Manuel Zelaya Rosales of the Partido Liberal (PL), who has just over half of his four-year term as president to run, appears increasingly beleaguered. The PL’s lack of a simple majority in Congress leaves the government reliant on the support of other parties. The Economist Intelligence Unit expects limited progress in 2008-09, despite an assertive stance by Mr Zelaya. Economic policy will focus on targets agreed under a likely Policy Support Instrument (PSI) yet to be agreed with the IMF. Honduras will benefit from debt relief under the World Bank/IMF heavily indebted poor countries (HIPC) initiative in 2008-09. Annual GDP growth will average 5.5% in 2008-09. Improved monetary policy tools will enable the Banco Central de Honduras (BCH, the Central Bank) to keep inflation below trend, in the absence of external shocks such as oil prices rising above current forecasts. The exchange rate will appreciate in real terms against the US dollar. Rapid growth in the import bill, associated with high oil prices and relatively firm domestic demand, will result in a widening trade deficit. Although this will be partly offset by rising remittances, the current-account deficit will remain relatively wide.