This policy document describes the current situation regarding the COVID-19 pandemic in Honduras. We analyze the internal and external channels of transmission on the Honduran economy, the potential impact on economic growth and labor market outcomes, the current political situation and its interaction with the pandemic, describe and analyze the initial policy responses from the Honduran government, and propose additional policy instruments to deal with the expected negative consequences from the crisis. Results indicate that while the Honduran government has taken measures to mitigate the economic impact of the crisis at the national, household, and individual level; there remains a high chance of economic downturn. The data also indicate that within the current proposed measures, informal workers and firms are being excluded from aid, although they represent almost 80% of the workforce. We conduct simulations that consider extending existing cash transfer programs, supplementing labor and remittance income to households, and also consider a universal income transfer to all Honduran households. Overall, the findings suggest increases in poverty rates, but also imply that well-targeted policies may help mitigate the negative impact of the COVID-19 pandemic on the welfare of the Honduran population.

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