Honduras Frontrunner Would Consider IMF Program, Top Aide Says
The frontrunner for Honduras’s presidential election, Xiomara Castro, would consider a program with the IMF, her top adviser said.
(Bloomberg) -- The frontrunner for Honduras’s presidential election, Xiomara Castro, would consider a program with the International Monetary Fund if the new government is able to negotiate terms that aren’t too onerous for the country, her top adviser said.
Hugo Noe Pino, an economist who worked on Castro’s government plan, said the team has held meetings with the IMF and would hold a “constructive dialogue” with the multilateral lender if the left-leading Libre party wins.
A Castro government would consider further talks “depending on the flexibility they offer on various topics, and if the terms are acceptable,” he said in an interview in the country’s capital of Tegucigalpa on Friday.
One of the key issues is the IMF requirement for the country to narrow its fiscal deficit down to 1% of GDP by next year. Noe Pino said it would negotiate to push that target to 2024, in line with the country’s fiscal responsibility law, he said.
Castro, the wife of a president deposed in a 2009 coup, leads polls heading into Sunday’s vote and could potentially end 12 years of rule by the conservative National Party. Her government would seek to eliminate some tax exemptions to boost revenues and slow the growth in annual defense spending to free up funds for health, education and social security, Noe Pino said.
A Castro government is committed to honoring debt payments to external bondholders and will potentially seek to rollover some internal debt to free up space in the annual budget, Noe Pino added.
“The term we have used is re-profiling the debt, substituting expensive debt with cheaper debt,” he said. “It’s more related to internal debt, finding longer maturities and other changes so that the weight of debt servicing on the budget isn’t so heavy.”
Castro’s party is also concerned about a proposal by the current government to break up the state-run electricity company and privatizing assets, and a bill it’s pushing which would keep central bank officials in their positions for the next five to seven years, Noe Pino said.
“Neither of the two things is acceptable for a future government,” he said. “If they wanted more central bank independence, why didn’t they do it in 2014 instead of now, two months before leaving government?”
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