IMF Completes Second Review Under Stand-By Arrangement and Standby Credit Facility for HondurasPress Release No. 11/298
July 29, 2011
The Executive Board of the International Monetary Fund (IMF) has completed the second review of Honduras’s economic performance under a program supported by an 18-month Stand-By Arrangement and a Standby Credit Facility. The arrangements were first approved on October 1, 2010 in the amount of SDR 129.5 million (about $207.1 million), equivalent to 100 percent of the country’s quota in the IMF (see Press Release No. 10/374). Completion of the review would make SDR 71.225 million (about $113.9 million) of that total available to the authorities. The Honduran authorities, however, intend to continue treating the financing as precautionary. The Board decision was taken on a lapse of time basis (a process where the Board agrees that a proposal can be approved without convening formal discussions) on July 29, 2011.
Higher domestic investment spending and growing demand for Honduras’ exports are contributing to output growth. However, high international commodity prices are putting pressures on inflation and the external current account deficit. The policy responses to these shocks, consistent with the authorities’ economic program for 2011, should include reassessing public expenditure priorities to help mitigate the effect of the shocks on the poor and a monetary policy stance that keeps domestic demand in check. The main goals of the Fund-supported economic program continue to be consolidating the public finances, increasing the share of investment and social spending in public expenditure, strengthening the international reserves position, and upgrading the monetary and exchange rate policy frameworks.