News Releases

Nov 30, 2011

Honduras to improve the long-term sustainability of its pension system with IDB support

$40 million loan will help the country’s macroeconomic and fiscal stability through the reform of pension institutions and human resource management

The Inter-American Development Bank (IDB) has approved a $40 million loan to help the government of Honduras reform its pension system and to improve administrative and budgetary systems for human resources management. These efforts will lay foundation for building more equitable and sustainable pension institutions and will contribute to the long-term macroeconomic and fiscal stability of the country.

The project entails three main components: macroeconomic stability; pension institutions reform; and improvement in management of the Central government’s human resources.

The first component is aimed at ensuring macroeconomic and fiscal stability.

The second component supports the Honduran government’s efforts to establish a pension system more equitable and sustainable through strengthening the financial viability (the actuarial financial position) of the National Pension Institute for Teachers (INPREMA), the National Institute of Retirement and Pension for Public Officials and Government Employees (INJUPEMP) and the Honduran Social Security Institute (IHSS).

The reform of INPREMA and INJUPEMP calls for implementation of a model that bases benefits on the current availability of contributions and expected returns on accumulated equity reserves. The reform of the IHSS aims to stabilize the short-term financial conditions of the institution by increasing revenues and adopting measures to improve operations management, both pension and health system.

The third part of the project will help strengthen the institutional capacity of the central government for monitoring and managing the human resources budget.

“With successful implementation of the project, the Government hopes to help mitigate the fiscal impacts of the actuarial and liquidity problems of both INPREMA and INJUPEMP, while protecting the financial position and improving operation management in IHSS and strengthening control over spending derived from the large central government payroll, particularly teacher payroll,” says Waldo Tapia, team leader of the project.

The IDB loan of $40 million is extended for a term of 30 years, a grace period of 5.5 years, and a disbursement period of 12 months. 

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