Press Release No. 19/405

IMF and Honduras Reach Staff-Level Agreement on the First Review of the Economic Program under the Stand-by/Credit Facility Arrangement

November 8, 2019

An International Monetary Fund (IMF) team led by Mr. Esteban Vesperoni visited Honduras from October 28 to November 8 to conduct discussions on the First Review of Honduras’s IMF-supported program under the Stand-By Arrangement (SBA) and the Credit Facility Arrangement (CFA). Mr. Vesperoni issued the following statement in Tegucigalpa today:

“An IMF team and the Honduran authorities reached a staff-level agreement on the first review of the economic program supported by a two-year Stand-by and Credit Facility arrangement.

“Honduras has made important progress implementing its economic program, which seeks to foster inclusive growth through prudent macroeconomic policies; and structural and governance reforms. Implementation of policies under the program will uphold macroeconomic performance.

“Honduras has experienced a moderation in economic growth during the last quarters, but growth is expected to recover next year, in line with a better global environment. The authorities continue to pursue prudent macroeconomic policies anchored by the Fiscal Responsibility Law. They are convinced that these policies are the right response to foster growth and the well-being of all Hondurans, while reducing poverty and inequality. With this in mind, the authorities are working on expenditures reallocations to protect investment and social spending. They are also committed to maintaining their revenue mobilization efforts to preserve the hard-won gains achieved over the past years.

“The authorities are making progress in their ambitious program of reforms; which has the potential to raise the economy’s growth potential. There were notable advances in the initial phase of the electricity sector reform, which aims at strengthening the institutional framework in the sector. The strengthening of the regulatory agency, the creation of an independent system operator, the efforts by the new management of the company and the Secretary of Finance to improve governance and transparency in the public electricity company (ENEE), and the establishment of an electricity theft task force have the potential to reinforce the institutional framework for an open, competitive and transparent market in the electricity sector; and a sustainable financial position in ENEE. Continued steadfast implementation of the reform plans in the sector remains essential. Strengthening the financial position in ENEE has the potential to create the needed fiscal space to protect infrastructure investment and social spending.

“The authorities have also developed a roadmap to enhance governance and the business climate, including by drafting the new central bank charter, improving the budget process and the quality of public spending, simplifying the regulatory framework, and developing reforms to foster transparency and advance the fight against corruption.

“The mission held discussions with President of the Republic Juan Orlando Hernández, president of Congress Mauricio Oliva, magistrates of the Court of Accounts, members of the economic cabinet, and other senior officials and representatives of civil society, the private sector and the international community. The mission would like to thank the authorities and other counterparts for the excellent discussions; and reiterate that it greatly appreciates their kind hospitality.”