Honduras IMF deal will help Hernandez consolidation

Subject

The impact of the agreement with the IMF.

Significance

One year after the election that took him to the presidency, Juan Orlando Hernandez's administration has secured an agreement with the IMF worth 188 million dollars over four years to strengthen public finances and debt sustainability. This is the culmination of over two years of legislative and administrative reforms to tackle the country's fiscal deficit, much of them passed before February 2014 while Hernandez was still president of Congress. Tighter fiscal austerity for the remainder of this government will intensify pressure on limited resources for dealing with security issues, the government's top priority.

Impacts

• Completing the terms of the IMF agreement by 2017 will be challenging.
• The electoral cycle will weaken the drive to implement reforms.
• The re-election debate will reawaken political tensions in a polarised society.