Aguan Agreement Endangered

The agreement between the Movimiento Unificado de Campesinos del Aguán (MUCA) and the Honduran government to buy land in the Bajo Aguan from Miguel Facussé is endangered. MUCA alleges the government is not keeping their part of the bargain.

Decree 161-2011 was signed on October 4, 2011, and gave a 90 day window for MUCA and the government to agree on financing of the purchase through private funding, with the government acting as a guarantor of the loan. MUCA would be responsible for paying off the loan.

According to Vitalino Alvarez, spokesperson for MUCA, the government only got one response to their request for proposals from private banks. That response, from BANHPROVI (the Banco Nacional Hondureña de Producción y Vivienda) agreed to finance the purchase, at 14% interest with full repayment in 7 years, and a two year grace period.

However, according to MUCA, the terms required them to assume all the costs of acquiring the loan (legal, environmental, registrations, etc.) which combined with the interest rate and repayment period, made the loan impossible for them to assume, according to Vitalino Alvarez.

Further MUCA said the government negotiated the loan terms without consulting them, whereas their interpretation of the agreement calls for a mutual discussion of the loan terms.

In any case, MUCA is right; the loan terms are too onerous for them to assume. They've earned about 150 million lempiras since they took over the land in April, 2010, or roughly 75 million lempiras a year. They put about 30 million lempiras of that back into land improvement. The balance they divided among the 3000 families of MUCA. That works out to be about 20,000 lempiras per family, or $1055 a year. Simple math shows they could never earn enough, at that rate, from the African Palms to ever come close to paying off the loan, even assuming the 3000 families that belong to MUCA needed no income for those nine years.

Did the government (or the bank for that matter) bother to even do the math? Apparently not since they presented this deal to MUCA. It turns out MUCA is smarter than the members of the Secretaria de Finanzas that negotiated this deal.

MUCA did the math, and it didn't add up. It would be insane for them to sign the proposed deal. It would have hurt the Honduran government as loan guarantor when MUCA inevitably defaulted.

Back to the drawing board.