Honduras will ensure the sustainability of its public finances, increase social spending on the COVID-19 crisis and protect its monetary and financial stability with a $76.2 million loan from the Inter-American Development Bank (IDB).
The budgetary support loan will help finance efforts to contain the pandemic, mitigate its effect on poor households, and promote counter-cyclical policies that will ease the crisis' short-term effect on the economy.
The operation is in line with a stand-by agreement of the International Monetary Fund that was approved last year. At the same time, the loan supports government action to move forward with structural reforms designed to ensure fiscal sustainability and monetary and financial stability, in a bid to encourage inclusive economic growth.
The aid is structured as a Special Development Loan, to be disbursed all at once. Sixty-five percent of the loan carries a 0.25 percent interest rate and a grace and payback period of 40 years. The rest has an interest rate pegged to the LIBOR, a grace period of three years and a reimbursement period of seven years.
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
IDB Project Team Leader
Emergency Program for Macroeconomic and Fiscal Sustainability