Press Release No. 15/339

Press Release: IMF Staff Concludes Visit to Honduras

July 16, 2015

An International Monetary Fund (IMF) mission led by Mr. Lisandro Ábrego visited Tegucigalpa during July 13-16 to review economic developments and the authorities’ implementation of their Fund-supported program during 2015. At the conclusion of the visit, Mr. Ábrego issued the following statement in Tegucigalpa today:

“The mission is encouraged by the continued strengthening of the Honduran economy. Economic activity has continued to expand at a solid pace, with real GDP posting a growth rate of 4 percent in the first quarter of 2015. At the same time, inflation remains on the low side, at 3.6 percent in June, supported by the decline in fuels prices and appropriate macroeconomic policy management. In the external sector, by end-June net international reserves (NIR) rose by over US$370 million compared to end-2014, aided by solid growth of exports and remittances as well as by increased capital inflows. This allowed the authorities to meet the June NIR target under the program with an important margin and increase reserve coverage to 4.5 months of imports.

“Fiscal performance has also continued strengthening, broadly in line with program targets. Data for January-May shows a substantial improvement in the finances of the central government and the state electricity company (ENEE) compared to the same period in 2014, supporting a significant strengthening of the position of the non-financial public sector. Available information through May bodes well for the achievement of the program’s June fiscal targets. The mission also notes that spreads on external sovereign bonds have continued declining, aided by the improvement in the public finances.

“The 2015 outlook for the Honduran economy remains positive. Real GDP growth is expected at 3.5 percent—slightly higher than previously anticipated— and end-year inflation at 4¾ percent. On the fiscal side, the deficit of the combined public sector is expected to be reduced to about 3 percent of GDP this year as targeted under the program.

“Most of the structural reforms are moving forward. Tax administration is being strengthened, contributing to solid revenue growth and the improvement in the fiscal accounts. The authorities have also developed a new medium-term fiscal framework, which is expected to guide budget formulation, starting this year. In the electricity sector, the new regulator (CREE) has been established and is expected to become operational over the coming months. The mission encourages the authorities to accelerate efforts to reduce electricity distribution losses, which have remained essentially unchanged from their 2014 level.

“The staff team met with President Juan Orlando Hernández, Minister Coordinator of the Government Jorge Hernández Alcerro, Central Bank Governor and Head of the Economic Cabinet Marlon Tábora, Minister of Finance Wilfredo Cerrato, Minister Director of the Tax Agency Miriam Guzman, President of the National Commission of Banking and Insurance Ethel Deras, Minister of Infrastructure and Public Services Roberto Ordoñez, Vice Minister of Public Credit and Investment Rocio Tábora and other senior government officials.

“The mission would like to thank the authorities for a fruitful and cordial dialogue, as well as for their excellent cooperation and hospitality.”