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