Honduras: A Country on the Brink of Bankruptcy

There is an abundance of signs of deterioration of the Honduran state, where the fiscal crisis and the political crisis are feeding off each other.

Friday, January 25, 2013

Roberto Arce's article for AP, published in Laprensa.hn, reviews the events that mark the depth of the institutional crisis, with cessation of salary payments to civil servants and an external public debt which has once again reached $5 billion, after international multilateral banks waived $3.5 billion in 2007.

"Honduras, a country which has been on the brink of bankruptcy for months, is facing a fiscal and financial crisis while the country's lawmakers have been slow to adopt a general budget. The country also has a huge foreign debt, $5 billion, acquired in the last five years, which is equivalent to the general budget of the Nation. "

"The financial crisis adds to the general feeling that Honduras is a failed state with one of the highest murder rates in the world, taken over by the drug traffickers who have invaded their cities and coasts and which has been without constitutional justice for a month and a half. '

"Experts consulted say that the crisis has been fueled by a mixture of state corruption, the fact that 2013 is an election year and an economy that was already struggling."

"In many ways, the state has stopped working", said Robert Naiman, policy director of Just Foreign Policy, a Washington-based organization that seeks to reform U.S. foreign policy.

More on this topic

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The country's economy, which has not yet recovered from the crisis of 2008, will suffer from a deficit for which the government can not find effective solutions.

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The IMF's prescription for Honduras

July 2010

Gradual increase in exchange rate flexibility, supported by fiscal consolidation, wage moderation, and a prudent monetary policy.

On July 12, 2010, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Honduras.

Background

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