Reducing the Monetary Policy Rate to 4.5% and temporarily suspending the daily auctions of Bills aimed exclusively at financial institutions are some of the measures taken by the Central Bank of Honduras in response to the spread of the covid-19.
Faced with a domestic and external context of greater uncertainty and volatility, the Central Bank of Honduras (BCH) established a set of monetary policy measures in order to continue flexibilizing financial conditions that allow the private financial system to have liquidity to meet the needs of the population at this time of high demand, the institution reported.
In order to mitigate the effects that will derive from the covid-19 crisis, businessmen of the industrial sector of Guatemala ask the government to adjust the measures in aspects such as banking, credit, labor and tax.
Economic activity will be reduced, which we are already experiencing. Therefore, it is important to take measures at both the health and economic levels to reduce the impact, explains a statement from the Chamber of Industry of Guatemala (CIG).
In Guatemala, the Executive Branch presented a proposal to the Congress to expand the public budget by nearly $940 million, resources that would be used to recover the economy in the face of the unemployment that will be caused by the spread of the covid-19.
The authorities' plan is to save between 20% and 25% in order to allocate these funds to investment in strategic infrastructure such as ports, airports, the subway and viable projects such as the construction of the Transversal del Sur (TVS), a 110-kilometer stretch that would connect the port of Champerico, Retalhuleu, with Puerto Quetzal, on the coastal strip.
Arguing that the current account deficit has been reduced, and that inflation remains within the target range, the International Monetary Fund approved the first revision of the Stand-By 2019-2021 agreement.
From the press release by IMF:
On December 18, 2019, the Executive Board of the International Monetary Fund (IMF) completed first reviews of Honduras’ performance under an economic program supported by a two-year Stand-By Arrangement (SBA) and a two-year arrangement under the Standby Credit Facility (SCF). This program was approved on July 15 th, 2019 in the amount of about US$ 309.2 million (SDR 224.8 million), the equivalent of 90 percent of Honduras quota in the IMF (see Press Release 19/285 ).
The Central Bank has revised down its year-on-year GDP growth forecast for 2018, from the range of 3.8% to 4.2%, projected at the beginning of the year, to a range of 3.6% to 4%, but has kept the projection of inflation unchanged.
From a statement issued by Banco Central de Honduras:
The Board of the Central Bank of Honduras (BCH), through Resolution No.336-8 / 2018, approves the Review of the Monetary Program (RPM) 2018-2019, which presents the update of the macroeconomic framework for the aforementioned biennium when incorporating the recent evolution of the national and international economic conjuncture, as well as the latest perspectives on the main macroeconomic and financial variables.
The entity recognizes the continued economic recovery, but warns that potential growth is below the desirable level, debt remains high, and wide financing gaps are projected for 2019 and in the future.
From a statement issued by the IMF:
On May 11, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with El Salvador.
The IMAE registered an increase of 3.1%, mainly explained by the activities of Financial Intermediation, Insurance and Pension Funds, the manufacturing industry and commerce.
From a statement issued by Banco Central de Honduras:
May 14, 2018.As of March 2018, the Monthly Index of Economic Activity (IMAE), indicator of national production, registered an increase of 3.1% (5.7% in the same period in 2017).By order of contribution, said behavior was driven by the activities of: Financial Intermediation, Insurance and Pension Funds; the Manufacturing industry; Commerce; Mail and Telecommunications; Transportation and Storage; and Construction.
In Costa Rica the Central Bank projects a 3.6% economic growth, but warns that without fiscal reforms, the deficit of the central government could reach 7.1% of GDP in 2018, and almost 8% in 2019.
The 2018-2019 macroeconomic program presented by the Central Bank reflects the complicated panorama that the Costa Rican economy will face this year.In a context of high fiscal deficit, and with a ministry of finance constantly resorting to the local market in search of resources to finance itself, it is expected that interest rates will rise, especially in the absence of fiscal measures to contain public spending.
Banco de Guatemala forecasts that the economy will grow between 3% and 3.8%, driven by a recovery in domestic demand and an international environment that could favor an increase
in external demand.
From the executive summary of a report by Banco de Guatemala:
Regarding the outlook for 2018 related to the domestic sphere, it should be noted that economic activity could grow in a range between 3.0% and 3.8%, due to a recovery in domestic demand and an international environment that could favor an increase in external demand.
The Central Bank has reported that in the third quarter of the year the Gross Domestic Product registered an interannual increase of 6.5%, mainly explained by the manufacturing industry and the agricultural sector.
From the quarterly report by the Central Bank:
DURING THE III QUARTER OF 2017 ECONOMIC ACTIVITY CONTINUED REGISTERING DYNAMISM HAVING GROWN 2.0%
The fiscal deficit stands at historically low levels, inflation is moderate and the macroeconomic perspective is positive, but a continuous effort is required to improve social indicators.
From a statement issued by the IMF:
21 November 2017: The authorities’ commitment to their reform agenda has remained strong during the program, which has successfully stabilized the economy, restored confidence, and paved the way for accelerating growth and reducing poverty.
As of July 2017, the IMAE recorded a cumulative growth of 5.4%, in which the activities with the greatest contribution were manufacturing and livestock.
From a report by the Central Bank, "State of the Economy and Prospects 2017":
The evolution of the main economic and financial indicators of the country during the first eight months of the year confirms the robustness of the economy and validate the growth forecasts for 2017, with highlights being dynamism of the IMAE, recovery of exports, a prudent fiscal policy and low inflation.In this context, the country's external position has improved, international reserves have strengthened, the stability of the exchange rate regime has been preserved and the performance of the financial system has remained solid.
The Central Bank has reduced its economic growth forecast from 4.1% to 3.8% for 2017, mainly due to a slower rate of growth in service industries.
From the Macroeconomic Program Review 2017-2018:
The macroeconomic projections for the biennium 2017-2018 are based on an international context characterized by: (i) a greater rate of world growth; (Ii) orderly reaction of financial markets to increases in interest rates in the United States; (Iii) moderate inflation.
In its review of the monetary program, the Central Bank has raised the expected economic growth rate for the biennium 2017-18, from 3.4% - 3.7%, to 3.7% - 4.1%.
From the executive summary of the report "Review of the 2017-18 monetary program" by the Central Bank:
The Board of Directors of the Central Bank of Honduras (BCH), in fulfillment of its powers, presents the Monetary Program (MP) Review 2017-2018 published in March of this year. This document contains an update of the macroeconomic framework for the aforementioned biennium, adapting it to thefirst half of year of the international and domestic economy, as well as to the latest perspectives on the world economy.