Press Release No. 05/295

Press Release: IMF to Extend 100 Percent Debt Relief to Honduras Under the Multilateral Debt Relief Initiative

December 23, 2005

Mr. Hunter Monroe, the Resident Representative of the International Monetary Fund in Honduras, issued the following statement on December 22 in Tegucigalpa:

"Under the Multilateral Debt Relief Initiative, the IMF Executive Board has approved debt relief for Honduras (see Press Release No 05/286). As part of the Initiative, the IMF will provide 100 percent debt relief on all debt incurred by Honduras to the IMF before January 1, 2005 that remains outstanding. This amounts to approximately US$154 million, or US$141 million excluding remaining assistance under the Heavily Indebted Poor Countries (HIPC) Initiative. This debt relief should become available in early January as soon as the remaining consents of the contributors to the PRGF Trust Subsidy Account have been received. The international community has made these additional resources available to help Honduras make progress toward its Millennium Development Goals (MDGs).

"Honduras has qualified for IMF debt relief because of its overall satisfactory recent macroeconomic performance, progress in poverty reduction, and improvements in public expenditure management. The Honduran authorities' implementation of sound macroeconomic policies and progress with structural reforms under their Fund-supported program have produced positive results. In 2005 economic growth has remained robust, while inflation will fall despite higher fuel prices. The external sector has strengthened significantly on account of substantial family remittances and higher exports. Prospects are good for continued economic growth and a further decline in inflation in 2006. In addition, the government has established a sound record of implementing the Poverty Reduction Strategy, and it has improved public expenditure management systems. Performance in these areas provides assurance that resources made available under the Multilateral Debt Relief Initiative will be used effectively.

"The IMF looks forward to working with Honduras to help it develop a strong and stable economy and to make sustained progress toward the MDGs," he said.