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Economy of Honduras

Honduras, with a per capita gross national income of $1,845, is one of the poorest countries in the western hemisphere. Economic growth was 6.3% in 2007 and 4% in 2008. The decreased growth rate is due to the combination of external price shocks, the global economic crisis, and reduced internal investment from the public sector. Historically dependent on exports of agricultural goods, the Honduran economy has diversified in recent decades and now has a strong export-processing (maquila) industry, primarily focused on assembling textile and apparel goods for re-export to the United States, as well as automobile wiring harnesses and similar products. These industries employ about 140,000 Hondurans, out of an economically active population of 2.9 million. Despite the recent economic diversification, there continues to be a large subsistence farmer population with few economic opportunities. Honduras also has extensive forest, marine, and mineral resources, although widespread slash-and-burn agricultural methods and illegal logging continue to destroy Honduran forests. Remittances from Hondurans living abroad, particularly the U.S., totaled $2.7 billion in 2008--equivalent to about one-fifth of GDP. Remittance slowed in 2007 and 2008 and is expected to turn negative in 2009. Meanwhile, Honduras's fuel import bill rose sharply with the surge in world oil prices (Honduras produces no petroleum), and foreign reserves of the Central Bank fell by nearly $98 million--about 4%. Reserves continued to decline during 2008 and by November equaled just over three months’ worth of imports. The rise in global grain prices also put upward pressure on Honduran consumer prices in 2008, and the inflation rate rose to 10.8% in 2008 from 8.9% in 2007. The official exchange rate has been essentially fixed at 18.9 Honduran Lempiras to the dollar since 2005. About one-third of the Honduran workforce was considered either unemployed or underemployed in 2008. This does not include the roughly 1 million Hondurans who have migrated to the United States for lack of acceptable employment opportunities at home. Since 2005, Honduras has received nearly $4 billion in debt relief from bilateral and multilateral donors. The donor community estimated this would reduce annual debt service payments by about $200 million in 2007. The Government of Honduras has committed to apply these funds to poverty alleviation, as laid out in the existing Poverty Reduction Strategy. However, much of the ensuing rise in government spending has gone to public sector salaries and fuel subsidies. Fuel subsidies were phased out and electricity subsidies reduced and targeted more tightly to the poor in 2008. But salaries, especially for teachers, continue to claim an increasing share of public spending. The total external debt at the end of 2008 was $2.3 billion, representing 23.2% of GDP. Economy (2008 est.) GDP: $14.3 billion. Growth rate: 4.0%. Per capita GDP: $1,845 (official exchange rate), $3,130 (PPP, IMF). Natural resources: Arable land, forests, minerals, and fisheries. Agriculture (18.6% of GDP): Products--coffee, bananas, shrimp and lobster, sugar, fruits, basic grains, and livestock. Manufacturing (19.7% of GDP): Types--textiles and apparel, cement, wood products, cigars, and foodstuffs. Services (54.2% of GDP). Trade: Exports (goods)--$6.95 billion: apparel, auto parts, coffee, shrimp, bananas, palm oil, gold, zinc/lead concentrates, soap/detergents, melons, lobster, pineapple, lumber, sugar, and tobacco. Major market--U.S. (70%). Imports (goods)--$11.60 billion: fabrics, yarn, machinery, chemicals, petroleum, vehicles, processed foods, metals, agricultural products, plastic articles, and paper articles. Major source--U.S. (52%).

Geography of Honduras

Location: Middle America, bordering the Caribbean Sea, between Guatemala and Nicaragua and bordering the North Pacific Ocean, between El Salvador and Nicaragua Geographic coordinates: 15 00 N, 86 30 W Map references: Central America and the Caribbean Area: total: 112,090 sq km land: 111,890 sq km water: 200 sq km
Area-comparative:
slightly larger than Tennessee Land boundaries: total: 1,520 km border countries: Guatemala 256 km, El Salvador 342 km, Nicaragua 922 km Coastline: 820 km Maritime claims: contiguous zone: 24 nm continental shelf: natural extension of territory or to 200 nm exclusive economic zone: 200 nm territorial sea: 12 nm Climate: subtropical in lowlands, temperate in mountains Terrain: mostly mountains in interior, narrow coastal plains Elevation extremes: lowest point: Caribbean Sea 0 m highest point: Cerro Las Minas 2,870 m Natural resources: timber, gold, silver, copper, lead, zinc, iron ore, antimony, coal, fish Land use: arable land: 15% permanent crops: 3% permanent pastures: 14% forests and woodland: 54% other: 14% (1993 est.) Irrigated land: 740 sq km (1993 est.) Natural hazards: frequent, but generally mild, earthquakes; damaging hurricanes and floods along Caribbean coast Environment-current issues: urban population expanding; deforestation results from logging and the clearing of land for agricultural purposes; further land degradation and soil erosion hastened by uncontrolled development and improper land use practices such as farming of marginal lands; mining activities polluting Lago de Yojoa (the country's largest source of fresh water) as well as several rivers and streams with heavy metals; severe Hurricane Mitch damage Environment-international agreements: party to: Biodiversity, Climate Change, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Tropical Timber 83, Tropical Timber 94, Wetlands signed, but not ratified: Climate Change-Kyoto Protocol

Government of Honduras

The 1982 constitution provides for a strong executive, a unicameral National Congress, and a judiciary appointed by the National Congress. The president is directly elected to a 4-year term by popular vote. The Congress also serves a 4-year term; congressional seats are assigned the parties' candidates in proportion to the number of votes each party receives in the various departments. The judiciary includes a Supreme Court of Justice (one president and 14 magistrates chosen by Congress for a 7-year term), courts of appeal, and several courts of original jurisdiction--such as labor, tax, and criminal courts. For administrative purposes, Honduras is divided into 18 departments, with 298 mayors and municipal councils selected for 4-year terms. POLITICAL CONDITIONS Reinforced by the media and several political watchdog organizations, concerted efforts to protect human rights and civil liberties continued up to the June 28, 2009 coup. In the immediate aftermath of Zelaya’s expulsion from Honduras, the de facto Micheletti regime used troops to shut down dissenting media outlets and imposed curfews to prevent anti-coup protestors from forming large groups to voice their opposition. The de facto regime issued a decree on September 27 suspending most civil liberties and invoking a state of emergency. Under the decree, pro-Zelaya television station Canal 36 and Radio Globo were immediately closed. The decree was unpopular with civil society groups and the Honduran public. The de facto regime also issued an executive order giving the executive the right to close any media service it deemed a threat to national security or public order, without a court order. On October 19, the de facto regime published a decree abrogating its earlier suspension of civil liberties. Immediately afterwards, the two media outlets were on the air again. Organized labor represents approximately 8% of the work force and its economic and political influence continues to decline. Honduras held its seventh consecutive democratic general elections in 2005 to elect a new president, unicameral Congress, and mayors. For the first time, as a result of the newly reformed Electoral Law, voters were able to vote for individual members of Congress, with photos of each candidate on the ballot, rather than party lists. For the electoral period 2006-2010, 31 women were elected to Congress. Additionally, 27 of these 31 congresswomen chose women as their alternates. In November 2008, successful primaries were held to select the candidates from the Liberal and National parties who will compete for the presidency in November 2009. Political Parties The two major parties are the slightly left-of-center Liberal Party and the slightly-right-of-center National Party. The three much smaller registered parties--the Christian Democratic Party, the Innovation and National Unity Party, and the Democratic Unification Party--hold a few seats each in the Congress, but have never come close to winning the presidency. Principal Government Officials President--Jose Manuel "Mel" ZELAYA Rosales Vice President--Aristides Mejia Minister of Foreign Relations--Patricia Rodas President of Congress--Roberto MICHELETTI Ambassador to the United States--Roberto FLORES Bermudez Ambassador to the United Nations--Jorge Arturo Reina Ambassador to the OAS--Carlos SOSA Coello Honduras maintains an embassy in the United States at 3007 Tilden Street NW, Washington, DC 20008 (tel. 202-966-7702). Government Type: Democratic constitutional republic. Independence: September 15, 1821. Constitution: 1982. Branches: Executive--president, directly elected to 4-year term. Legislative--unicameral National Congress, elected for 4-year term. Judicial--Supreme Court of Justice (appointed by Congress and confirmed by the president); several lower courts. Political parties: National Party, Liberal Party, Innovation and National Unity Party, Christian Democratic Party, and the Democratic Unification Party. Suffrage: Universal adult. Administrative subdivisions: 18 departments.

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History of Honduras

The restored Mayan ruins near the Guatemalan border in Copan reflect the great Mayan culture that arose in the fourth century. Mayan artifacts also can be found at the National Museum in Tegucigalpa. This culture had declined by the time Columbus sighted the region in 1502, naming it "Honduras" (meaning "depths") for the deep water off the coast. Spaniard Hernan Cortes arrived in 1524. The Spanish began founding settlements along the coast, and Honduras came under the control of the Captaincy General of Guatemala. The cities of Comayagua and Tegucigalpa developed as early mining centers. Independence Honduras, along with the other Central American provinces, gained independence from Spain in 1821; it then briefly was annexed to the Mexican Empire. In 1823, Honduras joined the newly formed United Provinces of Central America. Before long, though, social and economic differences between Honduras and its regional neighbors exacerbated harsh partisan strife among Central American leaders and brought on the federation's collapse in 1838. Gen. Francisco Morazan--a Honduran national hero--led unsuccessful efforts to maintain the federation, and restoring Central American unity remained the chief aim of Honduran foreign policy until after World War I. Since independence, Honduras has been plagued with nearly 300 internal rebellions, civil wars, and changes of government, more than half occurring during this century. The country traditionally lacked both an economic infrastructure and social and political integration. Its agriculturally based economy came to be dominated by U.S. companies that established vast banana plantations along the north coast. Foreign capital, plantation life, and conservative politics held sway in Honduras from the late 19th until the mid-20th century. During the relatively stable years of the Great Depression, Honduras was controlled by the harshly authoritarian Gen. Tiburcio Carias Andino. His ties to dictators in neighboring countries and to U.S. banana companies helped him maintain power until 1948. By then, provincial military leaders had begun to gain control of the two major parties, the Nationalists and the Liberals.
Military Rule
Authoritarian Gen. Tiburcio Carias Andino controlled Honduras during the Great Depression, until 1948. In 1955--after two authoritarian administrations and a strike by banana workers--young military reformists staged a coup that installed a provisional junta and paved the way for constituent assembly elections in 1957. This assembly appointed Ramon Villeda Morales as President and transformed itself into a national legislature with a 6-year term. The Liberal Party ruled during 1957-63. In 1963, conservative military officers preempted constitutional elections and deposed Villeda in a bloody coup. These officers exiled Liberal Party members and took control of the national police. The armed forces, led by Gen. Lopez Arellano, governed until 1970. Popular discontent continued to rise after a 1969 border war with El Salvador, known as "the Soccer War." A civilian President--Ramon Cruz of the National Party--took power briefly in 1970 but proved unable to manage the government. In 1972, Gen. Lopez staged another coup. Lopez adopted more progressive policies, including land reform, but his regime was brought down in the mid-1970s by corruption scandals. The regimes of Gen. Melgar Castro (1975-78) and Gen. Paz Garcia (1978-82) largely built the current physical infrastructure and telecommunications system of Honduras. The country also enjoyed its most rapid economic growth during this period, due to greater international demand for its products and the availability of foreign commercial lending. Seven Consecutive Democratic Elections Following the overthrow of Anastasio Somoza in Nicaragua in 1979 and general instability in El Salvador at the time, Hondurans elected a constituent assembly in 1980 and voted in general elections in 1981. A new constitution was approved in 1982, and the Liberal Party government of President Roberto Suazo Cordoba took office. Suazo relied on U.S. support during a severe economic recession, including ambitious social and economic development projects sponsored by the U.S. Agency for International Development (USAID). Honduras became host to the largest Peace Corps mission in the world, and nongovernmental and international voluntary agencies proliferated. As the 1985 election approached, the Liberal Party interpreted election law as permitting multiple presidential candidates from one party. The Liberal Party claimed victory when its presidential candidates, who received 42% of the vote, collectively outpolled the National Party candidate, Rafael Leonardo Callejas. Jose Azcona Hoyo, the candidate receiving the most votes among the Liberals, assumed the presidency in 1986. With the endorsement of the Honduran military, the Azcona administration ushered in the first peaceful transfer of power between civilian presidents in more than 30 years. Nationalist Rafael Callejas won the following presidential election, taking office in 1990. The nation's fiscal deficit ballooned during Callejas' last year in office. Growing public dissatisfaction with the rising cost of living and with widespread government corruption led voters in 1993 to elect Liberal Party candidate Carlos Roberto Reina with 56% of the vote. President Reina, elected on a platform calling for a "moral revolution," actively prosecuted corruption and pursued those responsible for human rights abuses in the 1980s. He created a modern attorney general's office and an investigative police force, increased civilian control over the armed forces, transferred the police from military to civilian authority, and restored national fiscal health. Liberal Carlos Roberto Flores Facusse took office in 1998. Flores inaugurated programs of reform and modernization of the Honduran government and economy, with emphasis on helping Honduras' poorest citizens while maintaining the country's fiscal health and improving international competitiveness. In October 1998, Hurricane Mitch devastated Honduras, leaving more than 5,000 people dead and 1.5 million displaced. Damages totaled nearly $3 billion. Ricardo Maduro Joest of the National Party won the 2001 presidential elections, and was inaugurated in 2002. Maduro's first act as President was to deploy a joint police-military force to the streets to permit wider neighborhood patrols in the ongoing fight against the country's massive crime and gang problem. Maduro was a strong supporter of the global war on terrorism and joined the U.S.-led coalition in Iraq with an 11-month contribution of 370 troops. Under President Maduro's guidance, Honduras also negotiated and ratified the U.S.-Central America Free Trade Agreement (CAFTA), received debt relief, became the first Latin American country to sign a Millennium Challenge Account compact with the U.S., and actively promoted greater Central American integration. Jose Manuel "Mel" Zelaya Rosales of the Liberal Party won the November 27, 2005 presidential elections with less than a 4% margin of victory, the smallest margin ever in Honduran electoral history. Zelaya's campaign theme was "citizen power," and he vowed to increase transparency and combat narcotrafficking, while maintaining macroeconomic stability. The Liberal Party won 62 of the 128 congressional seats, just short of an absolute majority.

People of Honduras

About 90% of the population is mestizo. There also are small minorities of European, African, Asian, Arab, and indigenous Indian descent. Most Hondurans are Roman Catholic, but Protestant churches are growing in number. While Spanish is the predominant language, some English is spoken along the northern coast and is prevalent on the Caribbean Bay Islands. Several indigenous Indian languages and Garífuna (a mixture of Afro-indigenous languages) are also spoken. The restored Mayan ruins near the Guatemalan border in Copan reflect the great Mayan culture that flourished there for hundreds of years until the early 9th century. Columbus landed at mainland Honduras (Trujillo) in 1502, and named the area "Honduras" (meaning "depths") for the deep water off the coast. Spaniard Hernan Cortes arrived in 1524. Nationality: Noun and adjective--Honduran(s). Population (2009 est.): 7.8 million. Growth rate (2009 est.): 1.96%. Ethnic groups: 90% mestizo (mixed Indian and European); others of European, Arab, African, or Asian ancestry; and indigenous Indians. Religions: Roman Catholic, Protestant minority. Language: Spanish. Education (2003): Years compulsory--6. Attendance--94% overall, 61% at junior high level. Literacy--83.3.2%. Health: Infant mortality rate--24.03/1,000. Life expectancy--69.4 yrs. Work force: Services--42.2%; natural resources/agriculture--35.9%; manufacturing--16.3%; construction/housing--5.6%.
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