...The ratings on the Republic of Honduras reflect recent fiscal and other reforms that are likely to stabilize the government's debt burden in the coming two years. Standard & Poor's Ratings Services expects that continued implementation of recent revenue measures, along with energy-sector restructuring, will contain Honduras' general government fiscal deficit to around 4% of GDP over the next two years. That, along with a modest increase in economic growth, should help keep net general government debt below 40% of GDP over the same period. We forecast that real GDP growth could reach 3.7% over the next two years (equivalent to 1.6% per capita GDP growth), up from 3.1% in 2014. Fiscal consolidation undertaken in 2014 improved Honduras' fiscal flexibility and should sustain further improvement this year and in 2016. We estimate that the general government's fiscal deficit--which includes the central bank's losses on open-market operations and budgetary transfers to public utilities, such as...
