The follow up of the IMF in the country's economic program
The Honduran Government, with the aim of establishing the conditions for a solid and sustainable growth has implemented key reforms designing an economic program focused on decreasing the macroeconomic imbalances and strengthening the public sector finances. The Stand-By Arrangement (SBA) and Stand-By Credit Facility (SCF) that has been approved by the International Monetary Fund (IMF) Executive Board in October 2010 and has been entered with the Honduran Central Bank are supporting it.
As part of the implementation of the aforesaid Agreements, an IMF mission has met in Honduras with the Presidency, Ministry of Finance, Central Bank Governor and other senior government officials on February 2012.
The mission is focused on the follow up of the actions engaged by Honduras in such Agreements. They have assessed recent economic developments; the performance of monetary and fiscal policies; and the progress in structural reforms provided under the government's economic program for 2011. The mission (IMF) also expressed that they noted achievements in economic growth and control of inflation and acknowledged significant progress in the structural reform agenda during 2011 and early 2012, in particular in public sector pension funds, taxation and education.
Though the mission has confirmed that the target deficit of the combined public sector has been achieved, they highlighted that the deficit of the central government has been higher than expected. Furthermore, the mission emphasized that the monetary targets under the program (net international reserves and central bank domestic assets) have not been met.
As well, the mission has updated the macroeconomic projections for 2012 and recommended to strengthen the economic policy framework accordingly. In particular, the mission has recommended continuing improving liquidity control mechanisms and the operational framework for monetary policy; continue the process of fiscal consolidation by keeping expenditures under control; improving budget management; and to implement ongoing structural reforms.
In comparison to last year statistics and those predicted for 2012 a GDP growth between 3.4% and 3.8% is expected as well as a decrease of the inflation rate. However, the public sector deficit may be higher than last year reaching 3.5% of GDP.
More commitment is mandatory in order to reach a higher GDP, less inflation rates and less public...