Honduras Secures $100 Million Loan from IDB for Fiscal Improvements

Honduras has secured a $100 million loan from the Inter-American Development Bank (IDB) to bolster its fiscal health, according to an official statement. The agreement, signed by Finance Secretary Emilio Hernández and IDB representative Julia Johannsen, is part of a broader program to strengthen the nation's fiscal sustainability.

The initiative aims to enhance macroeconomic management, boost the efficiency of revenue collection, and improve the transparency and quality of public expenditures. These measures are crucial for Honduras as it navigates economic recovery following the COVID-19 pandemic and addresses its vulnerability to natural disasters.

The loan comprises two tranches: $60 million from the IDB's ordinary capital with a 20-year term, including a 5.5-year grace period, and $40 million from concessional ordinary capital with a 40-year term, including a grace period, and a 0.25 percent interest rate. The financing terms for the latter are based on the Secured Overnight Financing Rate (SOFR).

This IDB funding complements existing programs supported by the International Monetary Fund (IMF), the World Bank, and the Development Bank of Latin America and the Caribbean (CAF). The Honduran government has prioritized strengthening relationships with international economic organizations to renegotiate financial programs, manage debt, attract investment, and enhance legal certainty.