Statement by IMF Staff Mission to Honduras
The following statement was issued today in Tegucigalpa by an International Monetary Fund (IMF) staff mission:
"An IMF mission visited Tegucigalpa during January 24-February 7, 2005, for discussions with the authorities on the
second review of the PRGF program, the 2005 Article IV consultation, and the status of implantation of policy
commitments for the HIPC completion point.
"The mission found that the government's economic program continues to deliver favorable results. Preliminary estimates
suggest that real GDP grew by nearly 5 percent in 2004—significantly above projections—with a broad rebound across all
sectors, including agriculture. Inflation has now stabilized, after drifting up during much of last year mainly because
of high oil prices. The external position has also strengthened significantly, boosted by rapid growth in remittances,
exports, and capital inflows; as a result, official international reserves now stand at over US$ 1.6 billion, well above
the program target.
"The strong performance reflects the government's steadfast implementation of macroeconomic policies and structural
reforms envisaged under the program. The fiscal deficit was reduced in line with the program targets, owing especially
to improved control of the wage bill which permitted poverty-reducing spending to increase as targeted. Important
structural reforms implemented included strengthening the financial system, and improving tax administration and
governance. All quantitative targets for end-December were met, and good progress has also been made on the set of
trigger conditions for the completion point under the enhanced HIPC initiative.
"Looking ahead, it will be critical for Honduras to maintain broad consensus on the program supported by the PRGF,
including the key elements of sustained public sector wage discipline, prudent macroeconomic policies, and financial
sector reforms. Keeping the reforms on track will be important for Executive Board consideration of the PRGF review and
HIPC completion. The program is working well, and evidence is growing that the key goal of poverty reduction is being
achieved. It will be critical to maintain continuity in these policies, through the forthcoming election year and
beyond, so that the hard-won gains of higher growth and social progress can endure and prosper further in the coming
years.
"Upon its return to Washington, the mission will submit its report to the IMF's Management. Executive Board discussion
of the PRGF review, the Article IV consultation, and the HIPC completion point could take place around end-March."