Honduras - Economic position and prospects

1-4 * El H~~~~~~~~~~~~~~~~~~~~~~~~~~~C * c-i~~~~~~i El .u~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I~~c C)~~~~C OTI ~~CD C) - C El El ~~~~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C) CD: CDi 0 Zb~~~~~~ z (7) ~~~~~~~~~~~~~~~~CD 0 C) __ _ d CD~ ~~~~~~~~ CD 0 -.~~~~2 lxi z 3-- ~~~~~~~~~~~~~~~~~~~CJ.) CD CD . CD 5r 'CD C C) C, ~ ~ ~ C CD. i~~rn t7l~~~~~~~~~~~~~~~E  CURRENCY EQUIVALENTS Unit: - Lempira U.S.$ 1 - Lempiras 2 TAe.,.pira I - T.S. $ .5 Lempiras 1,000 - U.S. $ 500 Lempiras 1,000,000 - U.S. $ 500,000  TABLE OF CONTENTS BASIC . DAT ................... SU1lveiARY AND wCNCLUSIONS ........................ I. SETTI.I 1... ... . . . II. RECENX T ThEN-DS A. Production and National Income . ... 2 B. Agriculture . . 3 C. Industry . ....... O ..... .. 6 D. Power.. .. .... 6 E. Transport.. 6 F. Public Finances ...................... 7 G. Government Development Efforts. b H. Money and Prices . 9 I. External Economic Relations . .10 III. PROSPECTIS AND CREDITWORTHINESS A. Public Investment Program ........ 12 B. Financing Public Investment 12 C. Private Sector Outlook .13 D. Overall Growth Prospects ................... 14 E. Balarnce of Payments Outlook .14 F. External Debt and Creditworthiness .16 Following Page No. CHARTS Sunnlv and Use of Resournes, 1- I QqQ .--. 2 Agricultuaral Productic,n Indexes, 1951-59. 3 Industrial Production Indexes- 1951-59 o...... 5 Budget Revenues and Expenditures, 1956-60 7 External Trade. 195n0_9 --.....-...--.... = 9 Export, :[mport & Terms of Trade Indexes, 1950-59 9 Voliume R UTnit Value of' Exports Tndpxe.q 19Nn-... l 1 Balance of Payments, ]955_59 .11 Foreign Thcnhange Holdings, 1950-59.-- 11---- External Public Debt, 1960-70 ............... 15 Pavments on External ihli Dent 1960-70 ....7 15 STATISTICAL APPMDIX 17.......................... 1  i BASIC DATA Area: 43,600 square miles 112,985 square kms. Population Estimate, 1959: 1.9 million Gross National Product, 1959: (at market priGes) 7L3 million lempiras Tncnme ner head (annrrm- 3717 lpmniras (MS$; 187) rTross NJational Investment: g ofG CN=P (1959) Financed by: Domestic Savings 10.4 Eixtvernl Rsncou-r'ces 1. 9 Expendit4J UJres 77f 7 . I; n l Imni Revenues 70.3 million lempiras V4 -4 ,- -4 Th,-,.p. -4 4 -.I- .1 ..JJX -L*.J Ui.'S Ui...~. Vj external loans 7.0 million lempiras Money Supply: (December 1959) 64.4 million lempiras Balance of Payments, 1959: (Goods and services) Exports 115.2 million lempiras Imports 126.0 million lempiras Trade Balance 1i9)2 million lemoiras Invisible receipts (gross) 903 million lempiras External Public Debt Outstanding: ('December 31, 1959) US} 16.41 milluio e:qu v. Foreign EKchange Reserves (net): (December 1959) (In millions of US" equiv.) Gold 0.1 Foreign Exchange 8.5 To ta.l R.6  0 0 ~~~~C A- R 1 8 8 e- t G;,UL:F: CF H'ON Diii LI k '5LA -DSS _ 69X2~~~~~~~~~40W jci Ceib '>~~~~~ ~ ~~~~ KR C A > - 9 w R4Si; j. s < M ) IMBARA, I@ C) EIiTOA S0N.E -'p=E= At,. ,c . - L ;ci A ,k c SI ,eO Hor of h oteser /, n . - . I /w\sb,c fhoo/nbeo, h nentbo * \CoPr&o Jst;c, pursuont t o onoremnJ)Tx %0~~~~~~~~~~~~~~~r/ L/ /957: I  SUMMARY AND COINCLUSIONS 1, The gross d-mestic product of Honduras has been increasing in recent years at an average annual rate of approximately 4%; real income per nead nas grown by roughly 17S annually. This growtn nas taken place under conditions of relative price stability-the cost of living index registered anl average increase of less than 2p annually. But because of political instability, sizeable budget deficits, and serious labor, weather an(d disease difficulties experienced by the banana industry, continuous losses in foreign exchange took place starting with 1954 These losses became particularly acute in 1958, and restraint in the fiscal and credit fields became imperative if the value of the Lempira was to be maintained. Measures to this effect were instituted late in 1958 and the authorities developed a program with the IMF to deal with the situation. 2. Early in 1959 Honduras entered into a one-year stand-by arrangement with the DIMF in the amount of US$ 4.5 million with the purpose of strengthening the country's weak foreign exchange reserve position and thereby assisting in the maintenance of a freely-conver- tible currency. The monetary measures set forth in the stand-by agreement of 1959 were satisfactorily carried out. The price level increased by less than 1% during the year. With the improved internal monetary and fiscal situation. exports increased bv 2% and imports were reduced by 7% during 1959 as compared with 1958. The decline in foreign exchange reserves was arrested and; on a net basis, foreign exchange reserves increased by USp 1.3 million in 1959. 3. In March 1960 Honduras entered a new stand-by arrangement with IMF under which tin to TJSS 7?. million hec -mes available. The Honduran authorities plan to continue to carry out the measures included in the sta 1i 7.fi nn program. t,hat WaS beguh n last year anti to adopt additional measures, if necessary. A principal objective of continuing the stabilization progrnm is to-i raie the foreign exchange reserves to a level at which they will be adequate to main- tain a fully convertihle o,1rrpnoyr 4= A p~rogram. of~ hpalic investment for economic development for the years 1960 to 1963 has been drawn up by the Honduran authorities. To carry out this program within. the p'lann.ed period would require local currency resources in excess of those now foreseeable from inter- nal bhiudrt ry urenr s.The authoriti-es expect to finan- e the shortfall in local currency largely by borrowing from the private sector and from abroad. nds obtainabLe frUm these sources may not be sufficient to meet all public investments programmed, and the Government may have to k, 11 ~ -1U k .LUi V.