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Is Honduras on the Brink of Needing a Bailout?

Article Summary:

There is an abundance of signs of deterioration in the Honduran government, where both fiscal and political crises are feeding off each other, which is causing some experts to predict the nation is on the brink of bankruptcy.

Photo Credit: La Prensa Honduras

Original Article Text From La Prensa Honduras via Google Translate:

Honduras on the verge of bankruptcy, fiscal and financial crisis facing

The company that maintains the security cameras on the streets of one of the most dangerous countries in the world put out for weeks because the government has not canceled the millions of dollars he owes. The company is now threatening to suspend frequency radios used by police to communicate.

The army not been paid regularly since September and last Friday they only paid part of the salary of December.

Teachers protesting almost daily for six months because the government has failed to pay them while doctors complain that since October there is not enough insulin for diabetics, blood thinners to prevent stroke or key inputs gauze, and gloves.

Protests must be done carefully because the streets are dotted with open sewers. The covers were stolen by burglars in complete impunity.

Honduras, a country on the brink of bankruptcy for months, facing a fiscal and financial crisis while the country’s MPs have been slow to adopt the budget. The country also has a huge foreign debt, 5,000 million, acquired in the last five years is equivalent to the general budget of the nation.

Then there is an internal debt of 2,900 million. In 2007, another debt of 3,500 million was forgiven by multilateral banks.

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 by drug trafficking that has invaded their cities and coasts without constitutional justice in a month and a half.

The paralysis of government extends to crucial functions like identify their citizens. Registration offices have closed ten days because they have not paid salaries to officials or have ink to stamp fingerprints.

The Ministry of Education says that 96% of schools closed several days a year because the teachers were on strike.

“We only have 180 medicines in stock (of the 350 recommended by the World Health Organization have),” he told the AP Maritza Ramirez, head of the drug store the Ministry of Health. “To all the suppliers we are having to the previous tender. Stay We risk nothing.”

In many cases, the lack of medicines and supplies to hospitals, doctors, nurses and ask relatives of patients who get the drug or including raising funds for buying what they need.

“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. “If you still do not pay their soldiers, the soldiers will probably cease to be soldiers, and perhaps may take other action.”

Consulted experts say 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. “If you still do not pay their soldiers, the soldiers will probably cease to be soldiers, and perhaps may take other action.”

Corruption and Transparency
The Honduran chapter of Transparency International in December revealed that during 2010 and 2011, lawmakers had spent ten million dollars of public money in expenses but only justified, receipts in hand, 14% of them.

“The National Congress there no transparency for spending,” Ludin said Ayala, head of research. “Besides being the most expensive of all of Central America. Costa Rica, with twice the state budget, devotes less than half to cover the cost of their Congress.”

Former presidential candidate and former legislator Olban Valladares accuses the government of using much of public money on political campaigns ahead of November elections to elect the president, mayors and 128 deputies.

“Unfortunately we have a lot of candidates who are officials and their tendency is to abuse state resources that manage to cover their campaigns,” he said.

In September, the AP reported as a deputy, through a partnership and protected under a legal, has spent about $ 127,000 in coffins give to the poor.

Hugo Noe Pino, an economist at the Central American Institute for Fiscal Studies paraHonduras, sees a future complicated.

“In this political year may be using state resources for political campaigns” while still issuing government bonds, the AP said Pino. “If you have not discussed the budget, why has approved financing (through bonds) for a budget that does not exist?”.

President Porfirio Lobo and President of Congress, Juan Orlando Hernandez, did not respond to interview requests from the AP. In his public appearances, and Lobo and Hernandez have referred to corruption charges, but Hernandez blames the president Manuel Zelaya (2006-2009) and supporters of the tax situation: “Today we have a huge debt … leaving an unsafe country, debt and isolated from the world. ”

To the surprise of many, the economic crisis – and insecurity – is the main concern of the vast majority of Hondurans, according to a survey that interviewed 1.540 Hondurans made by the Central American University Jose Simeon Cañas.

“Public power is upset in a brazen,” he told the AP Oscar Cruz, former prosecutor in charge of the defense of the Constitution. “They are removing the estado.Honduras is only a legal”.

Revenues to the treasury also decrease as the director Mario Lopez Steiner tax because “the culture of tax evasion is amazing in Honduras. The overall average is 43% and in the case of sales tax, much worse, the 60% “.

The fiscal crisis spread to the political. The Constitutional Chamber of the Supreme Court is not in session for a month and a half and only until Wednesday was named a junior judges that are going to fail some cases have not been resolved.

Among the cases in arrears to resolve an appeal is to be reinstated the dismissed justices and a resource related to a money laundering case in which defendant was the former Minister of Finance and his wife after the woman was arrested for police while traveling to San Pedro Sula with $ 50,000 in cash that he carried in a black plastic bag.

The government and the ruling bloc in Congress have an idea on how to solve the fiscal crisis: a bill that expands the number of people who must now pay VAT and eliminating tax breaks for companies that import inputs.

Supporters of the bill say it will generate additional revenue of $ 1,200 million, which would increase the national tax collection by 50% during the fiscal year.

For now, lawmakers suspended tax exemptions while a legislative committee reviewing the issue.

Speaking to the AP, the director said tax exemptions “are approved for political favors in return for the funding of election campaigns, always linked to tax favors.”

Many families have survived thanks to remittances from the approximately one million Hondurans living in the United States. The money sent represents 19% of the country’s gross domestic product, according to the World Bank.

But that money is not enough to leave Honduras fiscal deficit. And as Daniel Espunda teachers know very well: “Now I have five months’ salary, January will be the sixth because I have not taken, no one says anything when payday comes, it comes not only to the bank salary , one approaches human resources education secretary, look set and say that payroll is passed to the finance secretary, comes one there and say there is no money.

Link to Original Article:

From La Prensa Honduraas

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