July 21, 2009

Honduras: Budgets, audits, and new controls

In an article in El Heraldo newspaper, it is reported that the domestic public debt of Honduras has doubled during the approximately three and a half years of the Zelaya administration. The Ministry of Finance noted that the debt stood at L. 6.9 billion on December 31, 2005. By March 2009, the debt had grown to L. 13.7 billion. (US $ = L. 18.9)

The new Minister of Finance, Gabriela Núñez, and her staff are in the process of accounting for the money that was spent. It is speculated, though, that most of the funds were spent on operating expenses, including on the campaign to promote the so-called “cuarta urna” referendum to rewrite the Constitution, which is widely believed to have sparked the current political crisis in Honduras.

At least some of the funds have been used to print hundreds of thousands of ballot forms flown in from Venezuela, purchase television and radio air time, and to buy citizen support for the referendum process, along with helping to finance some of the street rallies and protests in favor of Mr. Zelaya during the past two weeks. Funds have been used to pay people for organizing the events and to pay to transport people, as well as simply to pay people to participate.

At least in some cases, taxicab and bus drivers have been paid Lps1,000 to haul people to demonstration sites, and individuals have been paid Lps200 to Lps500 to attend. Individuals in Tegucigalpa with whom I've communicated regularly have confirmed that during the past week, things have calmed down considerably in Honduras… largely due to the fact that the money is now drying up. Logistically, it has become far more difficult in recent days to stage mass events in support of Mr. Zelaya. One of my friends in Tegus observed that much of the steam has been taken out of the pro-Zelaya demonstrators... again, primarily because people are not getting paid like they were before.

Marco Cáceres
Project Honduras

(Links added by LG)

Last week the 2009 budget was presented to the congress for approval, an act that according to the constitution, should have been done by the president no later than September 15, 2008. The budget includes an 8.2% reduction from 2008. New Minister of Finances, Gabriela Nuñez, indicated that there is no money for any extras. She also indicated that there would be no more unaccounted for "slush funds."

Unfortunately for the new government, despite the vast amounts spent in the first 6 months of the year, numerous obligations of the government went unpaid and now will have to be paid, including teachers and government salaries in arrears.

Gabriel Nuñez, new Minister of Finance, announced new internal accounting controls going into effect immediately to help to prevent future fraud against the government, such as requiring two signatures on checks, not allowing cash withdrawals over a certain amount, and requiring that checks be deposited into an account rather than cashed (to provide an audit trail). She also stated that they will be contracting with an international auditing firm in order to provide transparency and dispel any rumors. These notices were met with applause from the congressmen.

Payments to municipalities of long overdue funds have been made. Zelaya's administration withheld lawful payments, some since 2007, due to refusal of the respective mayors to promote the cuarta urna campaign (fourth ballot box).

Olanchito received reimbursement for electricity projects for poor areas which previously had been approved under the Poverty Reduction Strategy aid program. The project was completed in good faith with municipal funds but the city has been waiting reimbursement since 2007.

The Choluteca mayor has long and loudly complained about funds and government efforts being wasted on the cuarta urna when the priorities of the people, such as clean water and electricity have been ignored. Choluteca also received a long overdue transfer from the new central government.

Both Sra. Nuñez and President Micheletti have invited any international observers to come to see for themselves what is happening in Honduras.
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