Lempira-cal Evidence Of Depreciation

President Manuel Zelaya is expected to meet with officials from the IMF in the coming months to start negotiations on a new standby loan arrangement. Honduras and Nicaragua are the only countries in Central America without IMF agreements. However, we believe that the Fund is likely to award the Honduran authorities an extension of the 12-month stand-by agreement that expired in April, albeit with conditionality on the fiscal front. Slashing the fiscal spending bill could prove problematic, however, with an election around the corner and given that around half of public sector revenue is spent on employee salaries.

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