- IMF staff and the Honduran authorities have reached staff-level agreement on policies and reforms to complete the fourth reviews of the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements. IMF Board approval of the review, expected for later this year, would result in a disbursement of about US$120 million.
- The Honduran economy remains resilient, and the authorities continue to make solid progress implementing their economic program, with a healthy accumulation of international reserves. Solid economic growth, anchored inflation, and an improved external position reflect prudent fiscal management and decisive monetary and exchange rate policies which have allowed the economy to continue to rebalance.
- Maintaining prudent and consistent macroeconomic policies amid elevated uncertainty is essential to safeguarding stability. Resolute and sustained efforts to implement key structural reforms remain critical to medium-term prospects for inclusive and equitable development. Continued progress to strengthen transparency and governance ahead of the 2026 Financial Action Task Force (FATF) evaluation is paramount.
Tegucigalpa, Honduras: An International Monetary Fund (IMF) team led by Emilio Fernandez Corugedo visited Tegucigalpa from September 16 to 26, 2025, to discuss recent economic developments and policy implementation. At the conclusion of the visit, Mr. Fernandez Corugedo issued the following statement:
"The Honduran authorities and the IMF team have reached staff-level agreement to complete the fourth reviews of the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements. The IMF's Executive Board is expected to consider the case later this year.
"The team and the authorities agreed that strong economic policies, a surge in remittances, and favorable export prices have allowed Honduras to continue to navigate successfully this period of exceptional global uncertainty and in the context of an election year. Macroeconomic policy performance has remained strong and supportive of program objectives. Economic activity indicators point to robust growth of 3.9 percent in the first half of 2025. Headline inflation, at 4.2 percent in August, has remained within the tolerance range of the Central Bank of Honduras' (BCH's) inflation objective, while core and services inflation remain modestly higher. International reserves have increased to US$9.7 billion, appropriately strengthening Honduras' external buffers amid a challenging global environment.
"The authorities have redoubled efforts in the implementation of their structural agenda, achieving important milestones and regaining traction in key areas. Notably, advances have been made in support of structural fiscal reforms, including measures to strengthen transparency and governance to support preparations for the 2026 Financial Action Task Force (FATF) evaluation. Likewise, the authorities, with the National Electric Power Company (ENEE), continue to lay the ground for the critical long-term international energy tender planned for early 2026.
"The authorities reiterated their strong commitment to a prudent macroeconomic policy mix. They remain vigilant and ready to act in the current uncertain global environment to ensure success of their economic program supported by the IMF. Discussions focused on policies to preserve macroeconomic stability, strengthen resilience, and bolster inclusive growth:
"First, continued fiscal prudence remains essential to safeguard macroeconomic stability, including during the election year. The 2025 deficit target of 1.5 percent of GDP remains appropriate and continues to allow additional space for productive and social investment. Consistent with program objectives, the draft 2026 budget submitted to Congress targets a 1 percent of GDP fiscal deficit, with capital expenditures above and priority social spending similar to the 2025 budget. The authorities reiterated their commitment to their structural fiscal reform agenda, including reductions in tax exemptions and strengthening public procurement, while recognizing that reprogramming some milestones may be required.
"Second, sustained efforts remain important to underpin social spending. Achievement of the June priority social spending target and completion of the urban census of poor households are welcome, with the latter allowing expansion of social support to more vulnerable families. Social spending targets for the remainder of the year are on track, and the authorities are advancing complementary interventions and digitalization initiatives. Continued efforts are needed on the Single Social Sector Information System (SUISS), whose completion has faced interoperability challenges. The production of a manual to guide temporary social assistance in emergencies, to help more effectively cushion families affected by weather-related shocks, is on track for the end of the year.
"Third, the BCH will continue its vigilant data-driven approach to maintain inflation within its tolerance range and build further buffers. Adjustments to monetary and exchange rate policies have yielded strong results and helped achieve balance between supply and demand in the FX auction. Supported by these policies, which have restored a positive differential with international interest rates, the real effective exchange rate has continued to adjust under the crawling band regime, underpinning external stability. The BCH is simplifying documentation and monitoring requirements for the FX auction, which should pragmatically improve the efficiency of the current system of FX allocation. The authorities agreed on the importance of taking further advantage of the unprecedented surge in remittances and favorable terms of trade to continue to accumulate reserves and further strengthen the external position amid an uncertain external environment.
"Fourth, redoubling efforts to maintain reform momentum in the energy sector is critical. The authorities are deploying measures to enhance loss reduction and ensure that a downward trend remains firmly established. Reducing payment arrears to energy generators and securing loans to refinance costly credit lines are key to continue strengthening ENEE's financial position. These measures would contribute to the success of the 1,500 MW generation tender planned for early 2026, already supported by a credit line of US$ 300 million approved by the Central American Bank for Economic Integration (CABEI). Steadfast implementation of reforms to strengthen ENEE's efficiency is essential, including aligning its accounting practices with international standards and consolidating distribution entities. Moreover, enhanced transparency through the planned publication of the 2021-23 financial audits, alongside that of a high-level online dashboard of key energy sector performance indicators, could further bolster investor confidence.
"Fifth, the authorities should continue reforms to combat corruption, improve the business environment, and strengthen governance. Ahead of the 2026 evaluation by the Financial Action Task Force (FATF), it is critical that the authorities prioritize, advance, and implement legislation addressing beneficial ownership and introducing legal amendments to further improve the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework. Efforts are also taking shape to modernize further the tax administration through projects on electronic billing and timely refunds and to strengthen public investment management with support from development partners. The authorities are developing a new whistleblower law and related reporting mechanisms and are committed to approving the Honduran National Transparency and Anti-Corruption Strategy (ENTAH).
"The IMF team would like to thank the authorities, the private sector, and other counterparts for their kind hospitality and candid discussions."
