Wednesday, September 22, 2010

Broke Again

Like many families today, the government of Honduras is having problems making ends meet. This despite the flurry of financial support announcements this month unleashed by the agreement with the International Monetary Fund.

The problem is that what the government collects in taxes and payments from businesses and citizens is falling behind the financial projections. Spending, in turn, has accelerated, not in small part due to the problems produced by the inclement weather, poor or nonexistent construction standards, and previous infrastructure neglect. More cash is going out than is coming in right now.

William Chong Wong, the Minister of Finance to Lobo Sosa complained yesterday in the Council of Ministers meeting, that the payments weren't coming in as projected, and the government cash on hand was down to 200 million lempiras. This is not entirely a surprise. Chong Wong has been predicting the cash flow would reach a crisis without an increase in government income, and has been promoting belt tightening measures in the government. His original prediction that the crisis would occur in August was incorrect, but only slightly off.

Chong Wong warned that he was being creative, using funds from other sources, such as the excess investible capital in government employee retirement funds managed by the private sector. Isn't this the same kind of creative financing that the Public Prosecutor is calling corruption when members of the Zelaya government did it? Still Chong Wong warns that as things stand, the government will not be able to pay the salaries of all the public employees this month.

This is the direct result of the spending practices of the de facto government. Last time Chong Wong issued a warning about cash flow, Lobo Sosa called him a cry baby. It should be interesting to see his reaction this time.

1 comment:

Tommy said...

Talking about Lobo's government, here's something hopefully of interest to you:

"On the sidelines of the opening 65th UN General Assembly this week, President of Honduras Porfirio Lobo met with UN Secretary-General Ban Ki-moon and received Ban’s assurance of the UN’s continued support for Lobo’s Truth and Reconciliation Committee. The agency is investigating human rights issues in the run up to Honduras’ June 2009 coup." (From a summary in the AS/COA weekly update)