Tegucigalpa, Honduras: An International Monetary Fund (IMF) team led by Emilio Fernandez Corugedo visited Tegucigalpa from April 27 to May 11, 2026 to discuss recent economic developments and policy implementation. At the conclusion of the visit, Mr. Fernandez Corugedo issued the following statement:
“The Honduran authorities and the IMF team have reached staff-level agreement to complete the fourth and fifth reviews of the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements. The authorities reaffirmed that the Fund-supported program remains a key anchor for macroeconomic stability and reform. The IMF’s Executive Board is expected to consider the case in late June 2026.
“The team and the authorities agreed that macroeconomic policies have remained prudent and that program performance has been broadly favorable, particularly strong against quantitative targets. Net international reserves continue to provide important external buffers and have strengthened further, reaching about US$11.6 billion at end-April, supported by still-robust remittance inflows and favorable export prices. Against this backdrop, the economy has remained resilient through the period of elevated uncertainty surrounding the election last year, with the economic activity indicator pointing to growth of 3.7 percent in February, and is well placed to navigate a more challenging external environment, notably the global energy price shock stemming from the war in the Middle East that has already impacted inflation directly and significantly. Headline inflation reached 5.6 percent in April, compared to 3.5 percent in February, due to an approximate 3.9 percentage points contribution from imported tradable goods.
“The new administration is advancing a structural agenda that places greater emphasis on private investment as a driver of jobs and growth, alongside efforts to improve state efficiency, strengthen legal certainty, and attract foreign direct investment. Shortly after taking office, the authorities restored Honduras’ participation in the International Centre for Settlement of Investment Disputes (ICSID) and have worked to accelerate momentum on structural benchmarks under the Fund-supported program. These include making further improvements to the foreign exchange auction mechanism and advancing structural fiscal reforms, measures to strengthen transparency and governance to support the needed actions for the 2026 Financial Action Task Force (FATF) evaluation, and structural measures to improve the performance and sustainability of the National Electric Power Company (ENEE).
“The authorities reiterated their strong commitment to a prudent macroeconomic policy mix and remain vigilant and ready to act in the current uncertain global environment. They will implement their reform agenda that combines macroeconomic and fiscal discipline with institutional strengthening and better-targeted social support. Discussions focused on policies to preserve macroeconomic and fiscal stability, strengthen resilience, and bolster inclusive economic growth:
“First, fiscal prudence remains essential to safeguard macroeconomic stability and create space for priority spending. The authorities target a non-financial public sector deficit of 1 percent of GDP, anchored on conservative revenue assumptions, realistic capital spending, targeted social spending, and a credible financing strategy. The response to the oil price shock has sought to maintain fiscal prudence, preserving incentives for consumers and firms to adjust to higher energy costs while providing temporary and partial support to mitigate the impact on domestic prices.
“Second, sustained efforts to strengthen social spending and improve targeting remain critical. The challenges posed by the oil-price shock reinforce the case for better targeting of social support. An important achievement in this regard is the operationalization of the Single Social Sector Information System (SUISS). The authorities are undertaking an administrative reorganization at the Ministry of Social Development (SEDESOL) and verifying beneficiary eligibility with a view to streamline costs, strengthen beneficiary identification, and better align support with the needs of vulnerable households. These efforts will support an increase in priority social spending in coming months.
“Third, the Central Bank of Honduras (BCH) will continue a vigilant data-driven approach to maintain low and stable inflation and adequate reserve buffers, preserve external competitiveness, and continue institutional strengthening. Adjustments to monetary and exchange rate policies implemented during the program have helped to rebalance supply and demand in the foreign exchange auction. The new authorities have implemented appropriate measures including through updates to auction regulations that have generated certainty in access to foreign exchange The authorities will continue to monitor the evolution of international interest rates, the outlook for international energy prices, and underlying inflation and are prepared to adjust policies as needed to contain second-round inflationary pressures and maintain external stability. As part of the ongoing process of institutional strengthening of the BCH, the authorities have taken steps to further reinforce its capital position and support its operational autonomy. Looking ahead, they also intend to transition gradually and carefully towards a private-sector led allocation of foreign exchange. The authorities will also carefully lay the groundwork to move towards an inflation targeting monetary policy framework and an exchange rate that responds to market conditions.
“Fourth, redoubling energy sector reforms is critical amid substantial near-term challenges, exacerbated by elevated fuel costs that have intensified financial pressures on ENEE. The authorities have articulated a market-oriented vision centered on the functional unbundling of generation, transmission, and distribution, alongside enhanced governance and transparency. They are taking actions, working closely with the Fund, to reduce ENEE’s arrears and energy losses and are advancing structural reforms to improve efficiency. In this context, the recent merging of ENEE’s distribution units, more targeted use of energy subsidies, and the regulator’s recent tariff adjustment are welcome steps towards long-term sector sustainability and stronger confidence and participation of the private sector in the energy sector.
“Fifth, advancing reforms to strengthen governance, combat corruption, and improve the business climate is essential. The authorities have made progress in liquidating trust funds identified under the Fund-supported program, demonstrating commitment to enhancing fiscal transparency. In this vein, the authorities are committed to maintaining the new health trust fund as an exception that is temporary, ring-fenced, and subject to rigorous safeguards, while strengthening state capacity to allow the trust fund to be phased out. The submission of key FATF-related legislation to Congress is an important milestone, and timely passage and implementation of this legislation as well as the operationalization of the beneficial ownership registry will be critical for the 2026 FATF evaluation. Priorities moving forward include the approval of the national anti-corruption strategy and addressing deep-seated institutional weaknesses that weigh on investor confidence and long-term growth.
“The IMF team would like to thank the authorities, the private sector, and other counterparts for their kind hospitality and candid discussions.”
