Fiscal Policy

Honduras spends more than 100 million lempiras (about $4 million) each day on public-employee salaries, with education receiving the largest budget allocation, according to former Education Minister Marlon Escoto.

Economist and former congressman Aníbal Cálix said public investment moved too slowly in the first half of 2026 and called for structural reforms at ENEE, the state power utility, to improve its financial performance and grid reliability.

Honduras' external debt climbed to $9.3 billion as of March 2026, up 13.3% over two years, prompting the business council to urge the government to prioritize efficient public spending and curb excessive borrowing.

Family remittances made up 52 cents of every dollar in Honduras's national income during the first half of 2026, while budget execution reached only 35 percent, according to the Finance Ministry.

The International Monetary Fund's board approved Honduras's fourth and fifth program reviews, unlocking a $242 million disbursement and bringing total IMF funding to $725 million of a $847 million package, though the IMF flagged missed targets on electrical utility arrears and urged faster energy-sector reform.

The Inter-American Development Bank says Central American and Dominican economies face heightened global volatility and must build fiscal space, strengthen currency flexibility (especially Honduras and Nicaragua), and shore up foreign reserves to cushion external financial shocks.

Economist Henry Rodríguez says Honduras's budget execution is tracking at only 32% through June due to delays in budget approval and cabinet formation, with 26.2% committed to salaries and 27% to debt service, leaving little room for public investment.

Honduras's public external debt reached $10.76 billion as of March 2026, up $24.5 million from December 2025.

Honduras's public debt increased by $1.8 billion in the first three months of 2026 compared with the same period a year earlier.

An analyst with Honduras's external-debt and development forum says poverty levels have remained flat over two decades despite spending more than 800 billion lempiras (roughly $32 billion) in anti-poverty programs, raising questions about where the money went.

Finance Vice Minister Lilian Rivera said the IMF board will review Honduras's macroeconomic performance on June 29 to decide whether to approve a $245 million disbursement, as the country also prepares for an international credit-rating agency visit.

Honduras signed a $100 million Inter-American Development Bank loan to strengthen fiscal management, revenue collection efficiency, and budget transparency, with support from the IMF, World Bank, and CAF.

Congress approved Decree 78-2026, extending amnesty deadlines for unpaid taxes, social-security contributions, municipal fees, and water and sanitation bills, allowing businesses and citizens to regularize outstanding obligations.

Jorge Hernández of the Social Forum on External Debt and Development says the International Monetary Fund has agreed to decouple discussion of Honduras's beneficial-ownership law from other conditions, a shift from prior administrations that tied its approval to broader negotiations.

Former Central American Bank president Dante Mossi says Honduras has approved no projects from a $1.6 billion (43 billion lempira) development portfolio offered by the regional bank this year, contrasting with Nicaragua and El Salvador's active borrowing for infrastructure projects.

Deputy Finance Minister Liliam Rivera said the National Treasury faces critical strain from automatic debt payments linked to lawsuits from the prior administration, combined with obligations to multilateral lenders and a floating debt exceeding 24 billion lempiras (about $960 million).

Honduras's tax authority (SAR) is offering individuals and businesses a chance to settle back taxes by paying only the amount owed, with penalties, interest, and surcharges waived, available through June 15.

Dante Mossi, former president of the Central American Bank for Economic Integration, criticized a proposed reform excluding bonuses from income-tax calculations, warning it could enable employers to reclassify wages as tax-free bonuses and erode government revenue.

Finance Minister Emilio Hernández and Central Bank President Roberto Lagos signed a letter of intent to the IMF ahead of the June 29 board review, with officials saying approval could unlock about $240 million in fresh funds and help stabilize the economy.

Honduras's state power utility ENEE requires L35.4 billion (roughly $1.4 billion USD) in domestic debt from 2026 to 2029 to cover payments to private generators, amid losses exceeding 34% and a total debt burden now at L73.3 billion.

Former Central American Bank president Dante Mossi cautioned that a proposed reform to exclude bonuses from income tax (ISR) calculations would create tax-evasion opportunities and reduce government revenue, reversing two decades of IMF-backed reforms.

Honduras's fuel subsidy has already cost 860 million lempiras (about $34.5 million) against a budgeted 680 million, with full-year costs projected at 1.2–1.3 billion lempiras, prompting the Finance Ministry to plan internal budget adjustments and consider narrowing the subsidy to lower-income households.

Finance Minister Emilio Hércules announced that Honduras will meet with the IMF's executive board on June 29, and said he hopes the board will issue a favorable communiqué for the country.

Congress is considering a reform to exclude performance bonuses, gratuities, and overtime pay from income-tax calculations, a move an economist says would reward worker effort but warns could enable tax evasion without proper state oversight.

From January through April 2026, the Honduran government received $156.3 million in international disbursements, directing $145.3 million to budget support and $11 million to agriculture, energy, and education projects.

Honduras's public-sector debt reached $9.35 billion by April 2026, up $50 million from December 2025, with the central government accounting for the largest share.

Honduras's public external debt reached $10.75 billion as of April 2026, with 81.2% denominated in US dollars, 14.8% in IMF special drawing rights, and smaller portions in euros, yen, and other currencies.

Honduras is servicing over $3.3 billion in foreign loans for 66 active projects, 76% of which have failed to reach 50% execution by end of 2025, including 19 that have not begun, forcing taxpayers to cover interest and fees on work generating no public benefit.

COHEP's May 2026 economic bulletin shows 4% accumulated GDP-activity growth through March, 3.12% inflation (transport up 10.55%), a pending $245 million IMF disbursement expected in late June, and government floating debt exceeding L 24.6 billion (about $985 million), or 2.4% of GDP.

FOSDEH economist Mario Palma says Honduras's public debt has risen to $18.454 billion this year, up from previous levels.