LatinNews Daily - 14 August 2023

In brief: Honduras and IMF reach staff-level agreement

*The International Monetary Fund (IMF) has announced a staff-level agreement with Honduran authorities on a 36-month arrangement under the IMF’s Extended Fund Facility (EFF) and Extended Credit Facility (ECF) for US$830m to support Honduras’ economic reform policies. The agreement, which is subject to the approval of the IMF’s executive board, follows a visit to Honduras from 5-16 June by an IMF delegation. An IMF press release highlights that the Honduran economy has remained “remarkably resilient to several shocks”, both domestic and external, including the coronavirus (Covid-19) pandemic, weather events, the impact of the Ukraine war, and the global economic slowdown. It says that the IMF-supported economic programme focusses on “creating fiscal space to help address urgent social spending and investment needs, while anchoring macroeconomic stability.” The programme “also contains measures to strengthen governance, ensure the sustainability of the energy sector and the public electricity company ENEE, enhance resilience to climate change, and foster inclusive growth” according to the same statement.  A June IMF report expects Honduras’s GDP growth to decline to around 3% in 2023 driven by lower remittances, a less supportive external environment, and drought. The current account deficit is expected to widen to close to 5% of GDP.

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