Caribbean & Central America - September 2011 (ISSN 1741-4458)

International reserves fell by US$298.2m in the period from 25 July to 25 August to reach US$2.71bn, which amounts to just 3.3 months of imports. The fall coincided with the first month of dollar auctions by the central bank under the reinstated exchange rate band system. There has been a fairly high demand for dollars, which the authorities have partially attributed to speculation. Under the new system the lempira is effectively allowed to fluctuate 7% above or below HNL18.89. It was trading at HNL18.88/US$ on 30 August. The bank spun the move as a ‘revaluation’, but there is a suspicion that it is really a devaluation in disguise. Honduras has reported a fiscal deficit of 4.8% of GDP for 2010, failing to meet the IMF targeted 3.5%. The deficit will be 3.9% in 2011, according to the government. Total public debt was US$5.7bn as of 30 June 2011, of which 57% was external. Internal debt has risen since 2009.

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