RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/120
3 September 2003
(03-4595)
Trade Policy Review Body
TRADE POLICY REVIEW
HONDURAS
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of HONDURAS is
attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on HONDURAS.HONDURAS WT/TPR/G/120
Page 3
CONTENTS
I. INTRODUC TION ................................................................................................................. .....4
II. GOVERNMENT PL AN 2002-2006...........................................................................................5
III. ECONOMIC AND TRADE PO LICY ENVIR ONMENT..........................................................9
IV. TRADE POLICY TRENDS 1990-2003...................................................................................12
(1) L EGAL AND INSTITUTIONAL FRAMEWORK ................................................................................12
(2) MULTILATERAL TRADE ..............................................................................................................13
(3) TRADE AGREEMENTS .................................................................................................................13
(4) SPECIAL REGIMES ......................................................................................................................17
(5) FOREIGN INVESTMENT REGIME .................................................................................................18
(6) INFRASTRUCTURE ......................................................................................................................18
(7) INTELLECTUAL PROPERTY .........................................................................................................18
(8) GOVERNMENT PROCUREMENT ..................................................................................................19
V. CONCLU SION................................................................................................................... ......20
VI. ANNEX 1 - 11 ................................................................................................................ ..........21
VII. ANNEX NO. 12 THE POVERT Y REDUCTION ST RATEGY..............................................33WT/TPR/G/120 Trade Policy Review
Page 4
I. INTRODUCTION
1. After operating for several decades on the basis of a development model oriented toward export
substitution, with non-market and often protectionist policies, since the beginning of the 1990s
Honduras has become more closely integrated into  the world economy.  In global terms, during the
1990s the Honduran economy had its ups and downs, sometimes due to exogenous factors such as the
energy crisis of 1994, hurricane Mitch in 1998 and, more recently, the fall in the international pricesof its main exports.  In the course of that decade, Honduras implemented a broad programme of
macroeconomic and structural reform aimed at correcting the imbalances which had built up during
the previous decade and laying the foundations for a more open and competitive economy.
Substantial efforts were made to consolidate participatory democracy and social measures were
adopted to temper the adverse effect of some of the adjustment measures.  In the course of time, thedifferent policy variables were brought under better control, as reflected in the improvements both at
the macro level and in the social sectors.  Howeve r, Honduran participation in international trade is
still limited as compared with that of neighbouring countries such as Costa Rica, El Salvador and
Guatemala.  This is because its exportable offer is restricted in both volume and range, the products
have little value added, its trade is concentrated on a few trading partners; and many of its productsare sufficiently competitive on the domestic, regional and international markets.
2. The market-opening process in which Honduras is engaged has helped to establish a more stable
economic environment, which has led to substantial increases in exports, in foreign trade-related
investment and in job creation.  However, it has also encouraged the development of a much more
competitive climate and is obliging every sector of the economy to take stock of itself and develop
more precise strategies in such areas as the modernization of the means of production;  trade
restructuring;  the negotiation and administration of trade agreements;  the training of humanresources;  labour issues;  micro, small and medium-sized businesses;  greater competitiveness,
institutional and legal reform;  the development and strengthening of strategic alliances at regional
and international levels;  the improvement of services  and infrastructure;  plant and animal health and
food safety;  environmental management;  and the reduction of vulnerability and risk, etc.
3. This new development strategy is also obliging the representatives of all sectors of the Honduran
economy to concern themselves with and participate effectively in the discussion and formulation of
policies and strategies on issues which under the previous development model went unnoticed and
which today must be taken more comprehensively into account so that the economy can be integrated
into international trade under conditions of compet itiveness and with the prospect of success, since
otherwise the country would run the risk of losing both its competitiveness and its ability to producefor the domestic market.
4. Within the context of foreign trade policy, Hondu ras' primary objective has been to accomplish,
effectively and efficiently, its integration into the world economy and to promote, facilitate and
consolidate Central American integration.  As a member of the Central American Common Market
(CACM), Honduras has actively promoted integrat ion and economic cooperation in the region, and
the obstacles to regional trade have been largely eliminated.
5. In the area of trade policy, the barriers to foreign trade have been lowered and efforts have been
made to gain access to international markets for Honduran products under competitive conditions, as
well as to open up the country more widely to trade and integrate it more closely into the world
economy.  In this connection, trade and investment treaties and partial scope agreements have been
signed with several countries, progress has been made with Central American Integration, and havingHONDURAS WT/TPR/G/120
Page 5
acceded to the General Agreement on Tariffs and Trade (GATT), Honduras became a founding
member of the World Trade Organization (WTO).
6. Although this report naturally lays its main emphasis on the economic and trade aspects, it is
worth mentioning that Honduras has made considerable efforts to fight poverty in such specific areas
as health, education, vulnerable group welfare, the environment, democracy and governance.  Each
component of the current Government Plan has a series of general and specific objectives anddeveloped policy measures, a portfolio of prioritized projects, and performance indicators.
Nevertheless, it should be pointed out that success in achieving the current administration's objectives
depends not only on its ability to implement the Government Plan but also on a combination of
exogenous variables linked with the international environment, as indicated by Honduras's sensitivity
to changes in the international prices for its main export products, international fuel prices and theapplication of debt relief measures under the Heavily Indebted Poor Countries (HIPC) Initiative, not
to mention the volatile international political scene, all factors on which a small country such as
Honduras has little or no impact.
TRADE POLICY REVIEW
II. GOVERNMENT PLAN 2002-2006
7. The Government Plan proposed to the Honduran people for the period 2002-2006 is based on
fundamental principles which seek to orient and prioritize the various actions, policies, programmes
and projects.  These principles are consistent with the following policies:  (1)  a long-term vision, with
the emphasis on fighting poverty, (2)  development centred on the human person, (3)  the inclusion
and participation of all sectors, and (4)  the transparency of every action whether taken at public or
private level.
8. The Government has launched a series of actions aimed at achieving such high-priority national
objectives as the establishment of law and order, the consolidation of democracy and the mitigation of
poverty.
9. When hurricane Mitch struck at the end the 1998, it revealed a high degree of ecological and
social vulnerability which made necessary a reordering of national priorities and sparked an extensiveprocess of national reconstruction and transformation.  Against this background, the following
important events stand out:  (i) the meeting of the Consultative Group in Stockholm (Sweden) in
May 1999 at which, following the destruction wrought by Mitch, a programme of cooperation for
national reconstruction and transformation was decided upon, (ii) the declaration of Honduras'
eligibility and subsequent reaching of the decision point for debt relief within the framework of theHIPC Initiative, (iii) the participatory formulation of the Poverty Reduction Strategy Paper (PRSP),
and (iv) the decision of the present Government to continue with its implementation with a view to
achieving a sustained reduction in poverty over a 15-year period.
10. In the final Declaration of the Meeting of the Consultative Group for the Reconstruction and
Transformation of Central America, held in May 1999 in Stockholm (Sweden), six goals and
principles were defined.  For Honduras they constitute the main foundation for the various actions
taken with respect to reconstruction and especially transformation. These principles are as follows:
(a) reduce the social and ecological vulnerability of the region, (b) reconstruct and transform the
country on the basis of an integrated approach of transparency and good governance, (c) consolidate
democracy and good governance, reinforcing the process of decentralization, with the active
participation of civil society, (d) promote respect for human rights as a permanent objective,WT/TPR/G/120 Trade Policy Review
Page 6
(e) coordinate donor efforts, guided by priorities set by the recipient countries, and (f) intensify efforts
to reduce the external debt burden.
Revitalization of the economy and job creation
11. In Honduras, economic growth is very variable and not very rapid.  This has had an adverse effect
on the creation of the jobs being demanded by an expanding population of working age and istherefore limiting the possibilities of making progress with the reduction of poverty.  Thus, almost a
third of the economically active population is unem ployed or underemployed.  Despite significant
changes in the legal and institutional framewor k to encourage private investment, advances in
macroeconomic policy and increased international cooperation, these efforts have not made the
impact necessary to increase and improve employment and hence social welfare.
12. In this connection, the present Government consid ers that the most immediate challenges facing
the nation are as follows:  (a) to speed up eco nomic growth mainly through tax reforms, the
consolidation of reforms in the financial sector and the reinvigoration of such production sectors as
agro-industry, forest products, light assembly, tourism and mining;  (b) to improve the access of small
and medium-sized producers, especially those in rural areas and from the gender standpoint, to thefactors of production as a key element in raising their living standards and their contribution to the
national economy;  and (c) to improve the production support infrastructure and other factors that
determine the country's competitiveness.  The following paragraphs describe the sectoral objectives as
defined in the current Government Plan.
13. Macroeconomic stability . Despite progress with the manage ment of most of the macroeconomic
policy variables, the country faces certain problems of sustainability.  Accordingly, the overall
objective is to establish a stable macroeconomic framework capable of generating the confidence andcertainty necessary to encourage private investment and guarantee economic growth, which require
the creation of more abundant sources of wealth within the population.  The policy measures in this
area are as follows:  (i) to exercise firm control over current expenditure, (ii) to make efforts to
improve tax administration, (iii) to establish a uniform public-sector wage policy, (iv) to pursue the
foreign debt relief negotiations, (v) to ensure proper management of the monetary variables, (vi) tocontinue reducing the mandatory investment requirement for national currency deposits until it is
eliminated, and (vii) to maintain a stable and predictable exchange rate system based on clear rules.
14. Promotion of investment and trade .  Gross internal investment in Honduras stands at about 30
per cent of GDP, which is much higher than the La tin American average (22 per cent).  However, this
does not seem to be influencing the country's economic growth due, among other things, to its lowlevel of efficiency.  Here, the objective is to promote opportunities for investment, especially in areas
with a strong production potential, capable of generating more value added, technology transfer and
jobs, and to improve the integration of the Honduran economy into international trade flows under
competitive conditions.  The investment and foreign trade promotion policy measures include: (i)
strengthening the legal framework to encourage the establishment of new enterprises,(ii) strengthening the agencies involved in the negotiation and administration of treaties and the
promotion of trade and investment, (iii) promoting and/or supporting action to improve legal certainty
in the area of investment, contracts, dispute settlement, and rural and urban land tenure,
(iv) strengthening the bilateral and multilateral negotiating and trade dispute settlement mechanisms,
(v) creating the conditions and agencies necessary for the effective promotion of investment and
exports, (vi) promoting Honduran participation in mu ltilateral forums, (vii) negotiating agreements to
speed up the transit of persons and goods and eliminate obstacles to free trade and cooperation withother countries and regions of the world, and (vii i) strengthening Honduran participation in theHONDURAS WT/TPR/G/120
Page 7
Central American integration process, with a view to improving joint negotiating capacities vis-à-vis
third parties.
15. Job creation policy .  The accelerating process of urban development is encouraging large
numbers of people to migrate from rural areas in search of employment and better living conditions.
At the same time, the structural heterogeneity of the Honduran economy has led to considerable
differences within the labour market and a redefinition of the function of the State directed towardsestablishing the conditions necessary to make private enterprise and not the public sector the country's
main source of employment.  The aim is to br ing about a substantial improvement in the labour
market and labour productivity leading to more skil led jobs with an improvement in real wages and
the predominance of formal employment among the economically active population, so as to create
decent living conditions and make the Honduran economy more competitive.  The policy measuresfor job creation are:  (i) to define an employment and wages policy consistent with the fiscal
objectives and public policies, (ii) to promote the modernization of the labour market, and (iii) to
strengthen the key productive sectors as strategic factors in the creation of new jobs.
16. Revitalization of the production sectors .  The country needs measures to promote medium-term
economic recovery within a framework of stability a nd confidence.  In this connection, it is necessary
to promote a well-defined, coherent and sustainabl e policy of development of the production sectors
capable of benefiting from the country's comparative and competitive advantages such as agriculture
and forestry, mining, tourism, the light assembly industry, and micro, small and medium-sized
enterprises (MSME).  The primary sectors require coordinated action to strengthen the institutional
framework, and where the light assembly industry is concerned this should lead gradually to better
integration into the national economy and product diversification, including the production of
technology goods which make it possible to open up new international markets and expand localopportunities.  The development of tourism depends, above all, on more intensive international
promotion and improvements in the infrastructure and support services, while in the MSME sector
it will be necessary to resolve the problems caused by low levels of productivity and competitiveness.
17. Priority will be given to agri-food development and the rural environment with a view to ensuring
that the sectors which make up the food supply chain significantly increase their contribution toeconomic growth and the sustainable reduction of ru ral poverty by improving their competitiveness
and their capacity to integrate successfully into the international economy.  The policy measures
include: integration of the agri-food chain, the development of agriculture, the promotion of stock
farming, the development of fishing and aquaculture, forest products and forest protection, and
sustainable rural development.
18. As far as the light assembly sector is concerned, the general objective is to go on promoting the
domestic maquila  industry so that it continues to be an important source of employment and
contributes, in its turn, to the generation of the competition necessary to increase the productivity of
capital and labour in other production sectors.  The policy measures are:  (i) to promote and encourage
the establishment of enterprises with more technology transfer, (ii) to extend and improve the supportservices infrastructure in order to expand the maquila  industry, (iii) to promote in the textile maquila
industry the integration of the stages of the producti on process and vertical integration, (iv) to design a
strategy and programmes for training administrative human resources to meet the needs of the
maquila  industry, and (v) to encourage economies of scope.
19. Strengthening the financial system .  The channelling of financial system resources to the
production sectors, on accessible terms, is a key to the revitalization and development of the
economy.  This important function of the financial system has been limited by factors such as theWT/TPR/G/120 Trade Policy Review
Page 8
contraction of domestic capital investment, the lack of investment in long-term financial products, and
the lack of a proper analysis of the economic and social return on the projects to be financed.  The aim
is to strengthen and increase the efficiency of the financial system thereby enabling it to channel the
resources needed to revive the economy, generate sustainable long-term growth and consolidate
macroeconomic stability.  The principal policy measures are: (i) to continue the process of
modernizing the supervision of the financial system, (ii) to take timely preventive action when afinancial institution is looking fragile, (iii) to find ways of improving access to financing in the
housing sector, (iv) to create specific mechanisms to enable the agricultural and tourism sectors and
small and medium-sized enterprises to obtain better access to financing, and (v) to promote options
for meeting the demand for financing not satisfied by domestic funds and savings.
20. Infrastructure development and modernization .  The damage done to the infrastructure sector
by hurricane Mitch seriously undermined the support which that sector provides for the national
economy.  Accordingly, in recent years action has been taken to rehabilitate, reconstruct and maintain,
in particular, the country's road network, in fulf ilment of the objectives laid down in the National
Reconstruction and Transformation Master Plan.  Likewise, efforts have been made to extend the
coverage and improve the quality of a series of basic services such as telecommunications, energy,ports and airports.  Moreover, action has been taken to implement reforms and expand investment
opportunities in these sectors by a variety of means, including the granting of concessions and the sale
of part of the share ownership.
21. With respect to the road network, the objective is  to maintain the country's road network in the
best possible operating condition, with the broad participation of private investment.  The policy
measures include: (i) promoting the increased participation of the entrepreneurial sector in road
network construction and maintenance, particularly by granting concessions, and (ii) strengthening themunicipalities administratively and technically in order to develop local and urban road network
construction and improvement projects with community participation.
22. As regards the ports, the objective is to improve their efficiency and competitiveness in providing
port services by encouraging private initiatives.  The policy measures for this sector consist of:  (i)
defining a strategy for the reform and modernization of the port sector, (ii) facilitating the greaterparticipation of private enterprise in the various port activities which help to promote trade and
tourism, and (iii) encouraging the implementation of equipment maintenance and port infrastructure
construction and improvement programmes.
23. In the energy sector, the general objective is to develop the electrical subsector as a contributor to
national competitiveness and economic and social well -being through the supply of electrical energy
under appropriate conditions of cost, quality, availability, coverage and sustainability.  The policy
measures are:  (i) to restructure the National Electricity Company (ENEE), to reinforce and modernize
the transmission and control infrastructure of the national grid within the context of closer integration
into the regional electricity market, (iii) to contract for new basic thermal generating capacity, (iv) to
invite bids and contract for billing and collection services with a private operator, (v) to promotepower saving and minimize losses at national level, (vi) to incorporate the private sector in the
management of the distribution systems, (vii) to formulate an integral and sustainable energy policy,
(viii) to establish a fund for the implementation of rural and marginal electrification projects, and (ix)
to promote power generation through the use of renewable sources.
24. In telecommunications, the aim is to extend and modernize telecommunications services and
other services necessary for communication for the purpose of achieving productivity and quality
ratings comparable with international standards.  The policy measures are: (i) to promote theHONDURAS WT/TPR/G/120
Page 9
competitiveness of mobile telephony, (ii) to initiate the authorization process for offering final basic
services before the expiry of HONDUTEL's exclusivity, (iii) to establish an International Transit
Centre to cater for the needs of the Central American region, (iv) to improve access to telematic
services and offer a higher grade of value-added services, (v) to expand the installed capacity of the
telephone line network for marketing purposes, (v i) to establish and implement a Fund for the
Development of Universal Access Telephone Services, (vii) to promote the provision of appropriateand high-quality telecommunications services in accordance with market requirements, (viii) to
establish a tariff rebalancing programme for telephone services, and (ix) to arrange for the private
sector to take a minority stake in HONDUTEL's operations with management control.
25. Science and technology .  The facilitation of scientific research is essential in order to support
national development and to compete in an envir onment increasingly dominated by knowledge and
information.  In this area, the aim is to develop, continuously and systematically, qualified human
resources, competitiveness and entrepreneurial productivity by encouraging the development of
science and technology through the direct financing of research and innovation projects in industry
and research centres.  The policy measures are:  (i) to create the Honduran Foundation of Science and
Technology (FUHCYT) as a private non-profit institution with State participation to preside over thenational system of science and technology, and (ii) to promote professional development and training
in engineering firms and consultancies with a view to improving productivity and competitiveness.
III. ECONOMIC AND TRADE POLICY ENVIRONMENT
Background
26. During the 1990s, judging by its main economic and social indicators, Honduras fared better on
average than in the previous decade.  Nevertheless, the average rate of growth of GDP barelyexceeded the rate of population increase.  Thus, according to the UNDP's Human Development
Report, per capita income (around US$ 900 in 2001) is equivalent to only 38 per cent of the Central
American average, including Panama and Belize.  Moreover, the rate of growth is too variable and
sluggish to create enough jobs to absorb the increase in the population of working age.  As a result,
more than one-third of the economically active population is having employment problems, mainlyassociated with underemployment.
27. A comparison of the trends in GDP and employment during the decade reveals a close correlation
between the two variables.  Thus , between 1991 and 1994 the annual average increase in employment
was 5.4 per cent, while GDP grew by 3.4 per cent.  During the following period (1994-1997), the
employment rate increased slightly (from 5.4 per cen t to 5.5 per cent), while GDP increased by eight
tenths of a point (from 3.4 per cent to 4.2 per cent).  In the latest three-year period both variables
showed conspicuous weakness, the annual average growth rates being only 1.9 per cent in the case of
GDP and 3.7 per cent in the case of employment.  This performance was mainly a reflection of the
devastating effects on the national economy of the passage of hurricane and tropical storm Mitch.
28. The Government Plan currently in force in Honduras, for the period 2002-2006, is intended to
correct the imbalances that have built up as a result of a series of factors, both exogenous and
endogenous, and is based on the relevant policy instruments such as the Poverty Reduction Strategy,
the principles of the Stockholm Declaration and an assessment of the realities of the country's
situation.  Its objective is to reduce poverty in its various manifestations:  economic backwardness,
poor quality of life, lack of ethical and civic values, and a high degree of social and environmental
vulnerability.WT/TPR/G/120 Trade Policy Review
Page 10
Recent economic trends
29. For the period 2002-2006, the Government is making efforts to correct the macroeconomic
imbalances within the framework of a set of policie s aimed at reducing poverty.  Under this scenario,
it is negotiating a new agreement with the Internati onal Monetary Fund (IMF) that will maintain the
country's credibility in terms of access to funding  from the international community, while permitting
a macroeconomic management policy that favours economic recovery, the attraction of productive
investment, provision for the social sectors and the environment, and the consolidation of democracy.
It is also seeking to ensure that the country continues to benefit from the Heavily Indebted Poor
Countries (HIPC) Initiative so as to obtain full acces s to the foreign debt relief so necessary for the
satisfactory implementation of the Poverty Reduction Strategy.
30. Within this context, a review of the performa nce of the main economic variables leads to the
following conclusions.
31. Fiscal sector .  There has been a conspicuous increase in expenditure, especially during 2001,
when it rose by almost 20 per cent.  A particular concern is the increase in current expenditure due
mainly to the continuing strong upward pressure on wages and salaries during the last four years.  Forits part, revenue is tending to decline from year to year due to reduced economic activity and the
shortcomings of the tax collection system, which is restricting the Government's ability to fulfil its
commitments, especially in the social area.  The budget  has therefore been adjusted to adapt it to the
country's priority needs.  This made it possible to close 2002 with a Central Government deficit of
5.2 per cent of GDP, lower than the 6 per cent recorded in 2001.
32. Monetary policy .  Inflation has been gradually brought under control.  Within the financial
system, interest rates, although still unattractive for the production sectors, are tending to fall andthere is an adequate level of international reserves.  The Central Bank of Honduras has reduced the
mandatory investment requirement to only 3 per cent
1, thereby helping to keep the legal reserve for
the banks at not more than 15 per cent, while opting for the greater use of open market operations as
an instrument of monetary control.
33. Exchange regime .  The policy of a crawling band nominal exchange rate under the Foreign
Currency Public Auction System (SAPDI) has been maintained.  Under this mechanism, during recent
years the nominal exchange rate has slid by an average of 4.9 per cent per year.  Nevertheless, the
international financial institutions have expressed concern at the real effective appreciation of the
national currency observed since 1997, which, although it has helped to control inflation, has also
affected the competitiveness of Honduran products on world markets.
34. Financial sector .  This sector is showing certain weaknesses which have made necessary various
types of intervention in several financial institutions and other additional measures to ensure the
sustainability of the system.  Work is continuing on strengthening the financial system supervision
and regulation functions exercised by the Nationa l Banking and Insurance Commission (CNBS) and
on consolidating the Deposit Insurance Fund (FOSEDE).
35. Agricultural policy .  In October 2002, the Honduran Agricultural Round Table was established
as a mechanism for consultation between the public, private and farm sectors on the policies pursued
with respect to 20 key crops, with a view to raising the income of rural families.  One of the principal
results is the State Policy Proposal for Honduran Agriculture, 2000-2021, which identifies the
problems of the agri-food sector and proposes various possible solutions.
                                                     
1 Government Plan 2002-2006.HONDURAS WT/TPR/G/120
Page 11
36. Trade policy .  This has focused on securing access to international markets for Honduran
products on competitive terms.  In this connection, it is important to mention the entry into force of
the Free Trade Agreement with Mexico and the Dominican Republic and the progress being made in
negotiating similar agreements with other countries.  Likewise, in 2000, export tariffs were totally
eliminated and the programme of tariff reduction, within the framework of Central American
Economic Integration, was completed with the establishment of a floor of 0 per cent and a ceiling of15 per cent for merchandise imports.
37. Internal trade .  Certain controls that limit trade libera lization continue to be applied, in some
cases taking the form of mechanisms such as pric e setting for sensitive products, the establishment of
tariff bands for imports, and possible prohibitions on the export of basic cereals.  These mechanisms
have served to moderate, in the short term, the rise in the prices of staple products.  Nevertheless, forseveral years work has been proceeding on various initiatives with a view to securing the passage of
competition policy legislation designed to correct distortions in the process of price formation and
suppress anti-competitive practices that distort competition and harm consumers, especially the
poorest, as well as businesses.
38. Foreign debt .  The policy has been to assume new debt only on concessional terms for the
purpose of financing priority projects of social or productive importance.  At the same time,
considerable progress has been made with foreign debt relief following the signing of the Paris Club
IV Agreements and the acceptance of Honduras as a beneficiary of the HIPC Initiative.
39. Social area .  In recent years there has been a tendency for social spending to increase, although
this may have been more to satisfy wage type dema nds than to achieve the objective of improving the
standard of living of the population.  At the same time, although significant progress has been made
with such key indicators as the illiteracy rate, average school enrolment, life expectancy, primaryhealth care, etc., these continue to be among the lowest in Latin America.
The Poverty Reduction Strategy (PRS)
40. The PRS explicitly sets itself the fundamental objective of reducing poverty significantly and
sustainably and is largely based on the development of conditions conducive to rapid economicgrowth and the achievement of social equity through improved access to production factors for the
poor, including the development of human capital and social security networks.  The main support for
the implementation and follow-up of the PRS comes from the commitment of Honduran society’s
representative bodies and society in general, which is converting it into a State policy with a long-
term vision.
41. The implementation, follow-up and evaluation of the PRS is the responsibility of the Social
Cabinet, which is advised by a Consultative Council composed of representatives of the Government,
civil society and the Honduran Association of Municipalities.
42. During 2003-2006, the PRS will be implemented on the basis of prioritization of the programmes
and projects laid down in the Government Plan 2002-2006.
National Competitiveness Programme (NCP)
43. Executive Decree No. PCM-004-2002 of 2 April 2002 established the NCP, assigning the
technical and operational secretariat function to the Foundation for Investment and Development of
Exports (FIDE).  The National Competitiveness Commission (CNC) coordinates the measures takenWT/TPR/G/120 Trade Policy Review
Page 12
under this Programme.  Its main objective is to improve the climate for investment and business
operations in Honduras, and promote productivity and management capacity on international markets.
44. Its principal components are:  improvements in the investment climate and the logistical
infrastructure;  building innovative capacity in the private sector; improvements in the quality
assurance system and the labour market;  the promotion and enhancement of SMEs in high-potential
sectors;  the creation of the Competitiveness Fund;  and the strengthening of foreign trademanagement, with the emphasis on areas with an excellent development potential, such as forestry,
agribusiness, tourism and maquila  industries.
IV. TRADE POLICY TRENDS 1990-2003
(1) L
EGAL AND INSTITUTIONAL FRAMEWORK
45. The general objective of Honduras’s foreign trade strategy is to achieve closer integration into
world trade, promote domestic production and the availability and provision of goods and services
through foreign trade and to foster efficiency, diversification and national competitiveness by
exploiting comparative advantages and opening up new markets.
46. Since the 1990s, the Honduran Government has been applying a policy of liberalizing trade
through the adoption of economic adjustment programmes that include fiscal and foreign exchangetype measures, while freeing prices and privatizing State enterprises.  During the period between 1990
and 2003, a dynamic and participatory strategy has been pursued in a search for closer collaboration
in regional and world markets with a view to developing an efficient economy and expanding trade by
creating the appropriate conditions for domestic and foreign investment.
47. The Ministry of Industry and Trade (SIC) is responsible for formulating, coordinating,
implementing and evaluating Honduran policies relating to the promotion and development of
industry, industrial estates and free trade zones, domestic and international trade in goods andservices, export promotion, economic integration, private investment, business development,
intellectual property matters, micro, small and medium-sized enterprises, crafts, trades and related
activities, and the promotion, development and fostering of the social sector of the economy.  At
institutional level, the Ministry of Industry and Trade coordinates with the government institutions
involved in the formulation, administration and follow -up of foreign trade policy, as well as with the
Honduran Private Enterprise Council (COHEP), the ma in link between the public and private sectors
in the area of international trade and investment, and the institutions of Honduran civil society
through bodies such as the National Convergence Forum (FONAC).
48. Executive Decree No. 001-2003 of 24 April 2003 established the National Foreign Trade
Commission as a joint body with responsibility for advising on the formulation of recommendationsto the President of the Republic in the field of trade negotiations.  The Committee is made up as
follows:  the Minister for the Pr esident's Office (Chairman), the Minister for Industry and Trade, who
acts as Secretary, the Minister for Foreign Affairs, the Minister for Finance, the Minister for
Agriculture and Livestock, the Presidency of the Central Bank, a representative of the General Union
of Workers (CGT), a representative of the Honduran Confederation of Workers (CTH), arepresentative of the Unitary Confederation of Wo rkers of Honduras (CUTH), a representative for the
National Peasant Farmers Counci l (CNC) and for the Honduran Confederation of Peasant Women
(CHMC), and five representatives of the organized private sector (COHEP).HONDURAS WT/TPR/G/120
Page 13
(2) MULTILATERAL TRADE
49. In the area of multilateral trade, Honduras' trade policy is primarily shaped by its commitments as
a Contracting Party to the GATT and a founding Member of the World Trade Organization (WTO).
Honduras ratified the Protocol of Accession to the GATT in Legislative Decree No. 17-94 of 13 April
1994 and under the Marrakesh Agreement establishing the WTO ratified its membership of the WTO
with the approval of Decree No. 177-94 in December 1994, thereby assuming a series ofcommitments contained in the various multilateral Agreements.  As a Member of the WTO, Honduras
firmly supports the incentives of the multilateral tr ading system while respecting the principles and
fulfilling the obligations arising therefrom.
50. Honduras has adapted its national legislation to WTO rules in fulfilment of the obligations
assumed under the Uruguay Round Agreements.  Likewise, Honduras has made institutionaladjustments in the specialized public sector for the purpose of administering those Agreements.
(3) 
TRADE AGREEMENTS
51. With regard to trade agreements, since the middle of the past decade, Honduras has actively
promoted the signing of regional trade agreements and has stepped up its participation in the regional
economic integration scheme as part of its market diversification strategy.  This has made it possibleto reduce its dependence on a single export market while broadening the exportable offer and winning
important niche markets.  Although it has not yet been possible to measure the value of regional
schemes effectively because of the recentness of the agreements with Mexico and the Dominican
Republic, it is obvious that market diversification is an important component of trade policy strategy,
especially in connection with the signature of the agreements currently being negotiated with the
United States and Canada, whose main objectives are centred on safeguarding the competitive
position of national products on those markets, while in the case of the Central American integrationscheme the aim is the more effective exploitation of the advantages inherent in closer integration.
52. Central American Common Market (CACM).  For Honduras, the General Treaty on Central
American Economic Integration, under which the country became part of the Central American
Common Market (CACM), has been in force since 4 June 1961.  In 1969, due to the armed conflict
with El Salvador, Honduras ceased to be part of the CACM Free Trade Area.  It was not until 1990,
with the adoption of the Central American Economic  Action Plan (PAECA), that concrete steps were
taken to re-establish free trade and the legal normality of the integration process.
53. Honduras was fully reincorporated into the General Treaty on Central American Economic
Integration by Legislative Decree No. 222-92 of 10 December 1992, which approved its accession to
the Convention on the Central American Tariff a nd Customs Regime.  Free trade between Honduras
and the rest of the Central American countr ies was re-established by Decree No. 59-93 of
31 March 1993 for all natural and manufactured products originating in their respective territories.
54. On 1 June 1992 there entered into force the Tegucigalpa Protocol reforming the Charter of the
Organization of Central American States (OCAS) with a view to modernizing the regional legal
framework by establishing the Central American  Integration System (SICA).  On 17 August 1995
there entered into force the Guatemala Protocol, a supplement to the Tegucigalpa Protocol aimed at
achieving the equitable and sustainable economic and social development of the Central American
countries.  In this Protocol countries undertook to improve the Central American Free Trade Area,
establish a Customs Union between their territories, and gradually and progressively complete the
Central American Economic Union.WT/TPR/G/120 Trade Policy Review
Page 14
55. In order to advance the regional integration process, Honduras and the other Central American
countries have negotiated Central American regulations.  Between 1990 and 2003 regulations were
adopted in the following areas: Sanitary and Phytosanitary Registers, Rules of Origin of Goods,
Safeguard Measures, Standardization Measures, Metrology and Authorization Procedures, Unfair
Trade Practices, International Customs Transit Regulations, Dispute Settlement Regulations, and the
Treaty on Services and Investment, while the question of Government Procurement is pending.  Theseregional trade rules have been adapted to WTO commitments.
56. A majority of the products originating in the Central American area benefit from zero tariffs; most
barriers to intraregional trade have also been removed.  The main exceptions are the products in
Annex "A" such as coffee, sugar, ethyl alcohol and petroleum products.
57. In relation to the Central American tariff, in Decree No. 257-2000 of 22 December 2000,
Honduras approved the Third Protocol to the Central American Tariff and Customs Convention,
ratifying it on 6 February 2002.  This Protocol authorizes the establishment of nominal ad valorem
tariff rates ranging from zero per cent (0%) to one hundred per cent (100%).  Honduras does not apply
tariffs higher than 100 per cent in accordance with the tariff policy in force and its GATT accession
commitments.
58. In conformity with the Guatemala Protocol, under Resolution No. 57-2000 of the Council of
Ministers for Economic Integration (COMIECO) of 29 August 2000, Honduras is participating in the
Customs Union process initiated by El Salvador and Guatemala, with a view to forming a common
territory.
59. It should be noted that as an intermediate step towards a Customs Union, integrated customs
offices have been established at the border posts El Amatillo and El Poy, between Honduras and El
Salvador, and El Guasaule, between Honduras and Nicaragua.  Moreover, a peripheral customs office
has been established at Puerto Cortes (Honduras) between Honduras and El Salvador.  Resolution
No. 75-2001 (COMIECO) of 6 April 2001 approved the mutual recognition of sanitary registers for
foods and beverages processed and produced in Guatemala, El Salvador, Honduras and Nicaragua.
60. With respect to the Uniform Central American Customs Code (CAUCA III), its amendments were
approved by Resolution No. 85-2002 of the Central American Tariff and Customs Council on 19 June2002.  The CAUCA Regulations are contained in Resolution No. 101-2002 of the Central American
Tariff and Customs Council of 12 December 2002.
61. Free and Preferential Trade Agreement between  the Republics of Honduras and Panama.  The
purpose of this agreement, which was signed on 8 November 1973 and entered into force for
Honduras on 23 February 1976, is to expand markets and increase production so as to promote tradebetween the two countries to the maximum extent.  In August 1999, the two countries converted from
the Uniform Central American Tariff Nomencla ture (NAUCA II), used by Honduras, and the
Customs Cooperation Council Nomenclature (CCCN) , used by Panama, to the Central American
Tariff System (SAC), for Honduras, and the Harm onized Commodity Description and Coding System
(HS), for Panama.  This agreement covers 213 products with two-way free trade treatment,230 products with preferential treatment, 2 products subject to quotas, and 24 products with treatment
under import control.
62. Free-Trade Agreement between El Salvador, Guat emala, Honduras and Mexico.  In force for
Honduras since 1 June 2001, this Agreement signed between Guatemala, El Salvador, Honduras and
Mexico is a new-generation agreement establishing rules and disciplines applicable not only to tradeHONDURAS WT/TPR/G/120
Page 15
in goods but also to other areas such as trade in services, investment, intellectual property,
government procurement, customs procedures, rules of origin, technical regulations, and sanitary and
phytosanitary measures.
63. Central America-Dominican Republic Free-Trad e Agreement.  In force for Honduras since
December 2001, this Agreement between Guatemala, El Salvador, Honduras, Costa Rica and the
Dominican Republic has as its objective the substantial intensification and diversification of traderelations between the parties by promoting the complementarity of their economies.  The Agreement
also covers such topics as unfair practices, competition policy and dispute settlement and was
negotiated in two protocols which include definitions of the treatment to be given to goods and
services produced under free trade zone and other special regimes and of products excluded from and
subject to tax relief programmes.
64. Partial Scope Agreement between Honduras and Colombia.  Legislative Decree No. 191-84 of 25
October 1984 approved Decision No. 546-84 of the Executive, dated 11 June 1984, relating to the
Colombia-Honduras Partial Scope Agreement.  This Agreement, with a term of three years
automatically renewable for further three-year periods, covers a total of 11 products.
65. The Second Protocol Amending the Partial Sc ope Agreement was signed on 13 June 2001,
approved in Honduras by Decision No. 48-2001 of 24 July 2001 and ratified by the National Congress
on 10 October of that year.  It provides for the extension of preferences through the incorporation of
two products and the amendment of the transcript of the list of products in the First Protocol
Amending the Agreement.
66. Partial Scope Agreement between Honduras and Venezuela.  Legislative Decree No. 43-86 of 8
April 1986 approved Decision No. 150-86 of 20 February 1986 relating to the Partial Scope
Agreement between Venezuela and Honduras in which they agreed to grant each other, on the taxes in
force, tariff preferences for the products included in the Agreement for a term of three (3) years
automatically renewable for further three-year periods.  The First Protocol Amending the Partial
Scope Agreement between Honduras and Venezuela, signed on 29 September 1992, amended
Article 5 of the Agreement.  The Agreement gives Honduras access to the Venezuelan market with a
list of 31 products that benefit from tariff preferences.
67. Central America-Chile Free-Trade Agreement.  Th e negotiations leading to this Agreement began
on 17 August 1998 when the Deputy Ministers for the Economy of Central America approved the
organizational framework for the negotiation of a Fr ee Trade and Investment Agreement.  The treaty
instruments were signed in October 1999 by the Presidents of the six countries.  In the case of
Honduras, it remains to formalize the bilateral annexes on market access, services reservations andrules of origin for the agreement to be finally approved by the National Congress.
68. Central America-Panama Free-Trade Agreement.  In 1998, negotiations were begun with a view
to establishing a new agreement that would repla ce the bilateral agreement in force since the 1970s
and would not only provide broad coverage of the tari ff schedule but also include provisions on rules
of origin and customs procedures, investment, services, government procurement, anti-dumping
measures, sanitary and phytosanitary measures and dispute settlement.  In May 2001, the negotiation
of the body of the agreement was concluded, le aving pending the negotiation of the Annexes on
market access, specific rules of origin and reservations in respect of services and investment.
69. Free-Trade Agreement between El Salvador, Guat emala, Honduras, Nicaragua and Canada.  The
negotiations on this Agreement began in December 2001.  The aim was to obtain preferential accessWT/TPR/G/120 Trade Policy Review
Page 16
for industrial and agricultural products with due account for the differences in scale and development
between the two economies.  The Agreement also in cludes the parallel signing of environmental and
labour cooperation agreements, based on cooperation between the parties.  New rounds of
negotiations were conducted in July 2003.
70. Central America-United States Free-Trade Agreement.  The negotiations with the United States
were launched on 8 January 2003 with the establishment of a negotiating agenda which includes:  (i)
market access, (ii) services and investment, (iii) dispute settlement, transparency and institutional
provisions, (iv) government procurement and intellectual property, (v) labour and environmental
issues, (vi) a working group on sanitary and phytosanitary measures, and (vii) a working group on
cooperation.  A timetable for nine rounds of negotiations was drawn up and five had been conducted
by July 2003, the intention being that the negotiations should be concluded in December 2003.  Withthis Agreement, Honduras is planning to further co nsolidate its position with regard to preferential
access to the United States and attract more investment.
71. Free-Trade Area of the Americas (FTAA).  Honduras is participating in the FTAA negotiations.
Since it began in 1994, this participation has involved working in the negotiating groups and on the
Trade Negotiations Committee (TNC) and Honduras’ position with respect to the FTAA is to givetotal support to the formation of such an Area, while taking into account the realities of the country’s
situation in its present phase of development.
72. Caribbean Basin Initiative (CBI).  Since 1 January 1984, Honduras has enjoyed the benefits of
duty-free treatment for eligible imports under the Caribbean Basin Economic Recovery Act, better
known as the Caribbean Basin Initiative, which the United States grants unilaterally to exports
originating in Central America and the Caribbean.  Since October 2000, import agreements concluded
within the framework of the special access progra mme have benefited from total tax exemption under
the Caribbean Basin Trade Partnership Act (CBPTA), which grants duty-free treatment to textile and
clothing products.  Thus, since 2 October 2000, Honduras has enjoyed preferential tariff treatment for
textile products and garments made using United States fabric, which were previously excluded from
the programme, a concession which expires in September 2008 or with the entry into force of the Free
Trade Area of the Americas (FTAA).  The main products exported under the CBI are:  bananas,coffee, shrimps, gold and silver concentrate, mi nerals (gold and silver), wooden furniture, metal
furniture, cigars, tobacco and tilapia.
73. Generalized System of Preferences (GSP).  Hondura s is a beneficiary of this preferential scheme
involving unilateral tariff exemptio ns and reductions granted by industrialized countries.  Under this
mechanism, goods are exported to the United States, the European Union, Canada, Japan, Australia,Norway, New Zealand, Switzerland, Bulgaria, Belaru s, Hungary, the Russian Federation, Poland,
Slovakia and the Czech Republic.
74. In 1999, for Honduras and the other Central American countries, the European Union extended
the benefits of the GSP to industrial products under the special arrangements to combat drug
production and trafficking, which grant benefits additional to those available under the System’sgeneral regime.  At present, the European Union is granting tariff preferences to Honduras under
Regulation (EC) No. 2501/2001, up to 31 December 2004.  The principal exports under the GSP are:
coffee, shrimps, zinc concentrate, bananas and pinewood.HONDURAS WT/TPR/G/120
Page 17
(4) SPECIAL REGIMES
75. As part of its export development and promotion strategy, Honduras grants a range of essentially
fiscal incentives which have made possible the unprecedented development of certain exports.  The
impact of these special regimes on exportable production and hence the national economy has been
highly significant since they provide a primary source of employment, help to support the value of the
currency and are creating a dynamic economy without  parallel in recent economic history, allowing
Honduras to diversify its exportable products and occupy a competitive position on international
markets.  Thus they form an important part of the growth and poverty reduction formula.  It should be
noted that Honduras is allowed these incentives because of its low per capita national income which,
at less than US$1,000 at 1990 constant prices, has warranted its inclusion in Annex VII to the
Agreement on Subsidies and Countervailing Measures.
76. In Honduras, imports by enterprises established under the export promotion legislation, for
example, the Temporary Import Regime (RIT), Free-Trade Zones (ZOLI), Industrial Export
Processing Zones (ZIP) and the Tourism Incentives Law (LIT), are exempt from the payment of taxes.
77. Under the Temporary Import Regime (RIT), the authorities can suspend the payment of customs
duties, consular fees, general sales tax and any other taxes or surcharges arising out of the import ofraw materials, semifinished products, containers, packaging and any other inputs necessary to produce
the goods or services exported; machinery and equipment, moulds, tools, spare parts and accessories
if used exclusively for assembling, processing, modifying or producing the goods or services for
export, and collections of samples, instructions, patterns, mannequins and models necessary to adapt
the production of goods and services to the standards and designs required on the international market
or for demonstrational, research or instructional purposes.
78. The Law on Industrial Export Processing Zones (ZIP) permits the importation free of levies,
customs duties, charges, surcharges, consular fees, internal consumption and sale taxes and other
taxes, charges and levies directly or indirectly related with the customs operations of import of all
goods imported and exclusively applied or incorporated in the development and operation of the
Industrial Export Processing Zone, including building materials, equipment, spare parts, office
machinery and equipment, provided that these goods are not produced domestically and subject to theprior authorization of the Minister for Industry and Trade.  Moreover, exemption from income tax
(ISR) and municipal taxes is granted to users of the industrial estate for an indefinite period, while the
Operating Company is granted 20 years of exemption from ISR and 10 years of exemption from
municipal taxes.
79. The Law on Free-Trade Zones (ZOLI) allows goods to be introduced free of customs duties,
charges, surcharges, consular fees, internal consumption taxes and other taxes and levies directly or
indirectly related with the customs operations of import and export.  Likewise, sales and production
within the Free-Trade Zone and its land, buildings and commercial and industrial establishments are
exempt from the payment of local rates and taxes.
80. The Tourism Incentives Law is intended to promote the development of Honduras’ tourism offer
by granting the following tax incentives:  exemp tion from the payment of income tax, granted
exclusively for new projects; exemption from the payment of taxes and other charges arising out of
the import of goods, services and new furnishings, granted exclusively to new projects; exemption
from the payment of taxes and other charges arising out of the import of printed matter for promoting
or advertising new projects or the country as a tourist destination; and exemption from the payment ofWT/TPR/G/120 Trade Policy Review
Page 18
taxes, rates, charges and any other kind of levy or pecuniary obligation on shows and cultural
presentations.
(5) FOREIGN INVESTMENT REGIME
81. By Legislative Decree No. 80-92 of 29 May 1992, th e Government of Honduras enacted the Law
on Investment and its Regulations in accordance with Decision No. 345-92 for the purpose of
encouraging and guaranteeing domestic investment, foreign investment and joint investment topromote national growth and economic and social development.  Under the Law, inter alia , investors
are guaranteed access to the purchase of foreign currency in the banking system, in exchange bureaux
and other institutions authorized by the Central Bank of Honduras;  the right of ownership, without
limitations other than those laid down in the Law; unlimited percentage participation in the capital,
except in those cases specified in the Constitution of the Republic; freedom to produce and marketgoods and services in general, except those prohibited by the Law; free determination of the prices of
the products or services offered by the investors, etc.
82. As part of its investment policy, the Government  of Honduras has signed investment promotion
and protection agreements and conventions with a view to ensuring conditions of security and
certainty for foreign investors and establishing criteria for the treatment and protection of investmentsand investors.  These agreements also incorporate a clause allowing foreign investment in accordance
with the national legislation, together with the na tional treatment and most-favoured-nation principles
and a mechanism for the settlement of disputes between the investor and the State.
(6) 
INFRASTRUCTURE
83. In the past decade, Honduras has made important changes in its infrastructure.  This is reflected in
the enactment of the Framework Law on Telecommunications, which opens up and expands the
delivery of these services; the Framework Law on the Electricity Subsector, which authorizes privateparticipation in the generation of electricity; the granting to an international enterprise of a concession
to operate four Honduran air terminals; the recent approval of a Water Resources Law and the
concession to the private sector of various activities previously carried out by the State.  Similarly,
important reforms are envisaged in the port services sector, as well as various concessions for the
construction of public works.  Honduras recognizes that the development of its infrastructure is afundamental part of its strategy for making the country competitive.
(7) 
INTELLECTUAL PROPERTY
84. In 1993, subject to analysis of the TRIPS Agreement, which was awaiting finalization and
signature in the Uruguay Round, the Laws on Industr ial Property and Copyright and Related Rights
were drawn up and, moreover, a Directorate General of Intellectual Property and a Copyright andRelated Rights Office were established in the Ministry of Industry and Trade.  In 1994, as a Member
of the WTO, Honduras accepted the commitments, rights and obligations under the Agreement on
Trade-Related Aspects of Intellectual Property Righ ts (TRIPS) and also adopted the Paris Convention
for the Protection of Industrial Property (Stockholm Act of 1967).
85. In 2000, the National Congress approved a new I ndustrial Property Law as well as a new Law on
Copyright and Related Rights incorporating all the provisions of the TRIPS Agreement, including the
enforcement measures and civil, criminal and administrative procedures.  In 2002, the WIPO
Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) were ratified.
All the conventions and agreements signed by Hondu ras have been ratified by the National Congress
and therefore form part of the national legislation.HONDURAS WT/TPR/G/120
Page 19
86. The Law on Copyright and Related Rights, with the amendments introduced in 2000, extended
the term of protection for works and related rights fr om fifty (50) to seventy-five (75) years, added a
chapter regulating the collective administration societies and defined cases of infringement of the
protected rights.  With respect to related rights, it provided in respect of performers, phonogram
producers and broadcasting organizations for the in clusion in favour of phonogram producers of the
right of distribution through sale, rental or any other means and the right to import copies of theprotected phonograms.  It also established administrative, civil and criminal procedures for claiming
the infringement of rights and the payment of damages.
87. The Industrial Property Law provides for the patenting of all inventions, in any sector of
technology, protecting them for a term of twenty (20)  years from the filing of the application.  It also
protects industrial designs and distinctive signs: trademarks, including well-known marks, tradenames, emblems and labels; advertising slogans and signs; and geographical indications.
88. Honduras makes provision for the suspension of the release of customs clearance of imports or
exports, in accordance with the measures that the holder of a protected right may request in the event
of an infringement of his right, on the basis of the Law on Copyright and Related Rights and the
Industrial Property Law.  The Honduran legislation allows the holder to initiate any proceeding beforethe Administrative Authority, without prejudice to the initiation of proceedings in the civil and
criminal courts, directly or through legal representatives.
89. Moreover, to ensure the full application and enforcement of the various intellectual property laws,
agreements and conventions, Honduras has set up an Inter-institutional Commission against Piracy in
order to protect, oversee and safeguard intellectual property rights.  This Commission, working in
coordination, is taking concrete steps to counteract piracy.  Honduras' application of its intellectual
property legislation was first reviewed by the WTO Council for TRIPS in 2001.  Draft texts on theapproval of the laws on the protection of plant va rieties and the legal protection of lay-out designs of
integrated circuits have been submitted to the National Congress.
(8) 
GOVERNMENT PROCUREMENT
90. Up to 1985-1986, Honduran government procurement procedures were regulated by the
provisions of the Constitution of the Republic and other relevant legislation.  As regards the supply ofgoods, materials and equipment, from April 1958 control was exercised through the Law Organizing
the Office of the Purveyor-General of the Republic.  The Government Procurement Law and
Regulations were enacted in 1985 and 1986 and amended in 2000 and 2001, respectively, with a view
to modernizing government procurement procedur es and making them reliable, flexible and
transparent, so as to strengthen the credibility of  the transactions.  Moreover, the application of the
Government Procurement Law and its Regulations is a means of combating corruption and thereby
ensuring administrative efficiency and transparency and legal certainty with a view to improving the
utilization of State resources and attracting foreign investment.
91. As the application of the Government Procurement Law and its Regulations and the Procurement
and Purchasing Standards Office are in the development stage, the Government and the Inter-American Development Bank (IDB) have signed an agreement on a loan for the implementation of
the Programme for Efficiency and Transparency in Government Procurement.  By this means it is
hoped to ensure the proper use of public resources while minimizing costs and acquisition times.
92. At regional level, Honduras has submitted to the other Central American countries proposals
which may lead to agreement on and the signature of a Central American Government ProcurementWT/TPR/G/120 Trade Policy Review
Page 20
Treaty.  Government procurement was one of the issues negotiated in the Free-Trade Agreement
between Central America and Chile and the existing FTA between Central America and the
Dominican Republic in which, taking account of the principles that govern Honduran legislation,
non-discriminatory national treatment is granted.  Honduras also intends, together with the other
countries of the Central American area, to negotiate the issue of government procurement with the
European Union.
V. CONCLUSION
93. In developing its main economic policies, Honduras has been applying macroeconomic and
structural reform processes that signal its firm intention to achieve ever closer integration into the
international economy and a macroeconomic environment favourable to private initiative and to take
action leading to the consolidation of sustainable economic growth as the principal means of reducingpoverty.  In this connection, Honduras will contin ue pursuing policies linked with that objective by
promoting investment to encourage production, tech nology transfer and increased exports and create
jobs for the benefit of the Honduran people as the basis of a sustainable strategy for raising their
standard of living.
94. Thus, Honduras will continue to focus on the application of an optimum economic policy formula
directed, externally, towards combining multilateral trade policy with the strategy of concluding
regional trade agreements, in a two-edged approach that seeks to ensure that the national economy
benefits from efficient participation in the world economy.  This is imperative for a small economy
such as that of Honduras operating within an equitable policy framework.
95. Practice shows that there is still work to be  done on reforming the economy and consolidating
democracy.  Honduras is firmly committed to this.  However, experience also shows that the
responsibilities must be shared between govern ments and the international community.  While the
former must ensure the continuity of the policies and their responsible administration, the latter and,
in particular, the developed membership of the WTO, should recognize the basic needs of countries
such as Honduras, by giving material expression to the aspirations of the Doha Ministerial Declaration
and progressing from a declaratory approach to an approach based on concrete considerations.  This
would further strengthen the confidence already di splayed by countries such as Honduras in the
multilateral trading system, as expressed in their more vigorous participation in international trade
forums and their commitment to an open and dynamic economy.HONDURAS WT/TPR/G/120
Page 21
VI. ANNEX 1- 11
Table No. 1 HONDURAS: Basic economic indicators, 1995-2002
1995 1996 1997 1998 1999 2000 2001 2002e
I. GDP
Current GDP (lempiras millions) 37,507 47,763 61,322 70,438 77,096 89,401 99,062 107,870
Current GDP (US$ millions) 3.961 4.079 4.717 5.264 5.437 6.024 6.403 6.565
Per capita GDP (US$) 707 704 789 852 851 913 939 933
GDP at 1978 constant prices (lempiras millions) 6,148 6,368 6,686 6,880 6,750 7,138 7,325 7,511
Real GDP, growth rate (%) 4.1 3.6 5.0 2.9 -1.9 5.7 2.6 2.5
Structure of GDP (% of current GDP at factor cost)
Agriculture, hunting, forestry and fishing 21.5 22.3 23.0 19.1 15.9 16.2 14.0 13.5
Mining 1.9 1.9 1.7 1.8 2.0 1.9 1.8 1.9
Manufacturing 17.8 18.1 18.0 18.6 19.6 19.6 20.3 20.4
Construction 5.5 4.6 4.6 5.1 5.9 5.4 4.9 4.1
Electricity, gas and water 5.4 6.2 5.5 5.1 4.9 4.7 4.3 4.3
Transport and communications 4.7 4.4 4.6 5.0 5.2 5.5 5.9 5.9
Trade, restaurants and hotels 12.0 11.9 11.8 12.3 12.7 12.4 12.6 12.6
Financial and other services 9.2 8.9 9.4 10.5 10.9 10.7 10.9 10.9
Home ownership 5.6 5.6 5.5 5.8 6.1 5.9 6.0 6.1
Government administration and defence 5.9 5.9 6.0 6.0 5.9 6.7 7.1 7.4
Personal services 10.3 10.1 9.8 10.6 11.0 11.0 12.2 12,8
 Breakdown of GDP by type of expenditure (% of current GDP)
  Total consumption 72.8 74.0 73.5 76.7 80.4 83.3 86.9 87.8
Private 63.5 64.4 64.6 66.6 69.0 70.7 73.0 74.0
Government 9.3 9.5 8.8 10.1 11.3 12.5 13.9 13.8
  Gross fixed capital formation 24.0 24.0 25.7 28.2 29.8 26.1 23.6 22.2
Private 14.0 15.2 18.9 22.8 23.5 20.3 16.9 17.3
Public 10.0 8.8 6.8 5.4 6.3 5.9 6.8 4.8
  Exports of goods and services 43.7 46.9 46.2 46.4 41.0 41.3 37.9 37.3
  Imports of goods and services 48.1 52.0 51.8 54.1 56.0 55.2 54.7 53.0
  Gross national savings 27.1 26.4 28.6 28.5 30.2 26.5 25.3 24,1
II. Fiscal indicators (in percentage of GDP)
  Income .. 23.6 17.4 19.3 20.0 19.0 19.4 ..
  Expenditure .. 23.4 22.4 23.3 25.9 25.8 27.0 ..
  Overall balance .. 0.2 -4.9 -4.1 -5.8 -6.8 -7,6 ..
III. Memo items
Population (millions) 5.6 5.79 5.98 6.18 6.39 6.60 6.82 7.04
Net international reserves (US$ millions) 198.3 371.3 667.7 897.7 1.371.6 1.490.4 1.637.7 1.851.7
Total external debt (US$ millions) 4,242.6 4,120.6 4,073.3 4,403.8 4,729.2 4,706.0 4,808.0 4,963.7
Total external debt (as a percentage of GDP) 107.1 101.0 86.4 83.7 87.0 78.1 75.1 75.6
Public external debt (US$ millions) 3,969.7 3,775.6 3,630.9 3,792.7 4,119.6 4,101.0 4,229.6 4,396.7
Public external debt (as a percentage of GDP) 100.2 92.6 77.0 72.0 75.8 68.1 66.1 67.0
External public debt servicing (US$ millions) 578.4 676.4 497.4 448.9 330.1 770.7 333.0 263,9
.. Not available.
e Estimated.
Source: Central Bank of Honduras and Ministry of FinanceWT/TPR/G/120 Trade Policy Review
Page 22
Table No. 2  HONDURAS: Central Government Financial Accounts, 1996-2002
(in millions of lempiras and percentage of GDP)
1996 1997 1998 1999a 2000a 2001a 2002p/
Revenue 7,983 10,694 13,565 15,440 16,753 19,239 20,924
  Current revenue 7,954 10,342 13,176 14,939 15,862 17,935 19,786
  Tax .. 8,651 11,973 13,620 14,620 16,446 17,278
    Direct .. 2,512 3,377 3,099 3,175 3,759 4,012
    Indirect .. 3,982 6,479 8,546 9,357 10,171 11,095
   Foreign Trade .. 2,156 2,115 1,973 2,088 2,513 2,166
       Imports .. 2,068 2,043 1,966 2,083 2,513 2,166
    Non-tax revenue .. 1,691 1,203 1,319 891 1,489 2,508
  Capital revenue 29 25 20 19 11 31 --
  External transfers (including HIPC grants) -- 327 369 482 881 1,273 1,138
Expenditure 10,888 13,718 16,424 19,940 22,756 26,732 26,710
Current expenditure 7,377 9,234 10,288 12,168 14,691 17,538 20,565
  Consumer spending 4,239 5,281 6,275 7,747 10,381 12,701 14,236
  Interest payments 1,650 2,084 1,965 1,717 1,438 1,316 1,842
  Transfers 1,650 1,868 2,047 2,705 2,872 3,520 4,487
Current account savings 577 1,109 2,889 2,771 1,171 397 -779
Capital expenditure 2,267 3,024 4,078 6,048 6,485 7,582 6,145
Investment 1,353 1,658 2,265 2,092 2,420 2,326 2,376
Financial investment 148 263 -21 1,503 611 1,389 848
Transfers 766 1,104 1,835 2,453 3,455 3,867 2,985
Debt redemption 1,244 1,460 2,058 1,724 1,580 1,613 2,636
Internal 496 424 781 693 564 649 600
External 749 1,036 1,277 1,031 1,017 964 2,036
Gross deficit (expenditure less total revenue) -2,905 -3,024 -2,859 -4,500 -6,003 -7,493 -5,786
Net deficit (excluding total redemption) -1,673 -1,564 -801 -2,776 -4,423 -5,880 -3,150
Gross deficit as a percentage of GDP -6.1 -4.9 -4.1 -5.8 -6.8 -7.6 -5.3
Net deficit as a percentage of GDP -3.5 -2.5 -1.1 -3.6 -5.0 -5.9 -2.9
Note: There may be slight differences in the totals as they have been rounded off.
.. Not available.--  Zero.
a Estimate.
p Provisional.
Source: Ministry of FinanceHONDURAS WT/TPR/G/120
Page 23
Table No. 3  HONDURAS:  Main monetary indicators, 1995-2002
(Annual rates of change)
1995 1996 1997 1998 1999 2000 2001 2002
Money and credit
M1 money supply 18.4 26.9 33.8 12.7 21.8 4.7 5.2 14.6
M2 money supply 19.8 38.5 43.3 16.8 21.2 16.6 8.3 11.3
M3 money supplya 23.8 51.0 39.6 18.4 22.2 18.2 14.1 13.2
Net domestic credit 11.1 41.9 29.2 16.7 1.8 22.8 17.5 6.8a
Weighted interest rate
Deposit rate (annual average) 11.25 11.84 15.31 15.27 15.63 13.41 12.03 10.61
Lending rate (annual average) 26.95 29.75 32.07 30.55 30.15 26.82 23.76 22.69
Legal reserve requirements b
Legal reserve requirement for commercial banks 34 34 12 12 12 12 12 12
Legal reserve requirement for savings companies 21 21 12 12 12 12 12 12
Legal reserve requirement for financial companies 15 15 12 12 12 12 12 12
Legal reserve requirement for short-term bonds 15 15 12 12 12 12 12 12
Investment requirements for commercial banks n.a. n.a. 19 13 13 7 3 0
Investment requirements for savings companies n.a. n.a. 9 5 5 5 3 0
Financial investment requirements and short-term bonds n.a. n.a. 3 3 3 3 3 0
Inflation
Consumer price index (average % change) 29.5 23.8 20.2 13.7 11.6 11.1 9.6 7.7
Exchange rate
Average exchange rate (lempira/US$) 9.47 11.71 13.00 13.38 14.18 14.84 15.47 16.43
Exchange rate end of period (lempira/US$) 10.34 12.87 13.09 13.81 14.50 15.14 15.92 16.92
Real effective exchange rate index (1995 = 100) c, d 100.0 100.5 108.7 119.5 123.2 128.3 133.3 133.0
Terms of trade (1995 = 100)c100.0 94.0 90.5 92.2 92.4 91.3 83.7 84.9
n.a. Not applicable.
a The foreign currency is valued at the exchange rate prevailing at the end of the period each year.
b End of period.
c Information from the Central Bank of Honduras.d An increase in the index means real appreciation.
Source: WTO calculations based on information from the Central Bank of Honduras and the Economic Commission for
Latin America and the Caribbean (ECLAC).WT/TPR/G/120 Trade Policy Review
Page 24
Table No. 4  HONDURAS:  Balance of payments, 1996-2002
(in US$ millions)
1996 1997 1998 1999 2000 p/2001 p/2002 p/
Current account balance    -193.9    -169.8    -128.2    -240.9     -245.6    -293.4 -243.0
Balance of goods and services    -470.6    -481.8    -615.7    -977.8 -992.5 -1,222.6 -1,200.0
Balance of goods -341.3 -504.4 -758.6 -1,291.8 -1,233.4 -1,416.1 -1,433.6
Balance of services -129.3 22.6 142.9 314.0 240.9 193.5 233.6
Exports of merchandise and services  1,944.30  2,223.7  2,504.1  2,310.9 2,600.7   2,517.5 2,517.5
   Merchandise exports a/ 1,417.6  1,534.3  1,611.9  1,217.8   1,436.2   1,391.3 1,370.7
   Freight and insurance on merchandise       16.7       17.9       19.3       14.6 17.2        16.7 16.4
   Travel costs     115.0     145.6     167.6     208.0      259.8      256.3 291.1
   Dividends and interest       29.0       40.6       55.2       72.2      104.1        81.5 60.0
   Government transactions       38.0       41.0       45.0       47.0        50.0        55.0 57.8
   Maquila  value added     203.7     312.7     454.9     538.5      575.4      551.5 559.7
   Other     124.3     131.6     150.2     212.8      157.9 165.2 161.8
Imports of merchandise and services  2,414.9  2,705.6  3,119.8  3,288.7   3,593.1   3,740.1 3,717.5
   Merchandise imports f.o.b.  1,758.9  2,038.7  2,370.5  2,509.6   2,669.6   2,807.4 2,804.3
   Freight and insurance on merchandise     170.1     198.6     234.3     247.3      263.8      275.8 275.1
   Travel costs       60.0       62.0       81.0       94.0      119.6      127.6 130.6
   Return on foreign direct investment       70.0       60.0       70.0       43.6        70.0        75.2 84.9
   Interest on the external debt and other     217.4     193.2     193.6     192.1      186.8      154.0 141.0
   Government transactions        8.2        9.2       10.3       11.0        13.8        14.0 14.2
   Other     130.4     143.9     160.1     191.1      269.5      286.1 267.4
Transfers     276.7     312.0     487.5     736.9      746.9 929.2 957.0
Capital account balance     227.2     227.4     171.8     335.6        68.4 230.7 187.8
Long term       84.9     115.5     179.5     426.3      177.0 254.7 80.5
  Private sector     103.3     112.6     170.4     291.2      298.8      197.4 127.3
     Direct investment       90.0     127.7       99.0     237.3      282.0      195.0 142.9
     Loans       13.6      -15.1       71.4       53.9        16.8         2.4 -15.6
     Debt arrears       -0.3 0.0 0.0 0.0            0.0 0.0 0.0
  Government sector       -8.8      -55.0      -30.3     168.8       -48.9      123.7 -10.0
     Loans       45.7      -27.8       -0.4     223.6        18.5 127.3 41.5
     Debt arrears      -54.5      -27.2      -29.9      -54.8 -8.0           0.0 -47.7
     Other 0.0 0.0 0.0 0.0       -59.4        -3.6 -3.8
  Banking sector        4.5       57.9       39.4      -33.7       -72.9      -66.4 -36.8
     Loans       -9.1       57.9       39.4      -32.1       -69.8      -66.4 -35.2
     Debt arrears       -0.5 0.0 0.0       -1.6 -3.1         0.0 -1.6
     Other 13.1 0.0 0.0 0.0 0.0 0.0 0.0
Short term     142.3     111.9       -7.7      -90.7     -108.6      -24.0 107.3
  Private sector       42.7     138.0       13.7      -18.3       -28.2        22.7 18.8
  Government sector       99.6      -26.1      -21.4      -72.4       -80.4      -46.7 88.5
Errors and omissions and capital not determined       69.4     130.9       97.7     121.3      123.5 62.4 118.7
Overall balance     102.7     188.5     141.3     216.0       -53.7 -0.3 63.5
Change in international reserves (- increase)    -174.3    -296.4    -230.0    -473.9     -118.8    -147.3 -214.0
  Debt renegotiation       18.4     107.4       69.7       57.9      250.7 83.4 19.1
  Arrears renegotiation       -1.0      -25.7      -30.0       -2.0     -158.8 -12.0 0.0
  Change in debt arrears       53.1       29.1       39.0       93.3        13.6 -13.5 64.8
  Debt conversion            0.0       -4.0 0.0 0.0 0.0 0.0 0.0
  Debt forgiveness for the year        1.1        1.1       10.0       36.9        16.4 39.5 31.0
  Debt forgiveness        1.4        1.1       19.4        2.5        31.9        19.0 0.0
  Reduction in arrears as a result of external
    debt forgiveness      -1.4       -1.1      -19.4       -2.5       -31.9      -19.0 0.0
  Debt servicing payments funded by CAETF            -            -            -       71.8        44.9         17.3 13.3
  HIPC Initiative repayments            -            -            -            -         5.7        32.9 12.3
a/ Includes non-monetary gold and exports of electric power.
p/ Provisional
Source: Central Bank of Honduras.HONDURAS WT/TPR/G/120
Page 25
Table No. 5  HONDURAS:  Flows of foreign direct investment, 1997-2001
(in US dollars thousands)
1997 1998 1999 2000 2001
By country investing
United States 50,499 33,049 113,855 64,241 52,600
El Salvador 25,839 7,652 13,908 7,879 9,240
Guatemala 6,088 5,190 3,355 11,085 10,847
Costa Rica 7,554 5,587 6,442 21,187 24,107
Panama 676 973 19,475 15,100 18,088
Mexico 6,677 1,183 4,613 -139 207
Spain 305 1,649 5,884 7,775 9,785
United Kingdom 12,983 6,609 2,567 14,957 4,289
Switzerland 1,310 3,746 6,948 -4,051 -1,250
Italy 7,200 11,885 -3,606 13,625 7,624
Germany 1,212 4,187 157 219 189
Japan 4,348 1,898 124 -- 1,151
Canada -- 11,999 55,100 36,058 15,057
Other 3,000 3,711 8,516 94,056 43,069
Total 127,701 99,321 237,337 282,000 195,001
By economic activity
Agriculture, hunting and fishing 3,662 -9,491 54,364 39,270 20,000
Mining and quarrying 4,201 12,063 58,160 28,022 20,859
Manufacturing 48,960 23,142 46,519 88,616 55,963
Electricity, gas and water 10,596 23,996 1,293 2,377 1,770
Construction 11,005 13,999 -3,517 14,722 10,958
Trade, restaurants and hotels 28,133 22,770 58,122 83,512 61,485
Transport, storage and communications 1,701 3,500 10,572 12,137 12,034
Financial establishments, insurance -- -- -- -- --
Immovable property and business services 12,751 7,792 11,485 13,344 11,933
Other 6,693 1,550 341 -- --
Total 127,701 99,321,20 237,337 282,000 195,001
-- Zero.
Source: Central Bank of Honduras, 20 September 2002.WT/TPR/G/120 Trade Policy Review
Page 26
Table No. 6   HONDURAS: Legal reserve rate and mandatory investment
requirement for national currency bonds, 1997-2002
(%)
Source:  Central Bank of Honduras.  Information collected up to May 2003.National Financial System
Commercial
banksSavings and loan
associationsFinance
companiesShort-term
bonds
Years Months
Legal
reservesMandatory
investmentsLegal
reservesMandatory
investmentsLegal
reservesMandatory
investmentsLegal
reservesMandatory
investments
1997 Feb
Mar
Apr
Aug34              -
33              -
12              2112              1921              -
21              -
12              912              915                -
15                -
12                312                315              -
15              -
12              312              3
1998 Apr
Oct
Nov12              17
12              15
12              1312              9
12              9
12              512                3
12                3
12                312              3
12              3
12              3
2000 Jun
Sep
Oct12              10
12              8.5
12              712              5
12              5
12              512                3
12                3
12                312              3
12              3
12              3
2001 May
Sep12              5
12              312              3
12              312                3
12                312              3
12              3
2002 Jul
Sep12             1.5
12              012              1.5
12               012                1.5
12                012              1.5
12              0HONDURAS WT/TPR/G/120
Page 27
Table No. 7  HONDURAS:  Goods subject to special import arrangements under the CACM
Tariff heading Description Measure
Arrangement common to all five countries
09.01.1 Coffee, not roasted Subject to import duties (DAI)
17.01
17.01.11.0017.01.91.0017.01.99.00Cane sugar, refined or unrefined
Of sugar caneContaining added flavouring or colouring matterOtherImport controls
Bilateral arrangement with Guatemala
09.01.2 Roasted coffee Subject to import duties
22.08 Distilled alcoholic beverages Subject to import duties
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt (27.13.20.00), which may be
freely traded between the States party)Subject to import duties
Bilateral arrangement with El Salvador
09.01.2 Roasted coffee Subject to import duties
22.07
22.08.90.10Ethyl alcohol, denatured or undenatured Import controls
22.08 except 22.08.90.10 Distilled alcoholic beverages Subject to import duties
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt (27.13.20.00), which may be
freely traded between the States party)Subject to import duties
Bilateral arrangement with Nicaragua
09.01.2 Roasted coffee Subject to import duties
22.08 Distilled alcoholic beverages Subject to import duties
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt (27.13.20.00), which may be
freely traded between the States party)Subject to import duties
Bilateral arrangement with  Costa Rica
09.01.2 Roasted coffee Subject to import duties
22.07
22.08.90.10Ethyl alcohol, denatured or undenatured Import controls
22.08 except 2208.90.10 Distilled alcoholic beverages Subject to import duties
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt (27.13.20.00), which may be
freely traded between the States party)Subject to import duties
Source: Resolution No. 44-99 of the Council of Ministers for Economic Integration (COMIECO), 17 September 1999, and
Resolution No. 01-2002 of the Executive Committee of Central American Integration (CEIE), which entered into force inJanuary 2003.WT/TPR/G/120 Trade Policy Review
Page 28
Table No. 8  HONDURAS:  f.o.b exports by main products
(Volume in thousands and value in US$ millions)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 p/2001 p/2002 p/
B a n a n a s             
  Value 357.9 314.4 256.3 225.6 155.1 214.2 279.8 224.6 219.6 38.1 124.2 204.2 172.4
  Volume in 40 lb. boxes 42,321 38,325 40,933 36,324 26,824 31,726 38,748 33,126 28,234 6,750 20,686 25,487 23,453
  Price 8.46 8.21 6.26 6.21 5.78 6.7 5 7.22 6.78 7.78 5.64 6.01 8.01 7.35
C o f f e e             
  Value 180.9 145.9 147.6 124.6 200.1 349.3 278.9 326.3 429.8 256.1 339.4 160.7 182.5
  Volume in 60 kg. bags 1,735 1,444 1,961 1,705 1,718 1,796 2,060 1,722 2,330 1,986 2,903 2,391 2,711
  Price 104.25 101.00 75.31 73.06 116.45 194.47 135.38 189.46 184.49 128.92 116.90 67.20 67.32
  Volume in 46 kg. bags 2,264 1,883 2,556 2,225 2,241 2,343 2,687 2,246 3,039 2,591 3,787 3,119 3,536
  Price 79.93 77.52 57.78 56.01 89.28 149.10 103.79 145.31 141.44 98.84 89.63 51.52 51.61
T i m b e r             
  Value 16.1 15.3 15.6 21.9 21.3 19.0 21.7 19.5 17.1 27.5 33.5 33.9 33.7
  Volume P.T. 36,868 30,627 33,690 36,387 32,282 28,654 30,111 25,658 25,540 38,168 44,179 44,026 43,205
  Price 0.44 0.49 0.46 0.60 0.66 0.6 6 0.72 0.76 0.67 0.72 0.76 0.77 0.78
G o l d             
  Value 25.3 31.4 37.0 39.6 39.0 13.0 11.0 0.0 0.0 0.0 6.3 63.8 80.5
  Volume in troy ounces 11,463 14,154 16,523 16,886 16,248 5,967 5,900 0 0 0 24 244 265
  Price 2.21 2.22 2.24 2.35 2.40 2.18 1 .87 0.00 0.00 0.00 260.32 261.68 303.89
S i l v e r             
  Value 4.7 4.3 5.2 3.5 4.4 5.5 4.7 6.5 7.8 5.4 8.3 7.9 5.1
  Volume in troy ounces 1,034 1,115 1,374 855 866 1,114 945 1,434 1,525 1,085 1,733 1,846 1,165
  Price 4.57 3.83 3.75 4.12 5.02 4.9 3 5.02 4.52 5.14 4.94 4.77 4.26 4.39
L e a d             
  Value 4.2 3.3 7.9 1.8 1.7 1.8 2.7 4.6 3.2 3.7 3.3 3.3 2.9
  Volume lbs. 12,339 12,741 29,749 7,828 6,349 5,774 7,423 13,624 10,365 12,435 10,835 15,092 15,975
  Price0.34 0.26 0.27 0.23 0.27 0.30 0.36 0.34 0.31 0.30 0.30 0.22 0.18
Z i n c             
  Value 46.4 36.3 35.7 23.0 21.1 27.1 25.7 53.8 36.3 50.2 54.5 38.5 29.0
  Volume lbs. 69,226 74,161 70,272 58,497 51,408 63,160 61,543 96,572 85,659 94,786 97,396 101,334 93,556
  Price 0.67 0.49 0.51 0.39 0.41 0.4 3 0.42 0.56 0.42 0.53 0.56 0.38 0.31
S u g a r             
  Value 12.4 8.4 5.4 5.2 4.8 6.8 9.5 12.1 10.2 5.3 7.8 30.4 17.5
  Volume kg. 27,111 20,053 12,829 11,637 9,634 13,292 19,343 24,862 21,033 10,509 25,499 160,083 97,066
  Price 0.46 0.42 0.42 0.45 0.50 0.5 1 0.49 0.49 0.48 0.50 0.31 0.19 0.18
F a r m e d  s h r i m p s             
  Value 29.0 43.2 53.3 100.5 106.7 93.9 124.6 130.8 135.9 127.4 122.7 156.3 131.9
  Volume kg. 3,323 4,675 5,966 9,092 8,190 6,962 9,296 9,083 10,037 9,200 8,250 10,912 13,336
  Price 8.73 9.25 8.93 11.05 13.03 13.48 13.40 14.42 13.54 13.85 14.87 14.32 9.89
S h r i m p s  c a u g h t             
  Value 7.1 11.0 15.6 11.9 26.9 30.6 18.6 20.1 21.0 22.4 33.0 20.8 15.8
  Volume kg. 811 1,187 1,757 1,083 2,066 2,273 1,386 1,393 1,549 1,620 2,222 1,456 1,600
  Price 8.73 9.25 8.93 11.05 13.03 13.48 13.40 14.42 13.54 13.85 14.87 14.32 9.88
L o b s t e r s             
  Value 29.6 38.7 32.4 26.8 31.9 34.1 35.0 28.2 31.8 39.5 29.6 29.9 37.0
  Volume kg. 1,792 2,231 1,697 1,188 1,045 1,066 1,082 866 968 1,200 897 1,029 1,193
  Price 16.54 17.35 19.14 22.56 30.53 32.00 32.38 32.54 32.80 32.93 32.95 29.01 31.05HONDURAS WT/TPR/G/120
Page 29
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 p/2001 p/2002 p/
Tobacco
  Value 2.5 2.1 4.1 6.4 5.8 5.5 5.3 7.3 8.6 10.5 12.6 7.2 6.5
  Volume kg. 1,221 1,188 1,869 2,858 2,572 2,394 2,322 2,438 2,729 3,750 4,606 2,547 2,321
  Price 2.07 1.78 2.16 2.22 2.25 2.3 0 2.29 2.98 3.16 2.80 2.75 2.84 2.80
M e l o n s             
  Value 6.6 12.8 10.8 19.6 24.2 25.4 30.9 39.3 43.8 35.7 31.4 25.5 27.8
  Volume kg. 38,301 42,216 44,958 67,719 83,420 68,718 79,312 98,193 109,603 102,000 120,864 127,589 132,235
  Price 0.17 0.30 0.24 0.29 0.29 0.3 7 0.39 0.40 0.40 0.35 0.26 0.20 0.21
Pineapples     
  Value 12.2 12.8 20.1 21.2 19.7 21.5 18.1 18.4 18.5 19.2 11.3 10.0 11.6
  Volume kg. 45,350 53,171 51,248 54,339 50,420 53,835 43,034 42,695 43,096 43,527 41,710 35,714 40,000
  Price 0.27 0.24 0.39 0.39 0.39 0.4 00 . 4 20 . 4 30 . 4 30 . 4 40 . 2 70 . 2 8 0 . 2 9
Soaps and detergents             
  Value 2.5 5.0 7.7 8.3 10.4 26.3 34.1 36.9 37.2 38.7 45.7 50.6 26.1
  Volume kg. 5,263 8,705 11,256 13,430 16,747 31,402 40,118 42,900 43,256 44,527 46,308 57,500 37,286
  Price 0.48 0.58 0.69 0.61 0.62 0.8 4 0.85 0.86 0.86 0.87 0.88 0.88 0.70
Articles of wood     
  Value 9.7 11.0 14.1 15.7 16.5 15.9 16.5 21.2 26.4 26.0 32.4 30.5 33.4
  Volume kg. 34,745 37,730 53,371 59,009 55,612 51,163 50,280 51,773 60,000 60,465 46,900 58,700 77,674
  Price 0.28 0.29 0.26 0.27 0.30 0.3 1 0.33 0.41 0.44 0.43 0.69 0.52 0.43
Palm oil     
  Value 1.7 0.7 4.8 6.2 4.3 3.1 3.2 1.6 22.1 13.4 16.2 25.7 30.3
  Volume kg. 4,599 1,423 10,707 14,424 8,686 4,075 4,279 3,000 30,031 21,830 27,000 35,205 57,212
  Price 0.38 0.47 0.45 0.43 0.50 0.7 5 0.75 0.53 0.74 0.62 0.60 0.73 0.53
Sub-Total 748.8 696.6 673.7 661.8 693.9 892.9 920.3 951.2 1069.3 719.1 912.1 899.2 844.0
Other 82.2 95.8 127.8 200.0 271.6 327.3 395.7 494.5 463.5 445.3 467.9 441.5 486.9
Total Goods 831.0 792.4 801.5 861.8 965.5 1,220.2 1,316.0 1,445.7 1,532.8 1,164.4 1,380.0 1,340.7 1,330.9
Note: Since 1993, an adjustment to Central American exports has been incorporated under the heading "Other".
p/ Provisional.
Last updated 23/06/2003.WT/TPR/G/120 Trade Policy Review
Page 30
Table No. 9:  HONDURAS: c.i.f. imports
(US$ millions)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 p/2001 p/2002 p/
1. Live animals; animal products 13.6 17.3 18.4 36.1 34.8 33.9 43.5 60.8 71.3 71.5 94.1 86.3 60.4
2. Vegetable products 34.6 51.6 39.1 54.8 77.3 83.2 99.1 99.8 103.6 134.4 145.0 143.0 150.9
3. Animal or vegetable fats and oils 2.4 4.1 6.0 7.2 6.9 20.2 16.8 15.6 21.5 22.3 19.2 13.5 21.3
4. Prepared foodstuffs 49.0 51.1 57.1 82.4 105.9 114.1 149.5 229.2 260.3 260.1 263.1 302.9 290.0
5. Mineral products 171.2 174.4 163.3 186.8 194.5 226.3 249.8 238.7 219.6 261.6 394.2 417.2 420.3
5.1 Other mineral products 3.0 2.0 2.5 4.1 3.9 4.7 3.6 5.0 5.2 5.2 10.5 22.8 7.7
5.2 Fuels and lubricants 168.2 172.4 160.8 182.7 190.6 221.6 246.2 233.7 214.4 256.4 383.6 394.4 412.7
6. Products of the chemical or allied
industries 146.9 158.6 171.3 206.7 209.6 248.2 266.1 276.5 336.5 351.7 390.2 421.1 444.8
7. Plastics and articles thereof 76.8 73.5 76.4 91.4 94.4 121.4 123.0 135.1 144.7 147.4 165.7 181.2 187.9
8. Raw hides and skins, leather, furskins
and articles thereof 0.5 1.2 1.0 1.6 2.3 2.8 2.9 4.3 4.8 5.8 5.7 6.6 8.3
9. Wood and articles of wood; wood
charcoal; cork and articles of cork 1.1 1.9 1.8 2.9 2.7 3.7 9.0 10.5 13.2 8.7 12.8 11.6 10.8
10. Pulp for manufacturing paper and
articles of paper 64.7 76.3 66.7 83.3 81.0 110.3 116.9 101.4 125.3 120.9 142.5 167.2 168.0
11. Textiles and textile articles 28.2 29.8 33.9 28.4 30.7 41.2 54.7 58.0 79.1 85.9 80.9 85.5 82.0
12. Footwear, headgear, feathers and
flowers 3.3 2.5 2.7 3.4 3.2 4.9 6.6 12.1 15.0 16.4 18.6 28.5 25.6
13. Articles of stone, plaster, cement,
glass 16.9 19.3 21.0 30.8 29.4 44.1 35.0 42.0 46.4 44.0 44.5 45.5 46.6
14. Pearls, precious stones and metals
and articles thereof 0.3 1.4 0.3 1.3 0.7 0.6 3.7 2.0 1.7 3.5 1.2 1.4 2.6
15. Base metals and articles of base
metal 80.3 69.0 79.4 98.8 116.2 143.6 151.3 185.0 204.9 245.2 201.6 239.9 208.1
16. Machinery and mechanical
appliances; electrical equipment 133.3 128.0 164.8 207.9 295.2 274.4 306.2 370.2 514.9 519.3 465.6 449.7 487.0
17. Transport equipment 88.5 76.3 108.4 137.0 146.5 134.0 156.7 245.8 295.0 279.1 299.1 283.4 266.9
18. Optical, photographic,
cinematographic and surgical instruments
and appliances 13.0 11.0 14.1 15.2 12.7 15.0 24.1 25.9 29.5 40.5 48.3 32.5 36.4
19. Arms and ammunition 2.5 0.9 0.4 0.4 0.8 1.1 0.8 0.6 1.1 3.0 5.5 8.7 2.1
20. Miscellaneous manufactured articles 7.3 6.8 10.3 13.9 15.4 19.6 24.1 34.2 44.9 53.1 56.6 57.9 56.2
21. Works of art, collectors' pieces 0.5 0.1 0.2 0.3 0.1 0.1 0.2 0.9 1.5 1.7 0.4 0.3 0.1
Total 934.8 955.2 1036.6 1290.6 1460.3 1642.7 1840.0 2148.6 2534.8 2676.1 2854.7 2983.9 2976.3
Total not including fuel 766.6 782.8 875.8 1107.9 1269.7 1421.1 1593.8 1914.9 2320.4 2419.7 2471.1 2589.5 2563.6
Note: Does not include imports by assembly plants ( maquiladoras ) in Honduras.
p/ Provisional.
Last updated: 23/06/2003.
Source : Figures provided by the Directorate General of Sta tistics and Census (DGEC), un til 1995, and by SIECE, the
information system for foreign trade statistics, adjusted by the Balance of Payments Section, in 1996 and 1997.HONDURAS WT/TPR/G/120
Page 31
Table No. 10  HONDURAS:  Regional distribution of f.o.b. exports
(in US$ millions)
COUNTRY 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 P/2001 P/2002 P/
America 457.2 463.8 516.9 572.5 655.7 846.1 898.2 961.2 1,034.4 864.8 943.4 1,042.4 1,048.7
North America 414.0 408.1 434.0 433.7 474.6 613.5 621.3 673.6 692.3 577.4 609.3 651.5 696.4
United States 410.4 403.3 419.9 432.2 470.4 608.2 612.4 666.2 686.0 572.4 604.2 607.6 665.2
Canada 3.6 4.8 14.1 1.5 4.2 5.3 8.9 7.4 6.3 5.0 5.1 43.9 31.2
Latin America 43.2 55.7 82.9 138.8 181.1 232.6 276.9 287.6 342.1 287.4 334.1 390.9 352.3
Central America 22.9 32.1 48.2 105.2 139.9 180.8 206.4 213.0 262.3 257.2 264.5 326.6 280.9
Guatemala 10.5 8.9 11.9 25.5 34.7 49.2 56.1 57.8 88.7 72.9 83.5 129.3 83.9
Nicaragua 1.7 4.2 8.9 36.5 40.2 56.2 64.0 66.1 65.7 73.7 30.8 26.5 9.4
Costa Rica 1.5 2.6 4.1 10.5 21.5 23.5 27.2 28.1 24.6 27.3 30.3 35.8 30.6
El Salvador 9.2 16.4 23.3 32.7 43.5 51.9 59.1 61.0 83.3 83.3 119.9 135.0 157.0
Mexico 2.4 3.7 2.3 4.2 2.0 2.5 4.1 4.5 6.0 1.4 4.1 7.4 11.2
Trinidad and Tobago 0.1 0.1 0.2 1.5 2.5 3.1 0.3 2.1 2.0 3.5 12.8 7.6 6.9
Venezuela 0.0 0.7 1.0 0.2 0.1 0.1 0.3 0.6 1.1 1.2 0.6 0.5 0.4
Colombia 1.1 1.2 0.8 1.4 1.5 1.9 1.3 1.2 0.6 1.6 1.6 3.9 5.3
Brazil 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.4 0.2 0.0 0.2 2.6 0.1
Argentina 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Dominican Republic 0.2 0.6 0.8 0.5 1.0 1.3 7.5 3.1 2.7 4.5 1.5 4.4 3.5
Ecuador 1.4 2.8 0.0 0.0 0.1 0.1 0.0 0.1 0.0 0.0 0.0 1.2 0.2
Other Latin American 15.1 14.5 27.6 25.7 34.0 42.8 57.0 62.6 67.2 18.0 48.8 36.7 43.8
Europe 285.8 277.6 246.0 239.7 236.5 297.7 353.8 417.3 385.1 213.9 300.9 228.7 230.1
Germany 63.9 41.3 87.7 99.7 60.0 104.7 85.8 120.6 94.2 50.4 74.9 57.4 83.9
Netherlands 12.6 11.3 9.3 8.5 18.4 23.1 29.9 15.6 15.0 12.8 23.5 19.2 23.9
Belgium 72.5 71.1 50.3 55.6 41.6 42.4 82.4 72.8 70.4 40.1 78.1 70.5 41.0
France 2.8 1.7 2.6 8.2 11.2 14.1 13.6 14.5 15.6 12.4 13.0 14.0 9.8
Spain 11.2 10.3 11.9 16.7 30.8 38.8 43.5 49.1 44.3 27.1 16.7 16.4 9.9
Italy 30.8 35.0 23.7 9.0 16.3 20.5 28.8 41.7 30.9 25.1 20.5 14.6 19.6
United Kingdom 28.2 47.4 29.8 24.1 38.3 29.0 21.8 56.7 32.9 10.4 38.8 4.6 12.2
Other European 63.8 59.5 30.7 17.9 20.0 25.1 48.0 46.3 81.8 35.6 35.4 32.0 29.8
Japan 38.5 39.6 19.1 18.9 31.2 39.3 37.6 43.2 66.7 55.5 42.4 30.0 20.2
Rest of the world 49.5 11.4 19.5 30.7 42.1 37.1 26.4 24.0 63.7 30.2 43.4 39.5 31.9
Total 831.0 792.4 801.5 861.8 965.5 1,220.2 1,316.0 1,445.7 1,549.9 1,164.4 1,330.0 1,340.7 1,330.9
Source:  Figures provided by the DGEC, the SIECE, Central American Central Banks, and adjusted by the Balance of
Payments Section.
P/ Provisional.
Last updated: 30/06/2003.WT/TPR/G/120 Trade Policy Review
Page 32
Table No. 11  HONDURAS:  Regional distribution of CIF imports
(in US$ millions)
COUNTRY 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 p/2001 p/2002 p/
America 682.5 739.4 846.4 1,061.5 1,143.1 1,289.3 1,536.1 1,822.8 2,143.5 2,274.8 2,487.2 2,556.5 2,559.7
VII. North America 401.3 467.4 556.9 602.4 640.0 716.1 869.7 1,045.3 1,188.4 1,198.7 1,238.2 1,298.5 1,230.6
UNITED STATES
397.7 460.1 547.2 588.3 626.6 705.2 857.6 1,033.0 1,177.3 1,182.7 1,220.2 1,281.7 1,213.1
CANADA
3.6 7.3 9.7 14.1 13.4 10.9 12.1 12.3 11.1 16.0 18.0 16.8 17.5
Latin America 281.2 272.0 289.5 459.1 503.1 573.2 666.4 777.5 955.1 1,076.1 1,249.0 1,258.0 1,329.1
Central America 74.6 96.8 114.5 198.8 214.2 290.2 299.6 342.2 501.7 540.9 596.4 630.3 573.7
Guatemala 33.9 44.6 48.8 83.0 93.7 134.4 133.5 151.1 232.5 224.7 233.1 295.4 236.6
Nicaragua 10.7 9.1 8.2 10.2 13.6 14.8 17.4 21.1 24.9 38.0 37.3 47.9 57.8
Costa Rica 14.6 22.4 26.8 55.3 47.9 57.4 59.3 56.6 87.9 97.8 100.9 103.0 103.3
El Salvador 15.4 20.7 30.7 50.3 59.0 83.6 89.4 113.4 156.4 180.4 225.1 184.0 176.0
Mexico 56.0 48.9 66.5 35.6 43.7 72.2 90.0 115.2 120.7 136.6 140.1 140.5 166.7
Trinidad and Tobago 0.6 0.1 0.4 4.2 3.7 1.5 4.5 9.7 24.8 15.5 30.5 35.0 75.8
Venezuela 61.0 59.8 18.6 11.8 13.0 21.7 29.4 28.5 31.8 29.3 30.9 26.3 52.9
Colombia 12.4 7.9 10.9 16.3 13.4 18.7 19.0 16.0 16.6 28.0 34.3 29.8 28.9
Brazil 16.2 17.4 19.4 24.7 25.9 26.3 20.5 24.2 23.5 30.9 29.6 29.5 37.8
Argentina 4.8 2.9 4.4 3.6 1.9 2.5 2.9 6.4 3.1 4.4 6.1 6.7 6.8
Dominican Republic 0.9 1.4 1.7 1.2 1.4 4.8 14.5 12.8 6.8 6.1 3.1 4.2 7.6
Ecuador 0.7 0.7 0.9 1.1 1.6 3.9 4.6 4.0 1.6 10.9 12.5 2.0 22.6
Other Latin American 54.0 36.1 52.2 161.8 184.3 131.4 181.4 218.5 224.5 273.5 365.5 353.6 356.3
Europe 153.5 123.9 100.9 119.0 181.0 187.9 147.1 162.2 188.8 219.3 172.1 238.5 220.2
Germany 37.2 26.8 20.5 29.7 52.3 37.3 30.4 33.4 33.5 46.4 35.9 30.7 33.5
Netherlands 61.0 45.9 22.1 11.8 21.8 55.7 17.8 9.7 35.1 27.6 10.7 83.5 51.1
Belgium 4.9 3.7 5.1 8.1 20.5 14.8 14.7 20.0 17.0 14.4 10.7 10.6 22.7
France 4.8 6.4 8.8 9.1 8.9 5.2 19.8 9.0 17.7 25.5 28.6 20.5 17.0
Spain 6.6 7.9 6.8 7.4 26.7 27.0 19.9 20.1 26.7 30.6 29.9 37.4 37.8
Italy 6.0 5.2 4.4 12.9 9.9 12.0 11.1 14.9 14.5 22.3 12.9 18.5 14.2
United Kingdom 10.5 8.8 11.0 10.4 10.0 7.3 9.4 10.5 16.0 12.1 9.8 7.7 7.2
Other European 22.5 19.2 22.2 29.6 30.9 28.6 24.0 44.6 28.3 40.4 33.6 29.6 36.7
Japan 64.2 56.0 53.0 56.8 68.7 59.2 78.3 76.4 117.1 107.2 103.2 114.3 101.4
Rest of the world 34.6 35.8 36.3 53.3 67.5 106.3 78.5 87.2 85.3 74.9 92.1 74.6 95.0
Total 934.8 955.1 1,036.6 1,290.6 1,460.3 1,642.7 1,840.0 2,148.6 2,534.8 2,676.1 2,854.6 2,983.9 2,976.3
p/ Provisional.
Last updated 30/06/2003.
Source : Figures provided by the DGEC and by Central American Central Banks, adjusted by the Balance of Payments
Section.HONDURAS WT/TPR/G/120
Page 33
VII. ANNEX NO. 12
THE POVERTY REDUCTION STRATEGY
All for Honduras
What is it and how far have we progressed?
BACKGROUND
1. The Poverty Reduction Strategy (PRS) is a response to the need to establish a long-term
policy framework that would enable Honduras to overcome the problems associated with thedevelopment of its human capital, which has been historically limited by a combination of factors of
an economic and social nature, a situation made worse by the effects of hurricane and tropical storm
Mitch in November 1998.  This coincided with certain changes in the view of the support provided by
the international community, such as the replacem ent of the IMF’s Enhanced Structural Adjustment
Facility (ESAF) by its Poverty Reduction and Growth  Facility (PRGF) and with Honduras admission
to the Heavily Indebted Poor Countries (HIPC) Initiative, which will eventually constitute an
important source of financing for the PRS.
2. The PRS paper was formulated with the broad participation of Honduran civil society, which
introduced a sense of ownership that will help to make the programme sustainable in the longer term.
The participatory process took place between January 2000 and May 2001, with the direct
participation of more than 3,500 representatives of civil society organizations.  In many instances, the
participants bore mandates stemming from the consultations which their organizations had previouslyheld with their membership.  The results of each meeting and the written proposals submitted by the
NGOs were organized, summarized and analysed to determine the points of agreement and assess
them on the basis of technical criteria within the context of the country’s economic and social
viability.  Accordingly, the final version of the PRS includes greater development, as well as
incorporating a series of topics proposed by civil society.
3. The year 2002 was the first year of implementation of the PRS.  Like other countries which
have prepared and implemented strategies of this type within the framework of the HIPC Initiative,
Honduras has undergone a learning process based on the lessons and the difficulties of this ambitious
project.  In many instances, it has had to experiment with novel arrangements and procedures, with
only very general guidance from multilateral bodies and only a distant acquaintance with theexperience of countries that had previously embarked on the process.  Moreover, the process has in
some ways turned out to be more complicated in the case of Honduras, since 2002 was the first year
of a new Government.
4. An initial stocktaking reveals considerable progress in the restructuring of macroeconomic
policy, in the orchestration of the PRS, project prioritization and the management of supplementaryresources.  On the other hand, the implementation of the planned investments has fallen short of
expectations, due partly to the overambitious original programming and partly to mismatches with the
completion of the HIPC Initiative.  It is expected that during 2003 the level of investment will pick up
sharply, reaching 3.2 per cent of GDP, and that the objectives set for 2004-2005 will be met.WT/TPR/G/120 Trade Policy Review
Page 34
CONTENT OF THE PRS
Status of poverty
5. Because poverty is multidimensional, there are various methods of measuring it, all of which
show that in Honduras poverty still stands at a hi gh level, despite a modest improvement in recent
years.  In 2002, approximately 64 per cent of households were below the poverty threshold and almost
47 per cent fell within the extreme poverty category, a slight improvement on the 75 per cent and
54 per cent, respectively, observed in 1991.  The Unsatisfied Basic Needs method revealed a more
favourable trend, the total number of households with UBN having fallen from 67 per cent to 47 per
cent between 1990 and 1997.  Nevertheless, the nutritional state of schoolchildren is a cause forconcern and the level of human development in Honduras continues to be one of the lowest in Latin
America due largely to the low per capita income, still one of the lowest in Latin America, with little
prospect of significant improvement into the medium  term since in the past decade the rate of growth
averaged 0.5 per cent per year.  This situation, together with the low poverty-income elasticity
(0.65 per unit per capita GDP), is making it necessary to intensify the measures that would makepossible a significant increase in the economic growth rate and to take steps to improve the
distribution of income, in order to achieve the objective of reducing the levels of poverty and
destitution by 24 percentage points by 2015.
6. In some cases the social indicators are more encouraging, especially in areas linked with basic
education and health services, which may be related with the increase in government social spending
from 45 per cent to 49 per cent of total expenditure.  Nevertheless, these indicators continue to lag
behind the regional averages.  Coverage in the first two cycles of primary education is approaching
90 per cent, due to the fact that it here that the greatest efforts have been made; however, coverage in
pre-primary education and at the third level of primary education is giving cause for concern,especially with respect to the third cycle, where the young people about to enter the labour market are
or should be found.POVERTY ACCORDING TO INCOME, 1991-2002
0102030405060708090100(in %)
Urban 61.6 62.6 61 57 56.3 56.2
Rural 76.5 71.1 75.3 69.2 73.8 71.5
National 69.9 67.4 68.7 63.1 64.5 63.91992 1994 1996 1998 2001 2002HONDURAS WT/TPR/G/120
Page 35
7. The health indicators also reveal some significant progress, although insufficient to ensure the
development of the country’s human capital.  Figures taken from the last national population and
housing census show that between 1970 and 2001 life expectancy at birth rose from 54 to 71 years;
the infant mortality rate fell from 116 to 43 per 1,000 live births and the nursing mothers’ mortality
rate dropped to 33 per 1,000 live births.  Likewise, in 2001 the maternal mortality rate was 104 per
1,000 live births, the situation being worse in the rural areas where the primary care services are lessreliable.  On the other hand, the chronic malnutrition rate for children under the age of five is 32.9 per
cent.  The percentage of the population with access to drinking water and sanitation services has
increased satisfactorily, thanks to the social programmes and projects set up during the last ten years,
such as the Social Investment Fund (FHIS), etc.  At  present, 80 per cent of the national population has
access to drinking water, although the percentage is lower if only those who have that service insidethe home are considered.  All the infrastructure damaged in 1998 by hurricane Mitch has been
repaired, so that the level of coverage achieved before the disaster has now been restored.  However,
it is essential to increase the coverage of these serv ices in view of their huge impact on the health of
the population.
GLOBAL VISION AND OBJECTIVES OF THE PRS
8. Both the global objectives and the intermediate and final performance indicators of the PRS
have been so designed as to be consistent with the diagnostic elements and determinants of poverty
used as a basis for the discussions with civil society during the consultation process.  During that
process, the country’s Global Vision up to the year 2015 and the Strategic Guidelines for realizing
that vision were also defined.  Table 1 reproduces the objectives of the PRS, with a baseline updated
in the light of the latest figures available.WT/TPR/G/120 Trade Policy Review
Page 36
Table 1
REVISED OBJECTIVES AND INDICATORS
Projection
OBJECTIVE(2) INDICATORBase
date 2005 2010 2015 2015
Real GDP growth Real GDP growth1 (2002) 2.1 3.5 4.5 5.1 5.6
Per capita GDP growth Per capita GDP growth2 (2002) -0.3 1.1 2.2 2.8 3.7
Population Growth rate3  (2002) 2.4 2.4 2.3 2.3 1.9
Social spending Social spending as % of total expenditure4  (2001) 47.5 47 48 50 50
Poverty rate (2002)563.9 62.1 60.2 58.4 39.9Reduce poverty by 24
percentage pointsExtreme poverty rate (2002)5
45.2 43.4 41.5 39.7 21.2
Double net coverage in
pre-primary education upto age 5Coverage rate in pre-primary education (2002)
5
31.3 36.9 39.7 42.5 62.6
95% net coverage in the
first two cycles ofprimary educationCoverage rate 1st and 2nd cycles (2002)
5
87.7 88.7 89.2 89.7 95.0
70% net coverage in the
third cycle of primary
educationCoverage rate 3rd cycle of primary education  (2002)5
31.3 36.9 39.7 42.5 70.0
Coverage of diversified cycle (10th to 12th grades)5 (2002) 15.3 20.3 22.8 25.3 50.050% of emergent labour
force to complete
secondary education % of emergent LF completing secondary education5 (2002) 11.8 14.5 17.3 20.0 50.0
Infant mortality rate /1,000 live births (2001)634 32 30 29 16 Halve mortality rates for
infants and children
below age 5 Mortality rate below age 5 (per 1,000 live births)6 (2001) 45 42 40 39 23
Malnutrition below age 5 Infant malnutrition rate6  (2001)32.9 30.9 29.9 28.9 20.0
Halve maternal mortality Maternal mortality rate per 100,000 live births6 (2001) 108 100 96 93 54
% of population with access to drinking water3 (2002) 78.8 81.1 82.3 83.4 95.095% access to water and
sanitation
% of population with access to sewage systems3 (2002) 68.4 70.7 71.9 73.0 95.0
HDI relating to gender7 (2001) 0.64 0.65 0.66 0.67 0.77Equal treatment and a
20% increase in the
human developmentindex for women Gender potentiation index
7 (2001) 0.46 0.47 0.48 0.49 0.59
% area with forest cover8  ( 2 0 0 1 ) 5 45 6 5 75 86 0
% protected areas under management8 (2001) 30 50 60 70 100Implement a sustainabledevelopment strategy
Air pollution in urban centres ( µg/m
3 PTS) (2001) 618 584 549 514 200
1 Central Bank of Honduras (BCH).
2 National Unit for Technical Support (UNAT), with BCH and National Statistical Institute
(INE) figures.
3 CMPV / INE
4 Ministry of Finance (SEFIN).
5 Estimates based on the Ongoing Multi-purpose Survey of Households (EPHPM).  The
original data are from the Ministry of Education (SE), but it is impossible to follow them up
6 Ministry of Health, Investigation of maternal mortality and the mortality of women of
reproductive age in Honduras, 1997.
Human Development Report 2000.
Honduran Forestry Development Cooperation (COHDEFOR), on the basis ofthe National System of Prioritized Protected Areas (40 areas protected).66.0
9. In designing the objectives, the international parameters defined up to 2015 by the United
Nations Organization, the Organization for Econom ic Co-operation and Development (OECD) and
the World Bank were also taken into consideration.  Nevertheless, for them to be viable a great effort
in terms of additional financing will be required and this will depend on the reaching of theHONDURAS WT/TPR/G/120
Page 37
completion point within the framework of the HIPC Initiative, as well as on the improved channelling
and greater efficiency of external resources in general.  To this end, a considerable effort is being
made to coordinate with international cooperation, as described in more detail in the next section.
10. In order to achieve these objectives, work is also being done on national strategies that should
make possible substantial improvements in th e competitiveness of the Honduran economy and
specific action is being taken to develop sectors with a high potential in terms of productivity and jobcreation.  Moreover, it is becoming ever clearer that there is the political will to increase, substantially
and sustainably, both the quantity and the quality of social spending.  The viability of the objectives
requires, in addition to an adequate rate of sustained growth, a decision to forge ahead with the
processes of national transformation in fundamental areas relating to the promotion of
competitiveness, human development and the reduction of environmental vulnerability.
III. Progress with the application of the PRS in 2002
IMPLEMENTATION OF POLICY MEASURES
11. The PRS has a very ambitious agenda involving both the reform of policies and legislation
and administrative changes.  It includes measures to strengthen the legal system, combat corruption,
modernize the political system and improve the climate for investment.  During 2002, the
Government and the National Congress pressed aggre ssively forward with the implementation of this
agenda.
12. In the field of economic policy, it was planned, in the short term, to fulfil the obligations of
the PRGF agreement between Hondu ras and the IMF in the areas of taxation, monetary policy,
management of the financial system, balance of payments and structural reform.  Although Hondurassucceeded in achieving the monetary and balance-of-payments objectives, the country encountered
difficulties with fiscal management, which led to the suspension of the PRGF in 2001.  However,
corrective measures were taken and this has made possible the signing of a Letter of Intent concerning
a new PRGF programme for 2003-2005.  Within this framework, Honduras will endeavour to achieve
the PRS objectives of boosting tax revenue, rationalizing public expenditure with priority for PRSprogrammes, obtaining external financing on concessional terms, and maintaining inflation at low
levels.
13. Other policy measures planned under the PRS which have already been implemented include:
action to strengthen the legal system and combat corruption, approval of the Law on the Streamlining
of Administrative Procedures, the establishment of the National Competitiveness Council, and theinitiation of negotiations and a free trade agreement with the United States (CA-US FTA).
14. Some of the policy measures and legal and administrative changes planned in the 2001 PRS
paper have not yet been implemented, due partly to the impossibility of pushing through all the
initiatives at the same time and the need to reconsid er the content and design of some of the policies
and laws.  Draft framework laws on electric power  were withdrawn from Congress for redrafting and
new versions were submitted in 2003.  Other outstanding measures include:  the Forestry Law,
reforms of the Labour Code, and the Commercial  Code, the Law on the Promotion and Protection of
Competition, the IHSS Law, the Law on the Modernization of the Housing Sector and the General
Framework Law on Education.  Draft laws on income  tax simplification and modernization and on the
Unified National Property Register have already been prepared and sent to the National Congress.WT/TPR/G/120 Trade Policy Review
Page 38
DEVELOPMENT OF THE INSTITUTIONAL FRAMEWORK OF THE PRS
15. During 2002, the Government and civil society worked together to establish the basis for the
operational framework of the PRS.  As a result , the PRS now has a well-defined institutional
framework, mechanisms have been established for focusing the Strategy and interfacing it with the
decentralization process, and progress is being made with the design and speedy implementation ofsystems for monitoring and evaluating PRS policy measures, projects and indicators.
16. An operational and institutional framework, with clearly defined and well coordinated
functions, has been set up for the purpose of implementing, monitoring and evaluating the PRS.  To
this end, certain legal provisions have been adopted, the necessary institutional adjustments have been
made and new mechanisms have been established to ensure that the processes are properly articulated,from central to municipal and local levels, with a view to achieving the poverty reduction objectives
more efficiently and with emphasis on the more vulnerable groups.  The most prominent features of
this operational framework include the definition of th e functions of the Social Cabinet,  the setting up
of the Consultative Council, the establishment of an Interinstitutional Technical Support Group and
the creation of the Fund for the Reduction of Poverty.
Medium-term commitments and policy measures
17. The present administration has prioritized the objectives and programmes of the PRS on the
basis of the fundamental principles of its governing agenda and the short and medium-term
requirements.  Thus, policy commitments have been assumed and resources have been channelled into
three main areas:  (i) revitalization of the economy and job creation;  (ii) development of the human
capital;  and (iii) justice and law and order.
18. Through these priorities run three cross-cutting threads, namely, environmental protection and
risk prevention;  gender equality; and decentralizatio n.  These commitments are all consistent with the
policy measures and programmatic areas of the original PRS paper, enriched and supplemented by the
proposals made within the context of the work of the sectoral round tables and the other participating
bodies representing civil society and international cooperation.
__________