Public Finances

Honduras ranks third in Central America for residential electricity costs at $0.236 per kilowatt-hour, but economists say the true cost to users and public finances is far higher due to losses at the state utility Enee, debt servicing, and an incomplete energy-sector reform.

Finance Secretary Emilio Hernández Hércules said Honduras is proceeding with an open auction of the presidential aircraft and plans to issue up to 16 billion lempiras (about $640 million) in bonds, with proceeds aimed at paying accumulated debts to electricity generators and addressing the state power utility's financial crisis.

Honduras is under pressure to meet a 1% fiscal-deficit target in its International Monetary Fund agreement, with economists warning that maintaining the goal will be one of its toughest challenges to preserve the IMF's confidence and safeguard economic credibility.

Finance Minister Emilio Hércules said reducing an electricity rate hike requires a large fiscal cost to the state, since the tariff increase was originally set at 21.5%.

A banking and finance expert says reforming Honduras's electric system could help recover over 16 billion lempiras ($640 million) in losses and reduce the fiscal burden on the national power company, which has weakened since 1990.