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Honduras strengthens its financial system and access to finance, with IDB support

$40 million will contribute to financial stability, transparency of information and inclusion of SMEs

The Inter-American Development Bank (IDB) approved $40 million in financing for Honduras to promote the strengthening and stability of the financial system and expand access to financial services.

The project will contribute to maintaining the stability of financial intermediaries, improving the transparency of pricing information, contracts and services, and promoting financial inclusion of small and medium enterprises and vulnerable segments of the Honduran population.

Among the project’s components are macroeconomic sustainability, strengthening the Financial Safety Net (RSF) and improving access to financing.

A strengthened RSF will lead to a regulatory framework in accordance with international best practices to ensure the financial system’s stability and sustainability. In addition, it will help improve risk monitoring of financial institutions by upgrading processes, manuals, information technology tools and assisted supervision of lenders. The National Banking and Insurance Commission’s professional career plan will be strengthened and improvements will be made to the operational capacity of the Early Warning Committee, the Deposit Insurance Fund, the viability of the capitalization fund and mechanisms for financial institution resolution.

Regarding access to credit, the key goals are improving customer service processes for financial institutions and the lender-of-last-resource window of the National Banking and Insurance Commission; financial literacy campaigns and the enactment of a law on secured transactions.

The financing consists of a 30-year, $28 million loan from the IDB’s Ordinary Capital with a 5.5-year grace period and a fixed interest rate, and a 40-year, $12 million loan from the IDB’s Fund for Special Operations fund lend $12 million with a 40-year grace period and an annual interest rate of 0.25 percent.

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