The World Bank Board approved a loan for U.S. $ 74.7 million to support the government program designed to address the difficult fiscal situation in the short term and to achieve balanced fiscal accounts, which will bear fruit in the medium and long term, thus, promoting development in the country.
The loan supports four core areas of Honduras´s fiscal program:
Fiscal reform and improved tax collection by the Central Government for collection of a higher tax base.
Strengthening civil services.
Strengthening financial sustainability of the state power company.
Strengthening public financial management and transparency.
"The fiscal challenges facing the administration of President Porfirio Lobo are the result of global crisis, the country's political crisis and pre-existing structural problems. In order to avoid a fiscal crisis, the government has pursued a course of corrective action that will help achieve a necessary balance. Until the impact of ongoing reforms show, Honduras will need substantial support from the international community," Laura Frigenti, Acting Director for Central America World Bank, emphasized.
The World Bank has funded development and poverty reduction since the 80's. Following the devastation caused by Hurricane Mitch, the agency increased its support to the country through projects with emphasis on reconstruction efforts and in generating economic growth, employment and improvement of public services for the poor.
Currently, 17 projects funded by the World Bank in Honduras focus on education, health, social protection, infrastructure, Bono 10.000, amounting to 40 million dollars.
As in all projects financed by the World Bank in Honduras, this credit has been awarded with zero interest rate, a maturity of 20 years and a grace period of 10 years before repayment.
The loan will be used to finance the "programs to strengthen the financial safety net and improving access to financing."
The IDB representative in Honduras, Miguel Manzi, at the signing ceremony said the purpose of the Inter-American Development Bank is to support the government in a program for financial reforms and institutional changes in the sector.
The agreement, which expires in March 2012, will enable the country to get immediate access to funds worth $196 million.
An International Monetary Fund (IMF) staff mission was in Tegucigalpa between 7 and 10 September to continue discussions on an agreement between Honduras and the IMF to support the government's economic program. At the close, the mission's chief, Mr. Przemek Gajdeczka, issued the following statement:
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