I am pleased to announce that in support of the Honduran government’s
economic and institutional reform agenda, the IMF and the Honduran
authorities have reached a staff-level agreement on a 24-month blended
Stand-By Arrangement (SBA) and Standby Credit Facility (SCF) for US$311
million (equivalent to SDR 224.8 million or 90 percent of Honduras’ quota
in the IMF). The authorities have indicated that they intend to treat the
agreement as precautionary.
An International Monetary Fund (IMF) mission led by Esteban Vesperoni
visited Tegucigalpa and San Pedro Sula during April 22-May 6, 2019 to
conduct the annual Article IV consultation and pursue discussions with the
authorities on an economic program that can be supported by the
International Monetary Fund. At the end of the mission, Mr. Vesperoni
issued the following statement:
“Macroeconomic conditions in Honduras remained stable in 2018. GDP growth
slowed from the buoyant performance in 2017 to 3¾ percent last year due to
weaker terms of trade, but remained close to potential, supported by
private consumption amid strong growth in remittances. Inflation is stable
around the center of the central bank´s 4±1 percent target band. Owing to
lower coffee prices and higher oil prices, the current account widened to
4¼ percent of GDP; but stayed close to its historical average. Despite a
higher than expected deficit in the electricity company (ENEE), the
nonfinancial public sector (NFPS) posted a deficit of 0.9 percent of GDP,
in line with the target in the Fiscal Responsibility Law (FRL). The
financial system is stable, liquid, and well capitalized, with NPLs at
historic lows.
“Amid lower global growth and still weak terms of trade, growth in 2019 is
expected to moderate slightly to around 3½ percent, still close to
potential. Policies in the economic program targeting an increase in
productivity will sustain the macroeconomic performance in coming years and
gradually create fiscal space for much-needed public investment and social
spending. Inflation and inflation expectations are expected to converge
towards the midpoint of the central bank target range, while the current
account deficit is expected to remain stable at around 4 percent of GDP.
“A key objective of the economic program is to maintain macroeconomic
stability, while enacting economic and institutional reforms to foster
inclusive growth. Policies will build on previous achievements to
strengthen the policy and institutional framework. Adherence to the FRL
will be coupled with reforms aimed at creating fiscal space to reduce the
infrastructure gap and increase social spending, including on important
gender programs. The program will preserve previous revenue mobilization
efforts, implement the electricity sector framework law, and put the
financial situation of the public electricity company (ENEE) on a
sustainable path.
“Priority has also been given to enhancing governance, including through
measures to increase transparency. These reforms will aim at improving the
macroeconomic policy framework, increasing the quality of public spending,
and strengthening the rule of law. These reforms are fundamental to
improving the business environment and foster growth.
“Monetary policy will continue to focus on controlling inflation and
maintaining an adequate level of international reserves. In addition, the
program will aim at further strengthening monetary policy and financial
institutions, developing money and foreign exchange markets to support the
transition towards inflation targeting, and enhancing the macro-prudential
framework to reinforce financial resilience.
“The mission held discussions with President Juan Orlando Hernández, Head
of the Economic Cabinet Marlon Tábora, Central Bank Governor Wilfredo
Cerrato, Minister of Finance Rocío Tábora, Director of the Tax Agency
Miriam Guzmán, President of the National Commission of Banking and
Insurance Ethel Deras and other senior officials and representatives of the
private sector.
“The IMF team would like to thank the Honduran authorities and other
counterparts for the excellent discussions; and reiterate that it greatly
appreciates their kind hospitality.”
