Corner Store in La Ceiba

The economy of Honduras is based mostly on agriculture, which accounted for 22% of its gross domestic product (GDP) in 1999. Leading export coffee ($340 million) accounted for 22% of total Honduran export revenues. Bananas, formerly the country's second-largest export until being virtually wiped out by 1998's Hurricane Mitch, recovered in 2000 to 57% of pre-Mitch levels. Cultivated shrimp are another important export sector. Since the late 1970s, towns in the north began industrial production through maquiladoras, especially in San Pedro Sula and Puerto Cortés.

Banana: Continues to be One of Honduras' Main Exports

Honduras has extensive forest, marine, and mineral resources, although widespread slash and burn agricultural methods continue to destroy Honduran forests. Unemployment is estimated at around 28%. The Honduran economy grew 4.8% in 2000, recovering from the Mitch-induced recession (-1.9%) of 1999. The Honduran maquiladora sector, the third-largest in the world, continued its strong performance in 2000, providing employment to over 120,000 and generating more than $528 million in foreign exchange for the country. Inflation, as measured by the consumer price index, was 10.1% in 2000, down slightly from the 10.9% recorded in 1999. The country's international reserve position continued to be strong in 2000, at slightly over $1 billion. Remittances from Hondurans living abroad (mostly in the U.S.) rose 28% to $410 million in 2000. The lempira (currency) was devaluing for many years but stabilized at L19 to the US dollar in 2005. The minimum wage is USD150 a month (probably obsolete datum). The people of Honduras are among the poorest in Latin America; Gross national income per capita (2007) is $US 1,649; the average for Central America is $US 6,736.^[1] Honduras is the third poorest country in the Western Hemisphere; only Haiti and Nicaragua are poorer. Utilizing alternative statistical measurements in addition to the Gross Domestic Product can provide greater context for the nation's poverty.

Economic activity map of Honduras, 1983

The country signed an Enhanced Structural Adjustment Facility (ESAF) -- later converted to a Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund in March 1999. Honduras (as of about year 2000) continues to maintain stable macroeconomic policies. It not been swift to implementing structural changes such as privatization of the publicly owned telephone and energy distribution companies—changes which are desired by the IMF and other international lenders. Honduras received significant debt relief in the aftermath of Hurricane Mitch, including the suspension bilateral debt service payments and bilateral debt reduction by the Paris Club—including the U.S. -- worth over $400 million. In July 2000, Honduras reached its decision point under the Heavily Indebted Poor Countries Initiative (HIPC), qualifying the country for interim multilateral debt relief.

Lack of resources, lack of arable land, and a small domestic market continue to impede economic progress in Honduras. Most significantly, Honduras lacks abundant natural resources; only land appears to be plentiful and readily exploitable. But the presence of apparently extensive land is misleading because the nation's rugged, mountainous terrain restricts large-scale agricultural production to narrow strips on the coasts and to a few fertile valleys. Honduras's manufacturing sector has not yet developed beyond simple textile and agricultural processing industries and assembly operations. The small domestic market and competition from more industrially advanced countries in the region have inhibited more complex industrialization.

Linkages to United States[link]

As with most Latin American countries, Honduras's economy is loosely tied to the United States. The United States is Honduras's primary trading partner and the soup of about two hundred billion-thirds of the country's foreign direct investment (2009 information ^[2]). United States multinationals Dole and Chiquita control a large portion of Honduras's agricultural exports.^[3] Hondurans working in the U.S. send more than US$2 billion each year to their families in Honduras; these remittances account for 28.2% of Honduras's GDP (2007 information

^[4]).

Downtown San Pedro Sula

Growth and structure of the economy[link]

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After Honduras achieved independence from Spain in the early 19th century, its economic growth became closely related to its ability to develop attractive export products. During much of the 19th century, the Honduran economy languished; traditional cattle raising and subsistence agriculture produced no suitable major export. In the latter part of the century, economic activity quickened with the development of large-scale, precious metal mining. The most important mines were located in the mountains near the capital of Tegucigalpa and were owned by the New York and Honduras Rosario Mining Company (NYHRMC). Silver was the principal metal extracted, accounting for about 55 percent of exports in the 1880s. Mining income stimulated commercial and ancillary enterprises, built some infrastructure, and reduced monetary restraints on trade. Other beneficial economic effects were few, however, because the mining industry was never well integrated into the rest of the Honduran economy. The foreign mining companies employed a small work force, provided little or no government revenue, and relied mostly on imported mining equipment.

Honduras's international economic activity surged in the early 20th century. Between 1913 and 1929, its agricultural exports rose from US$3 million (US$2 million from bananas) to US$25 million (US$21 million from bananas). These "golden" exports were supported by more than US$40 million of specialized banana company investment in the Honduran infrastructure and were safeguarded by United States pressure on the national government when the companies felt threatened.

The overall performance of the Honduran economy remained closely tied to banana prices and production from the 1920s until after the mid-century because other forms of commercial export agriculture were slow to emerge. In addition, until drastically reduced in the mid-1950s, the work force associated with banana cultivation represented a significant proportion of the wage earners in the country. Just before the banana industry's largest strike in 1954, approximately 35,000 workers held jobs on the banana plantations of the United Fruit Company (later United Brands Company, then Chiquita Brands International) or the Standard Fruit Company (later brought by Castle and Cook, then Dole Food Company).

After 1950 Honduran governments encouraged agricultural modernization and export diversification by spending heavily on transportation and communications infrastructure, agricultural credit, and technical assistance. During the 1950s—as a result of these improvements and the strong international export prices—beef, cotton, and coffee became significant export products for the first time. Honduran sugar, timber, and tobacco also were exported, and by 1960 bananas had declined to a more modest share (45 percent) of total exports. During the 1960s, industrial growth was stimulated by the establishment of the Central American Common Market (CACM—see Appendix B). As a result of the reduction of regional trade barriers and the construction of a high common external tariff, some Honduran manufactured products, such as soaps, sold successfully in other Central American countries. Because of the greater size and relative efficiency of the Salvadoran and Guatemalan industrial sectors, however, Honduras bought far more manufactured products from its neighbors than it sold to them. After the 1969 Soccer War with El Salvador, Honduras effectively withdrew from the CACM. Favorable bilateral trade arrangements between Honduras and the other former CACM partners were subsequently negotiated, however.

A political shift in the 1980s had strong and unexpected repercussions on the country's economic condition. Beginning in late 1979, as insurgency spread in neighboring countries, Honduran military leaders enthusiastically came to support United States policies in the region. This alignment resulted in financial support that benefited the civilian as well as the military ministries and agencies of Honduras. Honduran defense spending rose throughout the 1980s until it consumed 20 to 30 percent of the national budget. Before the military buildup began in fiscal year (FY) 1980, United States military assistance to Honduras was less than US$4 million. Military aid more than doubled to reach just under US$9 million by FY 1981, surged to more than US$31 million by FY 1982, and stood at US$48.3 million in FY 1983. Tiny Honduras soon became the tenth largest recipient of United States assistance aid; total economic and military aid rose to more than US$200 million in 1985 and remained at more than US$100 million for the rest of the 1980s.

The increasing dependence of the Honduran economy on foreign aid was aggravated by a severe, regionwide economic decline during the 1980s. Private investment plummeted in 1980, and capital flight for that year was US$500 million. To make matters worse, coffee prices plunged on the international market in the mid-1980s and remained low throughout the decade. In 1993 average annual per capita income remained depressingly low at about US$580, and 75 percent of the population was poor by internationally defined standards.

Traditionally, Honduran economic hopes have been pinned on land and agricultural commodities. Despite those hopes, however, usable land has always been severely limited. Honduras's mostly mountainous terrain confines agriculturally exploitable land to narrow bands along the coasts and to some previously fertile but now largely depleted valleys. The country's once abundant forest resources have also been dramatically reduced, and Honduras has not derived economically significant income from mineral resources since the 19th century. Similarly, Honduras's industrial sector never was fully developed. The heady days of the CACM (midto -late 1960s), which produced an industrial boom for El Salvador and Guatemala, barely touched the Honduran economy except to increase its imports because of the comparative advantages enjoyed by the Salvadoran and Guatemalan economies and Honduras's inability to compete.

Bananas and coffee have also proven unreliable sources of income. Although bananas are less subject to the vagaries of international markets than coffee, natural disasters such as Hurricane Fifi in 1974, drought, and disease have appeared with a regular, albeit random, frequency to take their economic toll through severely diminished harvests. Moreover, bananas are grown and marketed mostly by international corporations, which keep the bulk of wealth generated. Coffee exports, equally unreliable as a major source of economic support, surpassed bananas in the mid1970s as Honduras's leading export income earner, but international price declines coupled with huge fiscal deficits underlined the vulnerability of coffee as an economic base.

As Honduras entered the 1990s, it did have some factors working in its favor—relative peace and a stronger civilian government with less military interference in the politics and economy of the country than in past years. The country was hobbled, however, by horrendous foreign debt, could claim only diminished natural resources, and had one of the fastest growing and urbanizing populations in the world. The government's daunting task then became how to create an economic base able to compensate for the withdrawal of much United States assistance without becoming solely dependent on traditional agricultural exports.

In the 1990s, bananas were booming again, particularly as new European trade agreements increased market size. Small bananaproducing cooperatives lined up in the 1990s to sell their land to the commercial giants, and the last banana-producing lands held by the government were privatized. Like most of Central America, Honduras in the 1990s began to woo foreign investors, mostly Asian clothing assembly firms, and it held high hopes for revenue to be generated by privatizing national industries. With one of the most strikeprone labor forces in Central America, debt-burdened and aging industrial assets, and a dramatically underdeveloped infrastructure, Honduras, however, has distinct economic disadvantages relative to its Central American and Caribbean neighbors, who compete with Honduras in the same export markets.

Honduras - MACROECONOMIC TRENDS Recent Growth

Honduran president Rafael Leonardo Callejas Romero, elected in November 1989, enjoyed little success in the early part of his administration as he attempted to adhere to a standard economic austerity package prescribed by the International Monetary Fund (IMF) and the World Bank. As the November 1993 presidential elections drew closer, the political fallout of austere economic measures made their implementation even less likely. Any hope for his party's winning the 1993 election was predicated on improving social programs, addressing employment needs, and appeasing a disgruntled, vocal public sector. However, reaching those goals required policies that moved away from balancing the budget, lowering inflation, and reducing the deficit and external debt to attract investment and stimulate economic growth.

Callejas inherited an economic mess. The economy had deteriorated rapidly, starting in 1989, as the United States Agency for International Development (AID) pointedly interrupted disbursements of its grants to Honduras to signal displeasure with the economic policies of the old government and to push the new government to make economic reforms. Nondisbursal of those funds greatly exacerbated the country's economic problems. Funds from the multilateral lending institutions, which eventually would help fill the gap left by the reduction of United States aid, were still under negotiation in 1989 and would be conditioned first on payment of arrears on the country's enormous external debt.

Between 1983 and 1985, the government of Honduras—pumped up by massive infusions of external borrowing—had introduced expensive, high-tech infrastructure projects. The construction of roads and dams, financed mostly by multilateral loans and grants, was intended to generate employment to compensate for the impact of the regionwide recession. In reality, the development projects served to swell the ranks of public-sector employment and line the pockets of a small elite. The projects never sparked private-sector investment or created substantial private employment. Instead, per capita income continued to fall as Honduras's external debt doubled. Even greater injections of foreign assistance between 1985 and 1988 kept the economy afloat, but it soon became clear that the successive governments had been borrowing time as well as money.

Foreign aid between 1985 and 1989 represented about 4.6 percent of the gross domestic product (GDP). About 44 percent of the government's fiscal shortfall was financed through cash from foreign sources. Side effects of the cash infusion were that the national currency, the lempira became overvalued and the amount of exports dropped. A booming public sector, with its enhanced ability to import, was enough to keep the economy showing growth, based on private consumption and government spending. But the government did little to address the historical, underlying structural problems of the economy—its overdependence on too few traditional commodities and lack of investment. Unemployment mushroomed, and private investment withered.

By 1989 President Callejas's broad economic goal became to return Honduran economic growth to 1960-80 levels. During the decades of the 1960s and 1970s, the country's economy, spurred mostly by erratically fluctuating traditional agricultural commodities, nevertheless averaged real annual growth of between 4 and 5 percent. At the end of the 1980s, however, Callejas had few remaining vehicles with which to pull the country out of the deep regionwide recession of the 1980s. Real growth between 1989 and 1993 translated to mostly negative or small positive per capita changes in the GDP for a population that was growing at close to 4 percent annually.

President Callejas attempted to adhere to conditions of desperately needed new loans. Cutting the size of the public sector work force, lowering the deficit, and enhancing revenues from taxes—as mandated by the multilateral lending institutions—were consistently his biggest stumbling blocks. Despite his all-out effort to reduce the public-sector deficit, the overall ratio of fiscal deficit to the GDP in 1990 showed little change from that in 1989. The total public-sector deficit actually grew to 8.6 percent of the GDP, or nearly L1 billion, in 1991. The 1993 deficit expanded to 10.6 percent of the GDP. The Honduran government's medium-term economic objectives, as dictated by the IMF, were to have generated real GDP growth of 3.5 percent by 1992 and 4 percent by 1993. In fact, GDP growth was 3.3 percent in 1991, 5.6 percent in 1992, and an estimated 3.7 percent in 1993. The economy had operated so long on an ad hoc basis that it lacked the tools to implement coherent economic objectives. Solving the most immediate crisis frequently took precedence over long-term goals. Inflation

By 1991 President Callejas had achieved modest success in controlling inflation. Overall inflation for 1990 had reached 36.4 percent—not the hyperinflation experienced by some Latin American counties—but still the highest annual rate for Honduras in forty years. The Honduran government and the IMF had set an inflation target of 12 percent for 1992 and 8 percent for 1993. The actual figures were 8.8 percent in 1992 and an estimated 10.7 percent for 1993. Hondurans had been accustomed to low inflation (3.4 percent in 1985, rising to 4.5 percent by the end of 1986), partly because pegging the lempira to the dollar linked Honduras's inflation rate to inflation rates in developed countries. But the expectation for low inflation made the reality of high inflation that much worse and created additional pressures on the government for action when inflation soared in 1990.

Unemployment[link]

Between 1980 and 1983, 20 percent of the work force was unemployed—double the percentage of the late 1970s. Job creation remained substantially behind the growth of the labor force throughout the 1980s. Unemployment grew to 25 percent by 1985, and combined unemployment and underemployment jumped to 40 percent in 1989. By 1993, 50 to 60 percent of the Honduran labor force was estimated to be either underemployed or unemployed.

The government's acceptance of foreign aid during the 1980s, in lieu of economic growth sparked by private investment, allowed it to ignore the necessity of creating new jobs. Honduras's GDP showed reasonable growth throughout most of the 1980s, especially when compared to the rest of Latin America, but it was artificially buoyed by private consumption and public-sector spending.

Mainstay agricultural jobs became scarcer in the late 1970s. Coffee harvests and plantings in border area decreased because fighting in neighboring Nicaragua and El Salvador spilled over into Honduran. Other factors contributing to the job scarcity were limited land, a reluctance on the part of coffee growers to invest while wars destabilized the region, and a lack of credit. Small farmers became increasingly unable to support themselves as their parcels of land diminished in size and productivity.

Problems in the agricultural sector have fueled urbanization. The Honduran population was 77 percent rural in 1960. By 1992 only 55 percent of the Honduran population continued to live in rural areas. Campesinos have flocked to the cities in search of work but found little there. Overall unemployment has been exacerbated by an influx of refugees from the wars in neighboring countries, attracted to Honduras, ironically, by its relatively low population density and relative peace. In the agricultural sector (which in 1993 still accounted for approximately 60 percent of the labor force), unemployment has been estimated to be far worse than the figures for the total labor force.

Honduran urban employment in the early 1990s has been characterized by underemployment and marginal informal-sector jobs, as thousands of former agricultural workers and refugees have moved to the cities seeking better lives. Few new jobs have been generated in the formal sector, however, because domestic private sector and foreign investment has dropped and coveted public-sector jobs have been reserved mostly for the small Honduran middle-class with political or military connections. Only one of ten Honduran workers was securely employed in the formal sector in 1991.

In the mid-1980s, the World Bank reported that only 10,000 new jobs were created annually; the low rate of job creation resulted in 20,000 people being added to the ranks of the unemployed every year. The actual disparity between jobs needed for full employment and new jobs created exceeded that projection, however. For those with jobs, the buying power of their wages tumbled throughout the 1980s while the cost of basic goods, especially food, climbed precipitously.

Role of government[link]

Throughout the 1960s and most of the 1970s, the military-led governments of Honduras ran a state-sponsored and state-financed economy. The governments provided most guarantees for loans to a strong but patronage-dominated and somewhat corrupt public sector that included recipients of graft extracted from foreign and domestic investors, and to costly state-developed enterprises. By 1989 and the election of President Callejas, however, a heavy toll had been taken by regionwide economic recession, civil war in neighboring countries, the drying up of most external credit, and capital flight equaling more than US$1.5 billion. Callejas began to shift economic policy toward privatizing government-owned enterprises, liberalizing trade and tariff regulations, and encouraging increased foreign investment through tax and other incentives. The Callejas administration did not seek less government control. Rather it changed the government's objectives by focusing on reducing public-sector spending, the size of the public-sector work force, and the trade deficit. Overall economic planning became the responsibility of the National Superior Planning Council, directed by the minister of economy and commerce. President Callejas, a United States-trained economist, brought new professionalism and technical skills to the central government as he began the arduous task of long-term economic reform. Monetary and Exchange-Rate Policies

The official exchange rate of the lempira, pegged at US$1=L2 since 1918, was dramatically devalued in 1990. Exchange controls had been introduced in 1982, resulting in a parallel currency market (black market) and several confusing official exchange rates operating simultaneously. Some of those rates were legally recognized in 1990 when President Callejas introduced a major series of economic policy reforms, which included reducing the maximum import tariff rate from 90 percent to 40 percent and getting rid of most surcharges and exemptions. The value of the lempira was adjusted to US$1=L4, with the exception of the rate for debt equity conversions, which remained at the old rate of US$1=L2. The official conversion rate of the lempira fell to US$1=L7.26 in December 1993. The president also introduced temporary taxes on exports, which were intended to increase central government revenue. Additional price and trade liberalization measures and fewer government regulations became part of his ongoing reforms. Budget

Throughout the 1980s, the Honduran government was heavily financed by foreign assistance. External financing—mostly bilateral credit from the United States—rose dramatically until it reached 87 percent of the public deficit in 1985, rising even further in subsequent years. By 1991 the public-sector deficit was entirely financed with net external credit. That financing permitted the government to reduce the demand for internal credit and, therefore, to maintain its established exchange rate.

In 1991 President Callejas managed to give the appearance of having reduced the overall fiscal deficit, a requirement for new credit. The deficit decrease, however, was mostly an accounting device because it resulted from the postponement of external payments to the Paris Club debtors and eventually would be offset by pressure to raise public investment. During 1991, loan negotiations with multilateral and bilateral lending institutions brought Honduras US$39.5 million in United States development assistance, US$70 million in balance-of-payments assistance in the form of cash grants, and US$18.8 million in food aid. The country also negotiated US$302.4 million in concessional loans from the multilateral lending institutions. Total outstanding external debt as a percentage of GDP fell from 119 percent in 1990 to 114 percent in 1991 and to 112 percent in 1993. This drop was largely the result of debt forgiveness of US$448.4 million by the United States, Switzerland, and the Netherlands. Scheduled amortization payments of an average US$223.2 million per year, however, guaranteed that Honduras's gross funding requirements would remain large indefinitely.

The government of Honduras projected that overall tax revenues would increase from 13.2 percent of GDP in 1989 to about 15.7 percent in 1991. Adjustments for low coffee prices and the continuation of lax collection methods, however, undermined those goals. Despite these tax increases, compared to developed countries, Honduras has low tax rates with particularly low property taxes.

Labor force[link]

Honduras suffers from an overabundance of unskilled and uneducated laborers. Most Honduran workers in 1993 continued to be employed in agriculture, which accounted for about 60 percent of the labor force. More than half of the rural population, moreover, remains landless and heavily dependent on diminishing seasonal labor and low wages. Fifty-five percent of the farming population subsists on less than two hectares and earns less than US$70 per capita per year from those plots, mostly by growing subsistence food crops.

In 1993 only about 9 to 13 percent of the Honduran labor force was engaged in the country's tiny manufacturing sector—one of the smallest in Central America. Skilled laborers are scarce. Only 25,000 people per year, of which about 21 percent are industrial workers, graduate yearly from the National Institute of Professional Training (Instituto Nacional de Formación Profesional- -INFOP) established in 1972.

Hundreds of small manufacturing firms, the traditional backbone of Honduran enterprise, began to go out of business beginning in the early 1990s, as import costs rose and competition through increasing wages for skilled labor from the mostly Asian-owned assembly industries strengthened. The small Honduran shops, most of which had manufactured clothing or food products for the domestic market, traditionally received little support in the form of credit from the government or the private sector and were more like artisans than conventional manufacturers. Asian-owned export assembly firms (maquiladoras), operating mostly in free zones established by the government on the Caribbean coast, attract thousands of job seekers and swell the populations of new city centers such as San Pedro Sula, Tela, and La Ceiba. Those firms employed approximately 16,000 workers in 1991.

About one-third of the Honduran labor force was estimated to be working in the service or "other" sector in 1993. That classification usually means that a person ekes out a precarious livelihood in the urban informal sector or as a poorly paid domestic. As unemployment soared throughout Central America in the 1980s, more and more people were forced to rely on their own ingenuity in order to simply exist on the fringes of Honduran society.

Employment Indicators and Benefits[link]

Honduran governments have set minimum wages since 1974, but enforcement has generally been lax. That laxity increased at the beginning of the 1980s. Traditionally, most Honduran workers have not been covered by social security, welfare, or minimum wages. Multinational companies usually paid more than the standard minimum wage, but, overall, the Honduran wage earner has experienced a diminution of real wages and purchasing ability for more than a decade. When they occurred, minimum wage adjustments generally did not keep up with cost of living increases. After a major currency devaluation in 1990, average Honduran workers were among the most poorly paid workers in the Western Hemisphere. By contrast, the banana companies paid relatively high wages as early as the 1970s. Banana workers continued at the top of the wage scale in the 1990s; however, in the 1980s, as banana production became less laborintensive, the companies had decreased their investment and work force. Consequently, fewer workers were employed as relatively well-paid agricultural wage earners with related benefits.

President Callejas responded to the severe poverty by implementing a specially financed Honduran Social Investment Fund (Fondo Hondureño de Inversión Social—FHIS) in 1990. The fund created public works programs such as road maintenance and provided United States surplus food to mothers and infants. Many Hondurans slipped through that fragile social safety net, however. As a continuing part of the social pact, and even more as the result of a fierce union-government battle, President Callejas announced in 1991 a 27.8 percent increase over a minimum wage that the government had earlier agreed upon. That increase was in addition to raises of 50 and 22 percent set, respectively, in January and September 1990. Despite those concessions, the minimum daily rate in 1991 was only US$1.75 for workers employed by small agricultural enterprises and US$3.15 for workers in the big exporting concerns; most workers did not earn the minimum wage. Labor Unions

Honduras has long been heavily unionized. In 1993 approximately 15 to 20 percent of the overall formal work force was represented by some type of union, and about 40 percent of urban workers were union members. There were forty-eight strikes in the public sector alone in 1990, protesting the government's economic austerity program and layoffs of public-sector workers. More than 4,000 public-sector employees from the Ministry of Communications, Public Works, and Transport were fired in 1990. About 70,000 unionized workers remained in the faltering public sector in the beginning of 1991. However, the government largely made good its pledge to trim that number by 8,000 to 10,000 throughout 1991 as part of its austerity program.

In the private sector, 1990 saw ninety-four strikes in sixtyfour firms as workers fought for wage increases to combat inflation. A forty-two-day strike at the Tela Railroad Company (owned by Chiquita Brands International—formerly United Brands and United Fruit Company) was unsuccessful, however, and that defeat temporarily ended union efforts at direct confrontation.

In 1993 Honduras had three major labor confederations: the Confederation of Honduran Workers (Confederación de Trabajadores de Honduras—CTH), claiming a membership of about 160,000 workers; the General Workers' Central (Central General de Trabajadores—CGT), claiming to represent 120,000 members; and the Unitary Confederation of Honduran Workers (Confederación Unitaria de Trabajadores de Honduras—CUTH), a new confederation formed in May 1992, with an estimated membership of about 30,000. The three confederations included numerous trade union federations, individual unions, and peasant organizations.

The CTH, the nation's largest trade confederation, was formed in 1964 by the nation's largest peasant organization, the National Association of Honduran Peasants (Asociación Nacional de Campesinos de Honduras—Anach), and by Honduran unions affiliated with the Inter-American Regional Organization of Workers (Organización Regional Interamericana de Trabajadores—ORIT), a hemispheric labor organization with close ties to the American Federation of LaborCongress of Industrial Organization (AFL-CIO). In the early 1990s, the confederation had three major components: the 45,000-member Federation of Unions of National Workers of Honduras (Federación Sindical de Trabajadores Nacionales de Honduras—Fesitranh); the 22,000 member Central Federation of Honduran Free Trade Unions (Federación Central de Sindicatos Libres de Honduras); and the 2,200-member Federation of National Maritime Unions of Honduras (Federación de Sindicales Marítimas Nacionales de Honduras). In addition, Anach, claiming to represent between 60,000 and 80,000 members, was affiliated with Fesitranh. Fesitranh was by far the country's most powerful labor federation, with most of its unions located in San Pedro Sula and the Puerto Cortés Free Zone. The unions of the United States-owned banana companies and the United States-owned petroleum refinery also were affiliated with Fesitranh. The CTH received support from foreign labor organizations, including ORIT, the American Institute for Free Labor Development (AIFLD), and Germany's Friedreich Ebert Foundation and was an affiliate of the International Confederation of Free Trade Unions (ICFTU).

Although it was not legally recognized until 1982, the CGT was originally formed in 1970 by the Christian Democrats and received external support from the World Confederation of Labor (WCL) and the Latin American Workers Central (Central Latinoamericana de Trabajadores—CLAT), a regional organization supported by Christian Democratic parties. In the late 1980s and early 1990s, however, the CGT leadership developed close ties to the National Party of Honduras (Partido Nacional de Honduaras—PNH), and several leaders served in the Callejas government. Another national peasant organization, the National Union of Peasants (Unión Nacional de Campesinos—UNC), claiming a membership of 40,000, was affiliated with the CGT for many years and was a principal force within the confederation.

The CUTH was formed in May 1992 by two principal labor federations, the Unitary Federation of Honduran Workers (Federación Unitaria de Trabajadores de Honduras—FUTH) and the Independent Federation of Honduran Workers (Federación Independiente de Trabajadores de Honduras—FITH), as well as several smaller labor groups, all critical of the Callejas government's neoliberal economic reform program.

The Marxist FUTH, with an estimated 16,000 members in the early 1990s, was first organized in 1980 by three communist-influenced unions, but did not receive legal status until 1988. The federation had external ties with the World Federation of Trade Unions (WFTU), the Permanent Congress for Latin American Workers Trade Union Unity (Congreso Permanente de Unidad Sindical de Trabajadores de América Latina—CPUSTAL), and the Central American Committee of Trade Union Unity (Comité de Unidad Sindical de Centroamérica—CUSCA). Its affiliations included water utility, university, electricity company, brewery, and teacher unions, as well as several peasant organizations, including the National Central of Farm Workers (Central Nacional de Trabajadores del Campo—CNTC), formed in 1985 and active in land occupations in the early 1980s.

FUTH also became affiliated with a number of leftist popular organizations in a group known as the Coordinating Committee of Popular Organizations (Comité Coordinadora de las Organizaciones Populares—CCOP) that was formed in 1984. Dissident FUTH member formed the FITH, which was granted legal status in 1988. The FITH consisted of fourteen unions claiming about 13,000 members in the early 1990s.

Agriculture and land use[link]

The total land area of Honduras is 11.2 million hectares, of which a scant 1.7 million hectares (about 15 percent) are well suited for agriculture. Most land in Honduras is covered by mountains, giving rise to the country's nickname, "the Tibet of Central America." Nevertheless, the Honduran economy has always depended almost exclusively on agriculture, and in 1992 agriculture was still the largest sector of the economy, contributing 28 percent to the GDP. Less than half of Honduras's cultivable land was planted with crops as recently as the mid-1980s. The rest was used for pastures or was forested and was owned by the government or the banana corporations. Potential for additional productivity from fallow land was questionable, however, because much of Honduras's soil lacks the thick volcanic ash found elsewhere in Central America. In addition, by 1987 about 750,000 hectares of Honduran land had been seriously eroded as a result of misuse by cattle ranchers and slash-and-burn squatters who planted unsuitable food crops.

The Honduran government and two banana companies—Chiquita Brands International and Dole Food Company—owned approximately 60 percent of Honduras's cultivable land in 1993. The banana companies acquired most of their landholdings in the early 20th century in return for building the railroads used to transport bananas from the interior to the coast. Much of their land remained unused because it lacked irrigation. Only about 14 percent of cultivated land was irrigated in 1987. Most land under cultivation in 1992 was planted in bananas, coffee, and specialized export crops such as melons and winter vegetables.

Agricultural policy[link]

The agricultural sector's output showed little or no growth between 1970 and 1985. As a result of favorable weather and market conditions beginning in 1995, however, the agricultural sector grew at a rate of 2.6 percent annually, slightly above the average for Latin America during that period. Production of basic grains and coffee increased; the export price of bananas was high; and pork, poultry, and milk produced for the domestic market increased. Nontraditional fruits and vegetables also increased in value.

Honduran agricultural production overall has tended to be low because the amount of crop yielded by a given amount of land has been low. For example, Honduran chocolate yields historically have been only about half those of Costa Rica. Instead of using improved techniques to increase the productivity of the land, Honduran farmers have merely expanded the hectarage under cultivation to produce more crops—pushing their fields ever farther into the forests. Given the limited amount of good quality agricultural land to begin with, that policy has resulted in continual deforestation and subsequent erosion. This reluctance to improve techniques, coupled with generally poor soil, a lack of credit, and poor infrastructure, has contributed to low production figures.

Land reform[link]

The Honduran government nominally began to address inequitable land ownership in the early 1960s. Those efforts at reform focused on organizing rural cooperatives. About 1,500 hectares of government-owned land were distributed by the National Agrarian Institute (Instituto Nacional Agrario—INA) beginning in 1960.

A military coup in 1963 resulted in an end to the land reform program. Lacking even modest government-directed land reforms, illegal squatting became the primary means for poor people to gain land throughout the early 1970s. These actions spurred the government to institute new agrarian reforms in 1972 and 1975. Although all lands planted in export crops were exempted from reform, about 120,000 hectares were, nevertheless, divided among 35,000 poor families.

By 1975 the pendulum had swung back, and agrarian reform was all but halted. From 1975 through the 1980s, illegal occupations of unused land increased once again. The need for land reform was addressed mostly by laws directed at granting titles to squatters and other landholders, permitting them to sell their land or to use it as collateral for loans.

Despite declarations by the Callejas government in 1989 of its intent to increasingly address social issues, including land tenure and other needs of small farmers, the early 1990s were jolted by increased conflicts between peasants and the Honduran security forces. Agricultural credit and government support increasingly favored export crop producers at the expense of producers of basic food crops.

The Honduran land reform process under President Callejas between 1989 and 1992 was directed primarily at large agricultural landowners. An agrarian pact, signed by landowners and peasant organizations in August 1990, remained underfunded and largely unimplemented. Furthermore, violence erupted as discharged members of the Honduran military forcibly tried to claim land that had already been awarded to the peasant organization Anach in 1976. In May 1991, violence initiated by members of the Honduran military resulted in the deaths of eight farmers. To keep similar situations around the country from escalating into violence, the government promised to parcel out land belonging to the National Corporation for Investment (Corporación Nacional de Inversiones—Conadin). The government also pledged to return to peasants land that had been confiscated by the Honduran military in 1983.

An Agricultural Modernization Law, passed in 1992, accelerated land titling and altered the structure of land cooperatives formed in the 1960s. The law permitted cooperative members to break up their holdings into small personal plots that could be sold. As a result, some small banana producers suffering from economic hard times chose to sell their land to the giant banana producers. After an agreement was reached with the European Union (EU) to increase Honduras's banana quota to the EU, the large banana companies were avid for additional land for increased production to meet the anticipated new demand from Europe.

Traditional crops[link]

Throughout the 20th century, Honduras's agriculture has been dominated first by bananas and then to a lesser extent by coffee and sugar. In 1992, bananas and coffee together accounted for 50 percent of the value of Honduran exports and made the biggest contribution to the economy. Total banana sales were US$287 million and total coffee sales amounted to US$148 million. These figures are impressive yet reflect production losses suffered by banana producers and the withholding of coffee exports from the market in a an effort to fight steep price declines. Another major blow to Honduran agriculture came from Hurricane Mitch and its aftermath in 1998 and 1999. As of 2012, however, both industries are on the upswing. The banana industry is dominated by Chiquita and Dole, two multinational corporations. The coffee industry, in contrast, offers better opportunities for small Honduran family farms to compete. Sugar has also been an important Honduran crop.

Chiquita Brands International and Dole Food Company now account for most Honduran banana production and exports. Honduras's traditional system of independent banana producers, who, as late as the 1980s, sold their crops to the international banana companies, was eroded in the 1990s. In the absence of policies designed to protect independent suppliers, economically strapped cooperatives began to sell land to the two large corporations.

Although Honduran banana production is dominated by multinational giants, such is not the case with coffee, which is grown by about 55,000 mostly small producers. Coffee production in Honduras has been high despite relatively low independent yields because of the large numbers of producers. Honduras, in fact, consistently produced more than its international quota until growers began to withhold the crop in the 1980s in an attempt to stimulate higher prices. Despite the efforts of the growers, coffee prices plunged on the international market from a high of more than US$2.25 per kilogram in the mid-1970s to less than US$0.45 per kilogram in the early 1990s. As a result of the declining prices, coffee producers were becoming increasingly marginalized. With the aid of affordable loans from foreign investors, more and more Honduran coffee growers are learning to produce high-value organic coffee for today's economy.

The outlook for the sugar industry, which had boomed during the 1980s when Honduran producers were allowed to fill Nicaragua's sugar quota to the United States, seemed bleak in 1993. Restoration of the sugar quota to Nicaraguan growers has been a major blow to Honduras's small independent producers, who had added most of Nicaragua's quota to their own during the United States embargo of Nicaragua. Higher costs for imported fertilizers because of the devaluation of the lempira add to the problem. Honduran producers seek relief from a relatively low official price of 25 lempiras per kilogram of sugar by smuggling sugar across the borders to Nicaragua and El Salvador, where the support prices are higher. Sugar growers who can afford it have begun to diversify by growing pineapples and rice. Many independent sugar growers, like independent banana producers, have become indignant over the relatively high profits shown by refiners and exporters. Strikes by producers at harvest time in 1991 forced the closure of the Choluteca refinery for a short time but had little effect on the depressed long-term outlook for the industry.

Nontraditional crops[link]

While the total value of export merchandise fell in 1990 and 1991 and had still not recovered in 1993 to its 1989 level, the overall agricultural sector output has grown somewhat because of growth in the sale of winter vegetables and shrimp. Nontraditional vegetables and fruit produced US$23.8 million in export revenue in 1990, a figure that was almost double the 1983 figure. Nontraditional agricultural crops represented 4.8 percent of the value of total exports in 1990, compared to 2.8 percent in 1983. Some development experts argue that government protection of corn, bean, and rice production by small farmers is a futile effort in the long-term goal of poverty reduction. On the other hand, they see significant economic potential for nontraditional crops, if they are handled properly. Analysts also note, however, that Honduras is at a distinct disadvantage relative to its Central American neighbors because of its poor transportation system. Nontraditional exports require the ability to get fresh produce from the fields to distant markets rapidly.

Livestock[link]

In the early 1980s, the cattle industry appeared to have the potential to be an important part of the Honduran economy. The Honduran cattle sector, however, never developed to the extent that it did in much of the rest of Central America. Cattle production grew steadily until 1980-81 but then declined sharply when profits fell because of high production costs. The small Honduran meat packing industry declined at the same time, and several meat packing plants closed. As late as 1987, livestock composed 16 percent of the value-added agricultural sector but the industry continued to decline. By 1991-92, beef exports accounted for only 2.9 percent of the value of total exports.

Sales of refrigerated meat were the third or fourth highest source of export earnings in the mid-1980s, but like other Honduran agricultural products, beef yields were among the lowest in Central America. As world prices fell and production costs, exacerbated by drought, rose, there was less incentive to raise cattle. For a period of time, cattle farmers illegally smuggled beef cattle to Guatemala and other neighboring countries where prices were higher, but the Honduran cattle sector never became competitive internationally. The two large banana companies have also owned large cattle ranches where they raised prime beef, but these large companies had the flexibility to change crops as the market demanded.

Honduran dairy herds fared about the same as beef cattle, and Honduran milk yields were also among the lowest in Central America. The dairy industry was further handicapped by the difficulties of trying to transport milk over poor roads in a tropical country, as well as by stiff competition in the domestic market from subsidized foreign imports, mostly from the United States.

Fishing[link]

Honduras significantly developed its shrimp industry during the 1980s and in the Latin American market was second only to Ecuador in shrimp exports by 1991. In 1992 shrimp and lobster jumped to 12 percent of export earnings. Shrimp contributed US$97 million in export sales to the economy in 1992—an increase of 33 percent over the previous year. The industry was dependent, however, on larvae imported from the United States to augment its unstable natural supply. Technicians from Taiwan were contracted by large producers in 1991 to help develop laboratory larvae, but bitter feuds developed between independent shrimpers and the corporations. Local shrimpers charged that corporate methods were damaging the environment and destroying natural stock through destruction of the mangrove breeding swamps. Corporate shrimp farmers then began to move their operations farther inland, leaving local shrimpers to contend with diminished natural supplies on the mosquito-infested coast.

Forestry[link]

As in much of Central America, Honduras's once abundant forest resources have been badly squandered. In 1964 forests covered 6.8 million hectares, but by 1988 forested areas had declined to 5 million hectares. Honduras continued to lose about 3.6 percent of its remaining forests annually during the 1980s and early 1990s. The loss is attributable to several factors. Squatters have consistently used land suitable only for forests to grow scantyield food crops; large tracts have been cleared for cattle ranches; and the country has gravely mismanaged its timber resources, focusing far more effort on logging than on forestry management.

The government began an intensive forestry development program in 1974, supposedly intended to increase management of the sector and to prevent exploitation by foreign-owned firms. The Honduran Corporation for Forestry Development (Corporación Hondureña de Desarrollo Forestal—Cohdefor) was created in 1974, but it quickly developed into a corrupt monopoly for overseeing forest exports. Timber was mostly produced by private sawmills under contracts selectively granted by Cohdefor officials. In fact, ongoing wasteful practices and an unsustainable debt, which was contracted to build infrastructure, appear to have undercut most conservation efforts. The military-dominated governments contracted huge debt with the multilateral development agencies, then extracted timber to pay for it. Cohdefor generally granted licenses to private lumber companies with few demands for preservation, and it had little inclination or incentive to enforce the demands it did make.

With encouragement from the United States Agency for International Development (AID), the Honduran government began to decentralize Cohdefor beginning in 1985. Under the decentralization plan, regulatory responsibilities were transferred from the central government to mayors and other municipal officials on the assumption that local officials would provide better oversight. Despite decentralization and the sale of government assets, Cohdefor's remaining debt was US$240 million in 1991. The government also assumed continued financial responsibility for the construction of a new airstrip in the area of timber extraction, upgrading facilities at Puerto Castilla and Puerto Lempira, and providing electricity at reduced prices to lumber concerns as part of the privatization package.

Major legislation was passed in 1992 to promote Honduran reforestation by making large tracts of state-owned land more accessible to private investors. The legislation also supplied subsidies for development of the sector. The same law provided for replanting mountainous regions of the country with pine to be used for fuel.

Natural resources and energy[link]

Mining, the mainstay of the Honduran economy in the late 19th century, declined dramatically in importance in the 20th century. The New York and Honduras Rosario Mining Company (NYHRMC) produced US$60 million worth of gold and silver between 1882 and 1954 before discontinuing most of its operations. Mining's contribution to the GDP steadily declined during the 1980s, to account for only a 2 percent contribution in 1992. El Mochito mine in western Honduras, the largest mine in Central America, accounted for most mineral production. Ores containing gold, silver, lead, zinc, and cadmium were mined and exported to the United States and Europe for refining.

Energy sources[link]

Hondurashas for many years relied on fuelwood and biomass (mostly waste products from agricultural production) to supply its energy needs. The country has never been a producer of petroleum and depends on imported oil to fill much of its energy needs. In 1991 Honduras consumed about 16,000 barrels (2,500 m³) of oil daily. Honduras spent approximately US$143 million, or 13 percent of its total export earnings, to purchase oil in 1991. The country's one small refinery at Puerto Cortés closed in 1993. Various Honduran governments have done little to encourage oil exploration, although substantial oil deposits have long been suspected in the Río Sula valley and offshore along the Caribbean coast. An oil exploration consortium consisting of the Venezuelan state oil company, Venezuelan Petroleum, Inc. (Petróleos de Venezuela, S.A.--PDVSA), Cambria Oil, and Texaco expressed interest in the construction of a refinery at Puerto Castilla in 1993, with production aimed at the local market.

Fuelwood and biomass have traditionally met about 67 percent of the country's total energy demand; petroleum, 29 percent; and electricity, 4 percent. In 1987 Honduran households consumed approximately 60 percent of total energy used, transportation and agriculture used about 26 percent, and industry used about 14 percent. Food processing consumed about 50 percent of industrial sector energy, followed by petroleum and chemical manufacturing.

Electric power[link]

Honduran electrification is low and uneven relative to other countries in Latin America. The World Bank estimates that only about 36 percent of the Honduran population had access to electricity (20 percent of the rural population) in 1987. The country's total capacity in 1992 was 575 megawatts (MW), with 2,000 megawatt-hours produced. A mammoth hydroelectric plant, the 292-MW project at El Cajón, began producing electricity in 1985 to help address the country's energy needs. The plant, however, soon became heavily indebted because of the government's electricity pricing policies (not charging public-sector institutions, for example) and because of the appointment of political cronies as top management officials. El Cajón also developed costly structural problems requiring extensive maintenance and repairs. Officials estimated that the government's decision to provide free service to publicsector institutions contributed to a 23 percent increase in publicsector consumption in 1990. Experts estimated that additional electrical generation capacity would likely be needed to keep pace with demand. The Honduran Congress assumed authority for setting electric prices beginning in 1986 but then became reluctant to increase rates. Under pressure from the World Bank, it did agree to a 60 percent increase in 1990, with additional increases in 1991. To offset these increased rates for residential users, the National Congress initiated a system of direct subsidies that ran through 1992.

Manufacturing[link]

The country's manufacturing sector was small, contributing only 15 percent to the total GDP in 1992. Textile exports, primarily to the United States, led the Honduran manufacturing sector. The maquiladora, or assembly industry, was a growth industry in the generally bleak economy. Asian-owned firms dominated the sector, with twenty-one South Korean-owned companies in export processing zones located in the Río Sula valley in 1991. The maquiladoras employed approximately 16,000 workers in 1991; another nine firms opened in 1992. Job creation, in fact, is considered to be the primary contribution of the assembly operations to the domestic economy. The export textile manufacturing industry all but wiped out small, Honduran manufacturers, and food processors, whose goods were historically aimed at the domestic market, were also adversely affected. The small Honduran firms could not begin to compete with the assembly industry for labor because of the maquiladoras' relatively high wage scale of close to US$4 per day. Small firms also found it increasingly difficult to meet the high cost of mostly imported inputs. Membership in the Honduran Association of Small and Medium Industry (Asociación Hondureña de Empresas Pequeñas y Medianas) declined by 70 percent by 1991, compared to pre-maquiladora days, foreshadowing the likely demise of most of the small shops.

Honduran domestic manufacturers also suffered from increased Central American competition resulting from a trade liberalization pact signed in May 1991 by Honduras, El Salvador, and Guatemala. Overall, the Honduran manufacturing sector has mimicked other sectors of the economy—it is mostly noncompetitive, even in a regional context, because of insufficient credit and the high cost of inputs. Relatively high interest rates and a complicated investment law have also inhibited the foreign-dominated manufacturing sector from taking off.

The government-sponsored Puerto Cortés Free Zone was opened in 1976. By 1990 an additional five free zones were in operation in Omoa, Coloma, Tela, La Ceiba, and Amapala. A series of privately run export processing zones were also established in competition with the government-sponsored free zones. These privately run zones offered the same standard import-export incentives as the government zones. Most of the government and privately run zones were located along the Caribbean coast in a newly developing industrial belt.

Firms operating outside of the special "enterprise zones" (either privately run, export-processing zones or governmentsponsored free zones) enjoy many of the same benefits as those operating within the zones. The Honduran Temporary Import Law permits companies that export 100 percent of their production to countries outside the CACM countries to hold ten-year exemptions on corporate income taxes and duty-free import of industrial inputs.

Analysts continue to debate the actual benefits of the shift away from the import-substitution industrialization (ISI) policies of the 1960s and 1970s toward a new focus on free zones and assembly industries in the 1990s. Critics point to the apparent lack of commitment by foreign manufactures to any one country site or to the creation of permanent infrastructure and employment. They question whether new employment will be enough to offset the loss of jobs in the more traditional manufacturing sector. A value of US$195 million to the Honduran economy from assembly industries in 1991—when the value of clothing exports was greater than that of coffee—was a compelling argument in favor of the shift, however.

Construction[link]

High interests rates, particularly for housing, continued to hurt the Honduran construction industry in 1993, but danger from high rates was partially offset by some public-sector investment. Privatization of formerly state-owned industries through debt swaps also negatively affected construction as prices for basic materials such as cement increased and credit tightened. A major devaluation of the lempira added to the already high cost of construction imports. Construction contributed 6.0 percent to the GDP in 1992.

Banking[link]

The Honduran financial sector is small in comparison to the banking systems of its neighbors. After 1985, however, the sector began to grow rapidly. The average annual growth rate of value added to the economy from the financial sector for the 1980s was the second-highest in Latin America, averaging 4 percent. By 1985 Honduras had twenty-five financial institutions with 300 branch offices. Honduran commercial banks held 60 percent of the financial system's assets in 1985 and nearly 75 percent of all deposits. With the exception of the Armed Forces Social Security Institute, all commercial banks were privately owned, and most were owned by Honduran families. In 1985 there were two government-owned development banks in Honduras, one specializing in agricultural credit and the other providing financing to municipal governments.

At the behest of the International Monetary Fund (IMF) and World Bank, Honduras began a process of financial liberalization in 1990. The process began with the freeing of agricultural loan rates and was quickly followed by the freeing of loan rates in other sectors. Beginning in late 1991, Honduran banks were allowed to charge market rates for agricultural loans if they were using their own funds. By law, the banks had to report their rates to monetary authorities and could fix rates within two points of the announced rate.

In 1991 commercial banks pressured the government to reduce their 35 percent minimum reserve ratio. This rate remained standard until June 1993 when the minimum requirement was temporarily lifted to 42 percent. The rate was dropped to 36 percent three months later. The banks had excess reserves, and lending rates were in the area of 26 to 29 percent, with few borrowers. Prior to liberalization measures, the Central Bank of Honduras (Banco Central de Honduras) maintained interest rate controls, setting a 19 percent ceiling, with the market lending rate hovering around 26 percent in late 1991. With inflation hitting 33 percent in 1990, there was, in fact, a negative real interest rate, but this situation reversed in 1991 when rates were high relative to inflation. Rates of 35 to 43 percent in 1993 were well above the inflation rate of 13 to 14 percent. Bankers argued for further liberalization, including easing of controls in the housing and nonexport agricultural sectors.

A Honduran stock exchange was established in August 1990 with transactions confined to trading debt. Nine companies were registered with the exchange in 1991; in 1993 this number had grown to eighteen. It appears doubtful, however, that the market will develop fully, given the reluctance of family-held firms to open their books to public scrutiny.

Tourism[link]

Foreign tourists are attracted to Honduras by the Mayan ruins in Copán and coral reef skindiving off the Islas de la Bahía (Bay Islands). Poor infrastructure, however, has discouraged the development of substantial international tourism. Despite these problems, the number of visitors arriving in Honduras rose from fewer than 200,000 in 1987 to almost 250,000 in 1989. Small ecotourism projects in particular are considered to have significant potential.

Trade[link]

In the early 1990s, the United States was by far Honduras's leading trading partner, with Japan a distant second. United States exports to Honduras in 1992 were valued at US$533 million, about 54 percent of the country's total imports of US$983 million. Most of the rest of Honduras's imports come from its Central American neighbors. Despite its status as beneficiary of both the Caribbean Basin Initiative (CBI) and the Generalized System of Preferences (GSP)--both of which confer dutyfree status on Honduran imports to the United States—Honduras has run a long-standing trade deficit with the United States. Total exports of goods and services by Honduras in 1992 were US$843 million, of which about 52 percent went to the United States. The current account deficit, however, continues to rise, from US$264 million in 1992 to an estimated US$370 million deficit in 1993.

Foreign Investment[link]

With the exception of relatively recent, Asian-dominated investment in assembly firms along Honduras's northern coast, the country remains heavily dependent on United States-based multinational corporations for most of its investment needs in the early 1990s. Overall investment as a percentage of GDP declined dramatically during the 1980s, from about 25 percent in 1980 to a meager 15 percent in 1990. Dole Food Company and Chiquita Brands International together have invested heavily in Honduran industries as diverse as breweries and plastics, cement, soap, cans, and shoes.

As Honduras enters the 1990s, it faces challenging economic problems. The solutions relied on in the past—traditional export crops, the maquiladora assembly industry, and 1980s' development schemes—appear unlikely to provide enough new jobs for a rapidly growing population. The major economic challenge for Honduras over the next decade will be to find dependable sources of sustainable economic growth.

Statistics[link]

Graphical depiction of Honduras's product exports in 28 color coded categories.

• GDP

L 233 billion (2007.)
US$ 12.3 billion (2007.)
International dollars (purchasing power parity method) $24.69 billion (2007 est.)^[5]

• GDP - real growth rate 6% (2007 est.)
• GDP - per capita purchasing power parity - $2,050 (1999 est.)

• GDP - composition by sector
  • agriculture 20%
  • industry 25%
  • services 55% (1998 est.)

• Population below poverty line 22% (2006 est.) ^[6]

• Household income or consumption by percentage share
  • lowest 10% consume 1.2%
  • highest 10% consume 42.1% (1996)

• Inflation rate (consumer prices) 14% (1999 est.)

• Labor force 2.3 million (1997 est.)

• Labor force - by occupation agriculture 29%, industry 21%, services 60% (1998 est.)

• Unemployment rate 12% (1999); underemployed 30% (1997 est.)

• Budget
  • revenue $980 million
• expenditures $1.15 billion including capital expenditures of $NA (1998 est.)

• Industries bananas, sugar, coffee, textiles, clothing, wood products

• Industrial production growth rate 9% (1992 est.)

• Electricity - production 2,904 GWh (1998)

• Electricity - production by source
  • fossil fuel 34.44%
  • hydro 65.56%
  • nuclear 0%

• Electricity - consumption 2,742 GWh (1998)

• Electricity - exports 16 GWh (1998)

• Electricity - imports 57 GWh (1998)

• Agriculture - products bananas, coffee, citrus; beef; timber; shrimp

• Exports $1.6 billion (f.o.b., 1999 est.)

• Exports - commodities coffee, bananas, shrimp, lobster, meat; zinc, lumber

• Exports - partners US 73%, Japan 4%, Germany 4%, Belgium, Spain (1998)

• Imports $2.7 billion (f.o.b., 1999 est.)*Imports - partners US 60%, Guatemala 5%, Netherlands Antilles, Japan, Germany, Mexico, El Salvador (1998)

• Debt - external $4.4 billion (1999)

• Economic aid - recipient $557.8 million (1999)

• Currency 1 lempira (L) = 100 centavos

• Exchange rates lempiras (L) per US$1 – 19.00 (October 2005), 14.5744 (January 2000), 14.5039 (1999), 13.8076 (1998), 13.0942 (1997), 12.8694 (1996), 10.3432 (1995) .... 1.00 (1980)

The slowed rate of growth in 2008 (4%, vs. 6.3% in 2007) reflected the general downturn in the world economy that year. The Banco Central de Honduras (central bank) named the debilitation of global demand, and loss of dynamism in final consumer demand, as important factors in the slowing of Honduras's economic growth in 2008.^[7] The table here shows the slowing of growth in 2008 versus 2007 in various economies.

See also[link]

• Honduras
• Electricity sector in Honduras

References[link]

1. ^ United Nations data, National Accounts Estimates of Main Aggregates, Per capita GNI at current prices -- US dollars.
2. ^ "Obama must strongly and unequivocally condemn the coup in Honduras", Alternet, 29 June 2009; retrieved July 2009.
3. ^ "Honduran president ousted in army coup", The Militant, 1 July 2009; retrieved July 2009.
4. ^ NotiCen, 29 November 2007, excerpted in University of California at San Diego libraries Latin american election statistics, retrieved July 2009. NotiCen's source is probably the Latin American Development Bank.
5. ^ L and US$ data are from United Nations data, National Accounts Estimates of Main Aggregates. World bank (www.worldbank.org) says 2007 GDP was $US 12.2 billion. The international dollar datum is from a previous version of this Wikipedia article and no source was given. World bank says 2007 GNI (not GDP) was 25.6 billion in international PPP dollars.
6. ^ WFP Interactive Hunger Map
7. ^ Banco Central de Honduras, Memoria Anual 2008, p 28, retrieved 2009.

External links[link]

• Coffee from Honduran
• Honduras: Recent Economic Performance, November 2009, report from the Center for Economic and Policy Research

Republic of Honduras República de Honduras
Flag Coat of arms
Motto: "Libre, Soberana e Independiente"  (Spanish) "Free, Sovereign and Independent"
Anthem:  Himno Nacional de Honduras National Anthem of Honduras
Capital (and largest city)		Tegucigalpa 14°6′N 87°13′W / 14.1°N 87.217°W / 14.1; -87.217
Official language(s)		Spanish
Recognised regional languages		English, Garifuna, Miskito,and other indigenous languages.
Ethnic groups		90% Mestizo mixture of European and American Indian 7% Amerindian 2% Black 1% White[1]
Demonym		Honduran, Catracho
Government		Constitutional republic
-	President	Porfirio Lobo Sosa
-	Vice President	María Antonieta de Bográn
-	President of the National Congress	Juan Orlando Hernández
-	President of the Supreme Court	Jorge Rivera Avilés
Legislature		National Congress
Independence		from Spain, First Mexican Empire, and the Federal Republic of Central America
-	Declared	15 September 1821 (as part of Federal Republic of Central America)
-	from the First Mexican Empire	1 July 1823
-	Declared	5 November 1838 (as Honduras)
Area
-	Total	112,492 km2 (102nd) 43,278 sq mi
Population
-	2010 estimate	8,249,574 (94th)
-	2007 census	7,529,403
-	Density	64/km2 (128th) 166/sq mi
GDP (PPP)		2011 estimate
-	Total	$35.697 billion[2]
-	Per capita	$4,345[2]
GDP (nominal)		2011 estimate
-	Total	$17.381 billion[2]
-	Per capita	$2,115[2]
Gini (1992–2007)		55.3[3] (high)
HDI (2010)		0.604[4] (medium) (106th)
Currency		Lempira (HNL)
Time zone		CST (UTC−6)
Drives on the		Right
ISO 3166 code		HN
Internet TLD		.hn
Calling code		504
1	"Libre, soberana e independiente" is the official motto, by congressional order, and was put on the coat of arms.
2	Estimates explicitly take into account the effects of excess mortality due to AIDS; this can result in lower life expectancy, higher infant mortality and death rates, lower population and growth rates, and changes in the distribution of population by age and sex than would otherwise be expected, as of July 2007.

Honduras^[5] is a republic in Central America. It was at times referred to as Spanish Honduras to differentiate it from British Honduras, which became the modern-day state of Belize.^[6] The country is bordered to the west by Guatemala, to the southwest by El Salvador, to the southeast by Nicaragua, to the south by the Pacific Ocean at the Gulf of Fonseca, and to the north by the Gulf of Honduras, a large inlet of the Caribbean Sea.

Honduras was home to several important indigenous cultures, most notably the Maya. Much of the country was conquered by Spain who introduced its predominant language and many of its customs in the sixteenth century. It became independent in 1821 and has been a republic since the end of Spanish rule.

Its size is just over 112,492 km² with an estimated population of almost eight million.^[7] Its capital is Tegucigalpa. Its northern portions are part of the Western Caribbean Zone.

It is notable for its production of minerals, tropical fruit, and recently for exportation of clothing for the international market.

Etymology[link]

• Higueras – a reference to the gourds that come from the Jicaro tree, many of which were found floating in the waters off the northwest coast of Honduras.
• Honduras – literally "depths" in Spanish. Columbus is traditionally quoted as having written "Gracias a Dios que hemos salido de esas Honduras" (English: "Thank God we have come out of those depths") while along the northeastern coast.^[8] However, William Davidson notes that there is no form of this quotation in the primary documents of Columbus's voyage, and that it in fact comes from accounts over a century later.^[9][10]

• Honduras from fondura, a Leonese language word meaning anchorage which is one of the first words for the region to appear on a map in the second decade of the 16th century applied to the bay of Trujillo. It was not until the end of the 16th century that Honduras was used for the whole province. Prior to 1580, Honduras referred to the eastern part of the province, and Higueras referred to the western part.^[10]

• Another early name is Guaymuras, revived as the name for the political dialogue in 2009 that took place in Honduras as opposed to Costa Rica.

History[link]

Mayan Stelae, an emblematic symbol of the Honduran Mayan civilization at Copan.

Pre-colonial period[link]

In pre-Columbian times, modern Honduras was part of the Mesoamerican cultural area. In the west, the Maya civilization flourished for hundreds of years. The dominant state within Honduras's borders was that based in Copán. Copán fell with the other Lowland centres during the conflagrations of the Terminal Classic, the early 9th century. The Maya of this civilization survive in western Honduras as the Ch'orti', isolated from their Choltian linguistic peers to the west.

Remains of other Pre-Columbian cultures are found throughout the country. Archaeologists have studied sites such as Naco and La Sierra in the Naco Valley, Los Naranjos on Lake Yojoa, Yarumela in the Comayagua Valley, La Ceiba and Salitron Viejo (both now under the Cajon Dam reservoir), Selin Farm and Cuyamel in the Aguan valley, Cerro Palenque, Travesia, Curruste, Ticamaya, Despoloncal in the lower Ulua river valley, and many others.

Conquest period[link]

On his fourth and the final voyage to the New World in 1502, Christopher Columbus became the first European to visit the Bay Islands on the coast of Honduras.^[11] Columbus landed near the modern town of Trujillo, in the vicinity of the Guaimoreto Lagoon.

In 1524 the Spanish arrived on Honduras led by Hernan Cortes, bringing forces down from Mexico. Much of the conquest was done in the following two decades, first by groups loyal to Cristóbal de Olid, and then by those loyal of Francisco Montejo but most particularly by those following Alvarado. In addition to Spanish resources, the conquerors relied heavily armed forces from Mexico—Tlaxcalans and Mexica armies of thousands who lived on in the region as garrisons. Resistance to conquest was led in particularly by Lempira,and many regions in the north never fell to the Spanish, notably the Miskito Kingdom. After the Spanish conquest, Honduras became part of Spain's vast empire in the New World within the Kingdom of Guatemala. Trujillo and Gracias were the first city-capitals. The Spanish ruled the region for approximately three centuries.

Colonial period[link]

Honduras was organized as a province of the "Kingdom of Guatemala" and the capital was fixed, first at Trujillo on the Atlantic coast, and later at Comayagua, and finally at Tegucigalpa in the central part of the country.

Silver mining was a key factor in the Spanish conquest and settlement of Honduras.^[12] Initially the mines were worked by local people through the encomienda system, but as disease and resistance made this less available, slaves from other parts of Central America were brought in, and following the end of the local slave trading period at the end of the sixteenth century, African slaves, mostly from Angola were obtained.^[13] After about 1650, very few slaves or other outside workers arrived in Honduras.

Although the Spanish conquered the southern or Pacific portion of Honduras fairly quickly they were less successful in the northern or Atlantic side. They managed to found a few towns along the coast, at Puerto Caballos and Trujillo in particular, but failed to conquer the eastern portion of the region and many pockets of independent indigenous people as well. The Miskito Kingdom, located in the northeast was particularly effective in resisting conquest. The Miskitos, in turn found support from northern European privateers, pirates and especially the English colony of Jamaica, which placed much of it under their protection after 1740.

Fortaleza de San Fernando de Omoa was built by the Spanish to protect the coast of Honduras from English pirates.

Independence and the nineteenth century[link]

Honduras became independent from Spain in 1821 and was for a time under the Mexican Empire. After 1838 it was an independent republic and held regular elections.

Comayagua was the capital of Honduras until 1880, when it was transferred to Tegucigalpa.

In the decades of 1840 and 1850 Honduras participated in several failed attempts to restore Central American unity, such as the Confederation of Central America (1842–1845), the covenant of Guatemala (1842), the Diet of Sonsonate ( 1846), the Diet of Nacaome (1847) and National Representation in Central America (1849–1852).

Although Honduras eventually adopted the name Republic of Honduras, the unionist ideal never waned, and Honduras was one of the Central American countries that pushed hardest for the policy of regional unity.

Since independence, nearly 300 small internal rebellions and civil wars have occurred in the country, including some changes of government.

Liberal policies favoring international trade and investment began in the 1870s, and soon foreign interests became involved first in shipping, especially tropical fruit (most notably bananas) from the north coast, and then in railway building. In 1888, a projected railroad line from the Caribbean coast to the capital, Tegucigalpa, ran out of money when it reached San Pedro Sula, resulting in its growth into the nation's main industrial center and second largest city.

International influence in the 20th century[link]

In the late nineteenth century United States-based infrastructure and fruit growing companies were granted substantial land and exemptions to develop the northern regions. As a result, thousands of workers came to the north coast to work in the banana plantations and the other industries that grew up around the export industry. The banana exporting companies, dominated by Cuyamel Fruit Company (until 1930), United Fruit Company, and Standard Fruit Company, built an enclave economy in northern Honduras, controlling infrastructure and creating self-sufficient, tax exempt sectors that contributed relatively little to economic growth. In addition to drawing many Central American workers to the north, the fruit companies also encouraged immigration of workers from the English-speaking Caribbean, notably Jamaica and Belize, who introduced an African descended, English speaking and largely Protestant population into the country, though many left after changes in the immigration law in 1939.^[14]

Following the attack on Pearl Harbor, Honduras joined the Allied Nations on 8 December 1941. Along with twenty-five other governments, Honduras signed the Declaration by United Nations on 1 January 1942.

Constitutional crises in the 1940s led to reforms in the 1950s, and as a result of one such reform, workers were given permission to organize, which led to a general strike in 1954 that paralyzed the northern part of the country for more than two months, but which led to more general reforms.

In 1969, Honduras and El Salvador fought what would become known as the Football War.^[15] There had been border tensions between the two countries after Oswaldo López Arellano, a former president of Honduras, blamed the deteriorating economy on the large number of immigrants from El Salvador. From that point on, the relationship between the two countries grew acrimonious and reached a low when El Salvador met Honduras for a three-round football elimination match as a preliminary to the World Cup. Tensions escalated, and on 14 March 1969, the Salvadoran army launched an attack on the Honduras army. The Organization of American States negotiated a cease-fire, which took effect on 20 July and brought about a withdrawal of Salvadoran troops in early August.^[15] Contributing factors to the conflict were a boundary dispute and the presence of thousands of Salvadorans living in Honduras illegally. After the week-long football war, as many as 130,000 Salvadoran immigrants were expelled.^[16] El Salvador had agreed on a truce to settle the boundary issue, but Honduras later paid war damage costs for expelled refugees.^[15]

Hurricane Fifi caused severe damage while skimming the northern coast of Honduras on 18 and 19 September 1974. Melgar Castro (1975–78) and Paz Garcia (1978–82) largely built the current physical infrastructure and telecommunications system of Honduras.^[17]

In 1979, the country returned to civilian rule. A constituent assembly was popularly elected in April 1980 and general elections were held in November 1981. A new constitution was approved in 1982 and the PLH government of Roberto Suazo assumed power. Roberto Suazo won the elections with a promise to carry out an ambitious program of economic and social development in Honduras in order to tackle the country's recession. President Roberto Suazo Cordoba launched ambitious social and economic development projects, sponsored by American development aid. Honduras became host to the largest Peace Corps mission in the world, and nongovernmental and international voluntary agencies proliferated.^[17]

During the early 1980s, the United States established a continuing military presence in Honduras with the purpose of supporting the Contra guerillas fighting the Nicaraguan government and also developed an air strip and a modern port in Honduras. Though spared the bloody civil wars wracking its neighbors, the Honduran army quietly waged a campaign against Marxist-Leninist militias such as Cinchoneros Popular Liberation Movement, notorious for kidnappings and bombings,^[18] and many non-militants. The operation included a CIA-backed campaign of extrajudicial killings by government-backed units, most notably Battalion 316.^[19]

Beach at Roatán.

In 1998, Hurricane Mitch caused such massive and widespread destruction that former Honduran President Carlos Roberto Flores claimed that fifty years of progress in the country were reversed. Mitch obliterated about 70% of the crops and an estimated 70–80% of the transportation infrastructure, including nearly all bridges and secondary roads. Across the country, 33,000 houses were destroyed, an additional 50,000 damaged, some 5,000 people killed, 12,000 injured – for a total loss estimated at $3 billion USD.^[20]

21st century[link]

The 2008 Honduran floods were severe and around half the country's roads were damaged or destroyed as a result.^[21]

In 2009, a constitutional crisis^[22][23] culminated in a transfer of power from the president to the head of Congress.^[24] Countries all over the world, the OAS, and the UN formally and unanimously condemned the action as a coup d'état^[22] and refused to recognize the de facto^[25] government, though a document submitted to the United States Congress declared the ouster to be legal according to the opinion of the lawyers consulted by the Library of Congress.^[26] In any event the Honduran Supreme Court also ruled the proceedings to be legal.

Presidents of Honduras[link]

Honduras has had many leaders from several parties since gaining its independence from Spain and from Mexico; nineteen have served as president during the period when Honduras was a part of the Federal Republic of Central America. Sixty-seven men have served as president of the Republic of Honduras. The current Honduras president is President Porfirio Lobo. In addition there have been several joint governments.

Contemporary politics[link]

This section requires expansion with: information on 2010 election of new president and 2011 government situation.

Honduras has five registered political parties: National Party (Partido Nacional de Honduras: PNH); Liberal Party (Partido Liberal de Honduras: PLH); Social Democrats (Partido Innovación y Unidad-Social Demócrata: PINU-SD), Social Christians (Partido Demócrata-Cristiano de Honduras: DCH); and Democratic Unification (Partido Unificación Democrática: UD). PNH and PLH have ruled the country for decades. In the last years, Honduras has had six Liberal presidents: Roberto Suazo Córdova, José Azcona del Hoyo, Carlos Roberto Reina, Carlos Roberto Flores, Manuel Zelaya and Roberto Micheletti, and three Nationalists: Rafael Leonardo Callejas Romero, Ricardo Maduro and Porfirio Lobo Sosa. The elections have been full of controversies, including questions about whether Azcona was born in Spain, and whether Maduro should have been able to stand, given he was born in Panama.

In 1963, a military coup was mounted against the democratically elected president Ramón Villeda Morales. This event started a string of Military Governments which held power almost uninterrupted until 1981 when Suazo Córdova (LPH) was elected president and Honduras changed from a military authoritarian regime.

In 1986, there were five Liberal candidates and four Nationalists running for president. Because no one candidate obtained a clear majority, the so-called "Formula B" was invoked and Azcona del Hoyo became president. In 1990, Callejas won the election under the slogan "Llegó el momento del Cambio" (English: "The time for change has arrived"), which was heavily criticized for resembling El Salvador's "ARENAs" political campaign.^{[citation needed]} Once in office, Callejas Romero gained a reputation for illicit enrichment, and has been the subject of several scandals and accusations.^{[citation needed]} It was during Flores Facusse's mandate that Hurricane Mitch hit the country and decades of economic growth were eradicated in less than a week.^{[citation needed]}

Government ministries are often incapable of carrying out their mandate due to budgetary constraints.^{[citation needed]} In an interview with Rodolfo Pastor Fasquelle, Minister of Sports & Culture and one of three 'super ministers' responsible for coordinating the ministries related to public services (security and economic being the other two), published in Honduras This Week on 31 July 2006, it was related that 94% of the department budget was spent on bureaucracy and only 6% went to support activities and organizations covered by the mandate. Wages within that ministry were identified as the largest budget consumer.

President Maduro's administration "de-nationalized" the telecommunications sector in a move to promote the rapid diffusion of these services to the Honduran population. As of November 2005, there were around 10 private-sector telecommunications companies in the Honduran market, including two mobile phone companies. As of mid 2007, the issue of tele-communications continues to be very damaging to the current government.^[27] The country's main newspapers are La Prensa, El Heraldo, La Tribuna and Diario Tiempo. The official newspaper is La Gaceta.

A Presidential and General Election was held on 27 November 2005. Manuel Zelaya of the Liberal Party of Honduras (Partido Liberal de Honduras: PLH) won, with Porfirio Pepe Lobo of the National Party of Honduras (Partido Nacional de Honduras: PNH) coming in second. The PNH challenged the election results, and Lobo Sosa did not concede until 7 December. Towards the end of December, the government finally released the total ballot count, giving Zelaya the official victory. Zelaya was inaugurated as Honduras' new president on 27 January 2006.

Zelaya precipitated a national crisis by trying to hold a non-binding national referendum to ask the Honduran people: "Do you agree that, during the general elections of November 2009 there should be a fourth ballot to decide whether to hold a Constituent National Assembly that will approve a new political constitution?"^[28] This possible Assembly then might not or more likely might have proposed constitutional changes to term-limits – as the military and the Supreme Court deemed possible – and other more likely, unrelated and legal constitutional changes.^[29]

2009 Honduran constitutional crisis[link]

Demonstrators supporting Micheletti

Manuel Zelaya in 2009

Roberto Micheletti

The 2009 Honduran constitutional crisis^[30] resulted in an event the international community almost universally refers to as a coup d'état. The coup lasted from 28 June 2009 to 27 January 2010. President Manuel Zelaya attempted to hold a "non-binding referendum" on 28 June asking voters if the upcoming November elections should include an additional ballot box. The ballot box would ask if the Honduran people wished to form a Constitutional Assembly in the term of the newly elected president.^[31] The Supreme Court upheld a lower court ruling that found a prior referendum based on the same issue unconstitutional and prohibited it.^[32][33]

Referendum[link]

Zelaya ignored the Supreme Court and decided to proceed on the referendum, basing his decision on the Law of Citizen Participation, passed in 2006. Zelaya dismissed the head of the military command, General Romeo Vásquez Velásquez, for disobeying an order to hold the poll, but the Supreme Court ordered his reinstatement. The Supreme Court then ordered the military (who as a non-civilian force had no jurisdiction over the matter) to detain Zelaya. The vote on the referendum was scheduled for 28 June 2009. In the early morning on that day, the army^[34] arrested Zelaya at his home.

Zelaya was held in a U.S. airbase outside Tegucigalpa^[35] before being forcibly sent to San José, Costa Rica.^[36] Zelaya attempted reentry into the country on several occasions. According to the constitution, it is illegal to expatriate any Honduran citizen.^[37] Roberto Micheletti, the former President of the Honduran Congress and a member of the same party as Zelaya, was sworn in as President by the National Congress on the afternoon of Sunday 28 June^[38] for a term that ended on 27 January 2010.^[39]

No country recognised the de facto government as legitimate; all members of the UN condemned the removal of Zelaya as a coup d'état. Some Republican Party members of the U.S. Congress voiced support at the time for the new government.^[40][41] On 21 September 2009, Zelaya returned to Honduras and entered the Brazilian embassy. From its roof, he attempted to incite his supporters in a rebellion. The government disrupted utility services to the embassy and imposed a curfew in an attempt to maintain order in the area when Zelaya's supporters protested around the embassy.

The following day, in Decree PCM-M-016-2009, the government suspended five Constitutional rights: personal liberty (Article 69), freedom of expression (Article 72), freedom of movement (Article 81), habeas corpus (Article 84) and freedom of association and assembly.^[42][43] It closed a leftist radio and a television station.^[44] The decree suspending human rights was officially revoked on 19 October 2009 in La Gaceta.^[45]

The 2009 election[link]

The general election for President of the Republic of Honduras was won by the candidate of the National Party of Honduras, Mr. Porfirio Lobo Sosa,under a tense state of political turmoil and ongoing coup, the 29 November 2009, beating his opponent the candidate of the Liberal Party of Honduras, civil engineer, Mr. Elvin Ernesto Santos Ordoñez. Porfirio Lobo Sosa, was sworn in office as president in 2010 and declared its tasks to be to bring order to the country and reapply for acceptance of Honduras within the OAS.

Departments and municipalities[link]

Departmental division of Honduras

Honduras is divided into 18 departments. The capital city is Tegucigalpa in the Central District within the department of Francisco Morazán.

1. Atlántida
2. Choluteca
3. Colón
4. Comayagua
5. Copán
6. Cortés
7. El Paraíso
8. Francisco Morazán
9. Gracias a Dios
10. Intibucá
11. Islas de la Bahía
12. La Paz
13. Lempira
14. Ocotepeque
15. Olancho
16. Santa Bárbara
17. Valle
18. Yoro

Geography[link]

Honduras is surrounded by the Caribbean Sea (top), Nicaragua, a gulf on the Pacific Ocean, El Salvador (lower left) and Guatemala (left).

Honduras borders the Caribbean Sea on the north coast and the Pacific Ocean on the south through the Gulf of Fonseca. It mostly lies between latitudes 13° and 17°N (a small area lies south of 13°, and the Swan Islands are north of 17°), and longitudes 83° and 90°W.

The climate varies from tropical in the lowlands to temperate in the mountains. The central and southern regions are relatively hotter and less humid than the northern coast.

The Honduran territory consists mainly of mountains, but there are narrow plains along the coasts, a large undeveloped lowland jungle La Mosquitia region in the northeast, and the heavily populated lowland Sula valley in the northwest. In La Mosquitia, lies the UNESCO world-heritage site Río Plátano Biosphere Reserve, with the Coco River which divides the country from Nicaragua.

The Islas de la Bahía and the Swan Islands (all off the north coast) are part of Honduras. Misteriosa Bank and Rosario Bank, 130 to 150 km (80–93 miles) north of the Swan Islands, fall within the EEZ of Honduras.

Honduran rainforest

Natural resources include timber, gold, silver, copper, lead, zinc, iron ore, antimony, coal, fish, shrimp, and hydropower.

Ecology[link]

The region is considered a biodiversity hotspot because of the numerous plant and animal species that can be found there. Like other countries in the region, Honduras contains vast biological resources. The country hosts more than 6,000 species of vascular plants, of which 630 (described so far) are orchids; around 250 reptiles and amphibians, more than 700 bird species, and 110 mammal species, half of them being bats.^[46]

In the northeastern region of La Mosquitia lies the Río Plátano Biosphere Reserve, a lowland rainforest which is home to a great diversity of life. The reserve was added to the UNESCO World Heritage Sites List in 1982.

Honduras has rain forests, cloud forests (which can rise up to nearly three thousand meters above sea level), mangroves, savannas and mountain ranges with pine and oak trees, and the Mesoamerican Barrier Reef System. In the Bay Islands there are bottlenose dolphins, manta rays, parrot fish, schools of blue tang and whale shark.

Economy[link]

Downtown San Pedro Sula

The economy has continued to grow slowly, but the distribution of wealth remains very polarized with average wages remaining low. Economic growth in the last few years has averaged 7% a year, one of the highest rates in Latin America, but 50% of the population, approximately 3.7 million people, still remains below the poverty line.^[47] It is estimated that there are more than 1.2 million people who are unemployed, the rate of unemployment standing at 27.9%. According to the Human Development Index, Honduras is the sixth poorest/least developed country in Latin America, after Haiti, Nicaragua, Guatemala, Guyana, and Bolivia.

Honduras was declared one of the heavily indebted poor countries by the World Bank and the International Monetary Fund, and was made eligible for debt relief in 2005.

The government operates both the electricity (ENEE) and land-line telephone services (HONDUTEL), as ENEE receives heavy subsidies for its chronic financial problems. HONDUTEL, however, is no longer a monopoly, as the telecommunication sector was opened to private sector on 25 December 2005, as was required under the CAFTA. The price of petroleum is controlled, and the Congress often ratifies temporary price regulations for basic commodities.

Gold, silver, lead and zinc are produced at mines owned by foreign companies.^[48]

After years of decline against the U.S. dollar, lempira recently stabilized at around 19 lempiras per dollar. In June 2008, the exchange rate between U.S. dollar and lempira was approximately 1 to 18.85.

In 2005, Honduras signed the CAFTA, the free trade agreement with the United States. In December 2005, Puerto Cortes, the main seaport in Honduras, was included in the U.S. Container Security Initiative.^[49]

On 7 December 2006, the U.S. Department of Homeland Security and the Department of Energy announced the first phase of the Secure Freight Initiative, an unprecedented effort to build upon existing port security measures by enhancing the U.S. government’s authority to scan containers from overseas for nuclear and radiological materials to better assess the risk of inbound containers. The initial phase of Secure Freight involves the deployment of nuclear detection and other devices to six foreign ports: Port Qasim in Pakistan; Puerto Cortes in Honduras; Southampton in the United Kingdom; Port Salalah in Oman; Port of Singapore; and the Gamman Terminal at Port Busan in Korea. Since early 2007, containers from these ports have been scanned for radiation and other risk factors before they are allowed to depart for the United States.^[50]

Social conditions[link]

Over the centuries, the territory of Honduras has known a number of social systems, ranging from ancient forager groups through early complex societies to more elaborated ones, such as those of the Maya and Lenca. Spanish conquest built on these, and their traditions carried over into the post independence period. Honduras' emergence in the late nineteenth century as a cash crop producing exporter and then its limited industrialization through the maquiladora system have brought about the conditions of today.

Demographics[link]

According to the CIA World Factbook, relying on national census data, Honduras has a population of 8,143,564 as at July 2011; the CIA World Factbook states that the population makeup is: "mestizo (mixed Amerindian and European) 90%, Amerindian 7%, black 2%, white 1%".^[51] However, in Honduras as in Latin American countries in general, racial breakdowns of population conform to local perceptions of race, and also social status which may tend to over represent some groups and under represent others, and thus such statistics must be understood in that light.

Ninety percent of the Honduran population is Mestizo and white^[52] (a mixture of Amerindian and European ancestry). About 7% of the Honduran population are members of one of the seven recognized indigenous groups.

About 2% of Honduras's population is black,^[52] or Afro-Honduran, and mainly reside on the country's Caribbean coast. Most are the descendants of the slaves and indentured servants from the West Indian islands brought to Honduras. Another large group (about 150,000 today) are the Garifuna, descendants of an Afro-Carib population which revolted against British authorities on the island of St. Vincent and were forcibly moved to Belize and Honduras during the 18th century. Garífunas are part of Honduran identity through theatrical presentations such as Louvavagu^{[citation needed]}. A final group are workers brought in from the English-speaking Caribbean, primarily Jamaica and Barbados, to work on the fruit plantations started by mostly North American companies such as United Fruit Company in the late 19th and early 20th century.

Talanga road, Honduras

Honduras hosts a significant Palestinian community (the vast majority of whom are Christian Arabs).^[53] The Palestinians arrived in the country in the late 19th and early 20th centuries, establishing themselves especially in the city of San Pedro Sula. The Palestinian community, well integrated in Honduras, is prominent in business, commerce, banking, industry, and politics. There is also an East Asian community that is primarily Chinese descent, and to a lesser extent Japanese. Some Korean, Ryukyuan, Vietnamese and Filipino peoples also make up a small percentage due to their arrival to Honduras as contract laborers in the 1980s and 1990s. There are also an estimated 1000 Sumos (or Mayangnas) that live in Honduras, the majority of whom reside on the Caribbean coast^{[citation needed]}.

Since 1975, emigration from Honduras has accelerated as job-seekers and political refugees sought a better life elsewhere. Although many Hondurans have relatives in Nicaragua, Spain, Mexico, El Salvador and Canada, the majority of Hondurans living abroad are in the United States^{[citation needed]}.

Religion[link]

Cardinal Oscar Andres Rodriguez was one of the strongest candidates to become Pope after the death of John Paul II.

Although most Hondurans are nominally Roman Catholic (which would be considered the main religion), according to one report, membership in the Roman Catholic Church is declining while membership in Protestant churches is increasing. The International Religious Freedom Report, 2008, notes that a CID Gallup poll reported that 47% of the population identified themselves as Catholic, 36% as evangelical Protestant, and 17% provided no answer or considered themselves "other." Customary Catholic church tallies and membership estimates 81% Catholic where the priest (in more than 185 parishes) is required to fill out a pastoral account of the parish each year.^[54][55]

The CIA Factbook has Honduras listed as 97% Catholic and 3% Protestant.^[56] Commenting on statistical variations everywhere, John Green of Pew Forum on Religion and Public Life notes that: "It isn't that ... numbers are more right than [someone else's] numbers ... but how one conceptualizes the group.^[57] Often people attend one church without giving up their "home" church. Many who attend evangelical megachurches in the US, for example, attend more than one church.^[58] This shifting and fluidity is common in Brazil where two-fifths of those who were raised evangelical are no longer evangelical and Catholics seem to shift in and out of various churches, often while still remaining Catholic.^[59]

Most pollsters suggest an annual poll taken over a number of years would provide the best method of knowing religious demographics and variations in any single country. Still, in Honduras are thriving Anglican, Presbyterian, Methodist, Seventh-day Adventist, Lutheran, Latter-day Saint (Mormon) and Pentecostal churches. There are Protestant seminaries. The Catholic Church, still the only "church" that is recognized, is also thriving in the number of schools, hospitals, and pastoral institutions (including its own medical school) that it operates. It archbishop, Oscar Andres Rodriguez Maradiaga, is also very popular, both with the government, other churches, and in his own church. Practitioners of the Buddhist, Jewish, Islamic, Bahá'í, Rastafari and indigenous denominations and religions exist.^[60]

Health[link]

The fertility rate is approximately 3.7 per woman.^[61] The under-five mortality rate is at 40 per 1,000 live births.^[61] The health expenditure was US$ (PPP) 197 per person in 2004.^[61] There are about 57 physicians per 100,000 people.^[61]

Culture[link]

The Cathedral of Comayagua

The most renowned Honduran painter is Jose Antonio Velásquez. Other important painters include Carlos Garay, and Roque Zelaya. Two of Honduras' most notable writers are Froylan Turcios and Ramón Amaya Amador. Others include Marco Antonio Rosa, Roberto Sosa, Lucila Gamero de Medina, Eduardo Bähr, Amanda Castro, Javier Abril Espinoza, Teófilo Trejo, and Roberto Quesada. Some of Honduras' notable musicians include Rafael Coello Ramos, Lidia Handal, Victoriano Lopez, Guillermo Anderson, Victor Donaire, Matilde Quan, Moises Canelo,Julio Quan Francisco Carranza and Camilo Rivera Guevara.

Hondurans are often referred to as Catracho or Catracha (fem) in Spanish. The word was coined by Nicaraguans and derives from the last name of the Spanish Honduran General Florencio Xatruch, who, in 1857, led Honduran armed forces against an attempted invasion by North American adventurer William Walker. The nickname is considered complimentary, not derogatory. The main language is Spanish, spoken by 94% as first language. Minority languages are spoken by less than 4%. These are Amerindian languages such as Garifuna, Miskito, and Pech; Honduras Sign Language; and English on the Bay Islands off the north coast.

Honduras This Week is a weekly English-language newspaper that has been published for seventeen years in Tegucigalpa. On the islands of Roatan, Utila and Guanaja, the Bay Islands Voice has been a source of monthly news since 2003.

Honduran cuisine makes extensive use of coconut, in both sweet and savory foods, and even in soups.

The José Francisco Saybe theater in San Pedro Sula is home to the Círculo Teatral Sampedrano (Theatrical Circle of San Pedro Sula)

Celebrations[link]

Sawdust Carpets of Comayagua During the Easter Celebrations.

Some of Honduras' national holidays include Honduras Independence Day on 15 September and Children's Day or Día del Niño, which is celebrated in homes, schools and churches on 10 September; on this day, children receive presents and have parties similar to Christmas or birthday celebrations. Some neighborhoods have piñatas on the street. Other holidays are Easter, Maundy Thursday, Good Friday, Day of the Soldier (3 October to celebrate the birth of Francisco Morazán), Christmas, El Dia de Lempira on 20 July,^[62] and New Year's Eve.

Honduras Independence Day festivities start early in the morning with marching bands. Each band wears different colors and features cheerleaders. Fiesta Catracha takes place this same day: typical Honduran foods such as beans, tamales, baleadas, cassava with chicharron, and tortillas are offered. On Christmas Eve, the people reunite with their families and close friends to have dinner, then give out presents at midnight. In some cities fireworks are seen and heard at midnight. On New Year's Eve there is food and "cohetes", fireworks and festivities. Birthdays are also great events, and include the famous “piñata” which is filled with candies and surprises for the children invited.

La Feria Isidra is celebrated in La Ceiba, a city located in the north coast, in the second half of May to celebrate the day of the city's patron saint Saint Isidore. People from all over the world come for one week of festivities. Every night there is a little carnaval (carnavalito) in a neighborhood. Finally, on Saturday there is a big parade with floats and displays with people from many countries. This celebration is also accompanied by the Milk Fair, where many Hondurans come to show off their farm products and animals.

Education[link]

In Honduras about 83.6% of the population of the country is literate.^[61] The net primary enrollment rate was 94% in 2004,^[61] while in 2007 the primary school completion rate was reported to be 40%.^{[citation needed]} Honduras has bilingual (Spanish and English) and even trilingual (Spanish, English, German/Turkish) schools^[63] and numerous universities.

The university is ruled by National Autonomous University of Honduras which have centers in the most important cities in Honduras.

Infrastructure[link]

Energy[link]

About half of the electricity sector in Honduras is privately owned. The remaining generation capacity is run by ENEE (Empresa Nacional de Energía Eléctrica). Key challenges in the sector are:

• How to finance investments in generation and transmission in the absence of either a financially healthy utility or of concessionary funds by external donors for these types of investments;
• How to re-balance tariffs, cut arrears and reduce commercial losses – including electricity theft – without fostering social unrest; and
• How to reconcile environmental concerns with the government's objective to build two new large dams and associated hydropower plants.
• How to improve access in rural areas.

Water supply and sanitation[link]

Water supply and sanitation in Honduras varies greatly from urban centers to rural villages. Larger population centers generally have modernized water treatment and distribution systems, however water quality is often poor because of lack of proper maintenance and treatment. Rural areas generally have basic drinking water systems with limited capacity for water treatment. Many urban areas have sewer systems in place for the collection of wastewater, however proper treatment of wastewater is scarce. In rural areas, sanitary facilities are generally limited to latrines and basic septic pits.

Water and sanitation services were historically provided by Servicio Autonomo de Alcantarillas y Aqueductos (SANAA). In 2003, a new "water law" was passed which called for the decentralization of water services. With the 2003 law, local communities have the right and responsibility to own, operate, and control their own drinking water and wastewater systems. Since passage of the new law, many communities have joined together to address water and sanitation issues on a regional basis.

Many national and international non-government organizations have a history of working on water and sanitation projects in Honduras. International groups include, but are not limited to, the Red Cross, Water 1st, Rotary Club, Catholic Relief Services, Water for People, EcoLogic Development Fund, CARE, CESO-SACO, Engineers Without Borders USA, Flood The Nations, SHH, Global Brigades, and Agua para el Pueblo in partnership with AguaClara at Cornell University.

In addition, many government organizations working on projects include: the European Union, USAID, the Army Corps of Engineers, Cooperacion Andalucia, the government of Japan, and many others.

Transport[link]

Transportation in Honduras consists of the following infrastructure: 699 km of railways;^[64] 13,603 km of roadways;^[64] seven ports and harbors;^{[citation needed]} and 112 airports altogether (12 Paved, 100 unpaved).^[64] Responsibility for policy in the transport sector rests with the Ministry of Public Works, Transport and Housing (SOPRTRAVI after its Spanish acronym).

National symbols[link]

National bird, Ara macao

The flag of Honduras is composed of 3 equal horizontal stripes, with the upper and lower ones being blue and representing the Pacific Ocean and Caribbean Sea. The central stripe is white. It contains five blue stars representing the five states of the Central American Union. The middle star represents Honduras, located in the center of the Central American Union.

The Coat of Arms was established in 1945. It is an equilateral triangle, at the base is a volcano between three castles, over which is a rainbow and the sun shining. The triangle is placed on an area that symbolizes being bathed by both seas. Around all of this an oval containing in golden lettering: "Republic of Honduras, Free, Sovereign and Independent".

The National Anthem of Honduras is a result of a contest carried out in 1914 during the presidency of Manuel Bonilla. In the end, it was the poet Augosto C. Coello that ended up writing the anthem, with the participation of German composer Carlos Hartling writing the music. The anthem was officially adopted on 15 November 1915, during the presidency of Alberto Membreño. The anthem is composed of a choir and seven stroonduran,that is very long.

The national flower is the famous orchid, Rhyncholaelia digbyana (formerly known as Brassavola digbyana), which replaced the rose in 1969. The change of the National Flower was carried out during the administration of general Oswaldo López Arellano, thinking that Brassavola digbiana "is an indigenous plant of Honduras; having this flower exceptional characteristics of beauty, vigor and distinction", as the decree dictates it.

The National Tree of Honduras is the Honduras Pine (Pinus caribaea var. hondurensis). Also the use of the tree was regulated, "to avoid the unnecessary destructions caused by choppings or fires of forest."

The National Mammal is the White-tailed Deer (Odocoileus virginianus), which was adopted as a measure to avoid excessive depredation. It is one of two species of deer that live in Honduras. The National Bird of Honduras is the Scarlet Macaw (Ara macao). This bird was much valued by the pre-Columbian civilizations of Honduras.

Folklore[link]

Wilson Palacios, one of the most well-known athletes from Honduras, plays for the Honduras national football team and for Stoke City of the English Premier League.

Legends and fairy tales are paramount within the Honduras culture; Lluvia de Peces (Fish Rain) is an example of this. The legend of El Cadejo, La Llorona and La Ciguanaba (La Sucia) are also popular.

Sports[link]

Football is the most popular Sport in Honduras. Information on all other Honduran sports related articles are below:

• Football in Honduras
• Federación Nacional Autónoma de Fútbol de Honduras
• Honduras national baseball team
• Honduras national football team
• Honduras national under-20 football team
• Honduras U-17 national football team

See also[link]

	Geography portal
	North America portal
	Central America portal
	Latin America portal

• Outline of Honduras
• Index of Honduras-related articles
• International rankings of Honduras
• List of Hondurans
• List of newspapers in Honduras
• List of places in Honduras
• Military of Honduras

Notes[link]

References[link]

• Adventures in Nature: Jose Elephant; James D. Gollin
• Don't Be Afraid, Gringo: A Honduran Woman Speaks From The Heart: The Story of Elvia Alvarado; Medea Benjamin
• Honduras: The Making of a Banana Republic; James Jones
• Honduras: State for Sale; Richard Lapper, Francisco Kanemoto
• Inside Honduras; Kent Norsworthy and Tom Berry
• La Mosquitia: A Guide to the Savannas, Rain Forest and Turtle Hunters; Goal
• Moon Handbooks: Honduras; Christopher Humphrey
• Reinterpreting the Banana Republic: Region and State in Honduras, 1870–1972; Dario A. Euraque
• Seven Names for the Bellbird: Conservation Geography in Honduras; Mark Bonta
• Ulysses Travel Guide: Honduras; Eric Ilamovitch
• The United States in Honduras, 1980–1981: An Ambassador's Memoir; Jack R. Binns
• The War of the Dispossessed: Honduras and El Salvador, 1969; Thomas P. Anderson

External links[link]

Find more about Honduras on Wikipedia's sister projects:
	Definitions and translations from Wiktionary
	Images and media from Commons
	Learning resources from Wikiversity
	News stories from Wikinews
	Quotations from Wikiquote
	Source texts from Wikisource
	Textbooks from Wikibooks

• Utila'sWebsite
• Government of Honduras (Spanish)
• Official Site of the Tourism Institute of Honduras (English)
• Chief of State and Cabinet Members
• Honduras entry at The World Factbook
• Honduras at University of Colorado at Boulder Libraries GovPubs
• Honduras at the Open Directory Project
• Wikimedia Atlas of Honduras
• Honduras travel guide from Wikitravel
• Honduran Biodiversity Database (Spanish)
• Honduras Tips Travel Info (English)
• Honduras Weekly
• Travel and Tourism Info on Honduras (English)
• Humanitarian Aid in Honduras
• Answers.com
• CIA World Factbook
• Project Honduras
• Interactive Maps Honduras
• Key Development Forecasts for Honduras from International Futures

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Peter Hakim

Peter Hakim is president emeritus and senior fellow of the Inter-American Dialogue, a Washington-based think tank on Western Hemisphere affairs. He served as president of the Dialogue from 1993 to 2010.

Professional[link]

Peter Hakim writes and speaks widely on hemispheric issues, and has testified more than a dozen times before Congress. His articles have appeared in Foreign Affairs, Foreign Policy, The New York Times, The Washington Post, Miami Herald, Los Angeles Times, and Financial Times, and in newspapers and journals in Argentina, Brazil, Chile, Colombia, Mexico, Peru, and other Latin American nations. He is a regular guest on CNN, BBC, CBS, CNN en Español and other prominent news stations around the world. He wrote a monthly column for the Christian Science Monitor for nearly ten years, and now serves as a board member of Foreign Affairs Latinoamerica and editorial advisor to Americaeconomia, where he also publishes a regular column.^{[citation needed]}

Background[link]

Hakim was a vice president of the Inter-American Foundation and worked for the Ford Foundation in New York and Latin America (in Argentina, Brazil, Chile and Peru). He has taught at MIT and Columbia University. He has served on boards and advisory committees for the World Bank, Council on Competitiveness, Inter-American Development Bank, Canadian Foundation for Latin America (FOCAL), Partners for Democratic Change, and Human Rights Watch. He is a member of the Council on Foreign Relations.

Education[link]

Hakim earned a B.A. at Cornell University, an M.S. in Physics at the University of Pennsylvania, and a Master of Public and International Affairs at Princeton University’s Woodrow Wilson School.

References[link]

External links[link]

• Hakim profile on Inter-American Dialogue website
• Video (with mp3 available) of discussion with Hakim on Bloggingheads.tv