During the administration of President Callejas, between 1990 and 1993, economic policy was mostly based on neoliberal ideas. This included a move from an inward-oriented policy to an export-oriented one. In addition, privatization was deeply emphasized. During that period, GDP was characterized by consistent growth. At the same time the country's galloping inflation was reduced to single digits. Government corruption, however, prompted citizens to vote Callejas out of office.
The November 1993 elections gave birth to a new political era in Honduras. President Reina of the Liberal Party was expected to slow down the pace of market-oriented reforms, but to continue privatization. Strong growth in nontraditional exports and the prospects for an improvement in coffee prices helped to finance the current account deficit. The continuation of foreign aid and investment was essential to closing the Honduras trade gap.
Reforms in the late 1990s were focused on alleviating the lot of the poorest citizens in Honduras, and improving international competitiveness. Hurricane Mitch in 1998 damaged the economy (particularly banana exports), as did low world coffee prices in the early 2000s, and cold weather and heavy rains in 2002–03 harmed the harvest (coffee revenues were down to $161 million in 2001, from $340 million in 2000). The garment manufacturing industry, the third-largest in the world, turned in a strong performance in early 2003.
In 2000, Honduras became eligible under the International Monetary Fund (IMF)/World Bank Heavily Indebted Poor Countries (HIPC) Initiative for $900 million in debt service relief.