Is Honduras at the doorsteps of a signing of Stand-by Agreement with FMI?
Recently in the Republic of Honduras concluded the visit of a Mission of the International monetary Fund (FMI, by its acronyms in Spanish), aimed to verify the economic figures achieved by the Government of the Republic of Honduras and the projections for the next year 2019, with the purpose of an eventual signing of a Stand-by Agreement. The last Agreement signed with the Government of the Republic of Honduras expired in the month of December 2017, which period or validity was of 36 months. As it’s known, a Stand-by Agreement allows to have access to financial resources of the International Monetary Fund.
In an official statement issued by the Mission, was indicated that after a rapid growth observed in the year 2017, it is expected that in this year 2018 the economic activity reaches a 3.5% of growth, very close to the original projections made by the Government of the Republic. The financial intermediation, the manufacturing activity, commerce and telecommunications were influencing factors in the abovementioned growth. Along with this, the inter-annual inflation of the Republic of Honduras until October 2018 was of 4.66%, percentage placed within the inflation goal range established by the Central Bank of Honduras.
As a result of coffee prices drop and the increase of the petroleum prices, it is expected that the current account deficit of the balance of payment is of 3.2% GDP in this 2018. Likewise, it is expected that the non-financial public sector deficit remains under the ceiling of 1.2% of GDP.
Both the FMI Mission as that authorities of the Honduran Government agreed to continue with the conversations prone to the negotiation of an economic program, which will be supported through the subscription of a Stand-by Agreement.
To maintain the macroeconomic stability will be the main challenge of the Government of the Republic of Honduras to achieve the attainment of the signing of the referred Agreement.
The current tough financial situation of the National Energy Company (ENEE, by its acronyms in Spanish), was identified as one of the most prevalent factors in the fulfillment of the macroeconomic stability aspired by the Government of the Republic, and thus for the signing of the Agreement; therefore in the recent past the Government of the Republic, Private Company and ENEE subscribed an agreement for the reform of the Honduran electric sector and consequently the financial recovery of the state-owned energy company.
If the Government of the Republic of Honduras successfully implements the reform agreement and there is indication of a financial recovery of the National Energy Company, and in addition to it, maintains the fiscal discipline, watched by the Government to the date, we would be, for sure, at the doorsteps of the signing of an agreement with the Monetary Financial Fund (FMI), and as a result, there would be access to financing on the part of mentioned Organism.
Godofredo Siercke Núñez
Senior Associate
García & Bodán
Honduras