HONDURAS: RESPONSE TO REQUEST FOR FY 2010 FISCAL

UNCLAS TEGUCIGALPA 000056 SENSITIVE SIPDIS DEPT FOR EEB/IFD/OMA BRIANA SAUNDERS E.O. 12958: N/A TAGS: EFIN EAID AID PREL ECON HO SUBJECT: HONDURAS: RESPONSE TO REQUEST FOR FY 2010 FISCAL TRANSPARENCY INFORMATION REF: A. STATE 01923 ¶B. 09 STATE 81177 ¶C. 09 STATE 98111 ¶1. (U) The following is Post's responses to questions in ref ¶A. ¶2. (U) Is the central government expected to receive funding under the FY 2010 SFOAA? --Yes. The central government is expected to receive funding under the FY 2010 Department of State Foreign Operations and Related Programs Appropriations Act. ¶3. (U) Is the host country's annual national budget publicly available? --Yes. The host country's annual national budget is publicly available on the Ministry of Finance website ) http://www.sefin.gob.hn/portal prod/index.php?option= com content&task=view&id=131&Itemid=151 ¶4. (U) Are incomes and expenditures included in the publicly available budget? --Yes. Income and expenditure estimates are included in the publicly available budget. ¶5. (SBU) What is Post's assessment of the extent to which the publicly available budget accurately reflects actual government incomes and expenditures? --The full extent to which the publicly available 2009 budget accurately reflects actual government incomes and expenditures is difficult to ascertain. Deposed President Jose Manuel "Mel" Zelaya's administration never submitted a 2009 budget, allowing the misappropriation of a significant amount of funds. After President Zelaya's ouster, the de facto regime hastily put together a budget based on the 2008 budget, which helped control spending but did not adjust for the waste inherent in the 2008 budget. Though the Ministry of Finance does not employ any sophisticated forecasting models to project revenues or expenditures, estimates of tax revenue have been reasonably accurate. ¶6. (U) Have there been any events since the 2009 review that may have affected fiscal transparency (e.g., a coup.)? --On June 28, 2009, a coup d'etat forcibly removed and exiled President Jose Manuel "Mel" Zelaya from Honduras. Free, fair and transparent elections in November 2009 resulted in the election of the opposition party's candidate, Porfirio "Pepe" Lobo. He will be sworn in on January 27. ¶7. (U) Since last year's review, what efforts has the host government undertaken to improve fiscal transparency? What progress has been made, pursuant to the 2009 demarches on the subject (reftels)? --The Ministry of Finance and the Central Bank have made concerted efforts to improve fiscal transparency, publishing an array of accounting documents on their respective public websites. ¶8. (SBU) COMMENT: The June 28, 2009 coup d'etat and ensuing political crisis halted Post efforts to work with the Government of Honduras (GOH) to improve fiscal transparency. The Department of Treasury, Office of Technical Assistance (OTA) has resident program advisors assisting the GOH with Budget Policy and Management and Government Debt Issuance and Management. Additionally, OTA has an intermittent program in the area of Tax Policy and Administration. These programs have been suspended since the coup in accordance with the USG policy of no-contact with the de facto regime. Post was pleased with progress made by OTA in 2007 and 2008. After the new president is sworn in on January 27, Post plans to evaluate the new GOH's commitment to serious progress in these areas. If positive, OTA would be encouraged to resume advisory services with the host government. HENSHAW