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IMF Country Report No. 21/150
HONDURAS
TECHNICAL ASSISTANCE REPORT – FISCAL TRANSPARENCY EVALUATION
July 2021
This Technical Assistance report on Honduras was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in April 2020.
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Title page
FISCAL AFFAIRS DEPARTMENT
Honduras
Fiscal Transparency Evaluation
Ramón Hurtado, Concha Verdugo, Mariana Sabatés, Marta Morano, and Natalia Salazar
Technical Report
April 2020
Contents
ACRONYMS
INTRODUCTION
EXECUTIVE SUMMARY
I. FISCAL REPORTING
A. COVERAGE
B. FREQUENCY AND TIMELINESS
C. QUALITY
D. INTEGRITY
E. CONCLUSIONS AND RECOMMENDATIONS
II. FISCAL FORECASTING AND BUDGETING
A. COMPREHENSIVENESS
B. ORDERLINESS
C. POLICY ORIENTATION
D. BUDGET CREDIBILITY
E. CONCLUSIONS AND RECOMMENDATIONS
III. FISCAL RISK ANALYSIS AND MANAGEMENT
A. RISK DISCLOSURE AND ANALYSIS
B. RISK MANAGEMENT
C. FISCAL COORDINATION
D. CONCLUSIONS AND RECOMMENDATIONS
BOXES
1.1. Honduran Pension System
1.2. Key Findings of the 2018 TSC Report
3.1. Long-Term Pressures on Public Finances
3.2. Domestic Market Debt Absorption Capacity
3.3. Operating Earnings of Public Corporations
FIGURES
1.1. Fiscal Reporting Coverage
1.2. Coverage of Stocks in Fiscal Reports
1.3. Public Sector Net Worth in Selected Countries
1.4. Tax Expenditures, 2015–21
2.1. Accuracy of Macroeconomic Projections
2.2. MTBF Indicative Spending Ceilings and Initial Budget Appropriation
2.3. Annual Update of Multiyear Commitments
2.4. Central Administration and NFPS Balance Sheet
2.5. Honduras Open Budget Index
2.6. Citizen Participation Index
2.7. Increase in Total Amounts of Approved Budgets, 2014–17
3.1. Macro-fiscal Risk Indicators, Selected Central American Countries, 2003–17
3.2. Oil Prices and ENEE, 2009–17
3.3. Public Debt Indicators under Alternative Scenarios, 2018–38
3.4. Appropriation for Contingency as a Percentage of Central Government Current Revenue.
3.5. Capital Adequacy Ratios for the Banking System
3.6. Distribution of Capital Adequacy Ratios
3.7. Ratio of Liquid Assets to Short-Term Liabilities
3.8. Ratio of Liquid Assets to Total Assets
3.9. Natural Resources Income in Honduras and Selected Latin American Countries
3.10. Exposure to Natural Disasters
3.11. Number of Natural Disasters and Persons Affected, 1997–2018
TABLES
ES.1. Summary of Fiscal Transparency Evaluation
ES.2. Public Sector Financial Overview, 2017
1.1. Fiscal and Budget Projection Documents
1.2. Subsector Contributions to Public Sector Results
1.3. Flows Between Central Government and Trusts
1.4. Reconciliation of Stocks and Flows for Trusts
1.5. Fiscal Reports Published by BCH
1.6. Summary of Fiscal Reporting Evaluation
2.1. Fiscal and Budget Projection Documents
2.2. Documents Containing Medium-Term Fiscal Projections that Accompany the Budget Presentation
2.3. Characteristics of the Medium-Term Budget Framework
2.4. Budget Calendar
2.5. Basic Principles of the Fiscal Rule
2.6. Compliance with Fiscal Rule in 2016 and 2017
2.7. Summary of Evaluation of Fiscal and Budget Projections
3.1. Fiscal Risk Reporting
3.2. Internal Documentation: Revenue and Expenditure Sensitivity Analysis
3.3. Specific 2017 Risks
3.4. Bond Absorption Capacity
3.5. Floating Debt, 2018 and Prior Years
3.6. PPP Contracts in Execution
3.7. Deposits Insured by FOSEDE
3.8. Natural Disasters in Central America, 1997–2018
3.9. Consolidation of Municipalities’ Financial Accounts, Fourth Quarter 2017 prepared by DGID (Preliminary)
3.10. Municipalities’ Borrowings from the National Financial System
3.11. Municipalities’ Borrowings from Local Banks
3.12. Government Transfers to Nonfinancial Public Corporations
3.13. Nonfinancial Public Corporations Transfers to the Government
3.14. Aggregated Balance Sheet of Nonfinancial Public Corporations
3.15. Current Revenue and Expenditures of Financial and Nonfinancial Public Corporations
3.16. Summary of the Evaluation of Fiscal Risk Analysis and Management
ANNEXES
I. Recommendations of the Fiscal Transparency Evaluation: Action Plan
II. Summary of Nonfinancial Assets
III. Financial Soundness Indicators of Commercial Banks in Honduras and Summary of Banking System Indicators for Central America, the Dominican Republic, and Panama
IV. BANADESA Financial Statements (2016–17)
Acronyms
| AWP | Plan operativo anual (Annual work plan) |
| BAH N PRO VI | Banco Hondureño para la Producción y la Vivienda (Honduran Bank for Production and Housing) |
| BANADESA | Banco Nacional de Desarrollo Agrícola (National Agricultural Development Bank) |
| BANASUPRO | Suplidora Nacional de Productos Básicos (National Commodities Supplier) |
| BCH | Banco Central de Honduras (Central Bank of Honduras) |
| CEF | Consejo de Estabilidad Financiera (Financial Stability Comitte) |
| CGR | Contaduria General de la Republica (General Accounting Office) |
| CNA | Consejo Nacional Anti-Corrupción (National Anti-Corruption Board) |
| CNBS | Comisión Nacional de Bancos y Seguros (National Banking and Insurance Commission) |
| COALIANZA | Comisión para la promoción de las alianzas público-privadas (Public-Private Partnership Promotion Commission) |
| COPECO | Comisión Permanente de Contingencias (Permanent Commission on Contingencies) |
| DGCP | Dirección General de Crédito Público (Directorate General of Public Credit) |
| DGID | Dirección General de Instituciones Descentralizadas (Directorate General of Decentralized Institutions) |
| DGIP | Dirección General de Inversión Pública (Directorate General of Public Investment) |
| DGP | Dirección General de Presupuesto (Directorate General of Budget) |
| DGPMF | Dirección General de Política Macrofiscal (Directorate General of Macro-fiscal Policy) |
| DNBE | Dirección Nacional de Bienes del Estado (National Directorate of Government Property) |
| DSA | Debt sustainability analysis |
| HONDUCOR | Empresa de Correos de Honduras (Honduran Postal Service) |
| HONDUTEL | Empresa Hondurena de Telecomunicaciones (Honduran Telecommunications Company) |
| ENEE | Empresa Nacional de la Energía Eléctrica (National Electricity Company) |
| FHIS | Fondo Hondureño de Inversión Social (Honduran Social Investment Fund) |
| FNH | Ferrocarril Nacional de Honduras (National Railway Company) |
| FOPRIDEH | Federación de Organizaciones Privadas de Desarrollo de Honduras (Federation of Honduran Private Development Organizations) |
| FOSEDE | Fondo de Seguros de Depósitos (Deposit Insurance Fund |
| FTC | Código de Transparencia Fiscal (Fiscal Transparency Code) |
| FTS | Fideicomiso Tasa de Seguridad (Security Trust Fund) |
| GDDS | Sistema General de divulgación de datos (General Data Dissemination System) |
| GDP | Gross domestic product |
| GFSM | Government Financial Statistics Manual |
| IAIP | Instituto de Acceso a la Información Pública (Institute on Access to Public Information) |
| IFRS | International Financial Reporting Standards |
| IHMA | Instituto Hondureño de Mercadeo Agrícola (Honduran Agricultural Market Institute) |
| IHSS | Instituto Hondureño de Seguridad (Honduran Social Security Institute) |
| IIP | International Investment Position |
| IMAG | Ingreso mínimo anual garantizado (Secured minimum annual income) |
| IMF | International Monetary Fund |
| INE | Instituto Nacional de Estadística (National Statistics Institute) |
| INHGEOMIN | Instituto Geominero de Honduras (Honduran Institute of Geology and Mines) |
| INJUPEMP | Instituto Nacional de Jubilaciones y Pensiones del Poder Ejecutivo (National Executive Branch Retirement and Pension Administrator) |
| INPREMA | Instituto Nacional de Previsión del Magisterio (National Educational Professionals Pension Administrator) |
Instituto de Previsión Social de los empleados de la Universidad Nacional | |
| INPREUNAH | Autónoma de Honduras (“Universidad Nacional Autónoma de Honduras” Employee Pension Administrator) |
| INSEP | Secretaría de Estado de Infraestructura y Servicios Públicos (Ministry of Infrastructure and Public Services) |
| INTOSAI | International Organization of Supreme Audit Institutions |
| IPM | Instituto de Previsión Militar (Military Pension Administrator) |
| IPSAS | International Public Sector Accounting Standards |
| IRC | Informe de rendición de cuentas (consolidated annual reports required of all public sector entities pursuant to the respective governing laws) |
| ISPPIA | International Standards for the Professional Practice of Internal Auditing |
| LCE | Ley de Contrataciones del Estado (Government Procurement Law) |
| LCETME | Ley de Compras Eficientes y Transparentes a Través de Medios Electrónicos (Law on Efficient, Transparent Procurement via Electronic Media) |
| LOP | Ley Orgánica del Presupuesto (Framework Budget Law) |
| LOTSC | Ley orgánica del Tribunal Superior de Cuentas (Court of Audit Founding Law) |
| LRF | Ley de responsabilidad fiscal (Fiscal Responsibility Law) |
| LTAIP | Ley de transparencia y accesso a la información pública (Transparency and Access to Public Information Act) |
| MCA | Cuenta del Desafío del Milenio (Millennium Challenge Account) |
| MTBF | Medium-term budget framework |
| MTMFF | M ed ium-term macro-fiscal framework |
| NFPS | Nonfinancial public sector |
| NOGENAIG | Normas Generales de Auditoría Interna Gubernamental (General Standards for Government Internal Audit issued by the Honduran Supreme Court of Audit) |
| LPAPP | Ley para la promotión de las Alianzas Público-Privadas (Law on Promotion of Public-Private Partnerships) |
| OBI | Open Budget Index |
| ONADICI | Oficina Nacional de Desarrollo Integral del Control Interno (National Office on Comprehensive Internal Control Development) |
| ONCAE | Oficina Normativa de Contrataciones y Adquisiciones del Estado (Government Procurement Regulatory Office) |
| PACC | Plan Anual de Compras y Contrataciones (Annual procurement plan) |
| PEFA | Public Expenditure and Financial Accountability |
| PEI | Plan Estratégico Institucional (Institutional Strategic Plan) |
| PEP | Política de Endeudamiento Público (Public borrowing policy) |
| PFM | Public financial management |
| PIP | Plan de inversion publica (Public investment program) |
| PPAs | Contratos de compra de energía (Power purchase agreements) |
| PPP | Alianza Público Privada (Public-private partnership) |
| SAMI | Sistema de Administración Municipal Integrado (Integrated Municipal Administration System) |
| SANAA | Servicio Autónomo Nacional de Acueductos y Alcantarillado (National Water and Sewer Service) |
| SAPP | Superintendencia de alianzas público privadas (Superintendency of Public-Private Partnerships) |
| SCGG | Secretaría de Coordinación General del Gobierno (Ministry of Government Coordination) |
| SDJGD | Secretaría de Estado en el Despacho de Justicia, Gobernación y Descentralización (Ministry of Justice, Government and Decentralization |
| SDR | Special Drawing Rights |
| SEDS | Secretaría de Estado en el Despacho de Seguridad (Ministry of Security) |
| SEDUC | Secretaría de Estado en el Despacho de Educación (Ministry of Education) |
| SEFIN | Secretaría de Estado en el Despacho Finanzas (Ministry of Finance) |
| SESAL | Secretaría de Estado en el Despacho de Salud (Ministry of Health) |
| SIAFI | Sistema de Administración Financiera Integrada (Integrated financial management system) |
| SIGADE | Sistema de Gestión y Análisis de la Deuda (Debt Management Information System) |
| SINACORP | Sistema Nacional de Control de los Recursos Públicos (National System for Public Resources Control) |
| SIREP | Sistema de Registro y Control de Empleados (Personnel management system) |
| SIRFIDE | Sistema de Registro de Fideicomisos (Trust funds Registry) |
| SISERA | Sistema de Seguimiento a las Recomendaciones de Auditoria (Audit recommendations monitoring system) |
| SISOCS | Sistema de Información y Seguimiento de Obras y Contratos de Supervisión (Construction and supervision contracts information system) |
| SNIP | Sistema Nacional de Inversión Pública (National public investment system) |
| TSA | Treasury Single Account |
| TSC | Tribunal Superior de Cuentas (Court of Accounts) |
| UCF | Unidad de contingencias fiscales (Fiscal Contingencies Unit) |
| UN AH | Universidad Nacional Autónoma de Honduras (National Autonomous University of Honduras) |
| UPEP | Unidad de Planeamiento y Evaluation de la Gestión (Unit of Planning and evaluation of Performance) |
