Central bank chief hails a new chapter for Honduras

Q: Honduras has been working on an agenda aimed at institution strengthening and fiscal consolidation for a few years now. Is the country in a better place today?

A: Back in 2013, we faced a big challenge because the fiscal deficit reached about 8% of GDP. Four years on, we closed 2017 with a fiscal deficit of 2.6%, economic growth exceeded expectations at about 4.8% and inflation is under control. We did have an interesting fiscal consolidation without compromising on economic growth.

Yet in order to prevent the failure of our nation, we have to strengthen institutions. Many institutions have been reformed, some have been shut down altogether, such as the old agency tasked with collecting taxes, which had been infiltrated by organised crime. We set up a new agency, isolating the whole process of contracting new personnel from any political influence. We also had major problems with security, and today we have managed to bring crime levels back to those of eight to 10 years ago, because of a deep reform of the police forces.

Besides [this], the finance ministry has been very much strengthened. Among other things, we set up a fiscal responsibility law so that fiscal discipline and institution strength will remain immune to future political changes.

Q: What are you doing to attract foreign investment?

A: First, we had to put the economy in order – and we did that – and fix the security issue, because both things allow you to set the ground for investors to come over. Now we have to make the most of our human talent: we have a young, bilingual workforce.

In the past, poor public education was a reason for concern. Many private schools teaching English have been set up and today 70% of our youngsters speak English with little accent, which is very interesting for investors in fields such as call centres.

We are also betting on tourism. We are a few hours away by plane from the US, the Caribbean and Panama; we can make the most of opportunities in this sector, always keeping an eye on security. We have had success in industries such as agriculture and textiles, but today we want to add value to our production.

Q: When is the new logistics corridor, running north to south across the country, going to be ready?

A: We expect the Ecuadorian firm Hidalgo e Hidalgo – which won the concession for the logistics corridor running from the Pacific coast to the northern Atlantic coast and has been working at it for the three years – to wrap up works in the next few months. The new corridor is going to save costs and make exports to the US and other countries more competitive.