The IMF Hands Honduras $242 Million, With Strings on Its Power Company

Honduras · Economy

The latest Honduras IMF disbursement is a vote of confidence in a small Central American economy, but it comes with a pointed reminder of the one reform that keeps slipping.

The International Monetary Fund’s executive board met in Washington on June 29 and signed off on two reviews of Honduras’s economic program at once. The decision released about two hundred and forty-two million dollars to the country straight away.

For a country of Honduras’s size, that is real money. It flows directly into the national budget at a moment when the government is trying to hold spending steady and attract private investment.

What the Honduras IMF disbursement covers

The payment completes the fourth and fifth reviews of a pair of lending arrangements the Fund first approved in September 2023. Together those facilities are worth around eight hundred and forty-seven million dollars over three years.

With this tranche, Honduras has now drawn about seven hundred and twenty-five million dollars of that total. A final review, expected to release roughly another one hundred and twenty million, is the last step in the programme.

The money is what the Fund calls budget support. Rather than funding a single project, it shores up the treasury and signals to other lenders and investors that the country’s books are being kept in order.

A passing grade, with one failure

The Fund’s verdict on Honduras was broadly positive. It judged the programme’s performance favorable, noting that the country met its quantitative targets for both mid and late 2025.

The headline figure is the budget. The 2025 fiscal deficit came in at seven-tenths of a percent of the economy, comfortably inside the one-and-a-half-percent ceiling the programme had set, and the target for this year is tighter still at one percent.

There was one clear miss. Honduras failed a target tied to the unpaid bills of its state electricity company, and the board had to grant a formal waiver, accepting corrective measures, for the reviews to pass.

That single exception points to the deepest problem in the Honduran economy. The state utility is a standing drain on public money, and the Fund has tied the health of the whole programme to fixing it.

The power company at the centre of it all

The company in question is ENEE, the state firm that generates, carries and sells almost all of Honduras’s electricity. By the government’s own account it loses on the order of six hundred million dollars a year, the single largest hole in the national budget.

The administration of President Xiomara Castro, in office since January 2022, has pushed a reform to split the utility into separate generation, transmission and distribution arms. The aim is to let private capital into parts of the chain without selling the whole.

The IMF has effectively made that overhaul a condition of its support. The waiver granted this week buys time, but the Fund has been clear that lasting progress on the utility is what the next review will test.

The politics are delicate. The opposition calls the restructuring a disguised privatisation, while the government insists the company stays in state hands, a fight that could slow the very reform the Fund wants to see.

The wider economy and the investor read

The backdrop is steadier than the headlines about the region might suggest. The economy grew about three and eight-tenths percent in 2025, lifted by record coffee prices and the steady inflow of money sent home by Hondurans abroad.

Net international reserves stood near eleven and a half billion dollars at the end of April, a healthy external cushion. Growth is expected to ease to about three and three-tenths percent this year as higher oil prices bite, with inflation set to tick up toward the end of 2026.

For an investor scanning Central America, the signal is mixed but readable. Honduras is keeping its macroeconomic house in order and retains the IMF’s backing, yet the unresolved utility problem and a looming anti-money-laundering review are the variables that will decide whether the stability holds.

Frequently Asked Questions

How large is the Honduras IMF disbursement?

The IMF board released about two hundred and forty-two million dollars after completing the fourth and fifth reviews. That brings total disbursements under the 36-month program to roughly seven hundred and twenty-five million dollars of an eight hundred and forty-seven million dollar package.

Why did Honduras need a waiver?

It missed a target tied to the domestic debts of its state power company, ENEE, at the end of 2025. The board accepted corrective measures and granted a waiver so the reviews could be completed.

How is the Honduran economy performing?

Growth reached about three and eight-tenths percent in 2025, supported by record coffee prices and remittances, and is projected to slow to around three and three-tenths percent this year. The 2025 fiscal deficit beat its target at seven-tenths of a percent of GDP.

What happens next in the program?

A sixth and final review remains, expected to release roughly another one hundred and twenty million dollars. It is likely to focus on progress with the power-sector overhaul and on preparations for a 2026 anti-money-laundering evaluation.