IMF increases to USD769 million the availability of credit in favor of Honduras
The Honduran economy has been going through its worst economic recession since March 2020, due to the closure of many businesses because of the increase in COVID-19 infections and the flooding caused by tropical storms Eta and Iota, which brought economic activity to a standstill, causing the loss of more than 600,000 jobs, and affected vulnerable communities, aggravating humanitarian needs and food insecurity.
In view of this situation, after the fourth review of the Stand-By/Credit Facility Agreement, the technical mission of the International Monetary Fund (IMF) and the Honduran authorities reached an agreement that proposes an increase in the Fund’s support to USD 769 million, to achieve a moderate recovery by 2021.
The representative of the International Monetary Fund in Honduras, Jaime Puig, stated that this recommendation is aimed at supporting the reconstruction plan after the destructive passage caused by tropical storms Eta and Iota, which mainly affected the agricultural sector, which is recognized for the quality of several of its products; and Micro, Small and Medium-Sized Enterprises (MSMEs), which are one of the pillars of the Honduran economy and have been strongly impacted by the sanitary measures implemented by the government to counteract COVID-19.
To address these obstacles, the International Monetary Fund has earmarked funds for maintenance and sustainability through credits placed in national banks, with the objective of developing a platform of financial solutions to promote agribusiness development, increase productivity, increase exports, and improve food security.
Likewise, the International Monetary Fund will support Micro, Small and Medium Enterprises, strengthening credit, generating employment, and increasing productivity to promote the welfare of the people, since it is a key sector to attract private investment to Honduras as it plays a key role in the development and economic recovery of the country. The increase is also justified in the context of balance of payment needs caused by the prolonged pandemic and the Eta and Iota storms, which have hit the Honduran economy hard.
Ultimately, the IMF’s Stand-By Arrangement tool allows the Fund to respond quickly to countries’ external financing needs and to support policies that help them “exit crises” and “return to sustainable growth”.
Vanessa Oquelí de Riera
Managing Partner
García & Bodán
Honduras