Like many other countries around the world, Honduras is expected to face significant challenges associated with the dramatic impact of the COVID-19 pandemic. Amid heightened needs for healthcare and social spending to protect the well-being of Hondurans, the authorities will access resources in the amount of SDR104.92 million (US$143 million) currently available under the International Monetary Fund (IMF) SBA/SCF arrangement approved in July 2019 for a total of SDR224.82 million (US$312 million).
The impact of the COVID-19 pandemic will take place through a number of channels. Economic activity will be affected by the prudent decision to lock down the economy early in the expansion phase of the virus in order to save lives and contain pressures on the country’s health system. Economic growth and the external position will be affected as well by global spillovers, through the impact of external demand, lower remittances flows, tighter external financial conditions, and the contraction in tourism.
The authorities have maintained a steadfast commitment to sound macroeconomic policies over the last years. They have also reacted adequately to the pandemic with targeted fiscal actions to respond to the healthcare and humanitarian crisis, and with monetary and macro-financial measures to mitigate the impact on economic activity. The disbursement under the SBA/SCF will support the authorities’ policy response, helping to shore up the external position of the economy.