A nominal rate of 8.75% plus the devaluation of the Lempira -estimated 3.5% this year, will be paid for the $500 million placed in the international market.
After several negotiations with investors the country managed to place $500 million in sovereign bonds in the foreign securities market, said the chief of the Finance Ministry, Wilfredo Cerrato.
Plagued by serious liquidity problems, the government of Honduras is using cement as currency to pay off its debts.
Latribuna.hn reported that the president of the Honduran Chamber and Construction Industries (Chico), Alejandro Alvarez, revealed that "The government is using cement destined for social works to pay off debts held with some contractors and construction companies."
A law in Honduras allows the government to use state resources to raise funds to pay domestic debt.
"The attitude of Congress is irresponsible in dealing with these issues without beforehand consulting taxpayers who pay for these commitments with their taxes , nor conversing with civil society organizations," said Fernando Garcia, director of the National Association of Manufacturers (Andi).
Sales of securities by the Honduran government in 2013 have been at interest rates of around 6%.
According to Evelyn Bautista, Vice Minister of Finance for Credit and Public Investment, of the total amount of $419 million authorized by Congress in the General Budget of Revenues and Expenditures, they have managed to issue in the domestic financial system 75% of that figure, and they plan to issue the remaining 25%, which amounts to $105 million.
Seeking to overcome the collapse in public finances, a bill proposes the elimination of 70% of the tax exemptions granted by the state.
The chairman of the Commission for the Review of Exonerations and Tax Exemptions, Marco Ramiro Lobo, announced that it will present a report to the Government on the management of tax exemptions in the country and they will also submit a bill on exemptions to be sent to the National Congress (NC).
Honduras's Congress has approved the 60-day suspension of tax exemptions, except for the maquila and renewable energy generation sectors.
The purpose of the measure is not to eliminate the exemptions but to verify proper use of them, calling the sectors involved to appear before a commission created for that purpose, to review all of the existing schemes and customs exemptions in the country.
A bill submitted to the Congress of Honduras has temporarily suspended all exemptions and tax benefits granted by the Ministry of State in the Finance Dispatches.
The deadline set in the decree is for a period of sixty days from the effective date of this decree, but it will be extended to ninety days upon approval by Congress.
During that time a special committee will review and determine which sectors will maintain the tax benefits and exemptions, under a set of parameters that only benefit small and medium enterprises and non-governmental organizations (NGOs) ", noted an article in Latribuna.hn .
The National Congress of Honduras has approved the Executive’s tax package, including the placement of $247 million in bonds to finance domestic debt.
The four projects approved are Streamlining Act on Exemption of Fuels for Electric Power Generation, the amendment of Article 5 on the Income Tax, the authorization for the placement Sovereign Bonds in the order of 750 million dollars and bond issues to finance domestic debt for lempiras 4.900 million ($247 million).
The Government has submitted to Congress a package of tax measures which includes the unification of tariffs with the rest of Central America.
One initiative amends the import duty rate, currently at 5%, to bring it to 25%.
"Also to be sent is an initiative aimed at eliminating the road contribution which corresponds to a subsidy that thermal power generating companies receive on fuel imports." We talked about the elimination of the road contribution... We are removing this subsidy from thermal companies and making it clear: consumers will not have any problems because the state will give more than 1,100 million lempiras to pay the Enee so as to not affect end consumers", said Francisco Rivera, president of the Commission of Congressional Budget.
The budget approved by the National Congress represents an increase of 8.5% compared to 2011.
The increase in the budget ($ 582 million) is destined almost exclusively to cover increases in teachers salaries.
The departments which have been designated the most resources are Education with $1,227 million, Health $563 million, Interior $199 million, and Security $184 million.
The budget approved by the council of ministers represents a 10% increase relative to 2010.
The document sets the country's 2011 budget at $7.039 billion of which 56.8% will be managed by the central government with the remaining 43.2% administered by decentralized institutions.
The Finance Minister, Chong Wong, told La Tribuna that, "Honduras' economic outlook is bleak but with the prospect of improvements in the coming months taking into account donations received and planned investment projects worth between $582 and $635 million".
Congress authorized the Finance Secretary to sell additional bonds in the securities market.
These resources will be used to fund an enlarged budget (6.300 million lempiras, $333 million).
“The decree was passed on Wednesday night, under the premise that the government must comply with all its unpaid obligations from the 2009 exercise”, explained Laprensa.hn.
Proposals from Fosdeh (Social Forum on Foreign Debt and Development in Honduras) to the Honduran Congress.
“The economic, social and political crisis in the country has never been as evident and generalized as now, and we’ve never had such a thin margin for errors as we do now. We urgently need to reach consensus through real dialogue”.
FOSDEH calls on the Honduran congress to develop a realistic budget, in coordination with an Anti-crisis Plan, “to assist in visualizing investment priorities and builds the basis to harmonize our long term budget with a Country Plan developed through consensus”.