IMF spokesperson Bill Murray indicated today that the Fund may not allow the de facto government of Honduras to have access to $164 million dollars that it was allocated on August 28.
Rebeca Santos, Finance Minister for the constitutional government of President Manuel Zelaya of Honduras, told CEPR that their government had received assurances from the IMF that the de facto government would not be allowed access to these funds.
When asked if he could confirm this, Mr. Murray indicated that he could not officially do so, but also said "you should go with what you were told" by the Finance Minister.
"If this happens, it would be the most important economic sanction to date leveled against the de facto government that seized power in a military coup on June 28," said Mark Weisbrot, Co-Director of CEPR.
The funds are part of an allocation approved by the IMF for all member countries. The IMF decided in August to make $283 billion available in order to counteract the world recession. The money would be allocated to the IMF’s 186 member countries according to their quota at the Fund.
The money would be particularly important for the Honduran de facto regime for two reasons: First, the country has been losing reserves since the coup. The net international reserves of the Honduran Central Bank have shrunk by over $300 million, from $2.4 billion to $2.1 billion in the two months since the coup. This could be a problem for the de facto government and its management of the economy, which has been hard hit by the uncertainty and international isolation since the coup.
Second, the U.S. State Department announced yesterday that it would terminate some $30 million in aid to the Honduran government. This move would have very little impact if the de facto government had access to $164 million of new funding from the IMF.