Hondurass new government is considering its first ever
international bond sale, finance minister William Chong has
We want to reorganize our internal debt, Chong
said in an exclusive interview with Emerging Markets.
Some international organizations are helping us create a
programme to be able to reorganize this debt with bonds or some
other type of instrument for the international
A bond issue would be a central part of the countrys
return to the world financial market following the coup last
summer that deposed left-leaning President Rafael Zelaya and
brought Porfirio Lobo to power.
Chong said it was still weighing whether to perfom the
operation in local or international markets, and did not give a
timeframe or say how much debt Honduras might sell. He said he
had to be sure such an operation would lower the cost of the
The announcement comes as Honduras begins to gain
recognition again in the international financial community
under new President Porfirio Lobo.
The IDB paused all new loans to Honduras after Roberto
Micheletti toppled President Manuel Zelaya last summer with the
backing of the military but agreed to resume lending
last week, becoming the latest international institution to
bring the Central American nation back into the fold.
We already have some IDB financing in the pipeline,
including some that is being reactivated, said Chong.
Next week were meeting with the IDB to redefine
some projects and talk about the future.
Hondurass new government still faces major hurdles. It
faces tough questions about its human rights record, and about
its treatment of opponents during the political crisis. It is
not yet officially recognized by the UN, the Organization of
American States or a host of countries including left-leaning
Venezuela and its hemispheric allies.
But the IMF and the World Bank have already made overtures.
The IMF released Hondurass share of special drawing
rights (SDRs) to the central bank in September. An IMF
delegation is currently in Tegucigalpa analyzing
Hondurass fiscal accounts, and Chong said he will meet
with them on his return from Cancun.
Chong expects GDP to grow 2.5% this year. Last year it fell
2%, he said, partly because of the political crisis, but also
because of the slowdown in global demand which led some export
processing plants to close. He said the fiscal deficit from
last year was probably equivalent to a staggering 6.1% of
The problem was two-fold. There was no public
investment and the government had to finance itself by
expanding its internal debt, he said. It left us
with a very large floating debt and our internal debt
To build legitimacy among Zelayas embittered leftist
supporters, Lobos government must show it is putting the
countrys poor first.
Chong said that easing poverty would be a priority as it
made its fiscal plans for 2010. We will cut spending,
bring in more revenue and eliminate [tax] exemptions and
special regimes, he said.
These measures cant be allowed to to hurt the
poorest people, he said. The human being is the
focus of our countrys development.
Some civil society organisations that monitor IFIs
activities are disturbed at the ease with which funding to
Honduras has been resumed for the new leadership.
Mark Weisbrot of the Centre for Economic Policy Research
told Emerging Markets yesterday: The
administration is of questionable legitimacy and thats
why half the hemisphere dont recognise it. The
administration ran an illegal election campaign during which
newspapers were shut down.