HONDURAS HOMES HOUSING PROJECT

UNCLAS TEGUCIGALPA 002531

SIPDIS

STATE PASS OPIC FOR JRIVERA-MONTES AND DERB

E.O. 12958: N/A
TAGS: EINV ECON HO
SUBJECT: HONDURAS HOMES HOUSING PROJECT

REF: SECSTATE 225570


1. Reftel requests embassy comments and recommendations
regarding the possibility of OPIC providing a $9.8 million
direct loan to Honduras Homes, to construct 1,450 low-cost
houses. ZIP Buffalo is a maquila (light-assembly) operation
active in Honduras. Incohnsa Group and the Arguello family
are well and favorably known to the USAID mission in
Honduras, and it is therefore Post,s opinion that they are
creditworthy and reliable business partners.


2. The rapid growth of the light assembly and textiles
industries in Honduras, and particularly in the Sula Valley
between San Pedro Sula and Puerto Cortes, has led to
localized labor shortages and consequently higher average
wages and educational levels for workers. This growth
continues to draw immigrants from other parts of Honduras to
the Sula Valley, putting increasing pressure on social
services and basic infrastructure, including low-cost
housing. Addressing this issue is thus both a social and a
business imperative, and would benefit both workers and
employers. The GOH has a fully-elaborated strategy for
poverty reduction, including support for low-cost housing
purchases. Under the recent GOH agreement with the IMF,
fiscal austerity is the rule, and resources are dear.
However, in Post,s view, given low cost housing,s
associated impact on poverty reduction and its direct support
for continued growth in an economically vibrant sector, GOH
support for low cost housing is likely to continue.

PIERCE
Pierce