BUSINESS & ECONOMICS

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Monday, February 24, 2003 Online Edition 8

Informal economic sector at risk

If marginalized by the Central American Free Trade Agreement (CAFTA), workers in the informal economic sector are at a grave risk, said Labor Minister, German Leitzeler, this week. When the unemployed cannot find work they most often become part of the informal independent employment sector, for instance selling crafts or clothes.

“These workers don’t earn a minimum wage, don’t have social security, are exposed to safety hazards and have no possibility of a career. What’s worse, university educated citizens who cannot find work will end up driving taxis,” said the Minister. The recession and the consequent lack of economic growth threaten the formal labor market, he added. — La Tribuna

ANDI: Country is going broke

Petroleum should not be the government’s main source of income, said the National Association of Industries (ANDI) this week. These measures only accentuate the difficult economic situation that most Hondurans are experiencing, said an ANDI- press release on Wednesday. Instead the tax contributor’s base rate should be increased, and economically stronger sectors of the employment force should be taxed at a higher rate.

Continued increases in the price of petroleum derivatives cause production costs to go up and consequently the price of products and services to the consumer. Most affected are the price of transportation and electricity, that directly influence industry costs and the buying power of the entire population, especially low-income homes.

“It is well known that the petroleum taxes duplicate prices to the industrial and domestic consumer. The government is taking advantage of the fact that the international price per barrel is high to obtain more income, but with this policy, the country is going broke.”

Along with increasing oil prices, the government has also raised municipal taxes, social security contributions, and is discussing a minimum wage increase. Together with the economic recession in the United States, these factors are making it hard for Honduran industry to compete. The situation in general is creating an economic depression that could bring disaster to some areas, such as agriculture and specifically coffee.

“The government has a fiscal vision, and is trying at all costs to cover a enormous fiscal deficit (four billion lempiras) brought on by politicians approving professional statutes reforms.

Those who approved these laws, said the document, didn’t think about the large expense public finances would have to cover, more than three billion lempiras in the 1999-2001 period. — El Heraldo

Larry Palmer, “I have faith Honduras will come to an agreement with IMF”

The United States Ambassador, Larry Palmer, said this week that the letter of intent that Honduras is negotiating with international creditors is necessary to carry development programs through the country.

“I think President Ricardo Maduro is doing everything he can to put the programs need for a successful administration in action,” said Palmer. When asked if jailing corrupt politicians was an IMF condition for reaching agreement, the Ambassador said he had no knowledge of the point.

What is important is the fact that both the Honduran government and IMF officials are negotiating a financial agreement, he said. “Therefore, I have faith we will come to an agreement with these negotiations,” said Palmer. — La Tribuna

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Monday, February 17, 2003 Online Edition 7

Central America will apply flat tax for importation of milk products

The governments of Central America are meeting with producers to discuss the possibility of unifying import taxes of milk products as a means of facilitating commerce while avoiding contraband.

“Flat import taxes for milk products is achieving a customs unity,” said Gustavo Escobar, the president to the Association of Milk Producers of El Salvador.

Escobar said that the process of unifying the tariff for the importation of milk products from countries outside the isthmus will be introduced in conjunction with the ministers of agriculture from the five Central American Nations (Guatemala, Honduras, Nicaragua, El Salvador, and Costa Rica). — La Tribuna

Hotels reject municipal tax

The vice president of the Honduran Hotel Association, Ricardo Recaredo, accused municipal authorities of stifling tourism by charging an additional two- percent tax on the services provided by hotels.

“As a tourist destination we are making ourselves less attractive to visitors because by increasing hotel service costs, we are heightening the already high cost of visiting which is relatively high due to the price of airfares, that are already too high,” said the businessman. Recaredo was referring to the new two percent municipal tax that the municipalities of Tegucigalpa and the Caribbean port city of Trujillo are charging the tourism sector, which adds to the four percent the central government already charges for sales tax.

“We do not agree with this tax, taxes should be set in accordance with the services the municipalities offer, but in this case, an extra charge is hidden as a tax, which is totally unconstitutional, because only the National Congress can apply this sort of tax,” said Recaredo. According to the Minister of Tourism, Honduras received in 2002, approximately 350 million dollars from the visit of approximately 800,000 tourist, which represents an increase of 27.5 percent with respect to the previous year. — La Tribuna

Nicaraguan government will discuss elimination of 35 percent tax on Honduran goods

The government of Nicaragua will present to it’s parliament a bill to eliminate the 35 percent import tax on Honduran goods that has existed since a maritime border conflict between the two countries in 1999.

“The President is finalizing the proposal and it is expected to be signed by next Monday,” said the Nicaraguan Vice-chancellor Salvador Stadhagen.

The Honduran Congress threatened to approve on Tuesday, commercial reprisals against Nicaraguan, when the deadline for the tax suspension of the import tax, January 30, went by.

The tax was approved by the Nicaraguan congress in December 1999 to finance the case the government of Nicaragua presented against Honduras before the International Court of The Hague due the maritime conflict. Although Stadthagen said that the elimination project is almost ready, the process cannot be sped up due the patchy relationship between the president of Nicaragua, Enrique Bolanos and the Nicaraguan Congress, where the main political forces are opposed to eliminating the tax.

The Parliament is comprised of 93 congressmen, 44 of whom belong to the right wing Partido Liberal Constituticionalista (PLC) who supported the ex- president Arnoldo Aleman and 38 from the opposing left-wing Frente Sandinista de Liberacion National (FSLN).

The vice-chancellor did say that lobbying was previously carried out to speed up its approval and to gain the support of the Nicaraguan private sector.

The tax has provided Nicaragua with 7.9 million dollars in earnings, an amount that the Nicaraguan government considers sufficient to pay the expenses of the case against Honduras. —La Tribuna

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Monday, February 10, 2003 Online Edition 6

USAID donates US$ one million

The United States Agency for International Development (USAID) approved an additional US$ one million donation for the continued support of the Honduran government through the Program for the Improvement of Politics and Productivity (Propep).

With this extra donation, USAID’s support of this program adds up to US$ 20 million. A U.S. Embassy report claims Propep has achieved success in economic political activities, by promoting investment in the cultivation of non-traditional agricultural products and providing technical assistance to micro-financial non-governmental organizations. For example the export of non-traditional products such as cucumbers and melons increased more than US$6.2 million from 2001 and 2002. Propep also provides technical assistance to more than 25 milk producer groups that operate approximately 30 rural recollection centers throughout the country. The program also supports the export of handicrafts, and has generated sales of more than US$250 thousand to date. The original agreement between the two governments was made in December 1998 to finance activities that would provide market and resource opportunities to the more underprivileged segments of the population. —El Heraldo


Fuel prices rose between 24 and 63 percent in the last twelve months

The price to consumer of petroleum derivatives has suffered serious increases during the last 12 months according to statistics managed by the Petroleum Technical Unit (UTP) of the Secretary of Natural Resources and Environment (Serna).

According to this institution’s data, between February 3, 2002 and 2003, the price of these products has increased between 34.20 and 61.86 points. The biggest increase was in the price of kerosene, from Lps. 18.02 to Lps. 29.17 a gallon, or 61.8 percent. The price of a cylinder of LPG rose from Lps. 104.05 to Lps. 166.99 or 62.9 percent. The cost of diesel rose 52.6 percent from Lps. 22.29 to Lps. 34.02 per gallon.

Gasoline prices were the least affected, but still rose sharply. A gallon of super gasoline went from Lps. 33.77 to Lps. 45.32, a 34.2 percent increase. Regular gasoline rose from Lps. 31.93 to Lps. 43.56 or 36.4 percent.

It is expected that international market prices for petroleum derivatives will continue decreasing and that the central government will approve a small reduction in the price of these products as of February 17. — El Heraldo


Road repair to attract tourists

As Easter week approaches, a road repair program was initiated, especially for roads that lead to tourist centers.

For next month, the Department of Public Works announced the repair of 34 kilometers of road between Santa Elena and Cedeno in the southern sector of the country, at an investment of Lps. 168 million. Currently the road from El Picacho through El Hatillo is being repaired. — La Tribuna


Overfishing causes decrease in annual harvest

Due to commercial overfishing of lobster, shrimp and conch, these marine resources have suffered drastic decreases on the Atlantic coast of Honduras. In 1991, 22 thousand tons were captured, while during the last three years, only five thousand have been harvested yearly.

A study prepared at the petition of the Inter-American Development Bank (IDB), shows that year to year production of mollusks varies greatly, between 950 to 4000 tons.

The Director of Fish and Agriculture, Pedro Marcio Castellon, said that the situation has also been affected by natural phenomena such as ocean warming and the destruction caused by Hurricane Mitch.

He did however, recognize that commercial ocean and artisan lagoon overfishing is the main reason these resources are diminishing. Uncontrolled artisan fishing also disturbs reproduction areas. Castellon also said that the Secretary of Agriculture (SAG) of which his office is dependent, will seek measures to protect these resources and improve the situation. — La Tribuna

 

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Monday, February 3, 2003 Online Edition 5

Gray Line Worldwide will initiate Honduras operations in June

The largest tour operator in the world, Gray Line Worldwide Tours, who run holidays in more than 200 destinations worldwide, will initiate operations in June.

The group is made up of 150 independent companies, offering a wide range of services, from one-day tours, to multi-day packages, charter flights, personalized tours, and convention services, in a diversity of languages.

Gray Line Worldwide operate in places such as Alaska, Chicago, Las Vegas, Miami, Los Angeles, New York, Washington, and Niagara Falls, as well as other important cities and destinations.

The interest in initiating operations in Honduras is based on the country’s immense variety of natural, cultural and archaeological riches. — El Heraldo

Eliminate import tax says government to Nicaragua

The government of Honduras has warned the government of Nicaragua to quickly eliminate the 35% import tax that is strangling approximately 55 Honduran businesses. President Maduro made this revelation yesterday after finding out about the unanimous position of a group of Congressmen who, through El Heraldo, announced their willingness to re-take the initiative to charge 35% tax on Nicaraguan products in February, as well as apply other types of port duties. The Congressmen’s measure will be effective if Nicaragua has not eliminated the tax on Honduras in January.

President Maduro said he had recently sent a letter to his colleague Enrique Bolanos of Nicaragua asking him to retake the initiative to suppress the tax. “I feel the same frustration as our producers. Honduras has always respected international laws and resolved problems in international legal forums... I had to tell the Nicaraguan government that Honduras has been very patient and respectful of international decisions but our producers have suffered too much and for a long time and we expect rapid action to eliminate this obstacle to commerce.”

Maduro said that his government will protect Honduran goods in the negotiations that are about to be initiated with the United States about the Free Trade Agreement. “We have to protect local production, especially agriculture. We will not permit the free access of subsidized basic grains from rich countries. We have to protect the incipient industry in Honduras.” — El Heraldo

Electricity guaranteed for next 12 years

The supply of electric energy is guaranteed for the next 12 years so that the population won’t suffer any energy rationing. Congress ratified the contracts of purchase subscribed by the executive power with two companies, AES-Honduras and Luz y Fuerza de San Lorenzo S.A. (Lufussa). Both companies will provide the country with 410 Megawatts of electricity, starting in 2005. They will invest together the amount of 17,500 million lempiras.

According to the contract, the cost per kilowatt/hour will cost 4.5 US cents, 4 times less than other contracts acquired by the national electric company, ENEE. –El Heraldo
 

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