The Honduran Poverty-Reduction Strategy

Abstract

In the aftermath of Hurricane Mitch, which caused an estimated $3.8 billion in damages to the economy in October 1998 (Honduras 1999:4), Honduras was declared eligible for external debt relief under the Highly Indebted Poor Countries (HIPC) Initiative adopted in 1996 by the International Monetary Fund (IMF) and the World Bank. Under accelerated debt-relief procedures adopted in 1999, Honduras reached its HIPC “decision point” in July 2000, when the IMF and World Bank accepted its interim Poverty Reduction Strategy Paper (I-PRSP) and the IMF approved the Government’s macroeconomic-policy and structural-reform performance under an economic program supported by a three-year Poverty Reduction and Growth Facility (PRGF) loan signed in March 1999. The PRGF provides Honduras concessional balance-of-payments assistance of SDR 156.75 million (about $198 million at the SDR exchange rate on January 1, 2002) over a three-year period. Achieving decision-point status allowed Honduras to gain partial, interim access to external debt relief.