Chapter

HONDURAS

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of December 31, 2003)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 1, 1950.
Exchange Arrangement
CurrencyThe currency of Honduras is the Honduran lempira.
Exchange rate structureUnitary.
Classification
Crawling bandThe exchange rate of the lempira is determined in foreign exchange auctions. Banks and exchange houses are required to sell all of their daily foreign exchange purchases to the Central Bank of Honduras (CBH). Participants in auctions (banks, exchange houses, and private individuals) bid at a price that may not differ from the base price set by the CBH by more than ±7%. The base exchange rate is adjusted every five auctions by the CBH in accordance with the inflation differential between Honduras and its main trading partners and the exchange rates of its main trading partners’ currencies vis-à-vis the dollar. The amount of foreign exchange offered at each auction must be at least 60% of the CBH’s purchase of foreign exchange from its agents. The minimum amount of foreign exchange to be offered and the base price are announced before the auction. Individuals wishing to purchase foreign exchange must make offers in lempiras for amounts ranging between $5,000 and $300,000 or the equivalent. Foreign exchange agents may make purchases for their own accounts to meet private demands of less than the equivalent of $5,000; the maximum amount of foreign exchange that may be purchased for this purpose is $50,000 or its equivalent for commercial banks and $15,000 for foreign exchange houses. Foreign exchange agents may charge up to 1.5% commission on sales to the public of less than $5,000 or its equivalent and up to 1.2% for larger sales.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsYes.
Use of foreign exchange among residentsAll payment obligations to be made in Honduras must be settled in lempiras, except those contracted and documented in a foreign currency.
Payments arrangements
Bilateral payments arrangements
InoperativeThe Clearing and Credit Reciprocal Agreement between Honduras and Costa Rica, El Salvador, and Guatemala functioned until 1995.
Regional arrangementsHonduras is a member of the CACM.
Trade transactions with the rest of Central America may be carried out in local currencies or in dollars.
Administration of controlNo.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedBanks must hold these deposits in (1) foreign currency notes in their vaults; (2) deposits at the CBH; (3) special accounts at correspondent banks abroad; (4) investments in high-liquidity foreign instruments; or (5) export or import financing instruments.
Held domesticallyYes.
Held abroadBanks may hold accounts with correspondent banks in dollars, euros, and, effective July 25, 2003, Swiss francs, yen, and pounds sterling.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedBanks must hold these deposits in (1) foreign currency notes in their vaults; (2) deposits at the CBH; (3) special accounts at correspondent banks abroad; (4) investments in high-liquidity foreign instruments; or (5) export or import financing instruments.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresNo.
Import taxes and/or tariffsThe tariff rates are zero for capital goods and raw materials; 5–10% for intermediate products; and 15% for finished goods with some exceptions (e.g., beef, cigarettes, fertilizers, and medicines).
The tariff rate on goods produced in the CACM area is zero. There are industrial and agricultural processing zones that benefit from tariff exemptions. The tourism industry also benefits from temporary tariff exemptions.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsAll export earnings, except those from trade with other Central American countries, must be surrendered to banks or exchange houses within a period of 20 to 85 days. Commercial banks and exchange houses are required to sell all purchased foreign exchange to the CBH. Exporters are allowed to retain up to 30% of their foreign exchange proceeds to finance their own imports, as well as to pay for their authorized external obligations.
Financing requirementsNo.
Documentation requirements
DomiciliationYes.
Preshipment inspectionYes.
Export licensesLicenses are not required, but exports must be registered for statistical purposes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersThere are no controls on these payments, but all buyers of foreign exchange are required to fill out a form for statistical purposes. There are no limits on the amount purchased.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsPurchases of capital shares in existing domestic firms are permitted with the exception of industries that produce defense-related or hazardous materials.
On collective investment securities
Sale or issue locally by nonresidentsForeign mutual fund companies and similar financial institutions must have permission to collect funds in Honduras for deposit or investment abroad.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial credits
To residents from nonresidentsAll public sector foreign borrowing must be approved by the congress.
Financial credits
By residents to nonresidentsLending by commercial banks to nonresidents requires CBH authorization.
To residents from nonresidentsExternal borrowing by a commercial bank is limited to three times the amount of its capital and reserves.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsLending by commercial banks to nonresidents requires CBH authorization.
Controls on direct investment
Inward direct investmentInvestments are permitted in all sectors, with the exception of defense-related industries, and small-scale and commercial industries. Investments in industries producing hazardous materials require prior approval. All foreign investments must be registered with the Ministry of Industry and Trade.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsThere are location and size limitations.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadBorrowing by a commercial bank is limited to three times the amount of its capital and reserves.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)CBH authorization is required.
Lending locally in foreign exchangeFinancial institutions may lend up to 50% of their foreign exchange deposits domestically in foreign exchange.
Purchase of locally issued securities denominated in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsBanks, nonbank financial institutions, and savings and loan associations are subject to a nonremunerated reserve requirement of 12% on all deposits denominated in domestic or foreign currency.
Liquid asset requirementsFinancial institutions are required to deposit 38% of their liquid assets in a foreign bank.
Credit controlsUp to 50% of funds from foreign exchange deposits may be lent for export-related activities, and up to 15% of this amount may be lent for other purposes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2003
Resident accountsJuly 25. Banks were authorized to hold accounts with correspondent banks in Swiss francs, yen, and pounds sterling.

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