At the end of last year, the public sector's external debt totaled $7.378 million, 3% more than the $7.145 million reported at the end of 2017.
The Public External Debt/Gross Domestic Product (GDP) Balance indicator at the end of 2018 stood at 30.5%, 0.6% lower than the figure reported at the end of 2017, informed the Central Bank of Honduras (BCH).
At the end of the third quarter of the year, the total public debt of the country's Central Administration amounted to $11.002 million, 3% more than that reported in the same period of 2017.
During 2018, the total public debt balance of the Central Administration of Honduras reached US$11,002.8 million, which represents an increase of 0.13% with respect to the Second Quarter of 2018.
At the end of last year, the total balance of the Central Administration's debt was $10.928 billion, 13% more than what was recorded at the end of 2016.
From a Report by the Ministry of Finance:
At the end of 2017, the balance of the total debt of the Central Administration of Honduras reached an unpaid balance of US $10.92809 billion, reflecting a monetary increase of 12.64% compared to the close of 2016.The Debt / GDP ratio is equivalent to 47.5%.
Fitch notes that the relatively favorable external environment will not be enough for Central American countries to improve their credit ratings, which could remain stable despite fiscal problems.
From the press release by Fitch Ratings:
Fitch Ratings-New York-22 October 2015: External tailwinds are unlikely to lead to a significant uplift in Central America's creditworthiness, says Fitch Ratings in a new special report.
With the exception of improvements in Nicaragua and Honduras, in the rest of the Central American countries problems in public finances range from latent in Panama and already serious in Guatemala, to critical in Costa Rica and El Salvador.
From the report "Macrofiscal Profiles: 4th Edition" by the Central American Institute for Fiscal Studies (Icefi):
The agency improved the rating from B to B + highlighting the process of fiscal consolidation in place since 2014 but warned of weak internal controls and limited transparency in the public sector.
From a statement issued by Standard & Poor's:
OVERVIEW
We expect that continued implementation of recent fiscal and energy-sector reforms will contain Honduras' general government fiscal deficit to around 4% of GDP over the next two years, helping to keep net general government debt below 40% of GDP over the same period.
The average tax burden for the region is 13.4% of GDP, while the average public expenditure increased from 18.7% in 2013 to 19.2% at the end of 2014.
From the Introduction of the report Macrofiscal profiles in Central America, from Instituto Centroamericano de Estudios Fiscales (Icefi):
The fiscal situation has worsened in Central America in recent months, mainly due to a structural lack of sufficient resources to meet the needs of Central Americans and realize many of the commitments made by governments.
The Central American Institute for Fiscal Studies has carried out an assessment of the public finances 2010-2013, and prospects for 2014.
From a statement issued by the Central Institute for Fiscal Studies (Icefi):
The Icefi showed that sluggish revenues and a strong increase in public spending accelerated the growth of the fiscal deficit, from 4.6% of GDP in 2010 to 7.9% of GDP in 2013.
In July 2013 foreign debt reached $5.5574 billion, $713.4 million more than what was owed in December 2012.
From a report on external debt of the public and private sectors published by the Central Bank of Honduras:
External debt of the public and private sector published July 2013.
Total External Debt
Up to July 2013, the balance of the total external debt reached $5.5574 billion, up $713.4 million compared to what was registered in December 2012, mainly due to the net use (disbursements less amortization) of $729.3 million, while the balance was reduced by $15.9 million due to the depreciation of the U.S. dollar against other currencies.
In July, the public debt balance reached $14.57 billion, the highest in Central America in relation to GDP.
Elmundo.com.sv reports that "in the first half of the year, the ratio of public debt in El Salvador in relation to its Gross Domestic Product (GDP) was the highest in Central America, according to the Central American Monetary Council (CAMC)" .
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).
Several Central American governments have resorted to issuing public debt as a way to continue living beyond their means.
An article by Rafael Delgado Elvir in Laprensa.hn objectively analyzes the tendency of governments to fall in debt when faced with economic slowdowns. Excess liquidity worldwide makes it very easy to issue bonds of any kind and for states to obtain direct loans.
The new finance minister has announced plans to restructure Honduras’ public debt of about $5.8 billion, almost all of it in short-term format, with high interest rates.
Honduras is facing a severe debt problem which could become a disaster for their public finances.
Public debt, external and internal, had reached $5.772 billion up to December 31st, 2011 .
The U.S. could be facing a possible reduction in their risk rating, due to levels of national debt and government deficit.
Democrats and Republicans have been debating in the United States Congress trying to reach an agreement that will raise the debt ceiling and secure public finances for the future, avoiding a potential cessation of payments or a reduction in the country’s risk rating.