators. The fiscal deficit is at historic low levels, international reserves are at historic highs, and inflation remains subdued. Unemployment remains a challenge to reduce and poverty affects more than half of the population. Tackling these problems will require significant efforts to improve the coverage of social programs and to ensure adequate fiscal revenues, including by rationalizing tax exemptions and strengthening tax enforcement.
“The authorities acknowledged the importance of modernizing the monetary policy framework for macroeconomic stability, and they have started the process to adopt inflation targeting. As part of this, they have introduced an interbank repo market and reduced the FX surrender requirements. They recognize the need to continue with this process by amending the central bank law to give a clear mandate to achieve low and stable inflation.
“Structural reforms are critical to promote private investment and create jobs. Continuing to pursue reforms in the electricity sector, improving the efficiency of public spending, reducing corruption, closing the infrastructure gap, and working together in alliance with the private sector are critical for a sustained economic expansion with marked poverty reduction.”
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Table. Honduras: Selected Economic Indicators |
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Prel. |
Proj. |
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2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
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(Annual percentage change unless otherwise indicated) |
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National income and prices |
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GDP at constant prices |
4.1 |
2.8 |
3.1 |
3.6 |
3.6 |
4.0 |
3.6 |
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GDP deflator |
3.6 |
1.4 |
6.8 |
6.4 |
3.7 |
5.9 |
3.8 |
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Consumer prices (eop) |
5.4 |
4.9 |
5.8 |
2.4 |
3.3 |
4.5 |
4.0 |
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Exchange rate (eop, depreciation -) |
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Lempiras per U.S. dollar 1/ |
20.0 |
20.7 |
21.6 |
22.4 |
23.5 |
23.5 |
… |
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|
Real effective rate 2/ |
-1.7 |
0.3 |
3.8 |
1.8 |
-2.2 |
-1.5 |
… |
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Money and credit |
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Private sector credit |
16.9 |
11.2 |
10.7 |
10.4 |
10.8 |
11.4 |
11.5 |
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Broad money |
6.6 |
8.4 |
13.2 |
8.4 |
13.1 |
9.6 |
8.5 |
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Lending rate (eop, in percent) |
16.7 |
16.9 |
15.9 |
14.0 |
14.3 |
14.2 |
… |
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Deposit rate (eop, in percent) |
11.4 |
11.0 |
10.4 |
8.8 |
8.2 |
8.4 |
… |
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Nonfinancial public sector |
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Primary balance (percent of GDP) |
-4.5 |
-7.0 |
-3.4 |
0.1 |
0.3 |
-0.1 |
0.1 |
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Overall balance (percent of GDP) |
-4.4 |
-7.5 |
-3.9 |
-1.0 |
-0.5 |
-1.2 |
-1.2 |
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Gross debt (percent of GDP) |
32.4 |
41.0 |
41.3 |
41.2 |
42.5 |
43.0 |
44.1 |
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Saving and investment |
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Gross fixed capital formation (percent of GDP) |
24.4 |
22.9 |
23.0 |
24.8 |
23.2 |
25.9 |
25.7 |
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Gross national savings (percent of GDP) |
15.8 |
13.4 |
16.0 |
19.3 |
19.4 |
21.8 |
21.4 |
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External sector |
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Gross international reserves (millions of dollars) |
2,778 |
3,255 |
3,698 |
3,992 |
4,172 |
4,559 |
4,823 |
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Gross international reserves (in months of imports) 3/ |
3.3 |
3.8 |
4.3 |
4.8 |
4.5 |
4.7 |
4.8 |
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Change in net international reserves (increase -) |
367 |
-546 |
-264 |
-307 |
128 |
-311 |
-251 |
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Current account balance (percent of GDP) |
-8.6 |
-9.6 |
-7.0 |
-5.5 |
-3.8 |
-4.1 |
-4.3 |
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Exports f.o.b. |
4.8 |
-6.6 |
4.0 |
0.9 |
-4.2 |
10.3 |
3.6 |
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Imports f.o.b. |
2.2 |
-3.7 |
1.2 |
0.1 |
-4.8 |
10.5 |
3.1 |
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Sources: Central Bank of Honduras, Ministry of Finance, and IMF staff estimates and projections. |
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1/ 2017 data as of October 24, 2017. |
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2/ 2017 data as of June. |
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3/ Refers to the following year's imports of non-maquila and nonfactor services. |
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IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: Raphael Anspach
Phone: +1 202 623-7100Email: MEDIA@IMF.org