Since the last Article IV consultation in 2014, the Honduran economy has stabilized and macroeconomic conditions have improved considerably. Looking ahead, the Honduran economy is expected to grow just below potential, at about 3.6 percent in 2016, before gradually converging to potential (3.8 percent) over the medium term. Inflation is projected to rise somewhat, but remain in line with the BCH inflation target of 4.5 percent. The external position has strengthened and prudent fiscal policy is being institutionalized with the recent enactment of the fiscal responsibility law (FRL). The banking system appears sound, and private credit growth is expanding at a sustainable pace. On the political front, the next Presidential elections are scheduled for November 2017.
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