Money

Honduras Weekly
The Inter-American Development Bank (IDB) today approved a US$40 million loan to Honduras' National Electric Energy Company (ENEE) to invest in improvements in electric transmission lines, including the installation of transformer, protection, and measurement equipment for the distribution network. Some of the funds will also be used to strengthen ENEE commercial infrastructure so that it can better administer its billing and payments system. According to ENEE's assisant technical manager Leonardo Deras, the loan was acquired at extremely low rates of interest. The loan is a follow-up to a US$33.8 million credit extended by the IDB to ENEE on January 27, 2011 for similar efforts to modernize the company. Those funds were destined for investments in the construction of substations and transmission lines and the acquisition of communications equipment.

Honduras Weekly
Minister of Foreign Relations, Arturo Corrales, on Friday signed technical and financial cooperation agreements with Germany's Ambassador in Tegucigalpa, Karl Heinz Rode, to promote social and economic development in Honduras. Under the deal, Germany will provide €11 million worth of financing for job training and projects to protect natural resources, stimulate local economic development, and mitigate climate change. The money would be conditioned on submission by the Honduran government of a budget plan aimed at ensuring the sustained implementation of the work. The agreements would also give Honduras access to as much as €36 million in loans and donations from Kreditanstalt für Wiederaufbau ( KfW) of Frankfurt, Germany. KfW is a corporation under the German government which functions as a foreign development bank. (4/1/12)

Honduras Weekly
The Executive Directorate for Revenue (DEI) today filed a denunciation with the National Congress against 523 companies in Honduras for tax evasion. The agency, which is Honduras' equivalent to the Internal Revenue Services (IRS) in the United States -- reports that failure to pay taxes by these firms will represent nearly Lps 2 billion (US$105 million) in lost revenue this year for the government. Minister of Finance Héctor Guillén made reference to the denunciation following a meeting with the president of the Honduran Private Enterprise (Cohep), Aline Flores, within the framework of the Presidential Commission for the Modernization of Customs Services (Copremsa). "The relationship is simple," said Minister Guillén, "If we estimated that we would collect Lps 58 billion (US$3 billion) in taxes, but the figure is now reduced to Lps 55.7 billion (US$2.9 billion), then there will be an impact on funding for some institutions." He added, "The government needs to resolve this imbalance, and so that is why we are looking for new strategies to deal with the situation."

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Honduras Weekly
Remittances from Honduran nationals living abroad -- primarily in the United States -- to their friends and relatives in Honduras equaled US$2.7 billion in 2011, according to a report released by the country's Central Bank. The amount represents an 11 percent rise over the previous year total of US$2.4 billion. The increase is particularly good news for Honduras, as remittances are its primary revenue generator, easily surpassing the maquila, tourism, and agriculture sectors. The total for 2010 was approximately the same as in 2009, which was 11 percent less than in 2008. The lower levels for those years were attributed to the to the world financial crisis and, to a lesser degree, the rise in deportations of undocumented Hondurans from the United States. The Central Bank has been tracking these money transfers for many years. In 2001, remittances were estimated at US$460 million; in 2002, US$770 million; in 2003, US$862 million; in 2004, US$1.1 billion; in 2005, US$1.8 billion; in 2006; US$2.4 billion; in 2007, US$2.5 billion; and in 2008, US$2.7 billion.

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Honduras Weekly
In a recent report prepared by the Ministry of Finance and Central Bank of Honduras (BCH) for the International Monetary Fund (IMF), the public debt of Honduras at the end of 2011 was estimated at Lps 108.6 billion (US$5.7 billion). Of the total amount, 56 percent, or US$3.2 billion (Lps 60.7 billion), was external debt and 44 percent, or Lps 47.9 billion (US$2.5 billion), was internal. Honduras' external debt grew by US373.9 million (Lps 7.1 billion) in 2011. It stood at US$2.8 billion (Lps 53.6 billion) at the end of 2010. Meanwhile, its internal debt grew by Lps 10.7 billion (US$563.8 million) in 2011. It stood at Lps 37.2 billion (US$1.9 billion) at the end of 2010. The Lobo administration insists that the country's debt load is manageable. The debt equals approximately 37 percent of its Gross Domestic Product (GDP), which the World Bank estimated at$ 15.4 billion in 2010. By comparison, the United States debt surpasses 100 percent of its GDP.

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Honduras Weekly
The European Union (EU) will provide €50 million (US$64.795 million) to Honduras this year. The funds -- part of the €223 million (US$289 million) committed by the EU to Honduras for 2007-2013 -- will be spent on environmental support programs, specifically related to the preservation of forests and the balanced commercial development of lumber. The EU's delegate in Honduras, Peter Versteeg, said that a portion of the money would also be invested in efforts to improve security and human rights in the country. At least three human rights groups in Honduras will receive EU financial assistance. Mr. Versteeg noted that the EU is particularly interested in sending representatives to visit the Bajo Aguán Valley to better understand the land dispute in that unstable region. Some 50 people have died in the Bajo Aguán during the past two years in armed clashes involving peasant groups and security guards hired by wealthy landowners. (1/3/12)

Hispanically Speaking News
Honduras is one of the poorest countries in Latin America. About 65 percent of its 8 million people live in poverty. Informality prevails in its labor market, affecting particularly the young, women and persons with limited education. Now, 12,500 young Hondurans have taken part in PROEMPLEO, the program supported by the Inter-American Development Bank (IDB) as a part of US$30.6 million secondary education project from 2004 to 2011. The goal of the program was to boost job opportunities for unemployed and underemployed people aged 18 to 29. A strategic alliance with the private sector enabled the program to achieve a high job placement rate of over 77 percent. Out of all the young people who went through the program, 9,607 obtained a steady job with benefits at the companies where they interned at the end of their training. More than half the beneficiaries were women. Trainees also received a certificate for their future job searches.

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Honduras Weekly
The World Bank yesterday approved two loans to Honduras worth a total of US$104 million. The first loan, valued at US$86 million, will go to help the country strengthen its tax collection system, reform its civil service and pension system, and help fund its social security program. A second loan of US$18.2 million will be used to improve the management of public finances and increase the administrative capacity of government. These credit extensions by the World Bank come a week after the Inter-American Development Bank (IDB) provided US$40 million to strengthen the stability of Honduras' financial system and expand access to financial services. The IDB loan, approved on November 30, contains measures aimed at improving the regulatory framework and the supervision processes of the Honduran government based on best practices. It also seeks to enhance the sustainability of these reforms through the improvement of the organizational structure of the National Banking and Insurance Commission of Honduras through better supervision and an environment conducive to expanded coverage of the financial system. (12/7/11)

Inter-American Development Bank
The Inter-American Development Bank (IDB) approved US$40 million to strengthen the stability of the financial system and expand access to financial services in Honduras. The package of measures aims to improve the regulatory framework and the supervision processes based on best practices. The operation also seeks to enhance the sustainability of these reforms through the improvement of the organizational structure of the National Banking and Insurance Commission of Honduras through better supervision and an environment conducive to expanded coverage of the financial system.

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Hurricanes Fifi of 1974 and Hurricane Mitch in 1998 stand out as the most severe events in recent decades, with 23 percent and 38 percent of the population affected and material damages equivalent to 52 percent and 72 percent of gross domestic product, respectively.

Inter-American Development Bank
Honduras will better cope with extraordinary expenses in case of natural disasters with assistance from an Inter-American Development Bank (IDB) standby loan for US$100 million. The United Nations (UN) has identified Honduras as the most hurricane-vulnerable country in the world. In the last 30 years, the country has been battered by 12 of them, with an average of 1,300 deaths per event and a total of US$4 billion in losses. "The IDB's assistance will allow the country to reduce the financial cost of emergency expenses and mitigate the impact such disasters may have on the economy by increasing the availability, stability and efficiency of financing," said Guillermo Collich, IDB team leader for the operation.

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