Fiscal Policy

Honduras's Finance Ministry included L242 million (about $9.7 million) in the 2027 budget to pay a professional fee for agricultural scientists that the Supreme Court ruled unconstitutional in 2009, despite lawsuits by UNAG employees seeking roughly L600 million.

Economist Fredy Tejada cautioned that Honduras faces obstacles in its sixth IMF agreement review, citing high current spending, budget execution below 50%, unfulfilled commitments to cut public-sector payroll, persistent inflation, and ongoing losses at the state electricity company.

The proposed 455.4-billion-lempira budget for 2027 would reduce public investment by 17.3% year-over-year to 39.9 billion lempiras (about $1.6 billion), with productive investment falling 34%, according to business-group analysis.

The Finance Ministry paid 255.2 million lempiras (about $10.2 million) in severance to 1,353 employees from 16 closed public agencies as part of a government restructuring, with Finance Secretary Emilio Hernández Hércules saying the closures removed redundant positions without significantly impacting the budget.

Former Finance Minister Christian Duarte cautioned that the proposed 2027 budget cuts productive investment by 8 billion lempiras (about $320 million) while raising payroll spending, risking economic harm for Hondurans.

An International Monetary Fund delegation opened the sixth and final review of Honduras's economic program through November 2, assessing the government's compliance with commitments on macroeconomic indicators, public finances, energy-sector losses, and anti-money-laundering reforms.

An International Monetary Fund mission has started the sixth and final review of the economic agreement Honduras signed with the IMF in 2023, ahead of negotiations for a new program.

Honduras's total public debt has exceeded $18 billion, with external debt alone over $11.5 billion, and Fosdeh warns that debt service payments of $3 billion planned for 2027 will consume resources needed for health, education, and other sectors.

An International Monetary Fund delegation arrives in Honduras on October 20 for a two-week review of the country's 2023 economic program; if approved, it will unlock negotiations for a new three-year agreement and access to additional funding.

A technical commission is evaluating the closure or consolidation of roughly 10 state agencies by 2027, based on budget performance and whether entities fulfill their mandated functions, to redirect resources toward security, health, and infrastructure.

Honduras's public external debt reached $11.31 billion as of August 2026, up $571 million from December 2025, driven by new borrowing of $1.52 billion against debt repayments of $946 million, according to the Central Bank.

Honduras's public external debt reached 27.6% of GDP as of August 2026, a level the central bank says indicates low risk of unsustainable public debt.

The central government accounts for 86% of Honduras's public-sector external debt, with the central bank responsible for 13.2% and other public entities holding the remaining 0.8%.

Congress started analyzing the 2027 general budget of 455.4 billion lempiras (about $18.2 billion), a 2.5% increase from 2026, with the government proposing to cut operating expenses to direct more funds toward education, health, security, infrastructure, and job creation.

A Consulting HNL analysis shows that between 2016 and 2026, Honduras cut 10,180 public jobs yet increased wage spending by 114% (over L62 billion), raising questions about salary levels and government efficiency.

Honduras's tax authority is offering amnesty through October 12 for taxpayers to regularize overdue obligations under Decree 07-2026 without fines, interest, or surcharges for unpaid taxes and filings due by December 31, 2025.

Through nearly ten months of fiscal 2026, the Honduran government has executed L284.8 billion of L446.4 billion budgeted, leaving about 36% unspent with fewer than three months remaining in the year.

Finance Minister Emilio Hernández Hércules says the government is reviewing the current budget to reduce operational spending and redirect funds to investment, with electronic invoicing planned for 2027 to curb tax evasion.

Honduras's MIPYMES federation president José Castañeda endorsed the government's plan to reduce operating expenses while redirecting resources to productive infrastructure, citing poor road conditions and a growing public-sector labor liability that drains budgets with each administration.

The Finance Ministry is reviewing the 2027 budget to shift resources from administrative spending toward investment projects and priority areas including security, energy, and drought response, while managing pressures from fuel and electricity subsidies.

Economist Germán Dubón says a diesel subsidy could help stabilize transport and distribution costs for basic goods, though he warns the measure will cost the state roughly 77 billion lempiras (about $3.1 billion), equivalent to 30–40% of the Health Ministry budget.

Economic analysts say Honduras should finance its temporary diesel-tax exemption—costing 300–400 million lempiras monthly—through government spending cuts and remote work in the public sector, rather than new debt or social-program reductions.

A meeting between the government and transport leaders on fuel costs ended without agreement; transporters proposed temporarily suspending fuel taxes through year-end and revising the pricing formula, but the Finance Ministry said any relief would require identifying offsetting revenue sources.

Honduras's public external debt stood at $10.77 billion in June 2026, equivalent to 26.3% of GDP and down 0.8 percentage points from December 2025, with the general government accounting for 87.5% of the total.

Economists discussed whether Honduras should cut or eliminate fuel taxes—which generate roughly L14 billion (about $560 million) annually, or 7.5% of state tax revenue—to ease inflation and household costs, though analysts warned such a move would require immediate budget reforms or alternative funding.

Finance Minister Emilio Hernández Hércules warned that a six-month suspension of the fuel tax, proposed in Congress, would cost the government 6.6 billion lempiras (about $264 million) in lost revenue that would have to be offset by cutting other budget areas.

Economist Amparo Canales says just 10 of Honduras's 105 budget institutions control over 70% of resources and urges officials to review 2026 spending patterns—which have reached only 60% execution by late September—before allocating funds for 2027.

Finance Secretary Emilio Hércules presented the 2027 budget of 455.4 billion lempiras (about $18.2 billion), with 84% funded from domestic revenue and priorities including 8.6 billion for infrastructure, 8.7 billion for health, increased municipal transfers, and support for agriculture amid El Niño drought concerns.

Honduras's planned energy reform faces delays as the government struggles to find resources to cover the cost of freezing electricity rates for six months, raising questions about who will ultimately bear the financial burden.

Honduras's 2027 budget directs 8.563 billion lempiras (about $343 million) to infrastructure projects, mainly road corridors and social infrastructure, while increasing municipal transfers by 7.5% to roughly 11.6 billion lempiras.