IMF国际货币组织全球-Honduras_First-Reviews-Under-the-Stand_71页_7mb

Honduras: IMF First Reviews Under SBA and SCF Arrangements

Core Content

The International Monetary Fund (IMF) completed the first reviews under the Stand-By Arrangement (SBA) and the Standby Credit Facility (SCF) with Honduras on December 18, 2019. The program, approved on July 15, 2019, provides access to about US$144.7 million (SDR 105 million) and aims to maintain macroeconomic stability and support growth through fiscal, monetary, and governance reforms. The authorities have expressed their intention to treat the arrangements as precautionary.

The program focuses on three main areas:

• Securing the fiscal position while protecting social spending.
• Upgrading the monetary policy regime to support inflation targeting.
• Improving governance and the business environment, including reforms in the electricity sector and anti-corruption measures.

Main Views

1. Economic and Political Context

• Honduras has faced economic slowdowns due to a challenging external environment, lower global demand, and a severe drought.
• Social tensions arose in the summer due to political reforms and sectoral demands, but recent agreements on electoral reforms have helped ease these tensions.
• The external position has improved, with a current account surplus of 0.1% of GDP in the first half of 2019, compared to a deficit of 0.25% in 2018.
• Remittances have helped offset the trade deficit, and gross international reserves have increased.

2. Program Implementation

• All quantitative performance criteria (QPC) and indicative targets (IT) for end-September 2019 were met, except for the ceiling on the central government wage bill.
• The wage bill target was missed due to a technical error in calculating seasonal factors, but it is expected to be met by the end of the year.
• The structural benchmark on trust funds spending was met, and the creation of the new customs administration was completed with a delay, but the management appointment was finalized in November.

3. Fiscal Policy

• The nonfinancial public sector (NFPS) showed a revenue shortfall, but ENEE (the public electricity company) provided partial compensation through tariff adjustments.
• The fiscal position is maintained within the Fiscal Responsibility Law (FRL) deficit ceiling of 1% of GDP.
• The authorities have restrained public investment to protect the fiscal balance, while social spending remains safeguarded.
• A comprehensive intervention of ENEE is planned by the end of 2019 to address inefficiencies and reduce electricity losses.

4. Monetary Policy

• The Central Bank of Honduras (BCH) has kept the policy rate on hold, following an initial hike, to anchor inflation expectations.
• The crawling peg regime continues to support the transition to inflation targeting.
• Gross reserves reached US$5.3 billion by September 2019, which is 105% of the ARA metric.
• Net international reserves (NIR) have also increased, reflecting the improved external position.

5. Governance and Anti-Corruption Reforms

• The authorities have made progress on governance reforms, including the creation of an independent system operator (ODS) and strengthening the regulatory agency (CREE).
• Anti-corruption measures have been incorporated, such as reforms in public-private partnerships, beneficial ownership registry, public officials' asset declaration system, and public procurement.
• A new central bank charter and improvements in the budget process are part of the ongoing institutional strengthening.

Key Information

Economic Outlook

• Real GDP growth slowed to 2.75% in the first half of 2019, compared to 3.75% in the first half of 2018.
• The economic recovery is expected to be gradual, with growth projected to rise to 3.2% in 2020.
• Inflation is expected to stabilize around 4%, within the BCH's target band (3-5%).
• The current account deficit is projected to converge to 4% of GDP as the economy recovers.

Risks

• External risks include rising protectionism, weaker global growth, and lower US growth, which could affect exports, remittances, and employment.
• Domestic risks involve political instability, particularly with approaching 2021 elections, which may hinder reform implementation.

Program Modalities

• The program is supported by a two-year SBA and a two-year SCF, with a total access of SDR 224.8 million (about US$309.2 million).
• The fiscal space is used to support growth through small infrastructure projects and social programs, such as irrigation, house improvements, and communal road maintenance.

Structural Reforms

• The electricity sector reforms include:
  • Creation of an independent system operator (ODS).
  • Strengthening of the regulatory agency (CREE).
  • Implementation of tariff adjustments and regulatory frameworks.
  • Unbundling of ENEE into three independent entities: generation, transmission, and distribution.
  • Creation of a task force to address non-technical electricity losses.
  • Reassessment of generation contracts with EEH (Empresa Energía Honduras) to ensure compliance with demand projections.

Financial Sector

• The banking system remains solid, with low non-performing loans (NPLs), high provision coverage, ample liquidity, and a capital adequacy ratio (CAR) of 13.5%.
• Credit growth has slowed, with FX credit now aligned with local currency credit.

Conclusion

The IMF's first reviews under the SBA and SCF arrangements with Honduras confirm that the program is on track, despite economic headwinds and external shocks. The fiscal, monetary, and governance reforms are progressing, and the electricity sector restructuring is a key focus. The authorities are committed to maintaining macroeconomic stability and fostering inclusive growth. The medium-term outlook is cautiously optimistic, with gradual recovery expected. However, risks remain, particularly from external conditions and domestic political dynamics, which could affect the sustainability and success of the reforms.