The Board of Executive Directors of the Inter-American Development Bank (IDB) has approved a $100 million programmatic policy-based loan to support structural reforms aimed at strengthening fiscal sustainability in Honduras, according to a press release issued from Washington, D.C. on June 12, 2026. The financing represents the first of two standalone but technically linked operations. It is designed to strengthen regulatory and institutional capacity that improve the country’s fiscal resilience to external shocks. The package combines ordinary and concessional resources from the IDB. It targets reforms across fiscal management, tax incentives, and public expenditure.
The loan is the first of two standalone, but technically linked operations. It is designed to strengthen regulatory and institutional capacity to improve the country’s fiscal resilience to external shocks. The operation is aligned with the ongoing 2023 agreement with the International Monetary Fund (IMF). It also complements fiscal policy programs supported by the World Bank and the Development Bank of Latin America and the Caribbean (CAF). Together, these programs frame the broader reform context for Honduras.
The first IDB operation will strengthen the country’s fiscal responsibility framework and enhance institutional capacity for macrofiscal management within the Ministry of Finance. It will support reforms to improve efficiency, oversight, and transparency of tax incentives. The program will also promote key improvements in public expenditure management. These improvements focus particularly on public procurement, treasury management, and public investment. The reforms are structured to operate across multiple areas of fiscal governance.
The program aims to reduce public debt, strengthen the primary balance, and rationalize tax expenditures. It also seeks to enhance the quality of public investment projects and improve capital expenditure execution. According to the IDB, these reforms are “expected to bolster fiscal sustainability and improve the overall business environment in the country, benefiting both firms and the population at large.” The dual focus on fiscal discipline and business climate underpins the operation. The measures are intended to support both public finances and the private sector.
The $100 million IDB financing consists of $60 million from the Bank’s Ordinary Capital, with a 20-year maturity, a 5.5-year grace period, and an interest rate based on SOFR. The remaining $40 million will be provided from the IDB’s Concessional Ordinary Capital, with a 0.25% interest rate and a 40-year maturity and grace period. The blended terms reflect the operation’s policy-based design. The financing structure pairs market-linked and concessional resources. It marks the first step in a sequence of two linked operations supporting Honduras.