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Honduras Suffers Setback With IMF, Could Leave Country Without Backing of Major Credit Agency

Article Summary:

Despite gains in economic strength and inflation control, the third evaluation by the International Monetary Fund of Honduras was labeled cold and blunt, as the IMF stated many goals for the country were not met. This, according to economic analysts, and the deal the Honduran government has with the IMF ending in April, could leave the country without the financial backing by the major credit agency.

Photo Credit: El Financiero

Original Article Text From El Financiero via Google Translate :

Honduras Suffers Setback With Imf

While the closing figures of 2011 that revealed the Honduran government seemed optimistic test results of the International Monetary Fund (IMF) indicate otherwise.”

They managed to stabilize the macroeconomy and strengthened external position,” said Chairman of the Central Bank of Honduras (BCH), Maria Elena Mondragon.

The basis of the highest growth (0.6% more than in 2010) were due to an increased flow of foreign direct investment, with $ 1,014 million, about $ 797 million in 2010.IM F postponed.

However, the third evaluation of the IMF was cold and blunt. “Not met” some important goals. This, according to economic analysts, the deal stand by the Honduran government has with the IMF, which ends in April, could be breached and leave the country without the financial backing of the major credit agency.”

The IMF mission recognized achievements in economic growth and inflation control, and significant progress in structural reform program during 2011 and early 2012, particularly in the areas of pensions in the public sector, taxation and education .

The mission found the implementation of previously agreed target for the consolidated public sector deficit, “said Przemek Gajdeczka the IMF.

However, the mission “noted that the central government deficit was higher than expected (3.4% to 3.1% of GDP agreed). In addition, the mission noted that the monetary targets of the economic program (above the level of international reserves and net domestic assets of the Central Bank) were not met.

“The IMF mission recommended improving mechanisms for monitoring the liquidity and operational framework of monetary policy, continuing the process of fiscal consolidation while maintaining control of public expenditure and improving the management and budget execution, and the adoption of structural reforms adopted “.

$ 52 million a month needed to pay the external and internal public debt in Honduras
The picture worsens when the Treasury of the Republic informs that the increase in public debt is pushing tax revenues. The payment of public debt, external and internal needs more than $ 52 million a month, a figure that unbalances the millionaire current demand for budget resources.

Mauricio Diaz Burdett, coordinator of the Social Forum of External Debt of Honduras (FOSDEH), added that the IMF’s recommendations should be of concern to Honduran society.”We are concerned the government’s optimism and lack of explanation as to meet the tax revenues collected will finance the budget of the Republic 2012.

“According to the analyst, there is a certain level of monetary policy on which the IMF has been insisting for some time and suggests that certain functionality of the Central Bank of Honduras (BCH), must be reconsidered.

“With this we are not saying that the country is falling, but actually there are recommendations in this section will be addressed,” he said.

Burdett claimed the government broke up in 2011 with some rules to approve direct purchases.

The agreement with the IMF ends in April this year and thereafter is expected to sign another agreement for 18 months.

Link to Original Article:

From El Financiero

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