## IMF Staff Concludes Visit to Honduras

_IMF News, November 10, 2023_

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## Bibliographic details
- Published: November 10, 2023

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### Mission purpose and scope
- IMF team led by Ricardo Llaudes and supported by resident representative Christian Henn visited San Pedro Sula and Tegucigalpa, Honduras, during November 5-9, 2023.
- Visit focused on recent economic developments and the authorities’ implementation of their economic program supported by the Fund through the ECF/EFF arrangements approved in late September.
- End-of-mission press release date: November 10, 2023. Press Release No. 23/388.

### Key economic findings and outlook
- Growth has been picking up since May and is expected to close 2023 somewhat above 3 percent.
- Inflation has been coming down during most of this year, despite recent increases in global oil prices, and is expected to reach the BCH’s reference range in early 2024.
- The country’s international reserves remain at adequate levels.
- Against a more challenging global outlook, US interest rates are expected to remain higher.

### Fiscal and monetary execution
- Fiscal policy has remained prudent with incipient signs of higher budget execution, in particular on capital spending.
- Recent increases in banks’ reserve requirements are described as a valuable first step.
- Discussions centered on monetary and exchange rate policies needed to ensure low inflation and preserve external competitiveness and the country’s international reserves.
- Forthcoming Fund technical assistance will assist the BCH in evaluating the monetary and exchange rate frameworks to identify measures to strengthen these and improve the efficiency of FX allocation.

### Public investment, social programs, and debt market developments
- The team welcomed the authorities’ focus on scaling up public investment.
- Progress continues in rolling out social programs, especially Red Solidaria, while keeping them focused on the poorest and most vulnerable.
- The authorities have resumed domestic bond placements, described as essential to deepen domestic financial markets.
- Timely adoption of the 2024 draft budget submitted to Congress will be important to support inclusive growth and preserve debt sustainability.

### Structural reforms and specific policy measures discussed
- Authorities highlighted recent achievements:
  - Launches of customs reform and an electronic asset declaration system for public officials.
  - Publication of a public borrowing policy.
- Authorities reiterated commitment to energy sector reforms to improve the financial position of ENEE and guarantee the adequate provision of energy.
  - Key measures include investment in transmission and distribution and stepping up implementation of the national loss reduction program (NLRP).
  - Timely bond issuances by ENEE are important to address arrears and improve payment discipline.

### Policy recommendations and IMF support going forward
- Decisive implementation of program policies will be essential to preserve macroeconomic stability and bolster economic resilience.
- It will be necessary to decisively redouble efforts, in line with program commitments on monetary and foreign exchange (FX) policies, to achieve low inflation and preserve external competitiveness.
- IMF staff will continue to work with the authorities to support Honduras’ efforts to boost inclusive growth and reduce poverty, including through scaling up public investment and social spending.
- The IMF team stands ready to continue to support the government of Honduras in the implementation of its economic reform program.

*IMF Press Release No. 23/388, November 10, 2023.*

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## References

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_Source: https://www.imf.org/en/news/articles/2023/11/10/pr23388-honduras-imf-staff-concludes-visit_