Money

Minutes prior to the summit Friday between the presidents of Central America -- including President Porfirio Lobo -- and the Dominican Republic and United States Secretary of State Hillary Clinton in Guatemala City, President Lobo was notified by representatives of the World Bank (WB) and the International Monetary Fund (IMF) of their formal recognition of his government. According to Mr. Lobo's personal secretary, Reinaldo Sánchez, both the WB and the IMF "recognize that in Honduras there is a legitimate and democratic government elected through a transparent electoral process". The news opens the way for restarting the flow of credit from these institutions to Honduras. Yesterday, the WB also officially reactivated some US$30 million in loans via Honduras' Investment and Development Fund (FIDE) in support of commercial projects, while the IMF unfroze US$164 million in funding for Honduras. (3/6/10) (photo of Hillary Clinton and Porfirio Lobo courtesy Internet)

In advance of her meeting today in Guatemala with President Porfirio Lobo, US Secretary of State Hillary Clinton on Wednesday sent a letter to the US Congress formally notifying it that the State Department will be restarting its aid program to Honduras. "I have just sent a letter to the Congress of the United States notifying them that we will be restoring aid to Honduras," Mrs. Clinton told reporters Wednesday at a press conference in Costa Rica where she was visiting with outgoing President Óscar Arias. Following the ousting of President Manuel Zelaya on June 28, 2009, the US suspended more than US$30 million in economic assistance as punishment for what it viewed as a military coup d'état. The State Department, however, was unwilling to go through the process of officially declaring Mr. Zelaya's removal a military coup d'état. Had it done so, it would have ceded to Congress the authority to restart aid, thus hindering its ability to quickly restore the program. Secretary Clinton's letter of notification does not require Congressional approval. (3/5/10) (photo of Hillary Clinton courtesy Internet)

The government of Taiwan has made available US$5 million for low-interest loans to small- and medium-size businesses in Honduras that need to import machinery and technology to improve production. According to Taiwan's ambassador to Honduras, John Lai, the funds have already been deposited in an Honduran bank. The announcement of the loan program was made by Ambassador Lai before a visiting delegation of 13 business representatives from Taiwanese electronics and machinery firms participating in a trade show at the Expocentro facility in San Pedro Sula. (3/5/10)

The Central Bank of Honduras (BCH) reported Wednesday that the country's foreign debt through December 2009 stood at US$3.235 billion, compared to US$3.541 billion in December 2008. The amount represents a decline in the foreign debt of US$215.6 million, or 5.1 percent. According to the BCH, the public sector accounts for US$2.432 billion of the debt, or 75.2 percent, and the private sector US$803 million, or 24.8 percent. The foreign debt, which represents 16.9 percent of Honduras' Gross Domestic Product (GDP), would have been higher had the country not received US$182.1 million in debt pardons last year. (2/26/10)

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Honduras' banking system accounts for Lps 129.299 billion (US$6.84 billion) in private capital deposits, as of February 4, 2010, reports the Central Bank of Honduras (BCH). The amount represents an increase of 5.9 percent from a year ago. Of the total, Lps 89.221 (US$4.72 billion) is in the form of domestic currency and Lps 40.078 billion (US$2.12 billion) in foreign currencies. The supply of domestic currency has rise 3.4 percent in the past year. The supply of foreign currencies has grown 8.7 percent, due primarily to deposits from industrial firms, thermal energy companies, and distributors of petroleum-based products. (2/22/10) (photo courtesy Internet)

Tania Lobo de Quiñónez was named yesterday to be the director of the Central American Bank for Economic Integration's (CABEI) operations in Honduras. The appointment for the three-year term was made through a resolution (No. AG-4/2003) vote by the governors of the CABEI. According to Mrs. Quiñónez, her first priority will be to "initiate the release of funds for projects that have already been approved and identify new projects that can generate employment [in Honduras]". She expects that approximately US$22 million in CABEI funds will be released within the next two weeks, specifically for a project in Villa de San Antonio-Goascorán valued at US$15.4 million; the Quetzal corridor project, US$1.8 million; the Tela Bay project, US$1.7 million; rural electrification, US$1.3 million; CA-13, US$1.2 million; and Promorco, US$396,000. (2/20/10)

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The International Monetary Fund (IMF) has provided US$163 million to the Central Bank of Honduras (BCH). According to BCH president María Elena Mondragón, the money will be used to strengthen the country's international reserves, which stood at US$2.295 billion, as of January 28. Mrs. Mondragón noted that she has been in contact with other international and regional financial organizations such as the World Bank (WB), the Inter-American Development Bank (IDB), and the Central American Bank for Economic Integration (CABEI), and that she has been encouraged by their response. She acknowledged that loans from these institutions were suspended following the ousting of Manuel Zelaya as president on June 28, 2009, but that the environment has dramatically changed since the election of President Porfirio Lobo. International lending organizations have recognized the Lobo administration and are once again extending credit to Honduras. (photo courtesy Internet)

A group of private investors from the United States, led by Congressman Dana Rohrabacher of California's 46th District, visited yesterday with President Porfirio Lobo to discuss the development of a biodiesel project worth an estimated US$120 million. The project envisions the construction of a plant that would produce biodiesel fuel using the vegetable oil derived from the non-edible fruit of the piñon tree. The proposal calls for cultivating piñón trees in Choluteca, El Paraíso, and Valle, generating labor intensive employment within small farms in those departments. It would include financial and technical assistance to farmers, as well as guaranteeing a customer for their product. In addition to providing biodiesel feedstock, the trees would help prevent soil erosion and deforestation in Honduras. The price of diesel fuel on world markets is currently about US$42 per barrel, compared to US$75 per barrel for petroleum oil. (photo of piñon fruit courtesy IDB)

The price of cement in Honduras went up last week from Lps 120 per bag to Lps 125-127 per bag, while the price steel rebar went up six percent. The price of rebar in Honduras has been among the lowest in Central America, with the price of 5/8-inch rebar previously pegged at US$10.34 per unit, 1/2-inch rebar at US$6.62, 3/8-inch at US$3.74, and 1/4-inch rebar at US$1.43. The demand for rebar, a key indicator of the state of the construction industry, has been declining. In 2008, some 120,000 tons of rebar were ordered in Honduras. Demand dropped to 100,000 tons in 2009. It is projected that the rise in the cost of these building materials will likely have a further negative impact on new housing construction in a country that already faces a deficit of 800,000 available homes for its population, particularly for the poor. (photo courtesy La Tribuna)

The Inter-American Development Bank (IDB) announced Friday that it will lend Honduras US$27.1 million to finance the National Program for Sustainable Rural Development (Pronaders) in the departments of Colón, El Paraíso, Gracias a Dios, and Olancho. The program, directed by Ramón Chacón, was created by the Honduran government to enhance the quality of life in rural communities through self-management and community participation. It provides technical assistance, training, and loans to help improve marketing and commercialization of production. The government will also provide counterpart funds for Pronaders. The IDB on November 11 resumed disbursements of funds to Honduras that it had frozen shortly after the ousting of President Manuel Zelaya. The move to overturn economic sanctions by the IDB followed the signing of the Tegucigalpa-San José Accord between representatives of interim president Roberto Micheletti and Mr. Zelaya on October 30. (photo courtesy Internet)