Honduras This Week Online Business & Economics

legalfv.gif (4176 bytes) Big year ahead for Honduras in law and legislation

By MELANIE WETZEL

Suddenly it is the New Year. A life changing weather phenomenon kept us occupied during November and December and before you know it, here is 1999.

This will be a strange year for Honduras, one without precedent, but looking ahead right now there are some important events coming up in 1999 in Honduran Law.

To begin with, the next legislature should confirm the reform of Article 107 of the Constitution. This will allow foreigners to own land located on the coast of Honduras, if they plan to have a tourism-related business.

But the reform follows a long tradition of confusion over this point, and leaves many questions unanswered. What if the original tourism project goes bankrupt for example? Does the dissolution of the tourism-related use of the property immediately invalidate the title of the land, or will there be a forced sale?

Urban lands are exempt and are regulated under a separate law, which limits each person to about 3/4 of an acre. It is common practice to form a corporation to avoid this limitation. Will these corporations now be regulated under the new reform, which requires that the government tourism agency approve them? What about the protection of small Honduran landowners? Will they be allowed to sell out at the first high bid, and join the exodus into the already overcrowded cities of Honduras?

Other big news this year will include the continuation of the transfer of the police force to civilian command. Elimination of corruption and a move toward a more just and humane implementation of the law are the positive results all hope for. This important change in the structure of Honduran law enforcement will probably be compromised by a lack of necessary start-up funds -- the government budget will be tight this year and there will be huge demands for housing and infrastructure. Hopefully the good intentions will last until there are sufficient funds to invest in training and paying a skilled civilian security force.

This will also be a big year for investigation of corruption. The process is already underway to investigate and prosecute contractors who allegedly misused funds during construction of the sports complex used for the VI Central American games. Next in line will probably be contractors who were involved in the construction of the new Central Penitentiary -- the one where inmates were able to cut through the bars (made of PVC pipes painted black) with a razor blade.

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Honduras is dragging 15.7 inflation rate

By BLANCA MORENO

Although the Central Bank of Honduras (BCH) had projected economic growth for 1998 at 5%, this figure only reached 3%, translating to a loss of five million lempiras in relation to the gross national product (GNP).

According to the BCH figure, inflation has reached 15.7 percent, 1.7 percent higher than desired goal of 14 percent for the year. The highest increases occurred in consumer goods and housing.

Emin Barjum, President of the Central Bank, presented the figures to the public with no explanation.

The 1998 economic indicators for Honduras are as follows:

Economic Growth	3 percent
GNP	70,000 million lempiras
GNP loss	5,000 million lempiras
International reserves 1998	648 million dollars
International reserves 1997	491.5 million dollars
Increase in reserves 1998	150 million dollars
Reinsurance income	35 million dollars
Annual Increase Money Remittances	20 percent
Increase in exports	16 percent
Industrial parks increase	30 percent
Active Interest Rate	32.8 percent
Passive Interest Rate	22 percent
Bank Credit given	24,780 million lempiras
Increase in credit in relation to 1997	6,900 million lempiras
Savings in Commercial Banks	25,048 million lempiras
Devaluation lempira against US$	5.2 percent
Accumulated Inflation 1998	15.7 percent
Accumulated Inflation 1997	12.8 percent

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