Countries & RegionsMicrofinance in Honduras:
Market Overview
November 2010According to the Executive Secretary of the Central American Monetary Council (SECMCA) in its “Regional Economic Report 2009” the Nominal GNP of Honduras reached $14.405 billion USD in 2009, showing a decline in real terms of 2.1% (Table 1). The decline was attributed in part to the effects of the economic and financial crisis that affected the United States and Europe – Honduras’ principal trade partners. The decline was also attributed in part to the internal political crisis that resulted from the removal of President Manuel Zelaya at the end of June 2009, which caused a deterioration of relations between the international community as well as the withdrawl of financial support from the International Monetary Fund and the World Bank. The political crisis also delayed the signing of a Free Trade Agreement with the EU in 2009, which was not signed until President Porfirio Lobo was sworn into office in 2010, as reported by the Latin American Economic Comission (CEPAL) in its “Economic Study of Latin America and the Caribbean 2009-2010”.
| Table 1. Macroeconomics Indicators Honduras* (Amounts in millions of USD) | ||
| 2008 | 2009 | |
| Nominal GDP | 13,996.0 | 14,405.0 |
| Variation Real GDP | 4.2% | -2.1% |
| Exports FOB | 2,882.7 | 2,304.2 |
| Imports CIF | 8,830.9 | 6,133.3 |
| Remittance | 2,689.9 | 2,017.7 |
| Net International Reserves | 2,460.0 | 2,116.3 |
| IPC | 10.8% | 3.0% |
| Nominal Variation Credit to Private Sector | 10.3% | 2.5% |
| Active Interest Rate (Currency) | 20.0% | 19.3% |
| Pasive Interest Rate (Currency) | 11.9% | 10.9% |
| * Source: SECMCA, "Regional Economic Report 2009". | ||
The productive sectors most affected were industry, agriculture, trade, transportation, and construction. Total exports fell 20% with respect to 2008 figures and imports declined 30% compared to the pervious year, the latter influenced by a 31% fall in the petroleum invoice. The rate of inflation seen in the Consumer Price Index fell significantly in Honduras, as in the other Central American countries, from 10.8% in 2008 to just 3.0% in 2009. The Central Bank’s Monetary Policy Rate (TPM) and the reserve requirement behaved unusually in both halves of 2009. In the first half the TPM fell from 7.75% in December 2008 to 2.5% in June 2009 and the reserve requirement was differentiated by the economic sectors that financed the banking system (null or low in those institutions with more than 60% of their portfolios concentrated in productive sectors); in the second half TPM rose slightly and the reserve requirement was no longer linked with the sectors institutions financed.
As a part of the financial sector, both reports signal a decceleration of credit to the private sector given the reduction of interest rates and the policies regarding reserve requirements orientated towards guiding credit to the productive sector. This is explained by the presence of political uncertainty and the fall of external demand that produced lower demand for financing, combined with the risk aversion that pervaded the financial institutions. In fact, the financial sector preferred to invest in government securities. At the end of 2009, the SECMCA report showed a 2.5% increase in credit to the private sector and a notable increase of 50.7% in credit to the public sector (the highest in Central America, due to the decrease in funds from external sources directed toward the national budget).
Intstitutions and Legal Framework
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Supply
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Financial Performance
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