Honduran Economy: Good Forecast for 2020

According to the IMF, Honduras has experienced a moderation in economic growth in recent quarters, but a recovery is expected next year.

Tuesday, November 12, 2019

Honduras has made significant progress in implementing its economic program, which aims to foster inclusive growth through prudent macroeconomic policies and structural and governance reforms, according to the international organization's report.

From the IMF statement:

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.”

More on this topic

Honduras: IMF Approves Revision of Stand-By Agreement

December 2019

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 ).

IMF to Provide Financing to Honduras

May 2019

The entity and the Honduran government agreed to "a combined credit facility of Special Drawing Rights and 24-month Extended Credit Service, for $311 million."

For the country's business sector, the agreement between the International Monetary Fund and Honduras "represents a commitment by the government to maintain macroeconomic stability, a fundamental pillar that favors the country's competitiveness and creates the minimum conditions for the promotion of investment. See "Cohep Expects IMF Agreement to Maintain Macroeconomic Stability".

El Salvador: Better Economic Outlook

November 2018

According to the IMF, in the first half of the year, the Salvadoran economy increased above the estimated potential, the inflation remained low and the fiscal position was better than expected.

From the International Monetary Fund statement:

An International Monetary Fund (IMF) team, led by Ms.

Good Outlook for Honduran Economy

November 2018

Following the IMF assessment, the country's macroeconomic conditions are expected to remain strong and growth is expected to be solid in coming years.

From the International Monetary Fund statement:

November 16th, 2018. An International Monetary Fund (IMF) team led by Esteban Vesperoni visited Tegucigalpa from November 12-16 to assess recent economic developments since the completion of the 2018 Article IV consultation in May and the medium-term outlook. At the end of the visit, Mr. Vesperoni issued the following statement:

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