{
  "title": "IMF Executive Board Completes the Fourth Review Under the IMF’s Stand-By Arrangement and Arrangement Under the Stand-By Credit Facility for Honduras",
  "publication": "IMF News, September 13, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/09/13/pr21262-honduras-imf-execboard-completes-4threv-under-imfs-sba-and-arrange-under-sbc-facility",
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  "summary": "The Executive Board completed the fourth review under the Stand-By Arrangement (SBA) and the Standby Credit Facility (SCF).",
  "authors": [
    "Arrangement",
    "Arrangement Under"
  ],
  "publishDate": "2021-09-13",
  "sections": [
    {
      "heading": "Program actions and financing",
      "content": "- The Executive Board completed the fourth review under the Stand-By Arrangement (SBA) and the Standby Credit Facility (SCF).\n- The completion of the review enables an immediate disbursement of SDR 87.4 million (US$125.8 million).\n- The Board approved an augmentation of access by SDR 149.9 million (US$215.8 million).\n- The duration of the SBA and SCF was extended by two months until January 14, 2022.\n- The two-year arrangements were originally approved on July 15, 2019.\n- Including the augmentations approved on June 1, 2020 and the augmentation approved with this review, the two-year arrangement provides access to about SDR 537.1 million (about US$773 million).\n- The disbursements are intended to help Honduras meet balance of payments and fiscal financing needs exacerbated by the pandemic and tropical storms Eta and Iota."
    },
    {
      "heading": "Economic context and near-term outlook",
      "content": "- Honduras experienced a worse than expected economic contraction in 2020; the contraction will only be partly reversed in 2021.\n- The ongoing health emergency and significant reconstruction needs from tropical storms Eta and Iota warrant a temporarily looser fiscal stance in 2021-2022.\n- The authorities triggered the escape clause under the Fiscal Responsibility Law to support the economy without jeopardizing the debt trajectory.\n- Honduras’ risk of debt distress remains low."
    },
    {
      "heading": "Policy assessment and recommendations (from Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair)",
      "content": "- Fiscal policy\n  - Temporarily looser fiscal stance in 2021-2022 is appropriate given the health emergency and reconstruction needs.\n  - Further advancing procurement and electricity sector reforms, together with the revenue mobilization agenda, will be key to preserve gains.\n  - Authorities’ commitment to fiscal prudence over the medium term is crucial to anchor debt sustainability.\n- Monetary and exchange rate policy\n  - Monetary policy accommodation remains appropriate in the current conjuncture.\n  - Authorities should continue efforts to strengthen the monetary policy framework.\n  - Continue the transition towards a more flexible exchange rate regime to help anchor price stability and safeguard international reserves.\n- Structural and governance reforms\n  - Sustained efforts and steadfast implementation of structural reforms, especially in the governance and financial management of the electricity sector (ENEE), are urgently needed.\n  - Expeditiously improving governance in ENEE and strengthening its financial situation is key for fiscal sustainability and improving the business environment.\n  - Restarting the loss reduction strategy and containing the recurrence of arrears should be focal points.\n- Financial sector stability\n  - Continued vigilance, together with prudent provision of liquidity and support for credit growth, will bolster financial stability.\n  - The new requirement for supervised institutions to establish equity reserves will help build buffers.\n  - Authorities continue to enhance crisis preparedness and stand ready to act as needed.\n- Anti-corruption and public-sector governance\n  - Continued institutional strengthening is essential to step up the fight against corruption.\n  - Authorities have aligned public officials’ asset declarations with international standards.\n  - Authorities are finalizing the completion of a comprehensive beneficial ownership registry.\n  - Implementing the new procurement portal and streamlining administrative procedures are important next steps.\n- Climate and resilience\n  - Expanding investments in climate-resilient infrastructure will be key to sustainable development given Honduras’ vulnerability to climate shocks.\n- Political economy\n  - Engaging Congress for a swift passage of the draft laws submitted during the program will help anchor policy continuity.\n\nInternational Monetary Fund. Press Release No. 21/262, September 13, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Honduras and the IMF\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- Press Release 19/284\n- Press Release 20/230\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/09/13/pr21262-honduras-imf-execboard-completes-4threv-under-imfs-sba-and-arrange-under-sbc-facility"
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    "Authors: Arrangement, Arrangement Under",
    "Published: September 13, 2021",
    "The Executive Board completed the fourth review under the Stand-By Arrangement (SBA) and the Standby Credit Facility (SCF).",
    "The completion of the review enables an immediate disbursement of SDR 87.4 million (US$125.8 million).",
    "The Board approved an augmentation of access by SDR 149.9 million (US$215.8 million).",
    "The duration of the SBA and SCF was extended by two months until January 14, 2022.",
    "The two-year arrangements were originally approved on July 15, 2019.",
    "Including the augmentations approved on June 1, 2020 and the augmentation approved with this review, the two-year arrangement provides access to about SDR 537.1 million (about US$773 million).",
    "The disbursements are intended to help Honduras meet balance of payments and fiscal financing needs exacerbated by the pandemic and tropical storms Eta and Iota.",
    "Honduras experienced a worse than expected economic contraction in 2020; the contraction will only be partly reversed in 2021.",
    "The ongoing health emergency and significant reconstruction needs from tropical storms Eta and Iota warrant a temporarily looser fiscal stance in 2021-2022.",
    "The authorities triggered the escape clause under the Fiscal Responsibility Law to support the economy without jeopardizing the debt trajectory.",
    "Honduras’ risk of debt distress remains low.",
    "Fiscal policy",
    "Monetary and exchange rate policy",
    "Structural and governance reforms",
    "Financial sector stability",
    "Anti-corruption and public-sector governance",
    "Climate and resilience",
    "Political economy",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Honduras and the IMF](http://www.imf.org/external/country/HND/index.htm)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Press Release 19/284](https://www.imf.org/en/News/Articles/2019/07/16/pr19284-honduras-imf-executive-board-approves-stand-by-arrangement-and-standby-credit-facility)",
    "[Press Release 20/230](https://www.imf.org/en/News/Articles/2020/06/01/pr20230-honduras-imf-execboard-completes-2nd-rev-under-sba-scf-arrange-approves-support-covid19)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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