BUSINESS & ECONOMICS

The Secretary of Agriculture and Cattle Ranching has put two new varieties of bean seed on the market. According to a La Prensa report, the new varieties, Dicta 112 and Dicta 113, are more resistant to disease, insect damage, and drought.

The government announced in a La Prensa report that 40 companies from Mexico, the United States and Europe have expressed interest in buying the 49 percent share of the Honduran Telecommunications Company (HONDUTEL) soon to be put up for sale. HONDUTEL's general manager Arturo Morales says that only a foreign consortium could consider the purchase, because national firms do not have the necessary capital. Among the companies expressing interest are Bell and AT&T of the United States, France Telecom, Deutsche Telekom of Germany, and Telefonica de Espana from Spain. HONDUTEL is the highest grossing state-run business in Honduras, with annual income of over US$30 million. In addition to telephone services, the company is responsible for the authorization of Honduran radio and television stations. Arturo Morales, who took his post in 1996, is the first civilian general manager of the phone company, which had been under military control since its foundation.

Honduras had the highest level of inflation in Central America last year, at 12.5 percent. According to a La Prensa report, Costa Rica was close behind at 11.2 percent inflation. Guatemala and Nicaragua registered inflations of 7.3 percent and 7 percent, respectively, while El Salvador had the lowest inflation rate in Central America, only 1.93 percent.

The balance of Honduras' national debt fell 0.5 percent in 1997. According to an El Heraldo report, the national debt at the end of 1997 was $3.847 billion, down $18.5 million from the 1996 figure of $3.865 billion. Factors that contributed to the decrease in debt were fiscal discipline and the strengthening of the dollar on world markets.

Government revenue for 1997 was up 27.7 percent from 1996 figures. The government received Lps. 2.4 billion in taxes, including income and property taxes, while Lps. 6.05 billion were accumulated through indirect taxes, such as sales tax and taxes on beer, gas and cigarettes, according to a report in the financial section of El Heraldo. The remaining income was a result of capital and interest received from the privatization of government services. The government operated with a deficit, however, of Lps. 1.8 billion this year.

Milk prices went up this week, as reported in the daily El Periodico. The country's three milk production plants, Leyde, Delta, and Sula, made a coordinated increase from Lps. 5.50 to Lps. 5.75 per liter of milk. The companies, who have traditionally maintained uniform pricing, also raised orange juice and margarine prices, and distributors warn that mantequilla and cheese prices will soon be increased. Consumers have complained recently due to lack of taste and quality in milk products and Rafael Emiliano Verdial, president of the Association of Farmers and Ranchers, recently revealed an industry practice of diluting milk with African palm oil.

Honduran cantaloupe exports will not reach the predicted level for 1997. An official of the Secretary of Agriculture and Livestock told El Heraldo that the El Nino phenomenon has caused changes in weather patterns that have affected the planting and harvesting of the cantaloupe crop. Growers and traders had hoped to export up to 4,300 shipping containers of the fruit, but production was nearly 18 percent less than expected.

Used clothing vendors have formed an association to promote and protect the interests of their business. According to a La Tribuna report, the National Association of Vendors of Second Hand Clothing (ANVRAYS for its Spanish acronym) has been formed by business people dedicated to the sale of used clothing, imported from the United States, to unite efforts to protect themselves from planned legislation that could prohibit this commerce. Economy Vice-minister Sergio Nunez has announced plans to prohibit the import of second hand clothing because he says it represents unfair competition to Honduran clothing manufacturers.

The National Water and Sewage Service (SANAA) is conducting a production cost study to determine appropriate price increases to begin the second half of 1998. As reported in the daily El Heraldo, it is more costly to provide services in the central zone of Honduras than in the North Coast area; as a result SANAA is also planning to implement a price scale for zones in the coming year.

The European Community will donate $5 million between 1998 and 1999 to Central America's fishing industry. According to La Prensa, in Honduras the aid will continue supporting fishermen in the southern zone as well as the investigation of marine resources in Caribbean waters around the Bay Islands.

National economic activity during 1997 was generally satisfactory, according to the government. The gross domestic product grew 4.5 percent and a notable improvement was seen in all macroeconomic indicators, according to the Central Bank of Honduras. According to a report in El Heraldo, the minimum wage increased 25 percent from 26.08 to 30.85 lempiras a day. The value of exports was estimated at $1,520 million, showing an increase due to higher sales of coffee, metals, shrimp, melons, cigars, wood, and other food products; however, banana exports dropped.

Between January and September of 1997, national petroleum costs declined by 8 percent or $14.5 million in comparison with the same period for 1996. According to the daily El Heraldo, there was a decrease in purchases of bunker and diesel fuels while imports of gasoline increased. The reduction in bunker consumption was due to lesser generation of electric energy by private plants, now that the National Electric Company (ENEE) supplies a large part of the country's demand.

Exports of goods and services will be reduced next year if many Honduran businesses still do not comply with the demands of the International Standards Organization (ISO), which establishes standards to secure the conservation of natural resources and the environment. It was noted in El Heraldo that recently one of the largest agroindustry businesses of Honduras received a one million lempira fine for not obtaining an environmental license before operating in Comayagua.

The Ministry of Commerce, Industry, and Tourism announced this past week it is planning to prohibit the importation of used clothing and shoes. In response, the Association of Used Clothing Vendors held demonstrations and protested daily, claiming that more than 200,000 people depend on this business. According to El Heraldo, the association warned that prohibiting the import of used clothing would increase the amount of delinquency in Honduras by eliminating the jobs and incomes of many families and the government would lose Lps. 72 million in annual tax revenue created by import taxes paid by the used clothing industry.

The National Water and Sewage Service (SANAA) is conducting a production cost study to determine appropriate price increases to begin the second half of 1998. As reported in the daily El Heraldo, it is more costly to provide services in the central zone of Honduras than in the North Coast area; as a result SANAA is also planning to implement a price scale for zones in the coming year.

The European Community will donate $5 million between 1998 and 1999 to Central America's fishing industry. According to La Prensa, in Honduras the aid will continue supporting fishermen in the southern zone as well as the investigation of marine resources in Caribbean waters around the Bay Islands.