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World Bank restores aid to post-coup Honduras

17 February 2010

The World Bank announced in early February that it would restore aid to Honduras, following the inauguration of Porfirio Lobo as president.

Lobo was declared the winner of controversial elections in November, after former president Manuel Zelaya was deposed in a military coup last June amid a constitutional dispute. The coup prompted the World Bank, as well as other agencies and donor nations, to freeze aid to Honduras. The United Nations called for the immediate and unconditional restoration of Zelaya, and Honduras was suspended from the Organisation of American States pending his reinstatement.

However, coup leaders stalled until the scheduled election in November, which was reportedly boycotted by opponents of the coup. Under 50% of Hondurans voted, according to the non-profit Real News Network. Several Latin American countries, including Brazil and Venezuela, have refused to recognise the election.

Despite this heavily contested situation, the Bank is to restore a planned loan of $270 million and provide a further $120 million in new credit to Honduras. World Bank director for Central America, Laura Frigenti, said, “We believe that in the coming months we can begin to work together to design what will be a new strategic alliance with Honduras”.

According to the IMF, Fund members are currently being canvassed as to whether they recognise the new administration in Honduras. If members representing a majority of voting power at the Fund do so, the IMF will normalise relations with Honduras.

Civil society groups have been divided as to whether the international institutions should reinstate financial flows to the impoverished nation.