Front Matter

Copyright Page

IMF Country Report No. 21/150

HONDURAS

TECHNICAL ASSISTANCE REPORT – FISCAL TRANSPARENCY EVALUATION

July 2021

This Technical Assistance report on Honduras was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in April 2020.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

PO Box 92780 • Washington, D.C. 20090

Telephone: (202) 623–7430 • Fax: (202) 623–7201

E-mail: publications@imf.org Web: http://www.imf.org

Price: $18.00 per printed copy

International Monetary Fund

Washington, D.C.

© 2021 International Monetary Fund

Title page

FISCAL AFFAIRS DEPARTMENT

Honduras

Fiscal Transparency Evaluation

Ramón Hurtado, Concha Verdugo, Mariana Sabatés, Marta Morano, and Natalia Salazar

Technical Report

April 2020

Contents

  • ACRONYMS

  • INTRODUCTION

  • EXECUTIVE SUMMARY

  • I. FISCAL REPORTING

  • A. COVERAGE

  • B. FREQUENCY AND TIMELINESS

  • C. QUALITY

  • D. INTEGRITY

  • E. CONCLUSIONS AND RECOMMENDATIONS

  • II. FISCAL FORECASTING AND BUDGETING

  • A. COMPREHENSIVENESS

  • B. ORDERLINESS

  • C. POLICY ORIENTATION

  • D. BUDGET CREDIBILITY

  • E. CONCLUSIONS AND RECOMMENDATIONS

  • III. FISCAL RISK ANALYSIS AND MANAGEMENT

  • A. RISK DISCLOSURE AND ANALYSIS

  • B. RISK MANAGEMENT

  • C. FISCAL COORDINATION

  • D. CONCLUSIONS AND RECOMMENDATIONS

  • BOXES

  • 1.1. Honduran Pension System

  • 1.2. Key Findings of the 2018 TSC Report

  • 3.1. Long-Term Pressures on Public Finances

  • 3.2. Domestic Market Debt Absorption Capacity

  • 3.3. Operating Earnings of Public Corporations

  • FIGURES

  • 1.1. Fiscal Reporting Coverage

  • 1.2. Coverage of Stocks in Fiscal Reports

  • 1.3. Public Sector Net Worth in Selected Countries

  • 1.4. Tax Expenditures, 2015–21

  • 2.1. Accuracy of Macroeconomic Projections

  • 2.2. MTBF Indicative Spending Ceilings and Initial Budget Appropriation

  • 2.3. Annual Update of Multiyear Commitments

  • 2.4. Central Administration and NFPS Balance Sheet

  • 2.5. Honduras Open Budget Index

  • 2.6. Citizen Participation Index

  • 2.7. Increase in Total Amounts of Approved Budgets, 2014–17

  • 3.1. Macro-fiscal Risk Indicators, Selected Central American Countries, 2003–17

  • 3.2. Oil Prices and ENEE, 2009–17

  • 3.3. Public Debt Indicators under Alternative Scenarios, 2018–38

  • 3.4. Appropriation for Contingency as a Percentage of Central Government Current Revenue.

  • 3.5. Capital Adequacy Ratios for the Banking System

  • 3.6. Distribution of Capital Adequacy Ratios

  • 3.7. Ratio of Liquid Assets to Short-Term Liabilities

  • 3.8. Ratio of Liquid Assets to Total Assets

  • 3.9. Natural Resources Income in Honduras and Selected Latin American Countries

  • 3.10. Exposure to Natural Disasters

  • 3.11. Number of Natural Disasters and Persons Affected, 1997–2018

  • TABLES

  • ES.1. Summary of Fiscal Transparency Evaluation

  • ES.2. Public Sector Financial Overview, 2017

  • 1.1. Fiscal and Budget Projection Documents

  • 1.2. Subsector Contributions to Public Sector Results

  • 1.3. Flows Between Central Government and Trusts

  • 1.4. Reconciliation of Stocks and Flows for Trusts

  • 1.5. Fiscal Reports Published by BCH

  • 1.6. Summary of Fiscal Reporting Evaluation

  • 2.1. Fiscal and Budget Projection Documents

  • 2.2. Documents Containing Medium-Term Fiscal Projections that Accompany the Budget Presentation

  • 2.3. Characteristics of the Medium-Term Budget Framework

  • 2.4. Budget Calendar

  • 2.5. Basic Principles of the Fiscal Rule

  • 2.6. Compliance with Fiscal Rule in 2016 and 2017

  • 2.7. Summary of Evaluation of Fiscal and Budget Projections

  • 3.1. Fiscal Risk Reporting

  • 3.2. Internal Documentation: Revenue and Expenditure Sensitivity Analysis

  • 3.3. Specific 2017 Risks

  • 3.4. Bond Absorption Capacity

  • 3.5. Floating Debt, 2018 and Prior Years

  • 3.6. PPP Contracts in Execution

  • 3.7. Deposits Insured by FOSEDE

  • 3.8. Natural Disasters in Central America, 1997–2018

  • 3.9. Consolidation of Municipalities’ Financial Accounts, Fourth Quarter 2017 prepared by DGID (Preliminary)

  • 3.10. Municipalities’ Borrowings from the National Financial System

  • 3.11. Municipalities’ Borrowings from Local Banks

  • 3.12. Government Transfers to Nonfinancial Public Corporations

  • 3.13. Nonfinancial Public Corporations Transfers to the Government

  • 3.14. Aggregated Balance Sheet of Nonfinancial Public Corporations

  • 3.15. Current Revenue and Expenditures of Financial and Nonfinancial Public Corporations

  • 3.16. Summary of the Evaluation of Fiscal Risk Analysis and Management

  • ANNEXES

  • I. Recommendations of the Fiscal Transparency Evaluation: Action Plan

  • II. Summary of Nonfinancial Assets

  • III. Financial Soundness Indicators of Commercial Banks in Honduras and Summary of Banking System Indicators for Central America, the Dominican Republic, and Panama

  • IV. BANADESA Financial Statements (2016–17)

Acronyms

AWP

Plan operativo anual (Annual work plan)

BAH N PRO VI

Banco Hondureño para la Producción y la Vivienda (Honduran Bank for Production and Housing)

BANADESA

Banco Nacional de Desarrollo Agrícola (National Agricultural Development Bank)

BANASUPRO

Suplidora Nacional de Productos Básicos (National Commodities Supplier)

BCH

Banco Central de Honduras (Central Bank of Honduras)

CEF

Consejo de Estabilidad Financiera (Financial Stability Comitte)

CGR

Contaduria General de la Republica (General Accounting Office)

CNA

Consejo Nacional Anti-Corrupción (National Anti-Corruption Board)

CNBS

Comisión Nacional de Bancos y Seguros (National Banking and Insurance Commission)

COALIANZA

Comisión para la promoción de las alianzas público-privadas (Public-Private Partnership Promotion Commission)

COPECO

Comisión Permanente de Contingencias (Permanent Commission on Contingencies)

DGCP

Dirección General de Crédito Público (Directorate General of Public Credit)

DGID

Dirección General de Instituciones Descentralizadas (Directorate General of Decentralized Institutions)

DGIP

Dirección General de Inversión Pública (Directorate General of Public Investment)

DGP

Dirección General de Presupuesto (Directorate General of Budget)

DGPMF

Dirección General de Política Macrofiscal (Directorate General of Macro-fiscal Policy)

DNBE

Dirección Nacional de Bienes del Estado (National Directorate of Government Property)

DSA

Debt sustainability analysis

HONDUCOR

Empresa de Correos de Honduras (Honduran Postal Service)

HONDUTEL

Empresa Hondurena de Telecomunicaciones (Honduran Telecommunications Company)

ENEE

Empresa Nacional de la Energía Eléctrica (National Electricity Company)

FHIS

Fondo Hondureño de Inversión Social (Honduran Social Investment Fund)

FNH

Ferrocarril Nacional de Honduras (National Railway Company)

FOPRIDEH

Federación de Organizaciones Privadas de Desarrollo de Honduras (Federation of Honduran Private Development Organizations)

FOSEDE

Fondo de Seguros de Depósitos (Deposit Insurance Fund

FTC

Código de Transparencia Fiscal (Fiscal Transparency Code)

FTS

Fideicomiso Tasa de Seguridad (Security Trust Fund)

GDDS

Sistema General de divulgación de datos (General Data Dissemination System)

GDP

Gross domestic product

GFSM

Government Financial Statistics Manual

IAIP

Instituto de Acceso a la Información Pública (Institute on Access to Public Information)

IFRS

International Financial Reporting Standards

IHMA

Instituto Hondureño de Mercadeo Agrícola (Honduran Agricultural Market Institute)

IHSS

Instituto Hondureño de Seguridad (Honduran Social Security Institute)

IIP

International Investment Position

IMAG

Ingreso mínimo anual garantizado (Secured minimum annual income)

IMF

International Monetary Fund

INE

Instituto Nacional de Estadística (National Statistics Institute)

INHGEOMIN

Instituto Geominero de Honduras (Honduran Institute of Geology and Mines)

INJUPEMP

Instituto Nacional de Jubilaciones y Pensiones del Poder Ejecutivo (National Executive Branch Retirement and Pension Administrator)

INPREMA

Instituto Nacional de Previsión del Magisterio (National Educational Professionals Pension Administrator)

Instituto de Previsión Social de los empleados de la Universidad Nacional

INPREUNAH

Autónoma de Honduras (“Universidad Nacional Autónoma de Honduras” Employee Pension Administrator)

INSEP

Secretaría de Estado de Infraestructura y Servicios Públicos (Ministry of Infrastructure and Public Services)

INTOSAI

International Organization of Supreme Audit Institutions

IPM

Instituto de Previsión Militar (Military Pension Administrator)

IPSAS

International Public Sector Accounting Standards

IRC

Informe de rendición de cuentas (consolidated annual reports required of all public sector entities pursuant to the respective governing laws)

ISPPIA

International Standards for the Professional Practice of Internal Auditing

LCE

Ley de Contrataciones del Estado (Government Procurement Law)

LCETME

Ley de Compras Eficientes y Transparentes a Través de Medios Electrónicos (Law on Efficient, Transparent Procurement via Electronic Media)

LOP

Ley Orgánica del Presupuesto (Framework Budget Law)

LOTSC

Ley orgánica del Tribunal Superior de Cuentas (Court of Audit Founding Law)

LRF

Ley de responsabilidad fiscal (Fiscal Responsibility Law)

LTAIP

Ley de transparencia y accesso a la información pública (Transparency and Access to Public Information Act)

MCA

Cuenta del Desafío del Milenio (Millennium Challenge Account)

MTBF

Medium-term budget framework

MTMFF

M ed ium-term macro-fiscal framework

NFPS

Nonfinancial public sector

NOGENAIG

Normas Generales de Auditoría Interna Gubernamental (General Standards for Government Internal Audit issued by the Honduran Supreme Court of Audit)

LPAPP

Ley para la promotión de las Alianzas Público-Privadas (Law on Promotion of Public-Private Partnerships)

OBI

Open Budget Index

ONADICI

Oficina Nacional de Desarrollo Integral del Control Interno (National Office on Comprehensive Internal Control Development)

ONCAE

Oficina Normativa de Contrataciones y Adquisiciones del Estado (Government Procurement Regulatory Office)

PACC

Plan Anual de Compras y Contrataciones (Annual procurement plan)

PEFA

Public Expenditure and Financial Accountability

PEI

Plan Estratégico Institucional (Institutional Strategic Plan)

PEP

Política de Endeudamiento Público (Public borrowing policy)

PFM

Public financial management

PIP

Plan de inversion publica (Public investment program)

PPAs

Contratos de compra de energía (Power purchase agreements)

PPP

Alianza Público Privada (Public-private partnership)

SAMI

Sistema de Administración Municipal Integrado (Integrated Municipal Administration System)

SANAA

Servicio Autónomo Nacional de Acueductos y Alcantarillado (National Water and Sewer Service)

SAPP

Superintendencia de alianzas público privadas (Superintendency of Public-Private Partnerships)

SCGG

Secretaría de Coordinación General del Gobierno (Ministry of Government Coordination)

SDJGD

Secretaría de Estado en el Despacho de Justicia, Gobernación y Descentralización (Ministry of Justice, Government and Decentralization

SDR

Special Drawing Rights

SEDS

Secretaría de Estado en el Despacho de Seguridad (Ministry of Security)

SEDUC

Secretaría de Estado en el Despacho de Educación (Ministry of Education)

SEFIN

Secretaría de Estado en el Despacho Finanzas (Ministry of Finance)

SESAL

Secretaría de Estado en el Despacho de Salud (Ministry of Health)

SIAFI

Sistema de Administración Financiera Integrada (Integrated financial management system)

SIGADE

Sistema de Gestión y Análisis de la Deuda (Debt Management Information System)

SINACORP

Sistema Nacional de Control de los Recursos Públicos (National System for Public Resources Control)

SIREP

Sistema de Registro y Control de Empleados (Personnel management system)

SIRFIDE

Sistema de Registro de Fideicomisos (Trust funds Registry)

SISERA

Sistema de Seguimiento a las Recomendaciones de Auditoria (Audit recommendations monitoring system)

SISOCS

Sistema de Información y Seguimiento de Obras y Contratos de Supervisión (Construction and supervision contracts information system)

SNIP

Sistema Nacional de Inversión Pública (National public investment system)

TSA

Treasury Single Account

TSC

Tribunal Superior de Cuentas (Court of Accounts)

UCF

Unidad de contingencias fiscales (Fiscal Contingencies Unit)

UN AH

Universidad Nacional Autónoma de Honduras (National Autonomous University of Honduras)

UPEP

Unidad de Planeamiento y Evaluation de la Gestión (Unit of Planning and evaluation of Performance)

Honduras: Technical Assistance Report–Fiscal Transparency Evaluation
Author: International Monetary Fund. Fiscal Affairs Dept.