The Inter-American Development Bank's Board of Executive Directors has approved full debt relief benefits for Honduras under the enhanced initiative for Highly Indebted Poor Countries (HIPC), the IDB announced today.
The IDB will provide irrevocable debt relief totaling $192.5 million ($133 million in net present value) for the period 2001-2010. This contribution represents nearly one quarter of the relief Honduras will receive from its multilateral and bilateral creditors.
The IDB's support adds to the relief granted by the World Bank and the International Monetary Fund, whose boards decided in April that Honduras had reached HIPC's "completion point." The Central American Bank for Economic Integration is also taking part in this effort.
The IDB expects that by reducing Honduras' financial burden, the country will be able to solidify its macroeconomic stability, reduce its vulnerability to exogenous shocks and continue implementing its Poverty Reduction Strategy (PRS).
The IDB started to grant Honduras interim debt relief in 2001, assisting the country's efforts to reach several HIPC targets, such as launching the PRS, strengthening its basic health services, improving the quality of basic education and increasing the efficiency and targeting of its social safety network for vulnerable groups of its population.
Since Honduras reached HIPC's "decision point" in July 2000 the IDB has approved more than $600 million in soft loans to help finance key PRS programs as well as to modernize public sector institutions and boost the Honduran economy's competitiveness.