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Honduras

Author(s):
International Monetary Fund
Published Date:
March 1995
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I. Overview

In the 1990-93 period, Honduras adopted an economic program aimed at reducing macroeconomic imbalances and at greater openness and efficiency of the economy. Important structural reforms were carried out in the public, financial, and external sectors and economic activity and nontraditional exports increased at a fast pace. However, the adjustment of macroeconomic imbalances was short-lived as the fiscal deficit rose sharply in the run-up to the presidential elections of November 1993. Thus, there is a need to re-establish macroeconomic stability and deepen structural reforms to set the basis for sustained economic growth and a reduction in poverty and Honduras’ large external debt.

1. The situation in 1989

The expansionary economic policies followed in the second half of the 1980s, together with a reluctance to adjust the nominal exchange rate (which had been fixed since the early 1930s at L 2.00 per U.S. dollar), increased macroeconomic imbalances and led to a situation of high uncertainty, with the country facing a balance of payments crisis and mounting external payment arrears. By the end of 1989, external payment arrears had reached the equivalent of 22 percent of GDP, the external public debt 104 percent of GDP and gross international reserves had declined to the equivalent of two weeks of imports.

2. Policies and reforms during 1990-93

The Government that took office in January 1990 introduced an adjustment program, supported by a stand-by arrangement, aimed at reducing economic imbalances, re-establishing financial relations with external creditors, and setting the basis for sustained economic growth.

The program included the introduction of a market-determined exchange rate, which led to a strong depreciation of the lempira in real effective terms, sizable tax increases, adjustments to public utility rates, and cuts in public expenditure. These measures were accompanied by structural reforms including: tax reform; the elimination of price controls; the liberalization of the exchange rate system; the liberalization of interest rates; the reduction and compression of import tariffs; and the elimination of nontariff barriers.

The program was successful in reducing financial imbalances in 1990. However, real GDP stagnated, while the strong depreciation of the lempira (58 percent in nominal terms and 54 percent in real terms) was reflected in increases in both the external debt/GDP ratio (to 125 percent) and in the 12-month inflation rate (to 36 percent) at the end of 1990.

The economic situation improved significantly in 1991 and 1992. Real GDP increased by 3.3 percent in 1991 and by 5.6 percent in 1992. The 12-month inflation rate fell steadily to 6.5 percent at the end of 1992, the exchange rate stabilized, and gross international reserves increased to the equivalent of 2.6 months of imports. The fiscal deficit was reduced further in 1991, and although in 1992 it increased moderately, substantial external assistance in both years allowed for a reduction in the net domestic indebtedness of the nonfinancial public sector. However, due to an increase in imports, in response to a surge in investment and a deterioration in the terms of trade, the external current account deficit widened again to around 6.6 percent of GDP in 1992. The additional foreign borrowing prevented a substantial reduction in the external debt ratios despite debt relief granted by external creditors.

In July 1992 the authorities introduced a medium-term economic program supported by an ESAF that aimed at consolidating the stabilization effort and deepening the structural reforms initiated in 1990. This program has been less successful than the previous one mainly because of a deterioration of the fiscal position. The fiscal deficit widened from 4.8 percent of GDP In 1992 to 10.5 percent of GDP by 1993 in the run-up to the 1993 presidential elections. Public sector current revenue declined by 0.5 percentage point of GDP while current transfers rose by 1.2 percentage points of GDP and capital expenditure jumped from 11 percent of GDP in 1993 to over 14 percent in 1994.

Economic activity continued to expand at a fast pace in 1993 and real GDP rose by 6 percent. However, the sharp increase in the fiscal deficit and in domestic borrowing requirement of the public sector increased private sector uncertainty and resulted in a sharp reduction in private capital inflows, a strong depreciation of the lempira, and an acceleration in inflation. Also, gross international reserves declined to less than 1.5 months of imports in 1993. Once again, the depreciation of the lempira aggravated the external debt problem increasing both the debt/GDP ratio and the debt-service ratio even above their 1989 levels.

The economic situation remained difficult in 1994. Economic activity was affected adversely by major electricity shortages (partly related to a drought) and a reduction in construction activity, and real GDP is projected to have declined by 1.5 percent. At the same time, inflation accelerated to 29 percent. Net international reserves continued to fall during the first half of 1994, but recovered during the second half and for the year as a whole there was a small gain. The lempira continued to depreciate rapidly through mid-1994 (at an annual rate of 40 percent), but, following a tightening of credit policies in June 1994 and the introduction of a foreign exchange auction system, the rate of depreciation slowed down to an annual rate of around 18 percent.

In the fiscal area, the new administration adopted important measures to begin reversing fiscal imbalances. These included: a sharp reduction in subsidies; cuts in expenditure on goods and services and in budgeted public investment; increases in gasoline prices; an increase in the custom valuation factor (the referential exchange rate used to value imports for tax purposes) to a level closer to the official exchange rate; and a 42 percent increase in electricity rates (in June 1994). As a result, the fiscal deficit, which had been projected to widen to over 12 percent in 1994, was reduced to 8 percent of GDP in the first nine months of 1994 and is now projected to have declined to 7.5 percent of GDP during 1994 as a whole. The deficit was largely financed from abroad.

More recently, the authorities developed a comprehensive medium-term program for 1994-97.

II. Recent Economic Developments

1. Output, saving, and prices

Economic activity expanded steadily during 1991-93, after declining from 4 percent in 1989 to almost zero in 1990, in the wake of the devaluation of the lempira and the adjustment of relative prices. Real GDP growth accelerated to 3.3 percent in 1991 and 5.6 percent in 1992, as the depreciation of the lempira brought about increased production of traded goods. In 1993, real GDP growth accelerated to 6 percent due to a strong increase in public expenditures. However, economic activity is projected to have declined in 1994, due to a reduction in construction activity, electricity shortages, and uncertainty associated with the exchange rate depreciation and the rise in inflation.

a. Growth and composition of output

With the strong adjustment in relative prices, the dynamics of real output by sector was heavily influenced by the composition of production between tradable and nontradable goods in each sector. In 1990-91 the sectors producing relatively more tradable goods, like agriculture, experienced rapid growth; while the sectors producing relatively more nontradable goods either contracted or grew more slowly (Table 1). The manufacturing sector, which consists of industries producing both for the internal market and for the external market (in-bond industries) registered moderate growth in 1990-91.

The pattern varied somewhat in 1992. While sectors producing tradable goods continued to grow, i.e., agricultural and related sectors (3.6 percent), higher domestic demand raised the rate of growth of output in the sectors producing nontradable goods like services (5.1 percent) and construction (34 percent); the latter mainly due to the strong growth in public investment. The higher domestic demand also resulted in a rapid growth of manufacturing (6.1 percent).

Table 1.Honduras: Growth Rates of Production and National Income(In percent)
19891990199119921993
Real GDP at market prices4.30.13.35.66.0
Primary production 1/10.20.66.04.02.2
Of which: agriculture and
related sectors10.01.16.13.62.1
Secondary production 1/6.2-0.40.711.09.9
Of which: manufacturing3.80.71.76.16.3
construction14.7-9.9-2.834.021.1
Services 1/2.3-0.91.25.16.7
Of which: transport and communications6.53.82.94.33.4
commerce-4.5-0.82.22.95.9
housing4.24.33.23.43.9
public administration3.0-14.7-3.83.910.0
Real national income1.6-1.11.55.07.1
Real national income per capita-1.6-4.3-1.71.83.8
Real national income adjusted for terms of trade2/-3.9-1.34.23.47.0
Real national income per capita adjusted for terms of trade-7.1-4.51.00.23.7
Sources: Statistical Appendix Table 20.

Production figures are at factor cost.

The terms of trade adjustment is calculated on the basis of an index (1980=100) of purchasing power of exports prepared by the Central Bank of Honduras; these values may differ from those presented in Table 14 because the latter are calculated using annual variations in unit values of exports and imports.

Sources: Statistical Appendix Table 20.

Production figures are at factor cost.

The terms of trade adjustment is calculated on the basis of an index (1980=100) of purchasing power of exports prepared by the Central Bank of Honduras; these values may differ from those presented in Table 14 because the latter are calculated using annual variations in unit values of exports and imports.

This trend continued in 1993 mostly due to the expansionary stance of fiscal policy. In particular, the continued strong increase in public investment led to a sharp expansion in construction activity of 21.1 percent. Also, the growth of output of services accelerated to 6.7 percent (public administration to 10 percent) while manufacturing output grew 6.3 percent. Output of agriculture and related sectors only rose 2.1 percent, partly because the floods caused by the tropical storm “Gert” reduced production of export commodities such as bananas (-12 percent).

b. Saving and investment

The structural adjustment programs were accompanied by a substantial increase in investment. The investment coefficient rose from 19.1 percent in 1989 to 28.8 percent in 1993, as public fixed capital formation more than doubled in relation to GDP, from 5.6 percent in 1989 to 13.5 percent in 1993 (Table 2). The increase in investment in 1990 was mainly financed by higher national savings, which in terms of the GDP rose from 13.3 percent in 1989 to 20 percent in 1990. National savings declined somewhat to an average of about 19.5 percent of GDP in 1991-93, and the additional investment during this period was financed by large external savings, which rose from 2.9 percent of GDP in 1990 to 9.2 percent of GDP in 1993.

Table 2.Honduras: Financing of Investment(In terms of GDP)
19891990199119921993
Gross domestic investment19.123.024.726.028.8
Public fixed capital formation5.66.66.79.713.5
Private fixed capital formation12.613.612.312.611.0
Change in investment0.92.85.73.63.7
Financing of investment19.123.024.726.028.8
Gross national savings13.320.119.719.419.6
Public sector-0.90.83.56.83.4
Private sector14.219.316.212.616.2
External savings 1/5.92.95.06.69.2
National disposable income2/98.4100.899.399.398.5
Memorandum item
Rate of growth of real GDP (%)4.30.13.35.66.0
Sources: Statistical Appendix Tables 13 and 22.

Equivalent to the reciprocal of the current account of the balance of payments.

Equivalent to the sum of GNP and external transfers as reported in the balance of payments.

Sources: Statistical Appendix Tables 13 and 22.

Equivalent to the reciprocal of the current account of the balance of payments.

Equivalent to the sum of GNP and external transfers as reported in the balance of payments.

c. Prices, wages, and employment

Inflation (as measured by the 12-month change in the consumer price index) rose from 11.4 percent during 1989 to 36.3 percent during 1990, following the sharp depreciation of the lempira and the removal of price controls (which covered about one-fifth of the items included in the consumer price index). Thereafter, with the adjustment program, inflation declined steadily to 6.5 percent during 1992. However, the shift to more expansionary fiscal stance since late 1992 led to a strong depreciation of the lempira and, despite the temporary introduction of price controls in late 1993, to an increase in inflation to 13 percent during 1993 and to 28.2 percent in the 12 months ending in November 1994 (Table 3).

Table 3.Honduras: Annual Percentage Change in Consumer Price Indices
19891990199119921993Nov.

1994
I. Period average
Total9.823.334.08.810.7
Food12.526.543.76.212.7
Housing7.014.123.48.19.3
Clothing12.129.142.210.67.6
Health care5.726.244.210.313.0
Personal care15.527.223.06.15.6
Beverages and tobacco7.934.425.225.211.6
Transportation2.944.414.74.66.6
Other10.322.924.715.213.3
II. End of period
Total11.436.321.56.513.027.4
Food13.244.324.75.614.833.9
Housing6.323.816.85.511.523.9
Clothing16.145.724.58.68.512.3
Health care8.245.827.27.819.028.5
Personal care21.432.413.83.413.020.8
Beverages and tobacco30.724.223.815.812.830.8
Transportation3.970.8-4.24.28.226.4
Other6.729.228.17.215.928.3
Source: Statistical Appendix Table 26.
Source: Statistical Appendix Table 26.

There are no official wage indices or employment data in Honduras. However, available data indicate that total labor remuneration in real terms fell from 1989 to 1991 (about -22 percent in the public sector and -11 percent in the private sector) but increased sharply in 1992 (11.3 percent in the public sector and 12.2 percent in the private sector) (Statistical Appendix Table 28). The growth in total labor remuneration in real terms decelerated in 1993 (to 1.3 percent in the public sector and 1.5 percent in the private sector).

2. Public sector finances

a. The nonfinancial public sector

After improving during 1990-91, the fiscal situation began to deteriorate in late 1992 because of an acceleration in capital expenditure. Then, the more expansionary fiscal policy of 1993 led to a public sector deficit which at 10.5 percent of GDP was larger than the one at the start of the adjustment program. Nevertheless, public sector savings which were negative in 1989 reached 3.4 percent of GDP in 1993 (Table 4).

Table 4.Honduras: Consolidated Operations of the Nonfinancial Public Sector(In percent of GDP)
19891990199119921993
Total revenue19.022.023.825.024.1
Current revenue18.921.923.624.323.8
Tax revenue13.315.716.317.116.5
Nontax revenue2.01.81.10.90.5
Current transfers from private sector--0.10.1----
Social security contributions from private sector0.90.70.70.70.9
Operating surplus of public enterprises2.63.75.45.75.9
Capital revenue0.1--0.10.60.21/
Total expenditure and net lending2/23.322.721.324.429.7
Current expenditure 2/16.215.914.113.215.5
Wages and salaries10.29.78.08.28.2
Goods and services4.44.33.93.23.3
Current transfers1.92.42.72.84.0
To private sector1.92.32.62.74.2
To abroad--0.10.10.10.1
Adjustment-0.3-0.6-0.5-1.0-0.2
Capital expenditure and net lending7.16.87.211.114.2
Capital expenditure5.96.36.610.714.2
Fixed capital formation5.66.06.29.713.5
Inventory changes--0.50.40.80.4
Capital transfers to private sector----1.00.50.9
Other capital expenditure--0.10.10.20.2
Adjustment for transfers0.3-0.8-1.20.1-0.4
Net lending1.20.50.60.30.4
Pension funds lending to members1.20.50.60.30.4
Primary balance-4.3-0.72.50.6-5.6
Current primary balance2.76.19.611.18.3
Net interest revenue-3.5-5.2-6.0-5.4-4.8
Interest revenue1.21.11.01.10.9
Interest payments-4.7-6.3-7.0-6.5-5.7
External-2.5-3.7-4.8-4.6-4.3
Internal-2.2-2.6-2.2-1.9-1.4
Current account balance-0.90.83.55.73.4
Overall balance-7.9-6.0-3.6-4.8-10.5
Identified financing7.96.13.64.410.3
Net foreign financing5.35.45.74.78.7
Net foreign borrowing2.16.15.15.57.7
Disbursements3.211.56.19.59.8
Amortization-1.6-5.7-4.8-4.7-3.5
Debt rescheduling0.50.23.70.61.4
Increase in arrears2.7-3.0-0.2-2.6-0.2
Foreign grants0.62.50.91.51.4
Bonds held by International Organizations-0.1-0.1--0.3-0.2
Net domestic financing2.70.7-2.1-0.31.6
Banking system2.4-0.6-2.2-0.50.7
Central bank2.0-0.1-3.30.80.7
Rest of banking system0.4-0.51.1-1.2--
Private sector bonds0.31.30.1--0.2
Transfers from ESAF and other------0.20.7
Statistical discrepancy-0.1-0.2---0.4-0.2
Sources: Statistical Appendix Table 30.

Excludes L 87 million in 1993 from the sale of promissory notes of “Cementos del Norte” from the Central Government to INJUFEM and IMFREMA.

Excludes interest payments.

Sources: Statistical Appendix Table 30.

Excludes L 87 million in 1993 from the sale of promissory notes of “Cementos del Norte” from the Central Government to INJUFEM and IMFREMA.

Excludes interest payments.

In 1990-91, the new government sought to reverse the expansionary policies of the second half of the 1980s and introduced sizable increases in taxes (described in Appendix I) and in utility rates. It also cut current expenditure and adopted a reform agenda to increase efficiency in the public enterprises. These policies shifted the primary balance from a deficit of 4.3 percent of GDP in 1989 to a surplus of 2.5 percent of GDP in 1991 and reduced the overall deficit to 3.6 percent of GDP from around 8 percent of GDP in 1989. External financing more than covered this deficit and the net domestic indebtedness of the public sector declined by about 2 percent of GDP in 1991.

The fiscal position began to weaken in 1992 when, despite a continued increase in public sector revenue and further cuts in current expenditure, the primary surplus decreased to 0.6 percent of GDP and the overall deficit rose to 4.8 percent of GDP as capital outlays rose from 6.6 percent of GDP in 1991 to 10.7 percent of GDP in 1992. With external financing remaining at high levels, the net domestic indebtedness of the nonfinancial public sector declined further by 0.3 percent of GDP.

The fiscal stance was quite expansionary in 1993. Public sector saving, which had increased steadily through 1992, declined in 1993 largely because of sharp increases in central government transfers to the private sector. Also, capital spending rose further to about 14.2 percent in 1993, and the primary balance shifted to a deficit of 5.6 percent of GDP, while the overall deficit jumped to 10.5 percent of GDP. Net foreign borrowing increased to 8.7 percent of GDP and net domestic financing reached 1.6 percent of GDP. Due to the heavy recourse to foreign borrowing in 1990-93, and to the devaluation of the lempira, the external public debt rose from 96.5 percent of GDP in 1989 to 110.7 percent of GDP in 1993.

Capital expenditure remained high in 1994, mainly because of ambitious projects in the public enterprises. However, higher taxes, associated with an increase in the customs valuation factor (the reference exchange rate used to imports for tax purposes), an increase in electricity rates and a sharp reduction in current expenditure reduced the deficit to around 8 percent of GDP in the first nine months of 1994.

b. Central Government

Central government tax revenue as a percentage of GDP increased from 12.5 percent of GDP in 1989 to 15.5 percent of GDP in 1991 reflecting increases in the sales tax rate (from 5 percent to 7 percent) and in the tax on petroleum derivatives (from 7 percent to 15 percent) and the introduction of a temporary tax on windfall profits from export earnings (Table 5). The tax/GDP ratio rose further in 1992, when an increase in revenue from the income tax and from the tax on petroleum derivatives more than offset a fall in revenue from the elimination of the temporary tax on windfall profits from export earnings. The tax/GDP ratio fell in 1993, as export taxes declined because of continuous reduction of tax rates and lower international prices of primary products.

Table 5.Honduras: Central Government Revenue(In percent of GDP)
19891990199119921993
Total revenue14.816.417.418.217.3
Current revenue14.816.417.417.716.8
Tax revenue12.514.815.516.315.6
Income tax3.53.43.84.64.3
Property tax0.10.10.10.10.2
Asset revaluation tax--------0.4
Goods and services4.45.55.86.26.1
Sales tax1.92.72.92.93.1
Petroleum derivatives0.20.30.60.90.7
Alcohol and nonalcohol beverages1.11.01.01.01.0
Other1.21.41.41.41.4
International trade4.45.75.75.44.7
Imports3.84.04.24.54.4
Petroleum0.50.60.90.90.7
Other3.23.33.33.63.7
Exports0.61.71.50.90.3
Bananas0.40.30.60.50.3
Coffee0.2--0.20.2--
Other--1.40.80.1--
Other taxes----------
Nontax revenue 1/1.71.11.10.40.3
Current transfers0.60.50.81.00.8
From NFPE0.30.30.70.90.8
From rest of general government0.20.10.10.1--
From other--0.10.1----
Capital revenue------0.60.52/
Sources: Statistical Appendix Table 30.

Includes revenue derived from the differential between external and domestic prices of imported petroleum products.

Includes L 87 millions of promissory notes of “Cementos del Norte” sold to INJUPEM and IMPREMA.

Sources: Statistical Appendix Table 30.

Includes revenue derived from the differential between external and domestic prices of imported petroleum products.

Includes L 87 millions of promissory notes of “Cementos del Norte” sold to INJUPEM and IMPREMA.

The ratio of noninterest central government current expenditures to GDP, which had changed little in 1989-90, fell by 2 percentage points of GDP in 1991-92, reflecting largely a sharp decline in the wage bill. The decline in current expenditure, coupled with the higher tax revenues, shifted the primary balance of the Central Government from a deficit of 4 percent of GDP in 1989 to virtual balance in 1991-92 (Table 6). In turn, the overall deficit declined from 7.1 percent of GDP in 1989 to 4.9 percent of GDP in 1992.

Table 6.Honduras: Central Government Expenditure and Net Lending(In percent of GDP)
19891990199119921993
Total expenditures and net lending1/18.820.017.318.223.2
Current expenditures 1/14.814.512.512.314.0
Wages and salaries8.48.06.66.86.8
Social security contributions0.70.70.60.60.6
Goods and services3.93.73.12.62.8
Transfers1.92.22.22.33.9
Public sector1.41.51.31.41.5
Rest of general government1.41.51.31.41.5
NFPE----------
Private sector0.40.70.90.92.2
Abroad--0.10.10.10.1
Capital expenditures3.85.35.55.89.1
Fixed capital formation3.01.92.73.36.7
Transfers0.83.32.82.52.3
To public sector0.83.31.82.01.4
Rest of general government0.50.20.40.50.7
NFPE0.43.11.41.50.7
To private sector----1.00.50.9
Net lending0.20.2-0.70.10.2
To public sector0.20.2-0.70.10.2
Rest of general government0.1---0.3----
NFPE0.10.2-0.40.10.1
Current primary balance--1.94.95.42.8
Primary surplus (deficit -)-4.0-3.00.1---5.8
Interest obligations3.14.04.64.94.3
External 2/1.62.43.13.63.3
Domestic1.51.61.51.31.0
Current balance-3.1-2.10.40.5-1.6
Overall balance-7.1-7.6-4.4-4.9-10.2
Memorandum items
Military expenditures3/2.92.52.11.81.7
Budget directed expenditure2.72.01.71.51.2
Indirect expenditures0.20.50.40.30.5
Sources: Statistical Appendix Table 30.

Excludes interest obligations.

Estimated as the difference between interest obligations due and recorded interest by public enterprises.

Includes external debt service, free provision of public services, and other indirect expenditures.

Sources: Statistical Appendix Table 30.

Excludes interest obligations.

Estimated as the difference between interest obligations due and recorded interest by public enterprises.

Includes external debt service, free provision of public services, and other indirect expenditures.

In 1993, however, in the run-up to the presidential elections, there were sharp increases in both current expenditure (of about 2 percentage points of GDP) mainly because of higher transfers to the private sector and in capital expenditure (of about 3 percentage points of GDP), most of them related to road construction. Consequently, the primary balance shifted to a deficit of 5.8 percent of GDP and the overall deficit rose to 10.2 percent of GDP in 1993.

Military expenditure declined from 2.9 percent of GDP in 1989 to 1.7 percent of GDP in 1993 and 1.3 percent of GDP in 1994.

c. Rest of general government

The rest of the general government comprises the Social Security Institute (IHSS); three pension funds: (a) IMPREMA for teachers, INJUPEMP for public sector employees, and IPM for the military; (b) local governments; and (b) twelve small decentralized agencies which operate mainly with central government transfers.

The primary deficit of the rest of the general government declined somewhat (0.2 percent of GDP) from 1989 to 1993, despite an increase in capital expenditure and net lending from 2.4 percent of GDP in 1989 to 2.8 percent of GDP in 1993, as capital revenue (mainly, capital transfers from the Central Government) rose from 0.3 percent of GDP in 1989 to 0.9 percent of GDP in 1993 (Table 7). Net lending arises from the operation of the pension funds which provide housing loans to their members.

Table 7.Honduras: Summary Operations of the Rest of General Government 1/(In percent of GDP)
1989199019911992Prel.

1993
Total revenue4.75.24.55.15.0
Current revenue4.44.74.04.54.1
Tax revenue0.80.90.80.80.9
Contributions to IHSS2.01.71.71.61.8
From Central Government0.90.90.80.80.8
From state enterprises0.20.20.20.20.2
From private sector0.90.70.70.70.9
Current transfers1.31.41.41.61.2
From Central Government1.31.41.41.61.2
From state enterprises----------
Other nontax revenue0.30.70.10.50.2
Capital revenue0.30.50.50.50.9
Central Government transfers0.20.50.40.50.7
Other0.1--0.1--0.1
Total expenditures and net lending2/6.25.75.85.66.3
Current expenditures 2/3.93.84.03.73.5
Wages and salaries1.81.71.41.51.4
Goods and services0.50.60.90.70.5
Current transfers (Benefits to private sector)1.51.41.71.61.6
Capital expenditures1.21.51.21.62.4
Fixed capital formation1.21.31.01.42.2
Inventory changes--0.20.20.10.1
Net lending to members1.20.50.60.30.4
Current primary balance0.50.9--0.80.6
Primary surplus (deficit -)-1.5-0.6-1.3-0.5-1.3
Interest revenue1.21.11.01.10.9
Interest payments0.20.20.20.20.1
Current account balance1.61.90.81.71.4
Overall surplus or deficit (-)-0.40.4-0.50.4-0.6
Source: Statistical Appendix Table 30.

Includes IHSS, INJUPEM, IMPREMA, local governments and decentralized agencies.

Excludes interest payments.

Source: Statistical Appendix Table 30.

Includes IHSS, INJUPEM, IMPREMA, local governments and decentralized agencies.

Excludes interest payments.

d. The main state enterprises 1/

The operating surplus (before taxes, transfers and interest payments) of the four major state enterprises increased steadily in terms of GDP from 2.6 percent in 1989 to 5.9 percent in 1993, reflecting tariff increases and a better control of the wage bill, which in terms of GDP declined continuously during the period (Table 8).

Table 8.Honduras: Summary Operations of the Four Main Public Enterprises 1/
19891990199119921993
Operating surplus before taxes, transfers and interest2.63.75.45.75.9
Revenue5.05.67.37.67.4
Expenditure (excluding taxes and transfers)2.41.91.91.91.5
Of which: wages1.51.41.31.21.2
Net transfers received-0.5-0.5-0.8-0.8-1.0
Current transfers received----------
Less: taxes and transfers paid0.50.50.80.81.0
To Central Government0.40.30.70.60.9
To rest of general government0.10.10.10.10.1
To private sector------0.10.1
Net capital revenue0.43.81.91.51.3
Capital revenue----------
Plus: capital transfer receipts0.43.81.91.61.3
From Central Government0.43.81.91.61.3
Less: capital transfers------0.1--
To Central Government----------
To rest of general government----0.1--
Capital expenditure and net lending1.33.72.95.34.3
Capital expenditure1.53.72.95.34.3
Fixed investment1.53.32.54.43.8
Inventory changes--0.30.20.70.3
Other capital expenditure--0.10.10.20.2
Net lending-0.2--------
To Central Government-0.2--------
Primary surplus or (deficit (-)1.23.43.61.11.9
Interest payments1.52.22.31.41.3
External1.01.41.81.11.0
Internal0.50.80.50.30.3
Overall balance-0.31.31.4-0.40.6
Sources: Statistical Appendix Table 31.

ENEE, HONDUTEL, ENP, and SANAA.

Sources: Statistical Appendix Table 31.

ENEE, HONDUTEL, ENP, and SANAA.

The improvement in the operating balance together with sizable capital transfers from the Central Government to ENEE and SANAA allowed the enterprises to record an overall surplus averaging 1.4 percent of GDP in 1990-91, compared to a deficit of 0.3 percent of GDP in 1989, despite a rapid increase in capital expenditure from 1.5 percent of GDP in 1989 to an average of 3.3 percent of GDP in 1990-91, and larger interest obligations.

However, as capital expenditure jumped to 5.3 percent of GDP in 1992, the overall balance shifted to a deficit of 0.4 percent of GDP. Capital expenditure fell to 4.3 percent of GDP in 1993 and the overall balance shifted again to a surplus of 0.6 percent of GDP. A large increase in capital expenditure to around 6.3 percent of GDP in 1994 associated with a telecommunications project, resulted in a sizable overall deficit in the public enterprises.

3. Evolution of the financial system

Statistical coverage of the financial sector is partial in Honduras (as it is explained in Chapter III); therefore, the observations about the evolution of liquidity (and credit) are partial and limited to those of the covered institutions.

a. Demand for financial assets

Private sector’s demand for financial assets (banking system’s liabilities to the private sector), which declined by a cumulative 18 percent during the adjustment period (1990-91), grew 20.6 percent in real terms as the economy stabilized (Table 9). Growth in the real stock of quasi-money was still higher (24 percent) due both to an increase of 26 percent in the stock of time and saving deposits that reflected a sharp rise in real interest rates, and an increase of 167 percent in the real stock of foreign exchange deposits following the liberalization of these deposits in 1992.

Table 9.Honduras: Private Sector Financial Assets in Real Terms
L 9. 0=US$1
L 5.3=US$1L 7.3=US$1September
19891990199119911992199319931994
(In percent of GPP)
Total bank liquid liabilities38.538.933.734.137.134.8
Money15.516.414.614.614.814.5
Currency in circulation6.46.95.95.95.96.3
Sight deposits9.19.48.78.78.98.2
Quasi-money20.120.017.918.320.318.7
Domestic currency19.419.417.117.118.215.6
Time and savings deposits16.915.214.514.516.714.8
Specialized savings0.70.60.50.50.50.5
Other deposits in local currency1.83.62.12.11.10.4
Deposits in foreign exchange0.80.60.91.22.13.1
Bonds1.10.80.30.30.20.2
Other obligations1.71.70.90.91.81.4
(In constant (1978) prices)
Total bank liquid liabilities1,659.51,492.01,387.51,401.11,673.61,646.61,533.41,451.3
Money670.3628.2601.9601.9668.4686.1578.7570.8
Currency in circulation278.2265.8242.1242.1266.3299.6232.0231.9
Sight deposits392.1362.4359.8359.8402.0386.5346.7338.9
Quasi-money869.3766.3737.9751.4916.0886.2888.4812.8
Domestic currency836.1744.4702.0702.0820.1739.2734.3625.4
Time and savings deposits729.2583.5594.9594.9752.0700.5687.4601.1
Specialized savings30.924.021.321.320.521.720.016.0
Other deposits in local currency76.0136.885.885.847.617.126.98.4
Deposits in foreign exchange33.221.935.949.495.9146.9154.1187.4
Bonds46.031.610.310.38.77.78.06.9
Other obligations73.965.837.437.480.466.658.460.8
(Annual rates of growth in real terms)
Total bank liquid liabilities16.4-10.1-7.020.6-1.6-5.4
Money18.6-6.3-4.211.02.7-1.4
Currency in circulation6.6-4.5-8.910.012.5--
Sight deposits28.9-7.6-0.711.7-3.8-2.3
Quasi-money4.6-11.8-3.724.1-3.3-8.5
Domestic currency2.8-11.0-5.716.8-9.9-14.8
Time and savings deposits-0.8-20.02.026.4-6.8-12.6
Specialized savings-9.4-22.4-11.2-3.95.7-20.3
Other deposits in local currency72.180.0-37.3-44.6-64.1-68.7
Deposits in foreign exchange-29.3-33.963.4167.553.221.6
Bonds121.6-31.2-67.3-15.4-12.3-14.6
Other obligations76.4-10.9-43.2115.1-17.24.1
Sources: Statistical Appendix Table 40.
Sources: Statistical Appendix Table 40.

In 1993, banking system liabilities to the private sector fell by 1.6 percent in real terms. Money increased 2.7 percent in real terms because of a strong increase in currency (more than 12 percent in real terms), but the local currency part of quasi-money fell 10 percent in real terms, as the real interest rate fell in the wake of the strong depreciation of the lempira at midyear. Foreign exchange deposits continued to increase by more than 50 percent in real terms.

In 1994, the continued depreciation of the lempira created more uncertainty in the financial markets and banking system liabilities to the private sector fell 5.4 percent in real terms during the 12 months ended in September 1994. Quasi-money deposits in local currency fell almost 15 percent in real terms. However, foreign exchange deposits rose further in real terms (22 percent). Since 1991, the latter have had the highest growth of all banking liabilities to the private sector. In terms of the quasi-money, foreign exchange deposits have increased from 10 percent in December 1991 to 23 percent in September 1994.

b. Bank credit operations

After increasing rapidly during 1989-90, the net domestic assets of the Central Bank contracted sharply in 1991 mainly because of a decrease in the net credit to the public sector (Table 10).

Table 10.Honduras: Central Bank Accounts

(Annual percentage change) 1/

L 5.3=US$1L 7.3=US$1L 9.0=US$1
19891990199119921993Sept. 1994
Net international reserves-2.928.942.725.3-65.5-50.8
Foreign assets-24.714.338.86.0-55.4-43.0
Net IMF position1.71.1-1.3-52.1-6.210.6
Other short-term foreign liabilities20.113.55.217.4-4.0-18.4
Domestic Assets83.063.9-53.2-21.166.145.6
Credit to public sector25.0-12.0-56.012.811.815.3
Central Government48.1-9.1-56.54.610.116.9
Credit20.840.9-55.112.736.763.1
Deposits27.4-5.0-1.4-8.2-26.6-46.2
Rest of the public sector-23.1-2.90.58.31.7-1.6
Credit-0.73.0-1.34.0-1.1-0.2
Deposits-22.4-5.91.94.32.8-1.4
Government trust fund-0.7-0.1-1.1-1.4-2.3-1.2
FHIS---0.5-0.7-2.40.61.7
Official capital-12.2-7.8-15.2-8.6-14.4-8.4
Credit to the private sector1.40.30.30.91.30.8
Arrears deposits-37.61.013.110.710.15.1
Credit to banks, net7.111.211.4-20.213.4-1.9
Claims on banks17.44.86.47.40.61.7
Development banks5.00.6-2.54.7-1.6--
Commercial banks9.82.39.72.0-0.61.1
Specialized saving institutions2.51.9-0.80.82.70.5
Liabilities to banks-10.26.55.0-27.712.9-3.6
Net unclassified assets142.871.7-5.0-12.845.634.2
Exchange losses--70.426.074.9-19.8-7.0
Other 2/142.81.4-30.9-87.765.441.2
Medium and long term foreign liabilities60.856.4-24.0-13.3-24.5-30.5
Private sector deposits-1.74.7-1.50.7-1.21.9
Sight deposits--4.7-1.70.6-1.31.7
Time and savings deposits-1.6--0.20.10.2
Bonds2.0--0.10.20.20.3
Currency issue18.931.714.916.526.123.1
Cash in vault2.04.35.42.22.72.5
Currency in circulation16.927.49.414.423.420.6
Source: Statistical Appendix Table 40.

With respect to currency issue at the beginning of the period.

Includes valuation adjustment.

Source: Statistical Appendix Table 40.

With respect to currency issue at the beginning of the period.

Includes valuation adjustment.

The net domestic assets of the Central Bank contracted further in 1992 despite an increase in credit to the public sector, mainly because of a reduction in net credit to banks. Net international reserves increased by around US$115 million during 1991-92 notwithstanding a reduction in the Central Bank’s long- and medium-term foreign liabilities.

In 1993, however, the net domestic assets of the Central Bank rose by 66 percent as credit to the public sector and to banks expanded, and the Central Bank incurred large foreign exchange losses related to the sharp depreciation of the lempira. This credit expansion, coupled with the persistence of the medium-term external outflow, brought about a loss of net international reserves.

The expansion in the Central Bank’s net domestic assets decelerated in the first nine months of 1994. However, the continued growth of central bank credit coupled with a further reduction in its medium-term liabilities, brought about an additional loss in net international reserves of US$65 million during this period.

Credit developments in the banking system as a whole were followed by the movements of the domestic assets of the Central Bank, albeit with more moderate changes. The net domestic assets of the banking system declined by 9 percent during 1992, but rose by 18 percent in 1992, 23 percent in 1993, and 30 percent in the 12 months ended September 1994 (Table 11).

Table 11.Honduras: Accounts of the Banking System 1/(Annual Percentage Change)
L 9.0=US$1
L 5.3=US$1L 7.3=US$1September
1989199019911991199219931994
Net International reserves-6.57.69.79.6-10.8-7.6
Foreign assets5.34.18.517.3-10.1-6.2
Net IMF position-3.20.2-0.3-10.5-1.11.8
Short-term liabilities-8.53.31.42.80.5-3.3
Domestic Assets121.128.4-9.317.823.029.6
Credit to Public Sector6.1-3.8-7.4-1.62.14.6
Central Government13.6---5.8-1.70.52.8
Credit7.99.4-5.5--5.711.5
Deposits5.7-9.3-0.3-1.7-5.2-8.6
Rest of Public Sector-7.5-3.8-1.60.11.61.8
Credit-0.20.3-0.60.2-0.2-0.2
Deposits-7.3-4.2-1.0-0.11.72.1
Central Government Trust Fund-0.1---0.2-0.3-0.4--
Credit to nonbank private financial intermediaries0.30.6-0.6--
Credit to Private Sector16.910.98.219.211.319.0
Arrears deposits-7.80.22.62.21.90.9
Official Capital-10.2-1.5-1.9-1.7-2.7-0.2
FHIS---0.40.1-0.70.1--
Unclassified Assets121.922.4-10.20.610.57.3
Allocation of SDRs-6.2------
Valuation adjustment1.00.50.2-0.1-0.1--
Interbank Float-0.9-0.5-0.70.90.4-2.0
Medium-long term foreign liabilities82.710.5-16.3-2.6-4.8-3.8
Central Bank63.610.5-4.8-2.7-4.5-5.4
Rest of Banking System19.1---11.5---0.21.6
Liquid liabilities to the private sector32.422.712.926.711.217.6
Money13.011.36.97.76.48.5
Currency in circulation3.55.11.92.94.33.7
Sight deposits9.56.25.04.82.14.9
Quasi-money9.610.68.715.75.17.9
Domestic currency8.410.87.212.00.92.8
Time and savings deposits5.54.09.314.52.43.9
Specialized savings--0.10.1--0.2--
Other deposits in local currency2.96.7-2.2-2.5-1.7-1.1
Deposits in foreign exchange1.4-0.21.43.74.25.1
Bonds2.2-0.2-1.3-0.1--
Other obligations2.91.0-1.43.4-0.31.1
Capital and Surplus1.82.83.83.35.88.1
Source: Central Bank of Honduras

In terms of the liquid liabilities to the private sector at the beginning of the period.

Source: Central Bank of Honduras

In terms of the liquid liabilities to the private sector at the beginning of the period.

Banking system credit to the private sector fell from 31.8 percent of GDP in 1989 to 25.4 percent of GDP in 1991 but rose to an average of 27 percent in 1992-93 (Table 12). The direction of credit to the private sector shifted toward commerce as the share of credit to the agricultural sector (including livestock and fishing) and to the manufacturing sector fell steadily throughout the 1989-93 period.

Table 12.Honduras: Destination of Banking System Credit to the Private Sector 1/
19891990199119921993June

1994
(In millions of Lempiras)
Total3,283.43,644.64,142.85,200.25,970.46,508.8
Agriculture608.4663.7756.4902.7882.9943.8
Coffee185.5206.9236.6234.2237.8232.2
Cotton19.817.817.157.69.79.4
Basic grains104.0119.6161.0201.5173.8169.9
Other299.1319.4341.7409.4461.6532.3
Livestock228.8203.9217.4245.2251.4279.9
Fishing55.835.037.757.464.765.1
Mining3.61.62.42.75.36.5
Manufacturing718.5786.0920.61,089.11,149.31,236.7
Transportation and communications49.243.756.192.698.9110.6
Other services166.8184.4181.6290.2347.6312.4
Construction and real estate685.9739.2750.1851.81,075.61,217.1
Commerce590.7806.3969.51,300.31,663.61,848.5
Consumption139.4139.2201.9316.9380.2436.1
Unclassified36.341.649.151.350.952.1
(In percent of GDP)
Total31.829.125.427.726.5
Agriculture5.95.34.64.83.9
Livestock2.21.61.31.31.1
Fishing0.50.30.20.30.3
Manufacturing6.96.35.65.85.1
Transportation and communications0.50.30.30.54.4
Other services1.61.51.11.51.5
Construction and real estate6.65.94.64.54.8
Commerce5.76.45.96.97.4
Consumption1.31.11.21.71.7
Unclassified0.30.30.30.30.2
(In percent of total)
Agriculture18.518.218.317.414.814.5
Coffee5.65.75.74.54.03.6
Cotton0.60.50.41.10.20.1
Basic grains3.23.33.93.92.92.6
Other9.18.88.27.97.78.2
Livestock7.05.65.24.74.24.3
Fishing1.71.00.91.11.11.0
Mining0.1--0.10.10.10.1
Manufacturing21.921.622.220.919.219.0
Transportation and communications1.51.21.41.81.71.7
Other services5.15.14.45.65.84.8
Construction and real estate20.920.318.116.418.018.7
Commerce18.022.123.425.027.928.4
Consumption4.23.84.96.16.46.7
Unclassified1.11.11.21.00.90.8
Source: Central Bank of Honduras.

Includes only loans and discounts, and therefore the total figure differs from the total credit to the private sector which appears in the consolidated banking system accounts (Statistical Appendix Table 40).

Source: Central Bank of Honduras.

Includes only loans and discounts, and therefore the total figure differs from the total credit to the private sector which appears in the consolidated banking system accounts (Statistical Appendix Table 40).

c. Monetary policy

The traditional instruments of monetary policy in Honduras had been central bank rediscounts and legal reserve requirements. However, since mid-1992 and as part of the process of financial reform (see Chapter III) the authorities have relied mainly on changes in reserve requirements, which in Honduras include especially designated assets, in addition to cash-in -vaults and deposits at the Central Bank.

Reserve requirements on local currency deposits can be met using cash-in vaults, deposits held in the Central Bank, and especially designated government securities. Financial institutions can freely decide on the composition of these reserves (only limited by the amount available of accepted government securities, which is determined by the Central Bank). The same is true for reserve requirements on foreign currency deposits. In particular, the 100 percent reserve requirement on the “freely available” deposits (which is by far the most important type of foreign currency deposit) can be satisfied using cash in foreign currency, the balance of the accounts at correspondent banks abroad, investments in foreign instruments, or export-related credits and advances, at the discretion of the financial institutions.

Reserve requirements on local currency deposits remained fairly constant from 1989 to mid-1993 at about 35 percent for commercial and development banks and 15 percent for savings and loans associations (Statistical Appendix Table 41). However, in July 1993, the authorities increased these requirements by 7 percentage points to 42 percent for banks and 23 percent for savings and loans associations to reduce exchange rate pressures. In August 1993, however, the authorities began to gradually lower reserve requirements, as an apparent shift of deposits from commercial banks to unregulated institutions (the finance houses) made it difficult for banks to comply with them. Reserve requirements on local currency deposits were then fixed at 36 percent for banks and 17 percent for savings and loans associations in September 1993, before being further reduced to 34 percent for banks and 15 percent for savings and loans associations in February 1994. In June 1994, faced with a sharp depreciation of the lempira, the authorities again increased reserve requirements on local currency deposits by 6 percentage points, at the rate of 1 percentage point every two weeks.

Until 1992, central bank rediscounts, partly financed by foreign multilateral resources, had been used both to direct subsidized credit to certain activities and to regulate domestic credit in the economy. Since that time, the authorities have reduced the role of this instrument, both by reducing rediscount lines (those with domestic resources) and raising their cost.

There have been some attempts at introducing open market operations through auctions of government paper. However, the demand for government securities has remained very weak, in part because 47 classes of government bonds have been used, all with different financial terms: some are tax exempt, some can be used for reserve requirements, but in most cases their rate of return has been below market rates, ranging from 4 percent to 19 percent. Since June 1994, however, part of the new issues of government bonds have paid market interest rates. In particular, bonds issued to meet the 6 percentage points increase in reserve requirements in June 1994 pay market interest rates. Securities eligible for sale in the auction market must be held at least one month 1/ and are not transferable, thus eliminating the possibility of developing a secondary market.

Finally, the Central Bank started a gradual process of interest rates liberalization in August 1991. Prior to that date, maximum lending rates were set directly by the Central Bank. Since April 1992, all interest rates are freely set by market forces without any interference from the Central Bank (this gradual liberalization process is explained further in Chapter III).

4. External sector developments

a. Overview

After declining to US$80 million or 2.6 percent of GDP 1/ in 1990 from US$211 million or 4.1 percent of GDP in 1989, the external current account deficit rose steadily to 9.2 percent of GDP in 1993 as national savings remained about constant while domestic investment rose 23 percent of GDP in 1990 to 28.8 percent of GDP in 1993 (Table 13). In 1994, the external current account deficit is estimated to have declined to around 7 percent of GDP as national savings are estimated to have increased with the improvement in the public finances.

Table 13.Honduras: Balance of Payments, 1989-93(In millions of U.S. dollars)
19891990199119921993
Current account-211.0-80.4-150.4-219.9-317.9
Trade account-140.8-122.4-173.1-256.8-339.8
Exports, f.o.b.882.5865.2823.0824.3838.6
Imports, c.i.f.-1,023.3-987.6-996.1-1,081.1-1,178.5
Of which: oil-144.7-168.2-172.4-160.7-177.9
Service account-236.2-219.7-168.1-147.4-111.9
Factor services-248.0-235.0-211.0-206.7-183.7
Credits26.121.042.770.178.3
Debits-274.1-256.0-253.7-276.8-262.0
Of which: interest-199.4-184.0-181.7-202.9-188.5
Nonfactor services11.815.342.959.371.8
Credits155.8145.3181.3206.7228.1
Debits-144.0-130.0-138.4-147.4-156.2
Transfers166.0261.7190.8184.3133.9
Private24.725.327.529.331.4
Official141.3236.4163.3155.0102.5
U.S. AID81.8192.0102.988.052.0
Others59.544.460.467.050.5
Capital account-35.2120.227.0181.3138.6
Official capital-7.7130.610.165.5114.5
Disbursements113.3335.0229.0297.9348.4
Amortization-121.0-204.4-218.9-232.4-234.0
Financial system-0.6-15.32.0-32.6-21.2
Direct investments51.043.544.756.534.8
Private sector and other (net) 1/-77.9-38.6-29.892.010.5
Overall balance-246.239.8-123.4-38.6-179.3
Financing246.2-39.8123.438.6179.3
Change in net international reserves (increase)23.8-38.7-69.1-45.889.8
Change in arrears190.4-318.7-13.4-159.2-12.8
Exceptional financing32.0317.6206.0243.5102.3
Rescheduling of debt service 2/32.057.9120.89.665.5
Rescheduling of arrears 3/204.9--143.016.4
Cancellation/swap of debts4.6--10.92.7
Cancellation/swap of arrears50.385.280.117.8
Financing gap----------
Memorandum items
Export growth (in percent)2.0-2.0-4.90.21.7
Import growth (in percent)3.0-3.50.98.59.0
Current account (in percent of GDP)-4.1-2.6-5.0-6.6-9.2
Gross reserves (in months of imports)0.60.81.72.61.3
GDP (US$, average exchange rate) 4/5,167.03,050.03,021.03,357.03,421.0
Sources: Central Bank of Honduras; and Fund staff estimates.

Includes private capital, short term capital and errors and omissions.

Includes rescheduling from the October 1992 Paris Club agreement.

Includes rescheduling of arrears to Paris Club creditors.

It is measured using the market exchange rate.

Sources: Central Bank of Honduras; and Fund staff estimates.

Includes private capital, short term capital and errors and omissions.

Includes rescheduling from the October 1992 Paris Club agreement.

Includes rescheduling of arrears to Paris Club creditors.

It is measured using the market exchange rate.

The capital account surplus reached US$120 million in 1990 due to large financing associated with the clearance of external payments arrears, but declined to US$27 million in 1991. In 1992, the capital account surplus rose to US$180 million as private sector inflows (other than direct investment), which had been negative in 1990 and 1991, rose to around US$90 million. The capital account surplus declined to around US$140 million in 1993. Public sector capital inflows rose by around US$50 million relative to 1992 because of large amounts of project financing and balance of payments support loans but private inflows declined to US$10 million. Net international reserves rose by around US$150 million during 1990-92 but declined by around US$90 million during 1993.

On the supply side, the performance of traditional exports has been weak in recent years reflecting both low growth in volume and a deterioration in the terms of trade. However, the growth of nontraditional exports of goods, and of value added in the maquila (in-bond industry) and in services provided in the free trade zones has been quite strong. The value of imports rose little in 1991 but rose strongly during 1992-93.

b. Trade account

After improving in 1990, the trade deficit deteriorated continuously from a level of about US$120 million (or 2.7 percent of GDP) in 1990 to about US$340 million (or 10 percent of GDP) in 1993. Exports declined in nominal terms while the value of imports rose by 19 percent from 1990 to 1993.

(1) The export performance

The value of exports of goods in nominal terms declined by about 3 percent from 1990 to 1993; however, this decline reflected entirely a deterioration in the terms of trade (Table 14). The volume of exports declined by 2.2 percent in 1991, but increased by about 8 percent in 1992 mainly due to a major jump in the volume of traditional exports, but prices declined further by 7.2 percent. In 1993, prices increased by 3 percent, but export volume declined by 1 percent because of reductions in traditional exports. The volume of banana exports decreased in 1993 by 15 percent due to low prices, the loss of plants associated with tropical storm “Gert”, and uncertainty regarding the EEC market for bananas; the volume of coffee exports also fell in 1993 after a large 35 percent increase in 1992. In contrast, the volume of shrimp exports continued to expand by about 30 percent in 1993, a growth rate that has characterized the sector since 1989, with the advent of large scale cultivation in the Pacific Ocean. In 1994, export volume is estimated to have declined further mainly because of continued difficulties in the banana sector. However, the value of exports is estimated to have increased by around 9 percent because of higher coffee prices.

Table 14.Honduras: Foreign Trade Indices 1/
19891990199119921993
(Index 1987=100)
Exports, f.o.b.
Value110.7108.5103.2103.4105.2
Volume97.898.396.3104.0102.8
Unit value113.2110.4107.299.4102.3
Imports, c.i.f.
Value109.4105.6106.5115.6126.0
Volume101.498.5104.4112.2120.2
Unit value107.9107.2102.0103.3104.9
Terms of trade104.9103.0105.196.297.5
(Percentage change)
Exports, f.o.b.
Value2.3-2.0-4.90.21.7
Volume0.90.7-2.08.0-1.0
Unit value1.4-2.5-2.9-7.22.9
Imports, c.i.f.
Value3.0-3.50.98.59.0
Volume-2.9-2.86.07.57.1
Unit value6.1-0.6-4.81.01.6
Terms of trade-4.4-1.82.0-9.21.3
Source: Central Bank of Honduras.

All indices are Laspeyres.

Source: Central Bank of Honduras.

All indices are Laspeyres.

Although overall export performance has been weak in recent years, the performance of nontraditional exports has been quite strong (Tables 15 and 16). The value of nontraditional exports rose by 61 percent during 1991-92 and by 22 percent in 1993. As a result, their share in total exports of goods rose from 14 percent in 1990 to 27 percent in 1993. The nontraditional export sector includes a wide range of both agriculture and manufacture products. In 1992 the share of agriculture products was about 60 percent (the most important products were pineapples, melons, and tobacco), and the remaining 40 percent were manufactured products, of which clothing, wood manufactures, furniture, and soap were the most important ones. The number of export products is relatively high and export revenue is not dominated by a few products. In 1992, for example, the five most important products only had a share of about 35 percent.

Table 15.Honduras: Real Export Indices 1/(1987 = 100)
19891990199119921993
I. Indices
Total export of goods and services102.5100.5105.6128.6129.8
Traditional export goods96.298.994.0110.5103.7
Nontraditional export goods108.395.8110.8144.4171.2
Value added in free trade zones395.0323.5713.81,234.11,454.7
Other factor services103.672.4111.8142.2112.5
Nonfactor services109.898.2118.0130.7140.4
II. Weighted contribution
Total export of goods and services102.5100.5105.6128.6129.8
Traditional export goods70.272.268.680.675.7
Nontraditional export goods11.910.512.215.918.8
Value added in free trade zones3.93.27.112.314.5
Other factor services1.00.71.11.41.1
Nonfactor services15.413.816.518.319.7
III. Relative contribution
Total export of goods and services100.0100.0100.0100.0100.0
Traditional export goods68.571.965.062.758.3
Nontraditional export goods11.610.511.512.414.5
Value added in free trade zones3.93.26.89.611.2
Other factor services1.00.71.11.10.9
Nonfactor services15.013.715.614.215.1
Memorandum items
Real GDP109.1109.2112.8119.1126.7
Export/GDP ratio93.992.093.6107.9102.4
US GDP deflator108.7113.4117.8121.2124.5
Sources: Central Bank of Honduras; and Fund staff estimates.

All indices are Laspeyres. The real export of services are computed using the U.S. GDP deflator.

Sources: Central Bank of Honduras; and Fund staff estimates.

All indices are Laspeyres. The real export of services are computed using the U.S. GDP deflator.

Table 16.Honduras: Exports by Product 1/
19891990199119921993
(Value in millions of dollars, unit value in dollars)
Traditional export734.00716.10654.30616.60598.40
Coffee190.90180.90145.90147.60124.50
Volume (’000 of 60 kg. bags)1,420.001,735.001,444.001,961.001,705.00
Unit Value (per 100 lb.)101.6378.8276.3956.9055.20
Bananas351.70357.90314.40256.30231.70
Volume (mill, of 40 lb. boxes)45.0242.3238.3340.9334.60
Unit Value (per box)7.818.468.206.266.70
Wood24.1016.1015.3015.8017.70
Volume (’000 cubic meters)144.6487.0172.2879.5183.49
Unit Value (per cubic meter)166.62185.03211.68198.72212.00
Meat19.8025.3031.4035.7038.90
Volume (mill, kilograms)9.2611.4614.1516.9017.69
Unit Value (per kilogram)2.142.212.222.112.20
Lead6.004.203.307.003.40
Volume (mill, lbs.)19.4412.3412.7426.2413.50
Unit Value (per lb.)0.310.340.260.270.25
Zinc60.7046.4036.3036.9033.30
Volume (mill, lbs.)85.5169.2374.1670.2769.39
Unit Value (per lb.)0.710.670.490.530.48
Silver8.104.704.305.204.30
Volume (mill, troy ounces)1.541.031.121.371.04
Unit Value (per ounce)5.254.553.863.784.15
Shrimps31.5036.1054.2069.0095.20
Volume (mill, kilograms)3.424.135.867.7210.18
Unit Value (per kilogram)9.218.739.258.939.36
Lobsters29.7029.6038.7032.5038.80
Volume (mill, kilograms)1.891.792.231.702.02
Unit Value (per kilogram)15.7216.5217.3519.1519.23
Sugar8.3012.408.405.805.20
Volume (mill, kilograms)20.7627.1120.0513.1911.64
Unit Value (per kilogram)0.400.460.420.440.45
Tobacco3.202.502.104.805.40
Volume (mill, kilograms)1.171.221.191.902.09
Unit Value (per kilogram)2.742.051.772.532.58
Nontraditional exports124.50114.90138.10185.20225.40
Total exports, customs basis858.50831.00792.40801.80823.80
Adjustments24.0434.1730.5922.4523.07
Unrecorded exports17.1716.6215.8516.0416.48
Re-exports6.876.656.346.416.59
Total exports, BOP basis882.54865.17822.99824.25846.87
(In percent)
Memorandum items
Traditional share, customs basis85.5086.1782.5776.9072.64
Nontraditional share, customs basis14.5013.8317.4323.1027.36
Source: Central Bank of Honduras.

The export data have been revised for the period 1985-91. The revision, which primarily concerned the nontraditional export, was initiated in order to take exports related to the system of temporal imports into account.

Source: Central Bank of Honduras.

The export data have been revised for the period 1985-91. The revision, which primarily concerned the nontraditional export, was initiated in order to take exports related to the system of temporal imports into account.

(2) Imports

After increasing by less than 1 percent in 1991, the value of imports of goods increased by almost 9 percent each year in 1992 and 1993, mostly because of higher import volume. Although the increase in imports covered both consumer and capital goods, it was concentrated in capital goods and raw materials for manufacturing (Statistical Appendix Table 44). The oil import bill, which has a share of about 15 percent of total imports, increased from about US$140 million in 1989 to about US$175 million in 1993. In 1994, imports are projected to remain about constant.

c. Service account and transfers

The deficit in the services account has declined significantly from US$236 million in 1989 (almost 7 percent of GDP) to US$112 million in 1993 (4 percent of GDP). This development mainly reflects an increase in value added of the maquila (in-bond industry) export sector and in various services provided in the free trade zones. The maquila industry has expanded significantly both in volume and in value in recent years, 1/ as a result exports from this sector in the form of value added and various nonfactor services supplied to the factories are estimated to have been about US$90 million in 1993, or 8.5 percent of exports of goods and nonfactor services. Increased export earnings from telecommunication services have also contributed to the improvement in the services account.

Interest obligations declined by almost US$18 million during 1990-91 due to the increased share of concessional debt in total debt and debt-swap arrangements with commercial banks. Interest obligations increased in 1992, they declined again from about US$200 million, or 6 percent of GDP in 1992 to about US$190 million, or 5.5 percent of GDP in 1993.

Total transfers rose sharply to US$260 million or 8.6 percent of GDP in 1990 but declined significantly in the following years. In 1993 total transfers were around US$130 million, or 4 percent of GDP. This big drop in transfers reflects mostly the decline in transfers from the United States.

d. Capital account and exceptional financing

The capital account balance, which was negative (US$35 million) in 1989, shifted to a surplus of about US$180 million in 1992. In 1993 the surplus fell to about US$140 million as the decline in private inflows (about US$100 million) more than offset the increase in net official capital inflows (US$55 million).

During 1990-93 Honduras relied heavily on exceptional financing. In this period, exceptional financing in the form of rescheduling of current maturities and arrears and various debt-swap arrangements amounted to close to US$900 million.

Private capital inflows rose sharply in 1992, aided by improved confidence, exchange rate stability, and higher interest rates. These inflows declined sharply in 1993 as the exchange rate began to depreciate in the second half of the year.

e. External debt and arrears 1/

The stock of external debt, including arrears, fell by almost US$200 million from 1989 to 1991 (partly because of debt forgiveness and debt conversion) but rose by about US$50 million in 1992, and by US$215 million in 1993 to US$3.7 billion (114 percent of GDP) (Table 17). Most of this increase in debt is owed to multilateral institutions. Debt service falling due on public and publicly guaranteed external debt fell marginally from 39 percent of export of goods and services in 1991 to 37 percent in 1993. Debt service after rescheduling fell from 35 percent of exports of goods and services in 1991 to 31 percent in 1993.

Table 17.Honduras: External Debt and Debt Service, 1989-93(In millions of U.S. dollars)
19891990199119921993
Total outstanding (end of period)3,650.03,504.73,395.23,442.73,657.0
Public and publicly guaranteed 1/3,359.53,424.23,205.73,342.73,557.0
IMF38.932.233.7112.0119.2
Multilaterals 2/1,663.31,626.31,751.21,866.12,016.2
Paris Club creditors1,155.91,306.8938.4989.11,092.6
Other bilaterals278.3268.1273.8265.0238.8
Private creditors223.1190.7208.6110.590.1
Private nonguaranteed70.180.5189.5100100
Short-term220.7
Disbursements2/113.3365.2232.3377.5357.8
IMF30.23.379.69.4
Multilaterals174.3149.0240.1267.5
Paris Club creditors116.050.022.470.9
Other bilaterals44.718.535.48.1
Private creditors0.011.50.01.9
Debt service due before rescheduling340.9398.7402.6435.3427.4
IMF15.07.36.711.1
Multilaterals196.4212.2234.6246.0
Paris Club creditors86.584.583.593.5
Other bilaterals83.083.474.447.7
Private creditors17.815.336.129.0
Debt service due after rescheduling308.9366.6281.8414.8359.2
IMF15.07.36.711.1
Multilaterals196.4194.7234.6246.0
Paris Club creditors61.421.673.928.0
Other bilaterals76.043.063.547.2
Private creditors17.815.336.129.0
Debt service cash1/270.4223.2343.0327.3
IMF15.07.36.711.1
Multilaterals179.4182.1232.5240.7
Paris Club creditors----23.621.7
Other bilaterals76.033.854.129.7
Private creditors0.00.026.024.1
Stock of arrears1/696.6377.9364.4205.3193.7
IMF27.00.00.00.00.0
Multilaterals196.080.286.626.58.9
Paris Club creditors94.40.021.60.06.4
Other bilaterals156.1107.0116.2114.4112.0
Private creditors223.1190.7140.164.366.4
(In percent)
Debt ratios3/105.6125.0112.4102.7110.2
Public and publicly guaranteed97.2122.1106.199.7107.2
Private nonguaranteed2.02.96.33.03.0
Short-term6.4
Debt service ratios1/4/
Due before rescheduling32.038.738.539.537.3
Due after rescheduling29.035.526.937.731.4
Service Cash26.221.331.228.6
Sources: Central Bank of Honduras; and Fund staff estimates.

Public and publicly guaranteed debt.

Including CABEI.

Debt outstanding in percent of GDP.

Debt service in percent of export of goods and services.

Sources: Central Bank of Honduras; and Fund staff estimates.

Public and publicly guaranteed debt.

Including CABEI.

Debt outstanding in percent of GDP.

Debt service in percent of export of goods and services.

The stock of outstanding external arrears decreased continuously during the period from US$700 million in 1989 to US$195 million in 1993. Outstanding arrears in 1993 were mainly owed to Latin American bilateral creditors (US$114 million) and commercial banks (US$66 million).

f. Exchange rate developments

The exchange rate, which had remained fixed to the U.S. dollar (L 2.00 per U.S. dollar) since the early 1930s was sharply depreciated in 1990, resulting in a real effective depreciation of 55 percent in that year (Statistical Appendix Table 47). From the second quarter of 1991 to mid-1992 the lempira was fixed at around L 5.4 per U.S. dollar and the real effective exchange rate appreciated by about 6 percent. The lempira was allowed to float in June 1992 and during the following 12 months it depreciated by about 10 percent against the U.S. dollar to L 6.00 per U.S. dollar in May 1993, but remained about constant in real effective terms. The relative exchange rate stability of this period reflected the strengthening of the fiscal position and improved confidence, as evidenced by large private capital inflows in the second half of 1992. More recently, expansionary financial policies have created pressures in the exchange market and the rate of depreciation of the lempira against the U.S. dollar rose sharply to about 40 percent per year in the second half of 1993 and first half of 1994. In real effective terms, the lempira depreciated by 12 percent from May 1993 to June 1994.

A relative tightening of fiscal and monetary policies since the second quarter of 1994 and the introduction of foreign exchange auction system reduced the annual depreciation rate to about 19 percent in the second half of 1994.

g. Exchange rate system

In March 1991 the special exchange rate of L 2.00 per U.S. dollar, which applied only to central government debt-service payments and constituted a multiple currency practice, was eliminated. In May 1991 the Central Bank removed all restrictions on the holdings of foreign exchange deposits in the commercial banks and on their use. In February 1992 Congress approved the establishment of exchange houses to buy and sell foreign exchange at freely determined rates for all transactions, except for purchases of merchandise export proceeds. In June 1992 the foreign exchange regime was liberalized further as commercial banks were allowed to buy and sell foreign exchange at freely determined rates. The reforms of the exchange rate system were completed in May 1993 when exchange houses were allowed to purchase foreign exchange proceeds from merchandise exporters. In June 1994, the authorities suspended, on a temporary basis, the market-determined exchange rate system and introduced a foreign exchange auction system.

Under the auction system, banks and exchange houses must sell all their daily purchases to the Central Bank, and the latter auctions at least 60 percent of its purchases. Buyers (banks, exchange houses or private individuals) bid at a price that cannot differ from a base rate set by the authorities by more than 1 percent in either direction.

The base rate is modified each time that the reference exchange rate (the weighted average of successful bids) differs in the same direction from the base rate for 15 consecutive auctions. Auctions take place every working day. The maximum bid in a single auction is US$200,000. At the end of 1994, the base price was L 9.31 per U.S. dollar and the reference rate was L 9.28 per U.S. dollar.

h. Trade system developments

Under the tariff reform program initiated in 1990, customs duties were reduced from a range of 1-90 percent to a range of 4-35 percent and in January 1992 they were reduced further to a range of 5-20 percent. Nevertheless, a general customs surcharge of 5 percent on all imports is still effective. In 1994, Honduras became a member of GATT. Under the GATT accession agreement, Honduras has agreed to eliminate gradually the general customs surcharge. In December 1992 the Government eliminated the special 10 percent surcharge on two-thirds of the 650 custom positions on which the surcharge was applied. The special surcharge on the remaining customs positions was eliminated by end-1994.

In February 1991 the system of import permits was replaced by an import registration system and, in July 1991, the export permits were eliminated except for coffee, edible oil, sugar, and chicken. These remaining export permits were removed in the last quarter of 1992. The Government occasionally imposes export restrictions on goods (generally foodstuffs) that are deemed to be in short supply in Honduras.

III. Structure and Recent Reforms of the Financial System

1. Structure and coverage of the financial system

The Honduran financial system consists of 15 private commercial banks that are allowed to conduct most financial operations; 7 savings and loan associations that are allowed to provide primarily housing finance; 4 state-owned institutions that concentrate their operations on specific sectors; 86 credit cooperatives that are only allowed to provide credit to their members; and about 90 finance houses that are not subject to supervision or control.

Statistical coverage is limited to the first three types of institutions because credit cooperatives and finance houses have no reporting obligations with the Central Bank. Since finance houses and commercial banks conduct similar operations (both lend for commercial operations and accept time and saving deposits) and, in fact, many finance houses are owned by private commercial banks, large switches of credit and deposits between banks and finance houses are likely to take place in response to central bank regulations.

Despite the large number of institutions, the Honduran financial sector is highly concentrated. First, commercial banks are by far the biggest institutions accounting for 77 percent of total assets of the covered system. Second, the law allows holding companies that group together commercial banks, saving and loan institutions, insurance companies, and several other financial and industrial companies. 1/ Third, shareholding in financial institutions is concentrated.

2. Reform of the financial system

Until 1990 the Honduran financial system was highly regulated. The Central Bank set ceilings on interest rates and directed a sizable proportion (27 percent) of private sector credit through rediscount lines. In fact, rediscount was the main instrument for regulating domestic credit.

The adjustment program included structural measures to liberalize the financial system. The most important were: (a) interest rate liberalization; (b) a reduction of central bank rediscount lines with domestic funds; (c) liberalization of foreign exchange operations including allowing for foreign exchange demand deposits in the domestic financial system; (d) an attempt to establish a market for government bonds to carry out open-market operations; and (e) a reduction in barriers to entry into the financial system.

These measures were gradually implemented. In the area of interest rate liberalization, for instance, starting in August 1991, the Central Bank allowed banks to set a “basic” interest rate on lending operations (which could be adjusted once a month) and established a fixed spread of 4 percentage points around the “basic” rate for all loan rates. In April 1992 the Central Bank freed all interest rates in the banking system. Similarly, in allowing foreign exchange deposits in April 1990, the Central Bank established limits of US$25,000 for private individuals and US$50,000 for legal entities, before eliminating these limits in May 1991.

The effects of these reforms on the financial system have been mixed. On the one hand, interest liberalization may have improved the allocation of financial savings. On the other hand, it has been accompanied by an increase in spreads. On average, spreads increased from 9.1 percent in the second quarter of 1990 to 13.6 percent at the end of 1993 (Table 18), while inflation fell from 21.6 percent in the second quarter of 1990 to 13 percent at the end of 1993.

Table 18.Honduras: Banking System Average Weighted Interest Rates(In percent)
Deposit Rates
Lending RateInterest Differential
Aver. 1/SavingTermCertificateAverageAgainst Type of DepositInflation
(L)(d)(s)(t)(b)(L)-(d)(L)-(s)(L)-(t)(L)-(b)Rate 2/
1989
I15.67.76.28.69.97.99.47.05.710.3
II15.57.16.28.69.98.49.36.95.611.0
III15.47.16.28.69.98.39.26.85.512.9
IV15.27.57.18.510.57.78.16.74.712.5
1990
I15.57.56.98.410.48.08.67.15.127.4
II16.97.87.58.211.19.19.48.75.835.3
III17.18.38.28.511.98.88.98.65.227.6
IV18.19.08.510.012.79.19.68.15.457.4
1991
I20.39.58.810.714.010.811.59.66.342.1
II22.010.29.411.415.311.812.610.66.727.8
III22.010.49.611.815.711.612.410.26.310.2
IV23.210.59.811.916.112.713.411.37.18.4
1992
I22.410.79.812.415.911.712.610.06.56.1
II21.710.69.712.315.211.112.09.46.56.1
III21.410.39.312.214.611.112.19.26.83.5
IV20.910.19.212.113.710.811.78.87.210.4
1993
I20.79.99.211.513.510.811.59.27.29.4
II20.910.09.211.813.310.911.79.17.618.4
III23.29.99.211.713.413.314.011.59.814.9
IV23.49.89.211.414.013.614.212.09.49.6
1994
I23.210.19.311.715.013.113.911.58.223.9
II23.810.99.311.814.912.914.512.08.941.0
Source: Central Bank of Honduras and Fund staff estimates.

Weighted average.

In the quarter, annualized

Source: Central Bank of Honduras and Fund staff estimates.

Weighted average.

In the quarter, annualized

Since reserve requirements have remained virtually unchanged during 1990-93, the largest spread could reflect insufficient competition (Table 41). 1/ Although some barriers to entry have been reduced 2/ competition may still be restricted by administrative processes. The number of financial institutions remained practically the same during 1991-93. 3/

The introduction of foreign exchange deposits has also had mixed results. While they may have deepened financial intermediation, they may have reduced the comparative attractiveness of deposits of domestic currency deposits. For instance, in 1993 the increase in foreign exchange deposits accounted for more than three-fourths of the increase in total deposits (Table 10). Although the nominal reserve requirements on foreign exchange deposits is 100 percent, in practice foreign exchange deposits have zero reserve requirements, 4/ and this could be an additional factor in explaining the shift toward deposits in foreign exchange. Finally, it seems likely that the shift toward deposits in foreign exchange has affected adversely the capability of the Central Bank to control the stock of credit.

Attempts to increase the role of open market operations have not been successful due to low demand for these instruments, perhaps reflecting their relative lack of liquidity 1/ and the confusion due to multiple government securities with different characteristics. As a result, in recent years high reserve requirements have been the main monetary instrument and have resulted in important economic costs to financial institutions and to their clients.

These developments indicate that there is a need to improve further the efficiency of financial operations and of the financial system by extending supervisory and regulatory coverage to all financial institutions; by improving competition in the financial system; by reducing and unifying reserve requirements; and by relying more on market-oriented monetary policy instruments.

IV. The External Debt Problem

1. Introduction

As a result of inappropriate financial policies and a large external debt burden, Honduras’ external position became increasingly fragile during the second half of the 1980s and outstanding external payments arrears accumulated rapidly. These increased from about US$200 million (5.5 percent of GDP) in 1985 to US$760 million (22 percent of GDP) in 1989, including arrears to the Fund, the World Bank, and the Inter-American Development Bank (IDB). In November 1989 the Fund declared Honduras ineligible to use Fund’s resources. 2/

Debt service obligations grew sharply during the period 1985-87 reflecting the expiration of grace periods on loans from multilateral creditors and, combined with a relatively weak export performance, resulted in a very large increase in the debt-service burden. Scheduled debt-service payments on public and publicly guaranteed debt increased from 24 percent of export of goods and services in 1985 to 35 percent in 1987, but declined to 32 percent in 1989 as export performance improved. At the end of the 1980s, the debt-GDP ratio of public and publicly guaranteed external debt was almost 100 percent. About 55 percent of Honduras’ external debt was owed to multilateral creditors. Most of the remaining debt, about 45 percent, was owed to Paris Club creditors.

2. The initial actions

In 1990 the incoming government formulated an economic program, supported by the Fund, that aimed to re-establish normal financial relations with external creditors and bring the economy back to a sustainable growth path. To settle arrears to the Fund, the World Bank and the IDB, totalling about US$165 million, Honduras obtained bridge loans from the United States, Mexico, and Venezuela. With the exception of about US$10 million borrowed from Venezuela, the repayment of the bridge loans was directly connected to disbursements from the multilateral institutions. The stand-by arrangement, that triggered these disbursements, was approved on July 27, 1990.

On September 14, 1990 Honduras reached an agreement with Paris Club creditors on a comprehensive rescheduling of arrears and debt service falling due through July 1991 on medium- and long-term external public debt. The amount consolidated was about US$240 million, of which about US$155 million was in arrears, and it was rescheduled over 14-20 years with 4-8 years of grace. In addition, in 1990 about US$42 million in short-term debt, of which US$35 million was in arrears, were rescheduled with Mexico with repayments over six years with two years of grace.

Also, commercial bank debt conversions were intensified in 1990 as about US$85 million was converted into domestic assets. 1/

As a result of these initial actions, outstanding arrears were reduced from the US$700 million at end-1989 to about US$380 million at end-1990. However, debt-service obligations increased in 1990 to 39 percent (from 32 percent in 1989) of export of goods and services, as debt service to multilateral creditors continued to increase and exports decreased. The ratio of debt service due after rescheduling also rose to 35.5 percent of exports of goods and services from 29 percent in 1989.

3. Continuation of the debt restructuring process 1991-93

The process of external debt restructuring continued during 1991-93, although not at the same pace with all creditor groups. Renewed problems in the external sector emerged in the second half of 1993 as new arrears started to accumulate.

Following the approval of the ESAF-supported program on July 24, 1992, Honduras reached a new rescheduling agreement with the Paris Club creditors on October 26, 1992. Under the condition that Honduras continue to have a Fund program, this rescheduling consolidated debt service during the three-year ESAF period with a consolidated amount of about US$220 million, of which about US$70 million was in arrears that had accumulated mainly during 1992. The terms of the rescheduling included enhanced concessions, with debt relief in present value terms of 50 percent of the consolidated amount. In 1991 USAID forgave US$444 million of Honduran debt.

The pace of the restructuring process with non-Paris Club bilateral creditors continued to be slow during 1991-93 as only two agreements were signed. In 1992, the total stock of external debt owed to Mexico, amounting to about US$55 million, of which US$10 million was in arrears, was rescheduled on nonconcessional terms over 29 years. In 1993, a combined buyback and debt-swap arrangement was agreed with Brazil. The operation, which covered about US$16 million of debt, removed all external debt owed to Brazil. Thus, at the end of 1993, arrears to non-Paris Club bilateral creditors declined to US$112 million compared with US$126 million in 1993. 1/

Refinancing agreements of arrears were reached during 1994 with other creditors (such as the Central American Bank for Economic Integration (BCIE), the OPEC Fund, IFAD, and BLADEX.

The conversions on commercial bank debt continued in 1991-92 with about US$150 million being converted. Total outstanding debt to commercial banks, which is all in arrears, was reduced to less than US$60 million, of which US$35 million corresponded to principal. No conversions took place during 1993-94.

As a result of the restructuring process, the stock of arrears was reduced from US$378 million at the end of 1990 to US$194 million at the end of 1993 (Table 16). However, despite these efforts, the debt-service requirements at the end of 1993 were still high, as the debt-service ratio after rescheduling was about 31 percent (the debt-service ratio before rescheduling was about 37 percent).

V. The Social Safety Net Programs

Honduras is one of the poorest countries in the Western Hemisphere. Its gross domestic product measured in U.S. dollars per capita (US$644 in 1993) is higher only than that of Guyana, Haiti, and Nicaragua. Poverty (defined as income insufficient to purchase a basic basket of food and other necessities) affects over 50 percent of the total population and nearly 80 percent of the rural population. Average life expectancy (67 years in 1993) is the lowest in Latin America. Adult illiteracy rate is 32 percent (1993) and the schooling average for the whole population is only 3.9 years.

Notwithstanding the low values of the social indicators, these improved markedly during the 1980s when public expenditure in the social sector increased continuously (both in nominal terms and in terms of GDP) 1/ despite the cumulative fall of 8 percent in real GDP per capita during the decade. During this period, average life expectancy increased by 19 percent (from 53 years in 1980), the rate of infant mortality decreased by 41 percent (from 85 per 1,000 in 1980 to 50 per 1,000 in 1989), and the adult illiteracy rate fell by over 20 percent (from more than 41 percent in 1980 to 32 percent in 1989). Honduras also made significant progress in controlling transmissible diseases through intensive immunizations campaigns. During 1990-91, there were no reported cases of poliomyelitis, cholera, or hemorrhagic dengue and only a few cases of typhoid and measles. 2/

1. Developments in 1990-93

In the context of the adjustment program of 1990, the Honduran authorities initiated a “Social Compensation System” directed to alleviate poverty and prevent a deterioration in the already precarious living standards of the poorest groups during the adjustment period. This program was targeted at: (a) women that were heads of families, (b) children between 6 and 14 years that were attending school, (c) unemployed persons in urban areas, and (d) underemployed persons in rural areas.

Two institutions were created in 1990 to implement these safety net programs: the Honduran Social Investment Fund (FHIS) and the Family Allocations Program (PRAF). Originally, these institutions were set up for a period of four years to provide services during the adjustment period and until the line ministries were strengthened to carry out their social functions. However, in 1994 their operations were extended for a further period of four years through the beginning of 1998.

a. Honduran Social Investment Fund (FHIS)

The FHIS, an autonomous institution (supervised by the Presidency), supports projects geared to improve living conditions of the poorest population. The FHIS collects funds (from both external and domestic donors) and contracts the execution of the projects and to third parties.

FHIS extends assistance for three different kinds of activities:

(1) Construction/rehabilitation of infrastructure, including rehabilitation of roads, construction of latrines and wells, and rehabilitation of schools and health centers.

(2) Education, health, and nutrition programs for the poorest groups, including provision of teaching materials and health supplies, small agricultural projects, and training for social support personnel.

(3) Support for the informal sector, under a program called PASI, by providing credit for microenterprises (covering up to 70 percent of the working capital or 30 percent of the fixed capital).

During 1990-93, FHIS’ expenditure amounted to the equivalent of L 660 million or an average of 1 percent of GDP. The Honduran Government financed 15 percent of all this expenditure; the remaining 85 percent was financed by multilateral institutions, mainly IDB (44 percent), World Bank (35 percent), and foreign governments. Principal donors among the latter include Germany (55 percent) through two institutions, GTZ and KFW; 1/ the United States (31 percent) through USAID; the Netherlands (10 percent) and other countries (4 percent). 2/

b. The Family Allocation Program (PRAF)

The PRAF, also an autonomous institution (supervised by the Presidency) focuses on improving health, nutrition and education of the lowest income groups, specially of families headed by single women. PRAF’s main task is to provide nutritional assistance via food coupons coordinated with the provision of basic educational, and health services to the target beneficiary population. PRAF’s activities are divided into three projects:

(1) Bonus for the woman head of family

This project gives women heads of family a monthly subsidy of L 20 per child (6 to 14 years old) who attends elementary school during the ten months of the school year. This subsidy is limited to three children per family.

(2) Bonus for pregnant and lactating women

This project gives pregnant or lactating women a monthly subsidy of L 20 per pregnant woman and per child (less than five years old) who is breastfed.

(3) Professional training project

This project complements the other two by financing training geared to increase the professional capacities of women, in agriculture, commerce, and other services. Eligible are women heads of family or in charge of children less than five years old. There is also a PRAF program that distributes basic school supplies to children. It operates in 3 of the country’s 18 departments.

The bonus programs have been offered in 9 departments and the remaining PRAF programs have been extended in 13 departments. PRAF’s coverage has been well focused, serving the poorest population within the selected departments on the basis of individual eligibility criteria. More than 70 percent of women classified as poor in the 1988 Population Census have benefitted from these programs.

PRAF’s internal administrative cost at 9 percent are on par with other food stamp and direct subsidy programs in developing countries. This cost includes overall program planning; once-a-month bonus distribution and accounting; and other administrative expenses. School teachers and clinic staff that participate in the program are not paid for their extra labor.

Most of the PRAF expenditure is for the bonus programs (88 percent); the remainder is allocated for school supplies to children (9 percent); and the training of women for microenterprises (3 percent). PRAF is financed mainly by the Honduran Government (80 percent); USAID (10 percent); and other donors (10 percent).

APPENDIX I Honduras: Main Changes in the Tax System

Since 1990 there have been several changes in the tax system. The most important include:

1. Changes in 1990

a. International trade taxes

- A shift in the valuation of imports (for fiscal purposes) from the old exchange rate of L 2.00 per U.S. dollar to the newly created customs valuation factor (CVF). The value of the CVF was to be changed monthly by the Central Bank to reflect changes in the market exchange rate. The initial value of the CVF was L 4 per U.S. dollar. In the event the CVF has been changed infrequently.

- A temporary tax on windfall profits from export earnings (in the wake of the devaluation of the lempira). The initial tax rates were 12 percent on traditional exports and 9 percent on nontraditional exports. The rates were to decline gradually and be phased out in January 1992.

- In order to improve competitiveness, a program for the gradual compression and reduction of import tariffs was introduced. With this program, import tariffs were reduced from a range of 1-90 percent, before the reform, to a range of 5-35 percent in 1991 and to a more permanent range (from a minimum of 5 percent and to a maximum of 20 percent) since 1992.

- In addition, taxes on coffee exports were made dependent on international prices. The tax would only be triggered at prices of or above US$80 per 100-pound bag.

b. Income taxes

- Corporate income tax brackets were merged into two rates: 15 percent for incomes below L 100,000 and 35 percent for incomes at or over L 100,000.

- An increase in exempted minimum personal income from L 10,000 to L 18,000. At the same time most other personal tax exemptions were eliminated.

c. Taxes on goods and services

- The general sales tax rate was increased from 5 percent to 7 percent.

2. Changes in 1991-92

In the first half of 1991:

- An increase in the sales tax on petroleum products from 7 percent to 15 percent.

- In 1992 there were only minor changes to the tax system:

- The specific tax on the production of alcoholic beverages was converted to an ad-valorem tax.

- The import tariff on several agricultural products (beans, corn, rice, and animal processed food) was raised from 10 percent to 20 percent, while the import tariff on several agricultural inputs (fertilizers, insecticides, herbicides, and fungicides) was lowered to 1 percent.

- As part of the Free Trade Agreement with other Central American countries, products included in the Agreement were exempted from the import tariff.

- Several products (mainly planes, boats, and yachts) were exempted from both the import tariff and the sales tax.

3. Changes in 1993

The most important changes before the November presidential election included the following:

- A shift from a value-added tax (VAT) “income type” to a VAT “consumption type” as a tax credit equivalent to 100 percent of the sales tax was granted on purchases of machinery and equipment. In the first two years only 50 percent of the tax credit is granted in the same year the asset is purchased (the remaining 50 percent of the tax credit is granted in the next year). Beginning in 1996, the whole tax credit will be granted in the year the asset is purchased.

- A 10 percent tax on income earned both on bonds and stock operations outside the banking system and on savings accounts in the banking system. For purposes of simplicity and social equity, earnings on a capital base of less than L 15,000 were excluded from the tax.

- A once-and-for-all 5 percent asset-revaluation tax on depreciable assets and on land used directly in the production process, and of 8 percent on land not used directly in the production process.

The last two measures have some mixed effects. The tax on interest income may affect adversely financial saving. The asset revaluation, on the one hand, reduces distortions since it compensates for past inflation. However, it will have an adverse effect on fiscal revenue. It is estimated that the present value of future revenue losses exceeds by more than five times the yield of the tax.

After the November elections, the most important changes were the following:

- All fringe benefits received by workers, including the payment of the “thirteenth-month salary” are no longer considered as part of taxable income.

- The exemption from the income tax for medical services was increased from L 5,000 to L 10,000.

- Import tariffs for vehicles carrying ten people or more, trucks with capacity of at least five (metric) tons, and all parts and accessories for trucks and automobiles were reduced to 1 percent.

APPENDIX II The Social Security Institute (IHSS) and Public Pension Funds

The IHSS, created in 1963, provides medical benefits to public and private sector workers and members of their immediate family, and pension benefits to private sector workers. The number of the insured contributors is still small relative to the labor force, although it has increased from 17.9 percent in 1989 to 23.2 percent in 1993. Expenditures were, on average, equivalent to 1 percent of GDP during 1989-93.

The medical program, including hospital care, maternity and medicines is financed on a pay-as-you-go basis, with contributions of 7.5 percent of the contributory salary, of which employers pay 5 percent and workers 2.5 percent. The pension (old age, disability, and death) program is financed with contributions of 3 percent of contributory salary, of which employers pay 2 percent and workers 1 percent. The contributory salary has been subject to a L 600 per month ceiling, for the last 30 years, in the two main cities where over 91 percent of the contributors reside; this ceiling has weakened the finances of the system. The IHSS does not receive any transfers from the central government; on the contrary, the Government has fallen in arrears on its employer contributions.

The financial situation of the IHSS has been weak in recent years. Except for 1993, IHSS’ primary current balance has registered deficits averaging 0.2 percent of GDP. Its overall balance also registered deficits during 1990-92 (Statistical Appendix Table 33). The main factors behind the weak finances of the IHSS during 1990-93 were: (a) a faster growth in beneficiaries (which includes contributors’ Immediate family members) than contributors, with beneficiaries growing at an average annual rate of 11.4 percent during 1990-93 (reaching 997,000 in 1993) while contributors increased at an average annual rate of 10.8 percent (reaching 411,000 in 1993); (b) the accumulation of arrears both by the private sector and the Government as employers. Arrears to IHSS, at the end of 1993, were estimated at L 174 million (0.8 percent of GDP) from the Government and L 40 million from the private sector; finally, (c) the ceiling on the contributory salary. This ceiling (set at L 600) is in contrast with the flexibility applied to the formula used to calculate benefits. For example, old age benefits are a ratio (66 percent) of the average salary in the last five years of working life; invalidity and death benefits can vary from 40 percent to 100 percent of the last salary, depending on the degree of invalidity. Moreover, pension benefits have been adjusted for inflation. The pension program is currently in surplus, but as there is no sufficient link between benefits and contributions, increases in life expectancy and in the dependency ratio (the number of pensioners to contributors) will erode its finances.

Until 1988 the IHSS was compelled to invest in government paper; since then, the Board of Directors has been authorized to take independent investment decisions.

Other Public Pension Funds: INJUPEMP and IMPREMA

Civil servants are covered by INJUPEMP and teachers by IMPREMA. The number of contributors to INJUPEMP and IMPREMA reached about 80,000 and 25,000, respectively, in 1993. Contributions for each pension fund are set at 18 percent of salaries, of which 11 percent is paid by the Government as employer and 7 percent by the employees. The Board of Directors of INJUPEMP and IMPREMA is composed of one representative each from the Presidency of the Republic, the Ministry of Finance, the Central Bank, and the employees. Members of INJUPEMP and IMPREMA also participate in the Health and Maternity program provided by IHSS.

In 1993 INJUPEMP’s current revenue was roughly half of the IHSS’ revenue; it was equivalent to 1.6 percent of GDP. The current surplus remained at about 1 percent of GDP in 1989-90, but it declined in 1991 to 0.1 percent of GDP reflecting an increase in revenue arrears. In 1992-93, it improved to an average of 0.9 percent of GDP.

INJUPEMP’s capital expenditure and net lending to members (advances to private contractors for the construction of houses for sale to members) increased from the equivalent of 0.4 percent of GDP in 1991 to 0.9 percent in 1993 compared to an average of 0.7 percent in 1989-90. INJUPEMP’s overall balance shifted from a surplus of 0.3 percent of GDP in 1989-90 to a deficit of 0.3 percent of GDP in 1991. It rose to a surplus of 0.4 percent of GDP in 1992 but because of a strong increase in capital expenditure, it fell to virtual equilibrium in 1993 (Statistical Appendix Table 34).

IMPREMA’S current surplus has steadily declined from the equivalent of 0.6 percent of GDP in 1989-91 to an average of 0.2 percent of GDP in 1992-93, owing mainly to an increase in government contribution arrears (Statistical Appendix Table 35).

Although IMPREMA’S fixed capital formation and net lending declined from 0.7 percent of GDP in 1989-91 to 0.4 percent of GDP in 1992-93, the overall deficit was equivalent to 0.3 percent of GDP both in 1989 and 1993.

APPENDIX III The Main State Enterprises

ENEE’s operating surplus rose from 1.4 percent of GDP in 1989 to 3.1 percent of GDP in 1993 as electricity rates were increased sharply in real terms in 1990-93, with the objective of making them equivalent to 95 percent of the long-run marginal costs (Statistical Appendix Table 36). This objective was reached in 1992 and observed until June 1993. Electricity rates declined sharply in real terms during the 12 months ending June 1994, but rose in August 1994 as the authorities increased nominal rates by 42 percent.

ENEE’s overall surplus which averaged 1 percent of GDP in 1990-91, turned into a deficit of 0.5 percent of GDP in 1992, as capital expenditure rose sharply. In 1993 the overall balance shifted to surplus as capital expenditures moderated. A reduction in hydro-generated electricity in 1994 and the need to substitute it with the more expensive thermal-generated electricity led to a lower operating surplus in the first half of 1994. However, this was more than offset by a reduction in capital expenditures and the overall surplus in the six months of 1994 was higher than the annual surplus recorded in 1993.

HONDUTEL’s operating surplus rose from 0.9 percent of GDP in 1989 to 2 percent in 1990-93 as charges on long-distance calls rose sharply with the devaluation of the lempira (Statistical Appendix Table 37). Although capital expenditures also increased from 0.2 percent of GDP in 1989 to an average of 0.9 percent of GDP in 1990-93 HONDUTEL’s overall balance registered either a surplus (1991 and 1993) or virtual balance (1990 and 1992).

In late 1993 HONDUTEL undertook a major expansion project which will treble phone line capacity to 330,000 by 1995. The cost of the project is estimated at US$200 million (6 percent of GDP) of which US$150 million is being financed through two CARIFTA loans with maturities of 12 and 15 years. Because of this project, HONDUTEL’s investment in the first semester of 1994 (L 414 million) was more than four times larger than during 1993 (L 92 million) and the enterprise registered a relatively large deficit in the first half of 1994.

ENP’s rates have been set in U.S. dollars during the last four years. As a result, ENP’s operating surpluses in 1992-93 were equivalent to more than twice the surplus of 1989. Capital expenditure remained relatively constant in 1989-92 but increased substantially in 1993, generating an overall deficit for the first time in recent years (Statistical Appendix Table 38). The more moderate capital expenditures in the first half of 1994 have been reflected in a shift to an overall surplus.

In contrast with the other main enterprises, SANAA’s operating results have deteriorated in recent years despite a 10 percent tariff increase in 1990 (an increase in the operating surplus in 1993 only reflected a sizable increase in accounts payable to local supplies) as the enterprise faced water losses estimated at 40-50 percent of output and most users were charged a flat fee Independent of consumption. SANAA’S average annual operating surplus was less than 0.1 percent during 1991-93. Therefore, the bulk of its capital expenditure, which averaged 0.9 percent of GDP per year in 1991-93, was financed with central government transfers (Statistical Appendix Table 39).

STATISTICAL APPENDIX
Table 19.Honduras: National Accounts(In millions of current lempiras)
19891990199119921993
Consumption8,61410,14712,99515,02517,777
General government1,4751,6211,7692,1712,520
Private sector7,1398,52611,22612,85415,257
Gross domestic investment1,9782,8814,0224,8816,495
Fixed capital formation1,8842,5333,0964,2025,672
Public sector5838251,0971,8243,044
Private sector1,3011,7081,9992,3782,628
Inventory changes94348926679823
Gross domestic expenditure10,59213,02817,01719,90624,272
Exports of goods and nonfactor services2,0774,5175,4235,7746,955
Imports of goods and nonfactor services-2,335-4,996-6,126-6,880-8,702
GDP at market prices10,33413,53716,31418,80022,525
Net factor payments-496-1,050-1,139-1,157-1,211
Factor receipts from abroad5294231393511
Factor payments abroad-548-1,144-1,370-1,550-1,722
GNP at market prices9,83811,48715,17517,64321,314
Indirect taxes1,0981,6742,3812,7173,247
Subsidies202934248120
GNP at factor costs8,76010,10612,83614,97418,187
Depreciation-654-872-1,115-1,214-1,372
National income8,1069,23411,72113,76016,815
Sources: Central Bank of Honduras; and Fund staff estimates.
Sources: Central Bank of Honduras; and Fund staff estimates.
Table 20.Honduras: National Accounts at Constant Prices(In millions of 1978 lempiras)
19891990199119921993
Consumption4,1214,0434,1574,3034,560
General government669579520587616
Private sector3,4523,4643,6373,7163,994
Gross domestic investment9579881,1651,3101,538
Fixed capital formation9208778791,1161,322
Public sector285286311484738
Private sector635591568632549
Inventory changes37111286194216
Gross domestic expenditure5,0785,0315,3225,6136,098
Exports of goods and nonfactor services1,6291,6371,6041,7321,713
Imports of goods and nonfactor services-1,546-1,502-1,592-1,711-1,832
GDP at market prices5,1615,1665,3345,6345,979
Net factor payments-319-339-387-463-343
Factor receipts from abroad21152021161
Factor payments abroad-340-354-407-484-504
GNP at market prices4,8424,8274,9475,2845,636
Indirect taxes483600556566612
Subsidies9105101023
GNP at factor costs4,3684,3324,4014,7285,047
Depreciation-306-313-320-328-335
National income4,0624,0194,0814,4004,712
Terms of trade effect-233-238-141-467-505
National income adjusted by terms of trade3,8293,7813,9393,9334,207
Sources: Central Bank of Honduras; and Fund staff estimates.
Sources: Central Bank of Honduras; and Fund staff estimates.
Table 21.Honduras: Origin of Gross Domestic Product
19891990199119921993
(In millions of current lempiras)
Gross domestic product at factor cost9,25611,15613,97516,13119,398
Primary production2,1092,6943,3843,5944,362
Agriculture and related sectors1,9512,5033,1783,2863,993
Mining158191206308369
Secondary production2,1292,7503,6094,4665,502
Manufacturing1,3891,8232,3672,8753,456
Construction4645747451,0611,457
Utilities276353497530589
Services5,0185,7126,9828,0719,534
Transport and communications6487039091,0481,102
Commercial services1,0891,2891,5671,7622,137
Financial services7128261,1091,3281,654
Housing services7217909061,0421,162
Public administration7738141,0501,1871,446
Other services1,0751,2901,4411,7042,033
(In millions of 1978 lempiras)
Gross domestic product at factor cost4,6874,6714,7885,0785,390
Primary production1,3491,3571,4391,4961,529
Agriculture and related sectors1,2711,2851,3641,4131,443
Mining7872758386
Secondary production1,0591,0551,0621,1791,296
Manufacturing704709721765813
Construction242218212284344
Utilities113128129130139
Services2,2792,2592,2872,4032,565
Transport and communications396411423441456
Commercial services507503514529560
Financial services325335367402449
Housing services300313323334347
Public administration341291280291320
Other services410406380406433
Source: Central Bank of Honduras.
Source: Central Bank of Honduras.
Table 22.Honduras: Financing of Investment(In millions of current lempiras)
19891990199119921993
Gross domestic investment1,9782,8814,0224,8816,495
Public fixed capital formation5838251,0971,8243,044
Private fixed capital formation1,3011,7081,9992,3782,480
Change in inventories94348926679823
Financing of investment1,9782,8814,0224,8816,495
Gross national savings1,3702,5223,2103,6504,422
Public sector 1/-891035721,270776
Private sector1,4592,4192,6382,3803,646
External savings 2/6083598121,2312,073
Memorandum item
Average exchange rate (lempiras/US$)2.884.105.385.606.52
National disposable income 3/10,07112,47815,84018,34021,773
Sources: Central Bank of Honduras; and Fund staff estimations.

Equivalent to the current account balance of the nonfinancial public sector.

Equivalent to the reciprocal of the current account of the balance of payments.

Equivalent to the sum of GNP plus external transfers as reported in the balance of payments.

Sources: Central Bank of Honduras; and Fund staff estimations.

Equivalent to the current account balance of the nonfinancial public sector.

Equivalent to the reciprocal of the current account of the balance of payments.

Equivalent to the sum of GNP plus external transfers as reported in the balance of payments.

Table 23.Honduras: Composition of Gross Fixed Capital Formation(In millions of current lempiras)
1989199019911992Prel.

1993
Gross fixed capital formation1,8842,5333,0964,2025,524
Machinery and equipment8211,0271,1711,5121,772
Private7689481,0771,2551,561
Public537994257211
Construction1,0631,5061,9252,6903,752
Private5337609221,123919
Public5307461,0031,5672,833
Source: Central Bank of Honduras.
Source: Central Bank of Honduras.
Table 24.Honduras: Statistics on Selected Agricultural Products(Area in thousands of hectares: production and exports in thousands of quintals: yield in quintals per hectare: values in millions of current lempiras)
1989199019911992Prel.

1993
Bananas
Area21.021.321.422.022.1
Yield1,130.41,067.3998.31,022.7924.6
Volume of production23,738.022,733.021,363.022,499.020,433.0
Of which: exported18,009.016,928.415,330.016,373.214,212.0
Gross value of production639.01,058.91,230.01,388.01,061.2
Value added356.0495.4496.0329.0333.0
Coffee
Area140.7148.9157.5165.4173.7
Yield15.517.514.117.915.3
Volume of production2,179.12,604.32,215.12,968.02,665.0
Of which: exported1,878.32,296.31,910.02,593.92,255.3
Gross value of production415.6377.0674.6654.0939.0
Value added312.7261.7485.0598.0887.0
Corn
Area349.7361.7412.4413.5--
Yield31.434.229.830.8--
Volume of production10,980.312,381.512,292.912,728.013,163.0
Gross value of production193.7359.1412.0522.9557.8
Value added135.6238.2244.0287.7351.4
Beans
Area83.683.3101.3103.3--
Yield15.616.417.213.9--
Volume of production1,306.51,366.51,741.41,441.0857.0
Of which: exported57.9
Gross value of production52.3109.3200.0134.1158.5
Value added43.496.0115.043.063.4
Rice
Area15.917.120.820.2--
Yield91.282.991.668.5--
Volume of production1,450.01,417.91,905.21,383.0852.0
Gross value of production41.173.9114.081.045.2
Value added24.946.376.039.015.0
Plantains
Area10.511.011.111.210.0
Yield323.5325.1318.1313.6390.8
Volume of production3,396.73,576.63,531.03,512.03,908.0
Of which: exported721.2719.1477.1362.6519.3
Gross value of production73.385.2121.2132.8134.5
Value added45.252.673.680.7105.0
Sorghum
Area59.375.180.080.0--
Yield20.620.423.118.9--
Volume of production1,221.31,531.61,848.31,510.01,990.0
Of which: exported----------
Gross value of production18.636.555.048.071.6
Value added16.222.637.028.039.4
Tobacco
Area7.38.58.48.89.1
Yield14.413.313.114.518.4
Volume of production104.8113.0110.3128.0168.0
Of which: exported22.226.926.241.277.2
Gross value of production22.027.039.063.076.0
Value added13.314.022.034.041.0
Cotton
Area1.93.01.0
Yield50.733.430.0
Volume of production96.3100.130.0
Of which: exported16.723.1
Gross value of production6.511.04.5
Value added3.14.51.0
Sugarcane
Area41.641.342.440.440.5
Yield1,441.01,543.71,416.61,527.51,616.1
Volume of production59,944.063,753.060,063.061,711.065,452.0
Gross value of production89.0107.3118.0151.0163.4
Value added57.071.073.097.0118.0
African palm
Area20.420.822.323.223.2
Yield357.2359.7338.7382.2363.9
Volume of production7,287.77,482.47,552.08,866.08,443.0
Gross value of production42.461.171.691.0121.2
Value added24.035.041.049.068.0
Melon
Area----------
Yield----------
Volume of production943.9864.51,011.61,075.91,562.9
Gross value of production10.49.734.638.760.9
Value added7.66.820.121.131.1
Pineapple
Area2.32.32.32.4--
Yield540.5580.6593.6548.3--
Volume of production1,243.21,335.31,588.41,644.91,714.8
Gross value of production21.338.585.787.489.7
Value added12.820.432.533.935.9
Source: Central Bank of Honduras.
Source: Central Bank of Honduras.
Table 25.Honduras: Production and Prices of Basic Grains(Production in thousands of quintals: prices in lempiras per quintal)
WholesaleProduction

Prices
Support Prices

Paid to

Producers 1/
Corn
1987-889,522.021.0516.04
1988-8910,980.328.9917.64
1989-9012,381.534.8329.00
1990-9112,292.958.3533.50
1991-9212,728.046.8538.53
1992-9313,163.055.9642.38
Beans
1987-88510.0112.1554.88
1988-891,306.582.8440.00
1989-901,366.5103.6580.00
1990-911,741.4147.58115.00
1991-921,441.085.2270.00
1992-93857.0251.87185.00
Rice1/
1987-881,046.069.3323.56
1988-891,450.077.1028.37
1989-901,417.9103.3452.10
1990-911,905.2166.0659.99
1991-921,383.0169.4545.00
1992-93852.0163.8653.00
Sorghum
1987-881,019.024.0014.70
1988-891,221.324.8915.25
1989-901,531.632.3923.80
1990-911,848.348.4129.75
1991-921,510.047.9632.00
1992-931,990.058.7936.00
Sources: Honduran Institute for Agricultural Marketing (IHMA), and Central Bank of Honduras.

Market prices from 1991 on.

Sources: Honduran Institute for Agricultural Marketing (IHMA), and Central Bank of Honduras.

Market prices from 1991 on.

Table 26.Honduras: Consumer Price Index(1978=100)
Weight 1/19891990199119921993Nov.

1994
I. Period Averages2/
Total100.0227.1280.0375.1408.0451.8
By expenditure
Food41.2201.9255.5367.2390.1439.5
Housing30.6245.2279.7345.2373.3408.2
Clothing9.1275.9356.3506.7560.3602.6
Health care4.0215.2271.6391.6432.1488.3
Personal care3.0219.2278.9343.0364.0384.4
Beverages and tobacco3.8268.6361.0451.9565.6631.4
Transportation3.0175.4253.2290.4303.8323.5
Other5.3247.1303.2378.7436.2494.2
By region
Central47.5224.7278.1368.4399.3437.6
Northern40.2231.5284.6384.1419.4468.2
Southern4.7214.8268.3367.2400.5453.7
Eastern5.9228.2279.0379.1406.6454.3
Western1.9214.9261.3359.1403.1449.3
II. End of period3/
Total100.0238.6325.2395.0420.8475.7605.8
By expenditure
Food41.2213.4307.9384.0405.5465.6623.6
Housing30.6251.5311.4363.6383.6427.6529.8
Clothing9.1293.8428.2533.1578.9628.3705.5
Health care4.0223.8326.3415.0447.4532.2683.8
Personal care3.0236.4312.9356.2368.4416.3502.9
Beverages and tobacco3.8325.4404.1500.1579.0653.3854.4
Transportation3.0179.5306.5293.5305.9331.0418.4
Other5.3250.2323.3414.1444.0514.4659.8
By region
Central47.5235.7326.4385.2410.3458.9
Northern40.2244.1327.5407.8434.7497.1
Southern4.7225.0307.1388.9410.9474.2
Eastern5.9238.4326.6399.5418.7468.2
Western1.9223.9302.7375.4420.4469.8
Source: Central Bank of Honduras.

In percent.

Average over 12-month period ended in December.

Data refers to the month of December.

Source: Central Bank of Honduras.

In percent.

Average over 12-month period ended in December.

Data refers to the month of December.

Table 27.Honduras: Wholesale Price Index(1978=100)
19891990199119921993
Weight 1/I. Period Average2/
Total100.0214.4278.0373.8411.8463.9
National67.2197.9252.8359.9405.1466.3
Agriculture and livestock28.2189.4245.0359.1386.7488.5
Agriculture10.9168.4219.4317.5275.6349.1
Livestock10.3177.0240.7364.3378.4416.9
Other7.0239.9290.5415.1568.7805.4
Industrial39.1203.6258.0358.8418.3450.2
Food12.3173.6216.5307.9352.0376.8
Beverages and tobacco7.2242.6290.2385.0498.1542.0
Construction material4.0193.0251.7297.9303.6360.7
Textile2.9213.8226.6372.6457.1444.2
Clothing2.1173.6247.4333.9369.5387.8
Chemical3.3211.5223.7342.4546.8632.0
Oil products4.6211.6356.0506.3483.8502.8
Other2.7241.4287.1384.7404.3415.0
Imported32.8248.1329.4404.4425.5459.0
Food6.4232.6300.0381.3424.0479.1
Beverages and tobacco0.6272.3439.4517.0612.0626.8
Textile4.9230.1251.6314.0321.2345.1
Chemical9.8277.7410.8477.3474.9503.0
Pharmaceutic3.6143.8186.6323.3412.4457.9
Other7.5282.5358.9418.0422.1445.8
II. End of Period3/
Total100.0228.6322.8388.7426.4485.9
National67.2206.8297.1374.0425.0483.7
Agriculture and livestock28.2198.4283.0355.7423.8506.1
Agriculture10.9164.0264.0250.1278.4354.1
Livestock10.3191.6282.9386.9383.2448.6
Other7.0262.1312.8472.6704.8822.0
Industrial39.1212.4307.2387.1425.9467.5
Food12.3177.5264.2326.5357.7392.0
Beverages and tobacco7.2271.5312.5439.1506.6557.7
Construction material4.0198.6271.9291.4308.8383.1
Textile2.9217.9230.8439.4462.8467.6
Clothing2.1182.0317.2358.0361.5419.1
Chemical3.3222.0223.3408.4591.0664.8
Oil products4.6211.6339.0502.7483.0510.7
Other2.7241.4315.6410.5405.7417.9
Imported32.8273.2375.6418.9429.2490.5
Food6.4268.8331.5408.1437.1508.9
Beverages and tobacco0.6323.5439.4517.0612.0645.0
Textile4.9230.1307.6320.8319.7364.9
Chemical9.8321.3454.2490.8476.2527.0
Pharmaceutic3.6143.7281.2334.3418.6506.8
Other7.5300.6395.2431.3423.1489.1
Source: Central Bank of Honduras.

In percent.

Average over the 12-month period ended in December.

Data refers to the month of December.

Source: Central Bank of Honduras.

In percent.

Average over the 12-month period ended in December.

Data refers to the month of December.

Table 28.Honduras: Remuneration by Sector of Economic Activity
Prel.
19891990199119921993
(In millions of current lempiras)
Total4.5525.4586.4637.8808.848
Agriculture and related sectors9911,1831,3961,6251,826
Mining8780102133164
Manufacturing6728641,1231,4661,683
Construction256288374533631
Utilities829397128149
Transport and communication334426535582589
Commercial services412586574632707
Financial services288318367468514
Housing services727991157173
Public administration5145256938541,000
Other services8441,0161,1111,3021,412
Public services623725765901963
Private services221291346401449
(In millions of 1978 lempiras)
Public sector537480415462468
Private sector1,7151,7171,5291,7161,741
(Annual percentage change)
Public sector2.3-10.6-13.511.31.3
Private sector-0.60.1-10.912.21.5
Source: Central Bank of Honduras.
Source: Central Bank of Honduras.
Table 29.Honduras: Labor Force by Sector of Economic Activity(As a percent of total labor force)
19891990199119921993
Total100.0100.0100.0100.0100.0
Primary production48.247.346.445.644.7
Agriculture and related sectors47.947.046.145.344.4
Mining0.30.30.30.30.3
Secondary production17.918.018.318.518.7
Manufacturing11.811.811.811.811.8
Construction5.55.65.86.06.2
Utilities0.60.60.70.70.7
Services33.934.635.335.936.6
Transport and communications2.82.82.82.82.8
Commercial services10.010.110.310.410.5
Financial services1.81.81.81.91.9
Other services19.319.920.420.821.4
Memorandum item
Labor force as a percent of total population30.530.831.031.231.5
Source: Central Bank of Honduras.
Source: Central Bank of Honduras.
Table 30.Honduras: Consolidated Operations of the Nonfinancial Public Sector(In millions of lempiras)
19891990199119921993Jan–Jun

1994
I. Central Government
Total revenue1,527.82,055.92,842.03,428.33,894.12,168.6
Current revenue1,527.72,055.92,842.03,320.73,776.92,106.4
Tax revenue1,296.11,852.92,533.13,067.53,523.12,022.3
Income tax366.6430.7623.7863.2959.0592.4
Property tax14.415.720.123.734.919.2
Asset revaluation tax--------88.4--
Goods and Services459.0690.2952.31,168.91,383.8843.3
Sales tax193.3344.2472.3548.9688.3415.7
Petroleum derivatives24.342.996.3160.7154.1117.0
Alcohol and nonalcoholic beverages115.9127.4161.5188.7224.3140.7
Other125.5175.7222.2270.6317.1169.9
International trade454.7715.1935.71,009.91,056.2567.0
Imports389.0497.9691.1850.1966.2517.0
Petroleum55.481.1148.0170.4154.178.8
Other333.6416.8543.1679.7832.1438.2
Exports65.7217.2244.6159.670.050.0
Bananas42.739.090.4101.159.341.2
Coffee19.50.526.633.1--3.8
Other3.5177.7127.625.610.75.0
Other taxes1.41.21.31.60.80.4
Non-tax revenue173.8139.7172.371.474.645.6
Current transfers57.863.3136.6181.8179.238.5
From NFPE34.739.0108.5172.2179.236.0
From rest of general government18.716.318.09.6--2.5
From other4.48. 010.1----
Capital revenue 1/0.1----107.6117.262.2
Total expenditures and net lending2/1,945.02,504.42,818.13,422.25,205.72,012.2
Current Expenditures 2/1,531.61,823.52,034.72,307.33,154.11,259.9
Wages and salaries868.8999.01,069.51,272.61,523.6750.1
Social security contributions70.781.599.3113.1130.370.6
Goods and services399.8465.8501.4481.9628.1230.0
Transfers192.3277.2364.5439.7871.9209.2
To public sector148.4183.5216.1259.5343.4128.5
Rest of general government148.4183.5216.1259.5343.4128.5
NFPE------------
To private sector39.882.3138.9160.1504.769.3
Abroad4.110.99.520.123.811.4
Capital expenditures394.4658.6799.71,090.62,051.9567.0
Fixed capital formation306.9242.1434.0627.71,502.9342.9
Transfers87.5416.5456.2462.9514.0296.9
To public sector85.2410.3294.6368.0314.5218.2
Rest of general government47.226.771.893.2167.534.7
NFPE38.0383.6222.8274.3147.0183.5
To private sector2.36.2161.694.9199.578.7
Net lending19.022.3-106.824.334.7112.5
To public sector19.022.3-106.824.334.7112.5
Rest of general government7.05.4-41.0--2.4-10.5
NFPE12.016.9-65.824.332.3123.0
Current primary balance-3.9232.4807.31,013.4622.8846.5
Primary surplus (deficit -)-417.2-448.523.96.1-1,311.6156.4
Interest payments315.4501.9748.3925.2978.5601.1
External 3/161.1295.2501.1672.0743.3445.7
Domestic154.3206.7247.2253.2235.2155.4
Current balance-319.3-269.559.088.2-355.7245.4
Overall balance-732.6-950.4-724.4-919.1-2,290.1-444.7
II. Rest of General Government
Total revenue488.2649.5734.9952.31,122.7642.6
Current revenue454.4587.4646.7851.2930.3506.5
Tax revenue79.1110.7129.2146.0196.8111.0
Contributions to IHSS203.9211.3273.3305.8410.6229.7
From Central Government94.4108.1129.8141.3171.6102.7
From state enterprises18.020.226.230.838.020.2
From private sector91.583.0117.3133.7201.0106.8
Current transfers136.3179.2235.4308.8277.7101.0
From Central Government134.0175.8232.9306.0275.299.0
From state enterprises2.33.42.52.82.52.0
Other nontax revenue35.186.28.890.645.264.8
Capital revenue33.862.188.2101.1192.4136.1
Central government transfers25.059.671.893.2167.5136.0
Other8.82.516.47.924.90.1
Total expenditures and net lending2/641.6719.8946.11,046.41,415.7912.3
Current expenditures 2/398.9495.7660.8728.9855.3378.2
Wages and salaries189.5218.9233.0276.7315.3173.8
Goods and services55.476.7139.5122.2121.263.6
Current transfers (benefits to private sector)154.0174.8277.2299.8351.8140.8
Capital expenditures120.8187.2190.9292.6533.6491.0
Fixed capital formation120.8166.6158.1270.5504.8482.9
Inventory changes--20.632.822.128.88.1
Net lending to members121.962.2105.555.193.843.1
Current primary balance55.5117.1-3.0152.5142.0128.3
Primary surplus (deficit -)-153.4-70.3-211.2-94.1-293.0-269.7
Interest revenue126.8136.9163.5203.1196.0104.7
Interest payments18.820.229.830.028.914.5
Current balance163.5233.8130.7325.6309.1218.5
Overall deficit-45.446.4-77.579.0-125.9-179.5
III. Nonfinancial Public Enterprises
Operating surplus before taxes, transfers and interest270.9468.4883.21,066.11,331.5683.2
Revenue513.2702.81,197.01,427.01,699.41,020.4
Expenditure (excluding taxes and transfers)243.2234.4313.8360.9367.9337.2
Net transfers received-47.9-59.1-129.3-144.5-224.0-42.8
Current transfers received------1.8----
Less: taxes and transfers paid47.959.1129.3146.3224.042.6
To Central Government40.743.1108.4118.3193.424.1
To rest of general government6.610.716.013.415.711.6
To private sector0.34.61.913.513.74.8
To abroad0.30.73.01.11.22.3
Net capital revenue39.3477.2314.5278.8282.5151.9
Capital revenue1.03.67.40.5--82.0
Plus: capital transfer receipts38.3473.6307.1297.9288.171.1
From Central Government38.3473.6307.1297.9288.171.1
Less: capital transfers------19.65.61.2
to Central Government------2.0----
to rest of general government------17.65.61.2
Capital expenditure and net lending139.1459.4476.11,001.5968.1601.7
Capital expenditure157.1459.4476.11,001.5968.1681.7
Fixed investment155.2415.9414.1835.6852.2659.2
Inventory changes0.336.538.6131.570.513.5
Other capital expenditure1.57.023.434.445.49.0
Net lending-18.0---------80.0
To Central Government-18.0---------80.0
Primary surplus or (deficit -)123.2427.2592.3198.9421.9190.6
Interest Payments156.6269.7371.6264.9284.4185.0
External102.2172.1286.9199.4226.8168.5
Internal54.497.684.865.557.616.5
Overall balance-33.3157.5220.7-66.0137.55.6
IV. General Government
Total revenue1,743.92,345.63,124.43,830.54,315.52,434.1
Current revenue1,735.02,343.13,108.03,715.04,260.42,408.7
Tax revenue1,375.21,963.62,662.33,213.53,719.92,133.3
Non-tax revenue208.9225.9181.1162.0119.8110.4
Social security contributions109.5103.2143.5164.5239.0127.0
From NFPE18.020.226.230.838.020.2
From private sector91.583.0117.3133.7201.0106.8
Current transfers41.450.4121.1175.0181.738.0
From NFPE37.042.4111.0175.0181.738.0
From other4.48.010.1------
Capital revenue8.92.516.4115.555.125.4
Total expenditure and net lending2/2,314.53,864.43,311.73,918.56,007.12,511.5
Current expenditure 2/1,683.41,993.72,303.72,549.13,495.61,433.9
Wages and salaries1,058.31,217.91,302.51,549.31,839.1923.9
Goods and services455.2542.5640.9604.1749.3293.6
Current transfers167.9233.3360.3395.7907.2216.4
To private sector193.8282.9427.2490.1923.5210.1
To abroad4.110.99.520.123.811.4
Adjustment for transfers-28.0-60.5-76.4-114.5-40.1-5.1
Capital expenditure and net lending631.1870.71,008.01,369.42,511.41,077.6
Capital expenditure497.2791.6968.31,290.02,385.4984.3
Fixed capital formation427.7408.7682.6986.82,191.5325.8
Capital transfers69.5362.3343.4369.7348.9150.4
To NFPE38.0383.6222.8274.8147.0183.5
To private sector2.36.2161.694.9199.5150.4
Adjustment for capital transfers29.2-27.5-41.0---2.4-111.8
Inventory changes--20.632.822.128.88.1
Net lending133.979.139.779.4126.1166.1
Social security lending to members121.962.2105.555.193.843.1
To NFPE12.016.9-65.824.332.3123.0
Primary current balance51.6349.4804.31,165.9764.8974.8
Primary surplus-570.6-518.8-187.3-88.0-1,691.6-150.2
Interest revenue126.8136.9163.5203.1196.0104.7
Interest payments334.2522.1778.1955.21,007.4615.6
External161.1295.2501.1672.0743.3445.7
Internal173.1226.9277.0283.2264.1169.9
Current balance-155.8-35.8189.7413.8-46.6463.9
Overall balance-778.0-904.0-801.9-840.1-2,538.0-661.1
V. Consolidated Nonfinancial Public Sector
Total revenue1,960.82,755.03,877.84,691.85,427.33,141.1
Current revenue1,950.92,748.93,854.04,575.35,372.23,033.7
Tax revenue1,375.21,963.62,662.33,213.53,719.92,133.3
Non-tax revenue208.9225.9181.1162.0119.8110.4
Current transfers from private sector4.48.010.1------
Social security contributions from private sector91.583.0117.3133.7201.0106.8
Operating surplus of public enterprises270.9468.4883.21,066.11,331.5683.2
Capital revenue9.96.123.8116.055.1107.4
Total expenditure and net lending2/2,408.22,846.63,472.84,582.36,697.03,100.7
Current expenditure 2/1,676.31,990.12,295.82,489.63,499.91,418.5
Wages and salaries1,058.31,217.91,302.51,549.31,839.1923.9
Goods and services455.2542.5640.9604.1749.3293.6
Current transfers162.8229.8352.4336.2911.5201.0
To private sector194.1287.5429.1503.6937.2214.9
To abroad4.411.612.521.225.013.7
Adjustment for transfers-35.7-69.3-89.2-188.6-50.7-27.6
Capital expenditure and net lending731.9856.51,177.02,092.63,197.11,682.2
Capital expenditure610.0794.31,071.52,037.53,197.11,639.1
Fixed capital formation582.9824.61,006.21,733.83,103.31,485.0
Inventory changes0.357.171.4153.699.321.6
Capital transfers to private sector2.36.2161.694.9199.578.7
Adjustment for capital transfers22.9-100.6-191.1-20.8-100.844.8
Other capital expenditure1.57.023.434.445.49.0
Net lending121.962.2105.555.193.843.1
Pension funds lending to members121.962.2105.555.193.843.1
Current primary balance274.6758.81,558.22,085.71,872.31,615.2
Primary balance-447.4-91.6405.0109.0-1,269.740.4
Interest revenue126.8136.9163.5203.1196.0104.7
Interest payments490.8791.81,149.71,220.11,291.8800.6
External263.3467.3788.0871.4970.1614.2
Internal227.5324.5361.8348.7321.7186.4
Current account balance-89.3103.9571.91,068.7776.5919.3
Overall balance-811.3-746.4-581.2-908.0-2,365.5-655.5
Identified Financing820.2765.6594.6826.02,303.6896.8
Net foreign financing544.0680.3935.0890.01,950.6758.1
Net foreign borrowing216.3760.5826.71,033.21,729.8810.9
Disbursements335.21,446.51,000.14.72,204.41,158.9
Amortization-170.1-712.5-783.5-882.0-799.4-472.3
Debt rescheduling51.226.5610.2120.6324.7124.3
Increase in arrears274.4-382.0-39.8-490.3-45.6-86.0
Foreign grants60.4311.0148.1281.8320.534.4
Bonds held by international organizations-7.1-9.2--65.3-54.1-1.2
Net domestic financing276.285.3-340.4-64.0353.0138.7
Banking system244.7-79.7-361.8-89.8147.990.4
Central bank202.8-17.0-545.3143.2154.0102.4
Rest of banking system41.9-62.7183.5-233.0-6.1-12.0
Private sector bonds31.5165.017.1-6.948.2-11.7
Transfers from ESF and other----4.332.7156.960.0
Statistical Discrepancy-8.9-19.2-13.482.062.0-241.4
Sources: Central Bank of Honduras; SECPLAN; and Fund staff estimates.

Includes L 87 millions in 1993 and L 36.9 millions in 1994 of promissory notes of “Cementos del Norte” sold by the Central Government to INJUPEM and IMPREMA.

Excludes interest payments.

Estimated as the difference between total interest due and identified payments of NFPE.

Sources: Central Bank of Honduras; SECPLAN; and Fund staff estimates.

Includes L 87 millions in 1993 and L 36.9 millions in 1994 of promissory notes of “Cementos del Norte” sold by the Central Government to INJUPEM and IMPREMA.

Excludes interest payments.

Estimated as the difference between total interest due and identified payments of NFPE.

Table 31.Honduras: Operations of the Local Governments(In millions of lempiras)
1989199019911992Prel.

1993
Jan.-June

1994
Current revenue149.8198.1256.8336.0305.9172.0
Tax revenue79.1110.7129.2146.0196.8111.0
Nontax revenue57.465.293.8106.097.555.0
Goods and services41.747.968.177.084.048.0
Other15.717.325.729.013.57.0
Current transfers13.322.233.884.011.66.0
From Central Government11.018.831.381.29.14.0
From state enterprises2.22.42.52.82.52.0
From private sector0.11.0--------
Current expenditures141.2170.9200.5233.4244.2136.6
Wages and salaries101.0121.9127.0151.1168.093.0
Goods and services38.146.770.279.366.838.6
Current transfers2.12.33.33.09.45.0
To general government------2.46.13.2
To private sector2.12.33.30.63.31.8
Primary current account balance8.627.256.3102.661.735.4
Current account balance-10.27.026.572.632.820.9
Capital revenue15.221.337.985.2139.735.0
From Central Government11.018.831.381.2139.735.0
Other capital revenue4.22.56.64.0----
Capital expenditures56.267.5122.7175.6275.0195.0
Fixed capital formation56.267.5122.7175.6275.0195.0
Primary surplus-32.4-19.0-26.512.2-73.6-124.6
Interest payments18.820.229.830.038.914.5
Overall deficit-51.2-39.2-58.3-17.8-102.5-139.1
Source: Central Bank of Honduras.
Source: Central Bank of Honduras.
Table 32.Honduras: Operations of the Decentralized Agencies 1/(In millions of lempiras)
Prel.Jan.-June
198919901991199219931994
Current revenue123.0157.0201.6224.8266.195.0
Of which: central
government transfers123.0157.0201.6224.8266.195.0
Current expenditures119.1125.0202.7223.9275.095.0
Wages and salaries29.832.737.139.658.034.0
Transfers to private sector89.392.3165.6184.3217.061.0
Interest payments------------
Primary current account balance3.932.0-1.10.9-8.9--
Capital revenue14.040.840.512.027.8125.0
Central government transfers14.040.840.512.027.8125.0
Capital expenditures14.040.840.512.027.8125.0
Primary surplus or deficit (-)3.932.0-1.10.9-8.9--
Source: Central Bank of Honduras.

Includes INA (Agrarian Institute), INFOF (Professional Training Institute), IHDECOOP (Institute for Cooperatives), JNBS (National Welfare Board), EDUCREDITO (Credits for Education), Federation of Journalists; PANI (Children’s Institute); UNAH (National University) and UPN (University of Pedagogy).

Source: Central Bank of Honduras.

Includes INA (Agrarian Institute), INFOF (Professional Training Institute), IHDECOOP (Institute for Cooperatives), JNBS (National Welfare Board), EDUCREDITO (Credits for Education), Federation of Journalists; PANI (Children’s Institute); UNAH (National University) and UPN (University of Pedagogy).

Table 33.Honduras: Operations of the Social Security Institute
1989199019911992Prel.

1993
Jan.-June

1994
(In millions of lempiras)
Total revenue89.598.7115.691.1199.975.4
Contributions89.0100.3138.480.8197.074.5
From private sector63.965.693.972.9138.169.1
From Central Government5.512.519.012.221.111.1
From state enterprises17.019.121.322.927.014.6
From local governments0.20.50.92.46.13.3
From social security as employer2.42.73.33.44.62.3
Other current revenue2.53.84.29.02.20.8
Change in accounts receivable2.05.427.0-1.36.4
Capital revenue----------0.1
Total expenditure111.7125.4199.8156.5197.882.7
Current expenditure105.9114.5162.3153.3176.481.8
Wages and salaries51.155.960.375.175.939.5
Purchases of goods and services29.632.271.053.463.616.2
Current transfers (benefits)25.426.631.435.636.926.1
To private sector23.023.928.032.232.222.7
Contribution social security and other2.42.73.33.44.72.1
Other----0.10.10.11.3
Change in accounts payable0.20.20.310.9----
Capital expenditure
Fixed capital formation5.810.937.53.217.18.0
Primary current account balance-16.4-15.8-46.7-62.116.4-6.5
Current account surplus or deficit (-)3.015.7-16.714.866.010.9
Primary surplus or deficit-22.2-26.6-84.2-62.112.7-7.3
Interest19.431.430.047.449.617.4
Overall surplus or deficit (-)-2.84.8-54.2-14.862.310.1
(In terms of GDP)
Current account balance--0.1-0.1-0.10.3
Capital expenditure--0.10.2--0.1
Overall balance-----0.3-0.10.3
Sources: Central Bank of Honduras; Honduran Institute Social Security; and Fund staff estimates.
Sources: Central Bank of Honduras; Honduran Institute Social Security; and Fund staff estimates.
Table 34.Honduras: Operations of INJUPEMP
1989199019911992Prel.

1993
Jan.-June

1994
(In millions of lempiras)
Current revenue47.062.33.596.0113.873.0
Contributions62.552.659.5101.5110.266.0
From Central Government37.037.235.539.844.126.5
From state enterprises1.01.14.97.911.05.6
From private sector21.211.015.351.350.931.7
From rest of general government3.33.33.72.54.22.2
Other revenue1.04.86.89.69.67.0
Change in accounts receivable16.5-4.962.815.16.0--
Capital revenue4.6----3.924.9--
Total expenditure78.0101.2131.1117.8237.7157.6
Current expenditure8.023.566.910.436.527.6
Wages and salaries3.84.84.75.87.13.5
Purchases of goods and services0.86.04.47.12.81.4
Current transfers (benefits)15.725.042.333.440.322.7
To private sector15.224.537.432.736.522.3
Contribution social security and other0.50.50.60.70.80.4
Other----4.3------
Change in accounts payable12.312.3-15.536.013.7--
Capital expenditure27.156.847.456.5152.2108.0
Fixed capital formation27.156.847.456.5152.2108.0
Net lending42.920.916.850.949.022.0
Primary current account balance39.038.8-63.485.677.345.4
Current account surplus111.3103.923.5188.8173.6107.7
Primary surplus or deficit-26.4-38.9-127.6-17.9-99.0-84.6
Revenue from interest72.365.186.9103.296.362.3
Overall surplus or deficit (-)45.926.2-40.785.3-2.7-22.3
(In terms of GDP)
Current account surplus1.10.80.11.00.8
Capital expenditure and net lending0.70.60.40.60.9
Overall balance (deficit -)0.40.2-0.30.4--
Sources: Central Bank of Honduras; Honduran INJUPEMP; and Fund staff estimates.
Sources: Central Bank of Honduras; Honduran INJUPEMP; and Fund staff estimates.
Table 35.Honduras: Operations of IMPREMA
1989199019911992Prel.

1993
Jan.-June

1994
(In millions of lempiras)
Current revenue52.280.077.379.969.073.4
Contributions59.567.183.5100.1120.771.4
From private sector: employer3.63.85.05.77.74.0
From private sector: employee2.62.63.13.84.32.2
From Central Government: employer33.837.345.956.467.438.7
From Central Government: employee18.121.129.432.939.019.5
From decentralized agen: employer0.10.1--------
From decentralized agen: employee----0.1------
From State Enterprises
From Local Governments
From Imprema as employer1.12.2--1.32.31.2
Other current revenue1.03.47.14.84.92.0
Change in accounts receivable8.3-9.513.325.056.6--
Capital revenue----11.8------
Total expenditure45.860.755.9130.2108.178.0
Current expenditure28.140.622.684.871.643.0
Wages and salaries3.83.63.95.16.33.8
Purchases of goods and services2.32.84.04.44.42.5
Current transfers (benefits)24.932.740.050.463.531.8
To private sector24.632.339.549.962.731.3
Contribution social security and other0.30.40.50.50.80.5
Other------------
Change in accounts payable2.9-1.525.3-24.92.6--
Capital expenditure17.720.133.345.361.535.0
Fixed capital formation17.70.50.526.446.134.0
Other--19.632.818.915.41.0
Net lending79.041.388.74.244.821.0
Primary current account balance24.139.454.7-4.9-2.630.4
Current account surplus59.279.8101.347.647.555.4
Primary surplus-72.6-22.0-55.5-54.5-108.9-25.7
Interest revenue35.140.446.652.550.125.0
Overall surplus or deficit (-)-37.518.4-8.9-2.0-58.8-0.7
(In terms of GDP)
Current account surplus0.60.60.60.30.2
Capital expenditure and net lending0.90.50.70.30.5
Overall balance (deficit -)-0.30.1-0.1---0.3
Sources: Central Bank of Honduras; Honduran IMPREMA; and Fund staff estimates.
Sources: Central Bank of Honduras; Honduran IMPREMA; and Fund staff estimates.
Table 36.Honduras: Summary of Financial Operations of ENEE
1989199019911992Prel.

1993
Jan.-June

1994
(In millions of lempiras)
Current revenue226.0283.6671.0691.6865.7475.1
Operating surplus1/139.6256.8529.1565.9625.7298.0
Less: taxes and transfer payments12.416.524.75.428.11.6
to Central Government10.114.121.60.525.9--
to rest of general government2.32.43.12.22.21.6
to private sector------2.7----
Primary current account balance127.2240.3504.4560.5653.1296.4
Interest payments 2/122.7235.9303.7190.8220.6136.2
External90.2169.3229.7137.0163.9120.2
Internal32.666.674.053.956.716.0
Current account surplus or deficit (-)4.54.5200.7369.7432.5160.2
Net capital revenue--395.0154.8161.066.6--
Capital revenue--0.8--------
Plus: capital transfers receipts--394.2154.8161.066.6--
from Central Government--394.2154.8161.066.6--
Capital expenditure and net lending3/71.7248.7218.7627.9424.865.0
Fixed investment88.0210.3191.8558.3455.0125.0
Inventory changes1.736.410.756.1-32.720.0
Other capital expenditure--2.016.213.52.5--
Net lending 4/-18.0---------80.0
to Central Government-18.0---------80.0
to private sector------------
Overall surplus or deficit (-)-67.2150.8136.8-97.374.395.2
Primary surplus or deficit55.5386.6440.593.6294.9231.4
Overall surplus or deficit (-)-67.2150.8136.8-97.374.395.2
(In percent of GDP)
Operating surplus1/1.42.03.23.03.1
Primary current account balance1.21.93.13.02.9
Interest1.21.91.91.01.0
Current surplus or deficit (-)----1.22.01.9
Capital expenditure and net lending0.72.01.33.31.9
Primary surplus or deficit0.53.12.70.51.3
Overall deficit-0.71.20.8-0.50.3
Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Excluding interest payments.

Includes commissions.

Excludes depreciation.

Excludes external loans intermediated through Central Government.

Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Excluding interest payments.

Includes commissions.

Excludes depreciation.

Excludes external loans intermediated through Central Government.

Table 37.Honduras: Summary of Financial Operations of HONDUTEL
1989199019911992Prel.

1993
Jan.-June

1994
(In millions of lempiras)
Current revenue207.6318.7380.7563.5637.4382.3
Operating surplus1/96.1175.1319.7413.8520.9187.7
Less: taxes and transfer payments32.538.788.1131.0156.831.0
to Central Government30.629.074.6110.2135.319.1
to rest of general government1.44.68.99.511.55.7
to private sector0.24.51.710.38.94.3
to abroad0.30.73.01.01.11.9
Primary current account balance63.6136.4231.5282.8364.1246.7
Net capital revenue--1.40.31.0--79.4
Capital revenue--1.40.3----79.4
Plus: capital transfers receipts------1.0----
from Central Government------1.0----
Capital expenditure and net lending2/19.3115.993.3217.5179.7408.3
Fixed investment20.3114.459.0126.291.8413.7
Inventory changes-1.0-3.327.170.445.2-5.4
Other capital expenditure--4.97.220.942.7--
Primary surplus or deficit44.321.9138.566.4184.4-82.2
Current account surplus or deficit (-)41.5112.6171.0216.2307.1
Interest payments 3/22.123.860.666.657.045.0
External22.123.860.666.657.045.0
Internal------------
Overall surplus or deficit (-)22.3-1.978.0-0.2127.4-127.2
(In percent of GDP)
Operating surplus1/0.92.42.01.82.1
Primary current account balance0.61.11.41.51.6
Current surplus or deficit (-)0.40.91.01.21.4
Capital expenditure0.20.90.61.20.8
Primary surplus or deficit0.40.20.80.40.8
Interest0.20.20.40.40.3
Overall surplus or deficit (-)0.2--0.5--0.6
Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Excludes interest payments.

Excludes depreciation.

Includes commissions.

Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Excludes interest payments.

Excludes depreciation.

Includes commissions.

Table 38.Honduras: Summary of Financial Operations of ENP
1989199019911992Prel.

1993
Jan.-June

1994
(In millions of lempiras)
Current revenue60.271.699.5135.6165.8134.0
Sales of goods and services61.464.8100.8152.6145.2131.9
Other revenue 1/3.99.55.05.916.02.1
Change in accounts receivable5.22.76.322.9-4.6--
Operating expenditure39.352.662.650.670.834.8
Wages and salaries26.228.934.339.344.222.0
Purchase of goods and services7.59.613.016.618.79.3
Interest payments 2/11.49.67.27.25.93.3
External9.78.26.34.04.03.3
Internal1.81.40.93.21.9--
Other current expenditures0.30.40.40.6--0.2
Change in accounts payable6.1-4.0-7.713.0-2.1--
Operating surplus20.819.036.984.994.999.2
Less: taxes and transfer payments2.33.015.58.832.69.2
Current account surplus or deficit (-)18.516.021.476.262.389.9
Net capital revenue1.01.40.3-19.1-5.61.0
Capital revenue1.01.40.30.5--2.2
Less: capital transfers------19.65.61.2
Capital expenditure and net lending3/7.79.38.814.1135.235.9
Fixed investment7.08.47.714.1132.128.1
Inventory changes-0.80.81.10.12.9-1.2
Other capital expenditure1.50.1----0.29.0
Overall surplus or deficit (-)11.88.113.043.0-78.555.0
(In percent of GDP)
Operating surplus0.20.20.20.50.4
Current account surplus0.20.10.10.40.3
Capital expenditure0.10.10.10.10.6
Overall surplus or deficit (-)0.10.10.10.2-0.3
Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Includes accrual interest and other revenues.

Includes commissions.

Excludes depreciation.

Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Includes accrual interest and other revenues.

Includes commissions.

Excludes depreciation.

Table 39.Honduras: Summary of Financial Operations of SANAA
1989199019911992Prel.

1993
Jar.-June

1994
(In millions of lempiras)
Current revenue19.428.745.836.330.529.0
Sales of goods and services19.224.431.832.839.628.3
Other revenue 1/4.56.26.87.20.10.7
Change in accounts receivable4.31.8-7.23.79.1--
Operating expenditure16.721.355.742.32.624.5
Wages and salaries15.017.518.922.422.512.5
Purchase of goods and services4.58.113.318.128.611.2
Interest payments 2/0.30.40.20.20.90.5
Internel0.30.40.20.20.90.5
Other current expenditures0.30.314.03.10.50.2
Change in accounts payable3.45.1-9.31.649.7--
Operating surplus2.77.5-9.9-6.127.74.5
Less: taxes and transfer payments0.70.81.51.16.50.9
Plus: transfer receipts------1.7----
Current account surplus or deficit (-)2.06.7-20.9-5.521.23.6
Net capital revenue38.379.4159.0136.0222.571.5
Capital revenue----6.7----0.4
Capital expenditure and net lending3/40.485.6155.3142.0228.492.5
Fixed investment39.982.9155.6137.2173.392.4
Inventory changes0.52.7-0.34.955.10.1
Overall surplus of deficit (-)-0.20.5-7.2-11.514.3-17.4
(In percent of GDP)
Operating surplus--0.1-0.1--0.1
Current account surplus--0.1-0.1--0.1
Capital expenditure0.40.71.00.81.0
Capital revenue0.40.71.00.71.0
Overall surplus or deficit (-)-------0.10.1
Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Includes accrual interest and other revenues.

Includes commissions.

Excludes depreciation.

Sources: Ministry of Finance; Central Bank; and Fund staff estimates.

Includes accrual interest and other revenues.

Includes commissions.

Excludes depreciation.

Table 40.Honduras: Detailed Accounts of the Financial System(In million of lempiras)
L 9.0=US41
L 5.3=US$1L 7.3=US$1September
19891990199119911992199319931994
I. Central Bank
Net International Reserves-363.0-148.9266.8371.6654.1-200.0-202.7-848.0
Foreign assets250.2356.2734.11,011.11,681.9960.01,244.5698.6
Net IMF position-162.7-154.8-167.5-230.7-813.2-893.5-1,133.7-998.9
Other short-term foreign liabilities-450.5-350.3-299.8-408.8-214.6-266.5-313.5-547.7
Domestic Assets3,968.24,440.53,922.84,957.54,721.95,583.16,129.26,707.7
Credit to public sector1,172.51,083.7538.4459.3602.5756.5501.7695.4
Central Government1,290.91,223.5672.9641.9692.8824.5558.5773.0
Credit1,535.01,837.71,300.81,300.81,443.21,921.91,120.41,921.9
Deposits-244.1-614.2-627.9-658.9-750.4-1,097.4-561.9-1,148.9
Rest of the public sector-118.4-139.8-134.5-182.6-90.3-68.0-56.8-77.6
Credit125.7147.7134.7134.7179.0164.3166.5164.3
Deposits-244.1-287.5-269.2-317.3-269.3-232.3-223.3-241.9
Government trust fund-47.3-48.2-59.3-59.3-74.8-104.8-89.1-104.8
FHIS---3.8-10.8-10.9-37.3-29.8-59.4-37.2
Official capital-435.8-493.6-641.4-641.4-737.8-925.9-818.9-925.9
Credit to the private sector26.729.132.132.142.059.248.559.2
Arrears deposits-331.8-324.1-196.6-270.8-151.3-19.9-64.5--
Credit to banks (net)892.5975.610871087860.61,035.7952.7928.4
Claims on banks1,029.71,065.01,127.31,127.31,210.31,217.71,196.31,217.7
Development banks340.5344.7320.5320.5372.8352.6352.5352.6
Commercial banks541.7558.8653.4653.4675.3667.7653.2667.7
Specialized saving institutions147.5161.5153.4153.4162.2197.4190.5197.4
Liabilities to banks-137.2-89.4-40.3-40.3-349.7-182.0-243.6-289.3
Net unclassified assets2,824.23,354.63,306.24,541.04,397.54,991.65,895.56,330.1
Exchange losses--520.4773.3774.91,612.21,354.02,745.32,656.6
Other 1/2,824.22,834.22,532.93,766.12,785.33,637.63,150.23,673.5
Allocation of SDRs-132.8-132.8-132.8-179.5-179.5-179.5-237.5-237.5
Medium- and long-term foreign liabilities2,836.03,253.53,019.84,159.34,011.13,691.84,616.64,228.9
Private sector deposits16.951.637.237.244.928.720.644.3
Sight deposits11.246.029.929.936.620.011.933.3
Time and savings deposits5.75.67.37.38.36.78.711.0
Bonds12.712.914.314.316.919.919.924.3
Currency issue739.6973.71,118.31,118.31,303.11,642.71,289.41,562.2
Cash in vault73.3105.0158.0158.0182.3217.6190.9222.0
Currency in circulation666.3868.7960.3960.31,120.81,425.11,078.51,340.2
II. Commercial Banks
Net international reserves-5.382.4121.5167.3399.7474.4542.7622.4
Foreign assets75.0130.5152.6210.2482.3474.4542.7622.4
short-term liabilities-80.3-48.1-31.1-42.9-82.6
Claims or Central Bank167.2168.9304.1304.1561.3432.1443.2475.1
Cash in vaults63.691.3140.9140.9162.6195.1170.4203.2
Deposits90.450.7121.7121.7364.7208.0243.5242.9
FCVI bonds13.226.941.541.534.029.029.329.0
Domestic assets3,759.24,396.95042.15,043.75,828.56609.96,062.77,581.0
Credit to public sector (net)517.8469.6667.5653.3454.8488.3506.7711.1
Central Government819.5889.21,160.71,160.71,010.8937.81,166.21,149.8
Credit819.7889.41,160.91,160.91,011.0938.51,355.11,353.9
Deposits-0.2-0.2-0.2-0.2-0.2-0.7-188.9-204.1
Rest of public sector-301.7-419.6-493.2-507.4-556.0-449.5-659.5-438.7
Credit62.850.339.539.54.72.42.91.3
Deposits-364.5-469.9-532.7-546.9-560.7-451.9-662.4-440.0
Credit to rest of banking system29.928.45.05.0--------
Credit to nonbank private financial intermediaries9.934.134.534.5--------
FHIS---12.1-0.9-0.9-10.5-12.8-2.6-25.6
Credit to the private sector2,603.73,026.13,481.13,481.14,341.45,008.54,594.85,792.0
Unclassified assets 1/597.9850.8854.9870.71,042.81,125.9963.81,103.5
Medium- and long-term foreign liabilities49.039.3----3.62.262.3182.4
Liabilities to rest of banking system553.8560.6656.0656.0678.7695.8662.3760.3
Liabilities to rest of banking system15.619.910.010.0--------
Liabilities to the private sector3,302.74,028.44,801.74,849.26,107.16,818.46,324.07,735.8
Liquid liabilities2,876.83,497.04,093.94,141.45,231.15,584.05,293.76,179.9
Sight Deposits909.01,117.51,377.01,377.01,639.01,804.91,584.31,970.6
Quasi-money1,860.52,257.62,580.72,628.23,292.23,542.73,506.03,997.0
Domestic currency1,783.12,189.92,455.02,455.02,928.02,906.72,848.93,004.2
Time and savings deposits1,528.31,666.62,031.12,031.12,642.72,724.12,632.32,865.2
Specialized savings74.078.484.584.586.2103.093.192.2
Other deposits180.8444.9339.4339.4199.179.6125.546.8
Deposits in foreign currency77.467.7125.7173.2364.2636.0657.1992.8
Bonds32.327.822.822.818.716.116.914.8
Other obligations75.094.1113.4113.4281.2220.3186.5260.5
Capital and surplus425.9531.4707.8707.8876.01,234.41,030.31,555.9
III. Consolidated Development Banks
Net International reserves1.6-1.92.73.71.52.10.8--
Foreign assets3.21.85.37.32.52.10.8--
Short-term liabilities-1.6-3.7-2.7-3.7-1.0
Claims on Central Bank30.628.826.926.922.926.323.833.0
Cash in vaults7.59.19.79.710.710.88.96.8
Deposits23.119.717.217.212.215.514.926.2
Domestic assets1,129.91,206.1621.7651.7623.0580.5599.1614.3
Credit to public sector (net)50.946.154.254.253.428.511.98.9
Central Government10.9-0.70.50.51.1-20.7-32.6-27.6
Credit16.25.46.06.012.37.22.87.4
Deposits-5.3-6.1-5.5-5.5-11.2-27.9-35.4-35.0
Rest of public sector40.046.853.753.752.349.244.536.5
Credit106.1109.9102.8102.8103.4107.1109.4102.2
Deposits-66.1-63.1-49.1-49.1-51.1-57.9-64.9-65.7
Government Trust Fund-1.0-1.0-1.01.0--------
Official capital and surplus-331.0-331.8-278.5-278.5-277.7-277.7-254.1-162.2
Credit to nonbank private financial intermediaries0.50.40.40.4--------
Credit to the private sector521.3486.6296.8296.8285.1234.7266.8223.4
FHIS---0.5------------
Unclassified assets889.21,006.3549.8577.8562.2595.0574.5544.2
Medium- and long-term foreign liabilities571.3594.781.3112.0109.794.4128.0123.0
Liabilities to Central Bank343.5382.4462.1462.1411.2371.4361.8370.0
Liabilities to rest of banking system2.5--1.31.3--------
Liabilities to the private sector244.8255.9106.5106.8126.5143.1133.9154.3
Sight deposits18.920.820.020.016.113.915.517.0
Quasi-money69.366.268.268.579.376.274.778.4
Domestic currency69.065.967.467.478.774.972.678.0
Time and savings deposits67.763.666.566.577.673.371.076.1
Other deposits in local currency1.32.30.90.91.11.61.61.9
Deposits in foreign exchange0.30.30.81.10.61.32.10.4
Bonds65.162.73.93.91.20.50.50.5
Other obligations91.5106.214.414.429.952.543.258.4
IV. Specialized Saving Institutions
Net international reserves--3.514.920.541.159.058.384.0
Foreign assets--3.514.920.541.159.058.384.0
Claims on Central Bank25.131.939.739.753.968.659.862.1
Cash in vaults2.24.67.47.49.011.711.612.0
Deposits7.35.113.313.325.937.428.228.9
FOVI bonds15.622.219.019.019.019.520.021.2
Domestic assets337.4359.4463.8464.1651.4827.6767.3874.1
Credit to public sector (net)-58.9-68.5-91.1-91.1-124.6-139.3-128.2-187.1
Central Government16.927.623.623.627.127.927.126.2
Credit16.927.623.623.627.127.930.543.6
Deposits-------------3.4-17.4
Rest of public sector-75.8-96.1-114.7-114.7-151.7-167.2-155.3-213.3
Credit----------2.50.80.7
Deposits-75.8-96.1-114.7-114.7-151.7-169.7-156.1-214.0
Credit to rest of banking system19.117.87.77.7--------
Credit to nonbank private financial intermediaries----------------
Credit to the private sector312.3355.8488.5488.5695.6858.9806.1993.5
FHIS---1.0-----1.1-2.0-2.0--
Unclassified assets64.955.358.759.081.5110.091.467.7
Medium- and long-term foreign liabilities19.96.6------------
Liabilities to Central Bank148.1154.9174.4174.4177.5207.9210.4236.3
Liabilities to rest of banking system1.12.13.73.7--------
Liabilities to the private sector193.5231.2340.3346.2568.9747.3675.0783.9
Liquid liabilities157.0189.6290.8296.7502.1632.1582.2642.6
Quasi-money146.6174.8270.3276.2474.7587.9540.6610.2
Deposits in domestic currency144.7171.1254.6254.6435.9526.3483.6520.6
Time and savings deposits144.7171.1254.6254.6435.9526.3483.6520.6
Deposits in foreign currency1.93.715.721.638.861.657.089.6
Other obligations10.414.820.520.527.444.241.632.4
Capital and surplus36.541.649.549.566.8115.292.8141.3
V. Consolidated Banking System
Net international reserves-366.7-64.9405.9563.11,096.4335.5399.1-141.6
Foreign assets328.4492.0906.91,249.12,207.81,495.51,846.31,405.0
Net IMF position-162.7-154.8-167.5-230.7-813.2-893.5-1,133.7-998.9
Short-term liabilities-532.4-402.1-333.6-455.4-298.2-266.5-313.5-547.7
Domestic assets8,279.79,407.78,955.610,022.211,013.112,635.312,659.714,758.7
Credit to public sector1,682.31,530.91,169.01,075.7986.11,134.0892.11,228.3
Central Government2,138.22,139.61,857.71,826.71,731.81,769.51,179.21,921.4
Credit2,387.82,760.12,491.32,491.32,493.62,895.52,508.83,326.8
Deposits-249.6-620.5-633.6-664.6-761.8-1126.0-789.6-1,405.3
Rest of public sector-455.9-608.7-688.7-751.0-745.7-635.5-827.1-693.1
Credit294.6307.9277.0277.0287.1276.3279.6268.5
Deposits-750.5-916.6-965.7-1,028.0-1,032.8-911.8-1,106.7-961.6
Central Government Trust Fund-48.3-49.2-60.3-58.3-74.8-104.8-89.1-104.8
Credit to nonbank private financial intermediaries10.434.534.934.9--------
Credit to private sector3,464.03,897.64,298.54,298.55,364.16,161.35,716.27,068.1
Arrears deposits-331.8-324.1-196.6-270.8-151.3-19.9-64.5--
Official capital-766.8-825.4-919.9-919.9-1,015.5-1,203.6-1,073.0-1,088.1
FHIS---17.4-11.7-11.8-48.9-44.6-64.0-62.8
Unclassified assets4,376.25,267.04,769.66,048.56,084.06,822.57,525.48,045.5
Allocation of SDRs-132.8-132.8-132.8-179.5-179.5-179.5-237.5-237.5
Valuation adjustment28.849.260.560.552.948.4----
Interbank float-2.3-22.6-55.6-55.6-4.021.554.1-90.0
Medium- and long-term foreign liabilities3,476.23,894.13,101.14,271.34,124.43,788.44,806.94,534.3
Central Bank2,836.03,253.53,019.84,159.34,011.13,691.84,616.64,228.9
Rest of Banking System640.2640.681.3112.0113.396.6190.3305.4
Liabilities to the private sector4,436.85,448.76,260.36,314.07,985.19,182.58,251.910,082.8
Liquid liabilities3,974.44,875.75,503.05,556.77,042.37,832.97,128.88,325.6
Money1,605.42,053.02,387.22,387.22,812.53,263.92,690.23,298.1
Currency in circulation666.3868.7960.3960.31,120.81,425.11,078.51,340.2
Sight deposits939.11,184.31,426.91,426.91,691.71,838.81,611.71,957.9
Quasi-money2,082.02,504.22,926.52,980.23,854.54,215.54,130.04,696.6
Domestic currency2,002.52,432.52,784.32,784.33,450.93,516.63,413.83,613.8
Time and savings deposits1,746.41,906.92,359.52,359.53,164.53,332.43,195.63,472.9
Specialized savings74.078.484.584.586.2103.093.192.2
Other deposits in local currency182.1447.2340.3340.3200.281.2125.148.7
Deposits in foreign exchange79.571.7142.2195.9403.6698.9716.21,082.8
Bonds110.1103.441.041.036.836.537.339.6
Other obligations176.9215.1148.3148.3338.5317.0271.3351.3
Capital and surplus462.4573.0757.3757.3942.81,349.61,123.11,697.2
Source: Central Bank of Honduras.

Includes valuation adjustment.

Source: Central Bank of Honduras.

Includes valuation adjustment.

Table 41.Honduras: Legal Reserve Requirements(In percent)
DecemberSept.
198919901991199219931994
I. Regular Legal Reserve Requirements
Commercial banks. BANADESA. and BANMA
Local currency deposits
Demand, saving, and time deposits353535353640
Other deposits 1/353535353640
Bonos de caja 2/
Housing131010101010
Industrial131010202020
Foreign currency deposits
Demand, saving and time deposits303030303030
Certificates of deposit (3- to 12-month) 3/202020202020
Free availability 4/--100100100100100
Specialized saving institutions
Local currency deposits Saving and time deposits151515151721
Foreign currency deposits Saving and time deposits151515151721
II. Reduced Legal Reserve Requirements5/
Loans for agriculture and livestock activities (in percent of loan portfolio)
Between 45.0 and 54.0 6/333030303030
Between 54.0 and 64.0 7/282525252525
Above 64.0 8/232020202020
Source: Central Bank of Honduras.

Savings certificates and certificates of deposit.

Long-term bonds issued to finance specific activities.

US$25,000 minimum balance.

Banks are authorized to hold these reserves in deposits abroad or in credits for exports.

Commercial banks and BANADESA are entitled to these reserve requirements, provided that their loans for agriculture and livestock amount to 45 percent or more of their portfolio.

Between 50 and 60 percent before December 23, 1993.

Between 60 and 70 percent before December 23, 1993.

Above 70 percent before December 23, 1993.

Source: Central Bank of Honduras.

Savings certificates and certificates of deposit.

Long-term bonds issued to finance specific activities.

US$25,000 minimum balance.

Banks are authorized to hold these reserves in deposits abroad or in credits for exports.

Commercial banks and BANADESA are entitled to these reserve requirements, provided that their loans for agriculture and livestock amount to 45 percent or more of their portfolio.

Between 50 and 60 percent before December 23, 1993.

Between 60 and 70 percent before December 23, 1993.

Above 70 percent before December 23, 1993.

Table 42.Honduras: Distribution of the Domestic Bonded Debt(In millions of lempiras)
December 31June 30Sept. 30
1989199019911992199319941994
Total2,856.73,258.53,030.93,122.73,530.03,274.1
Central government bonds2,799.33,211.72,989.63,030.43,401.73,150.03,385.4
By holder:
Central Bank 1/1,205.61,837.71,300.81,443.21,921.91,530.91,452.2
Commercial banks819.7889.41,160.91,011.0938.51,124.71,354.3
BANADESA14.85.411.77.87.37.37.3
Savings and loans associations16.931.823.727.227.941.343.2
Insurance companies13.316.912.226.817.87.9--
IHSS48.932.631.5--------
Rest of public sector187.6188.7215.8236.1230.6189.2201.5
Sindicature BANFIN35.9------------
Private sector447.4209.2233.0212.9246.6238.6309.9
International organizations9.2----65.311.210.117.0
Local government bonds36.229.226.826.837.737.7
By holder:
Central Bank----0.30.30.30.3
Other credit institutions12.87.56.313.525.825.8
Rest of public sector16.416.816.410.411.411.4
Private sector7.04.93.82.40.30.3
Other public sector bonds21.217.614.565.590.686.4
By holder:
Central Bank6.311.014.565.567.054.8
Private sector12.64.3----23.631.6
IHSS and INJUMPEM2.32.3--------
By debtor:
ENEE21.017.514.010.57.05.3
SANAA0.20.1--------
COHDEFOR----0.5------
FOSOVI (INVA)------55.083.681.1
Sources: Central Bank of Honduras; and Superintendency of Banks.

Excludes metallic coin consolidated bonds.

Sources: Central Bank of Honduras; and Superintendency of Banks.

Excludes metallic coin consolidated bonds.

Table 43.Honduras: Distribution of Exports, f.o.b., by Destination(As percent of total)
1989199019911992
Total exports100.0100.0100.0100.0
United States50.752.850.953.9
Other Western Hemisphere6.86.77.67.4
CACM countries3.43.34.04.6
Trinidad and Tobago0.10.1----
Venezuela0.1--0.10.2
Dominican Republic0.20.20.10.1
Panama0.10.4
Jamaica0.1------
Other2.82.73.42.5
Europe32.933.034.632.9
Germany8.58.55.211.3
Netherlands1.21.31.41.2
Belgium6.76.88.98.3
Italy3.13.34.43.8
Spain1.41.41.31.2
France0.40.40.20.2
Other11.611.313.26.9
Other countries9.67.56.95.8
Japan5.14.84.92.4
Other4.52.72.03.4
Source: Central Bank of Honduras.
Source: Central Bank of Honduras.
Table 44.Honduras: Economic Classification of Imports
19891990199119921993
(In millions of U.S. dollars)
Total imports, c.i.f.1/968.6934.8955.11,036.61,130.0
Consumer goods225.1200.1203.7219.9239.1
Durables53.555.448.065.471.1
Nondurables171.6144.7155.7154.5168.0
Raw materials338.7317.2347.5363.7395.4
Agriculture54.350.564.975.782.3
Manufacturing284.4266.7282.6288.0313.1
Lubricants and fuels145.7168.2172.4160.8177.9
Capital goods248.9240.1217.3272.8296.5
Agriculture7.86.78.110.111.0
Manufacturing126.3113.2109.0134.0145.7
Transport86.280.371.097.8106.3
Construction28.639.929.230.933.5
Other10.29.214.219.421.1
(In percent of total imports)
Consumer goods23.221.421.321.421.1
Raw material35.033.936.435.235.0
Lubricants and fuels15.018.018.116.315.7
Capital goods25.725.722.826.126.2
Other1.11.01.51.01.9
Sources: Central Bank of Honduras; and Fund staff estimates.

Customs basis.

Sources: Central Bank of Honduras; and Fund staff estimates.

Customs basis.

Table 45.Honduras: Distribution of Imports, c.i.f., by Origin(As percent of total)
1989199019911992
Total imports1/100.0100.0100.0100.0
North America39.641.948.953.0
United States38.841.048.252.1
Canada0.80.90.70.9
Other Western Hemisphere28.328.127.930.3
CACM countries6.46.38.99.8
Trinidad and Tobago--------
Venezuela5.56.06.31.8
Mexico5.46.75.18.8
Brazil2.12.61.81.9
Colombia1.11.50.81.0
Other7.85.05.07.0
Europe17.717.913.69.7
Germany3.43.52.82.0
United Kingdom1.81.40.91.1
Netherlands4.96.94.82.1
Belgium0.70.60.40.5
Italy0.90.60.50.4
Spain1.21.10.80.7
France2.01.20.70.8
Other2.82.62.72.1
Other countries14.412.19.67.0
Japan10.09.25.93.8
Other4.42.93.73.2
Source: Central Bank of Honduras.

Excludes adjustments for undervaluation and coverage.

Source: Central Bank of Honduras.

Excludes adjustments for undervaluation and coverage.

Table 46.Honduras: Visible Trade with the Central American Common Market(In millions of U.S. dollars)
19891990199119921993
Exports, f.o.b.1/31.223.632.036.546.4
By destination
Costa Rica2.62.52.61.25.5
Guatemala14.89.68.911.012.6
Nicaragua2.21.64.14.612.3
El Salvador11.69.916.419.716.0
By commodity
Soap1.52.65.0
Barbed wire0.50.30.7
Natural and vulcanized rubber1.30.20.8
Edible corn starches1.31.81.7
Organic compounds------
Plywood0.40.90.7
Fruit juices0.10.10.2
Crown corks and metal stoppers------
Other26.216.422.9
Imports, c.i.f.1/76.669.185.0101.4154.3
By origin
Costa Rica12.912.620.020.835.0
Guatemala45.333.636.744.471.0
Nicaragua4.99.18.66.95.9
El Salvador13.513.819.729.342.4
By commodity
Foodstuffs, beverages, and tobacco11.212.312.8
Raw materials0.31.114.7
Chemicals34.823.324.0
Manufacturers25.627.427.1
Capital goods4.75.06.4
Trade balance-45.4-45.5-53.0-64.9-107.9
Costa Rica-10.3-10.1-17.4-19.6-29.5
Guatemala-30.5-24.0-27.8-33.4-58.4
Nicaragua-2.7-7.5-4.5-2.36.4
El Salvador-1.9-3.9-3.3-9.6-26.4
Source: Central Bank of Honduras.

Excludes adjustments for undervaluation and coverage.

Source: Central Bank of Honduras.

Excludes adjustments for undervaluation and coverage.

Table 47.Honduras: Nominal and Real Effective Exchange Rates 1/(1980=100)
PeriodNominal Effective

Exchange Rate
Real Effective

Exchange Rate
1989
I228.43126.57
II235.32128.95
III244.17132.00
IV253.83134.08
1990
I232.27119.39
II137.4971.87
III125.1767.11
IV104.9159.56
1991
I112.2267.39
II117.6073.15
III119.9075.20
IV119.7474.18
1992
I122.6474.09
II124.5073.24
III120.9769.23
IV122.6269.20
1993