Friday, 25 September 2009

IMF recognises Zelaya’s government - denies funds to Michelletti regime

IMF Recognises Zelaya’s Government - denies funds to Michelletti regime

By Timothy R. Homan

Sept. 24 (Bloomberg) -- The International Monetary Fund, which has rescued economies from Pakistan to Iceland in the past year, said it will recognize the government of ousted President Manuel Zelaya in Honduras.

The Washington-based lender said today that its management made the decision after consulting member states over the past few weeks, according to an e-mailed statement from the IMF. The fund has 186 members.

Zelaya appeared unexpectedly at the Brazilian embassy in the capital, Tegucigalpa, this week after he was overthrown and expelled in June. The acting government of interim President Roberto Micheletti today lifted a nationwide, soldier-enforced curfew following violent protests by supporters of each leader.

On Sept. 6, the IMF announced that the Honduran interim government won’t be allowed to draw on as much as $163 million to boost its foreign reserves until the IMF determines if it “will deal with that regime as the government of Honduras.” The Zelaya government now has a legitimate claim on the funds.

The U.S. and the European Union cut aid to Honduras to create pressure for Zelaya to be allowed to return.

International lenders including the Inter-American Development Bank have suspended operations in Honduras, and the country’s long-term credit rating was lowered by Standard & Poor’s on Sept. 11 to B from B+.

Zelaya was ousted at gunpoint on June 28 after soldiers arrested him on orders from the Supreme Court. His opponents allege he was planning to follow in the footsteps of Venezuelan President Hugo Chavez, his top ally, by trying to modify the constitution to extend his term in office.

World Bank

In the days following Zelaya’s ouster, World Bank President Robert Zoellick said the Washington-based lender had put on hold aid to Honduras pending an outcome to the Central American country’s political crisis.

The World Bank has 16 projects in Honduras totaling $400 million, spokesman Stevan Jackson said in an e-mail on July 1. He said $270 million has yet to be disbursed.

Jackson wrote in the e-mail that the World Bank is not proposing any new Honduras projects for board approval for the time being, adding that the allocation for the fiscal year that started that day is $80 million.

Gabriela Aguilar, a spokeswoman for the bank, wrote in an e- mail today that the World Bank “has not changed its pause policy in Honduras” since the beginning of July.