The International Monetary Fund (IMF) Executive Board has completed the first and second reviews of Honduras' arrangements under the Extended Fund Facility and Extended Credit Facility. This completion allows Honduras to draw approximately US$198 million, increasing total disbursements under the program to about US$315 million. The 36-month arrangements for Honduras, totaling around US$823 million, were initially approved on September 21, 2023.
During the review process, the IMF assessed quantitative performance targets for December 2023 and June 2024. While all criteria for December 2023 were met, some targets for June 2024 regarding net international reserves and domestic assets were not achieved. However, waivers were granted based on corrective actions taken by Honduran authorities.
Despite challenges such as an El Niño-related drought affecting agriculture and energy production, as well as a recent tropical storm, the Honduran economy showed resilience with a growth rate of 3.6 percent in 2023 and a projected expansion close to four percent in 2024. Inflation rates are declining towards a four percent objective while fiscal performance remains strong.
Kenji Okamura, Deputy Managing Director and Acting Chair of the IMF Executive Board stated: "The Honduran economy remains resilient despite global and domestic challenges... The authorities’ policy adjustments and remedial actions demonstrate strong commitment to their Fund-supported program."
Okamura emphasized that continued efforts are needed to strengthen social safety nets and maintain fiscal discipline. He also highlighted the importance of addressing energy sector challenges promptly: "Promptly addressing energy sector challenges remains a priority."
Additionally, Okamura noted that structural reforms are crucial for fostering inclusive growth: "Steadfast implementation of structural reforms remains key to fostering inclusive growth." He pointed out that measures like simplifying administrative processes can create favorable conditions for investment.
The frequency of climate change-related events was also addressed by Okamura who mentioned that Honduras has requested an arrangement under the Resilience and Sustainability Facility to accelerate climate adaptation policies.