June 13, 2025
- The Executive Board of the International Monetary Fund (IMF) completed the Third Reviews under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements for Honduras, enabling a disbursement of about US$160 million (SDR 117.6 million).
- The Honduran economy has remained resilient, and program performance for the third reviews has been strong. Prudent fiscal policies and decisive adjustments in monetary and exchange rate policies have bolstered economic stability. Progress in energy sector reforms continues.
- Strengthened budget execution, greater social spending, proactive implementation of monetary and exchange rate policies, and a deepening of energy sector reforms remain key to safeguard macroeconomic stability and boost the growth potential of the economy.
The Executive Board of the International Monetary Fund (IMF) today completed the third reviews under the Extended Fund Facility and Extended Credit Facility arrangements for Honduras. The completion of the reviews enables the authorities to draw about US$160 million (SDR 117.6 million), bringing the total disbursements under the programs so far to about US$485 million (SDR 356 million).[1] Honduras’ 36-month arrangements totaling about US$850 million (SDR 624.5 million) were approved on September 21, 2023.
Program performance for the third reviews has been strong. In completing the reviews, the Executive Board assessed that all quantitative performance targets for end-December 2024 had been met. Through end-May 2025, three structural benchmarks were also met – including the adoption of a manual for budget execution programming, the launch of a digital investment portal, and the completion of a diagnostic study of the foreign exchange allocation system, while progress has been made on the implementation of three additional structural benchmarks.
The Honduran economy continues to show resilience. Following growth of 3.6 percent in 2024, the economy is projected to expand by 3.5 percent in 2025, supported by a rebalancing of the economy, normalizing weather conditions, and favorable terms of trade. Inflation has declined close to the 4 percent objective. Fiscal performance continues to be strong, with the fiscal deficit outperforming the program target in 2024 at 1.0 percent of GDP and projected to increase modestly to 1.5 percent of GDP in 2025. International reserve coverage has strengthened since late 2024, supported by external market access, exchange rate and monetary policy adjustments, and favorable foreign exchange inflows in the context of high remittances and coffee prices.
At the conclusion of the Executive Board’s discussion, Ms. Gita Gopinath, First Deputy Managing Director and Acting Chair made the following statement:
“The Honduran economy remains resilient in the face of a challenging economic landscape. Policies under the program have bolstered macroeconomic stability and contributed to a rebalancing of the economy, including a marked strengthening of the external position. That said, policy agility and steadfast program implementation are essential amid heightened external risks. The authorities’ commitment to the Fund-supported economic program is strong.
“Fiscal prudence continues to be a pillar of the authorities’ agenda and is key to creating fiscal space for public investment and social spending while preserving debt sustainability. Importantly, containing non-productive spending is key to anchor stability this election year. Targeted efforts are underway to strengthen the social safety net and protect the most vulnerable. Continued progress on structural fiscal reforms is essential to improve public investment and strengthen budget execution.
“The authorities’ decisive recalibration of monetary and exchange rate policies has been instrumental to support low inflation, improve external competitiveness and international reserve buffers, and strengthen conditions in FX markets. Amid ongoing global uncertainty, including related to migration and trade policies, the authorities’ readiness to adjust monetary and exchange rate policies as needed is essential to safeguard stability. The authorities also remain committed to improving the efficiency of the current system of foreign exchange allocation.
“Significant progress is being achieved in the energy sector. The authorities’ initiatives to reduce energy losses, including investments in energy transmission and distribution, are delivering positive results, while stronger coordination across government institutions is facilitating the reduction of arrears with private generators. These measures are contributing to a stronger financial position for the state-owned utility company, helping to reduce related fiscal risks and supporting medium-term economic growth.
“Structural reforms are the cornerstone of the authorities’ agenda to spur private sector investment and job creation. Advancements in public financial management, procurement modernization, and institutional transparency are strengthening governance. Concurrent efforts to improve the business environment, combat corruption, and reinforce the AML/CFT framework are also progressing.”