Economy & Business - August 2003

The President of Honduras, Ricardo Maduro, said that he did not know when the country would sign its letter of intent with the IMF. He said that he recognised that the deal was necessary, but clinching it would not be easy. He admitted that his earlier hopes that a deal could be signed in September or October were hypothetical.

Maduro blamed the government of his predecessor, headed by the late Roberto Reina, for the problem. This government increased public spending from 4bn to 11bn Lempiras (US$229m to US$629m). The money went on increasing pay for civil servants. Maduro said that the increase meant that 11% of GDP was now going on public sector wages. The IMF has been pushing for a cut in this. Maduro said that the government did not like the suggestion of cutting the cost of public sector wages by 1% a year. Maduro said that the government had concluded, after a prolonged negotiation, that the IMF suggestion was not acceptable.

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