Honduras' Political Crisis Worsens Its
Economic Downturn
TEGUCIGALPA - The political crisis in
Honduras "expanded" the impact of the global
recession on Honduras' economy, the Economic
Commission for Latin America and the
Caribbean (ECLAC) said Monday.
The ECLAC said that apart from the unstable
political situation in the country, the
military coup against ousted President
Manuel Zelaya also had a negative impact on
Honduras' economy, which is highly dependent
on external aid.
"Honduras is submerged in a deep political
polarization, and strong restrictions on its
economic growth are visible, which are the
product of the events that occurred in
2009," the ECLAC said.
From June 28 when the coup broke out till
Nov. 30, Honduras had lost more than 1.1
billion U.S. dollars in aid, according to
the Honduran Social Forum on External Debt
and Development.
The domestic political stalemate has also
diverted the country's attention from
revealing an anti-crisis plan against the
backdrop of the global financial crisis.
Given the grave economic situation of the
nation, the ECLAC noted that the new
government, led by President-elect Porfirio
Lobo who has not been largely recognized by
the international community, would face a
very difficult situation.
According to the ECLAC, the gross domestic
product (GDP) of Honduras is expected to end
the year 2009 with a contraction of 3
percent, against the previously forecasted
growth of 2.5 percent.
Meanwhile, the Central Bank of Honduras
(BCH) projected a worse outcome, between
minus 1 and minus 2 percent, explaining that
the Honduran economy as a whole had
contracted by 3.2 percent from January to
September.
Additionally, during that period, the
country's economy had decreased 34.7 percent
in terms of the construction sectors. These
sectors suffered a "lack of financing and
the reduction of the capital incomes through
the direct foreign investments" that dropped
by 40 percent, the BCH added.
"It reflects the negative effects of the
world recession, and the uncertainty
produced by the internal political crisis,"
the central bank explained.
Moreover, "due to the drop of the incomes
and the impossibility of getting external
financing," the ECLAC said the internal debt
has grown almost 80 percent.
Also, the lack of foreign investments and
the 11 percent reduction of remittances
contributed to a greater governmental
deficit, which has risen from 2.4 percent of
the GDP to 4.5 percent.
A drop in the imports of goods and services
by 22 percent might also exacerbate the
plight, while 650,000 people in the country
are living in extreme poverty.
As for next year, Honduras has projected
negative growth, and its external debt of
3.6 billion dollars has become almost
unpayable.
Although the international community has
promised Honduras a package of financial
aid, Lobo stressed earlier this month that
international aid worth at least 2 billion
U.S. dollars would be at stake if the
political crisis in his country was not
solved.
The fund, according to the president-elect,
was related to the aid programs of many
countries and organizations, including the
Central American Bank for Economic
Integration (CABEI) and the Inter-American
Development Bank (IDB).
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