The International Monetary Fund (IMF) agreed with Honduras to extend up to 530 million dollars (222 more) its Stand-by and Credit Facility agreements with the Central American country.
The agreement, reached by technical personnel of the Fund in the framework of the second review of the economic program with Tegucigalpa, now requires the approval of the agency’s executive board.
To explain the agreement, the Fund said that the pandemic “is having a significant adverse impact on social and economic conditions in Honduras. It will cause a recession in 2020, with an expected contraction of the economy of approximately 3.3%.”
“This reflects the impact of the necessary mitigation measures to alleviate pressures on the health system and protect lives, as well as large external shocks through remittances, maquila, commerce, tourism and external financial conditions.” , he detailed.
“It is also projected,” he added, “that the pandemic will generate increases in the needs for fiscal financing and balance of payments.”
Honduras has reported to date 1,685 confirmed cases of coronavirus and 105 deaths.
In its statement, the Fund explained that, beyond the immediate response to the crisis, Honduras has ratified “its firm commitment to maintain macroeconomic stability while continuing to implement necessary structural reforms.”
That is why the Honduran Government will continue to focus on “protecting social spending and investment”, “implementing reforms in the electricity sector” or “strengthening monetary policy and frameworks of regulation and financial supervision”
The IMF executive board endorsed in July 2019 a two-year stand-by agreement with Honduras that allowed it to have access to a loan for $ 312 million, which with the revision announced this Thursday reaches 530 million.
On March 31, the Fund approved the disbursement of $ 143 million under this agreement.