Vaccine inequality adds to Honduras’ economic woes

Unequal access to vaccines is hampering Honduras' post-pandemic recovery, according to finance minister Marco Midence.

“We regret the inequality globally in terms of vaccine distribution. We have been dealing with direct procurement issues. This is very important,” Midence said at a forum of Latin American finance ministers organized by the Inter-American Development Bank (IDB).

Midence became finance minister in August 2020 and tested positive for COVID-19 a month later. 

Honduras’ economy is facing uncertainty because of presidential elections in November and because of upcoming loan negotiations with the IMF.

Internal debt grew from US$4.83bn to US$6.10bn in 2020 because of more bonds issues to compensate lower tax collection, according to the finance ministry’s (Sefin) public credit department.

“We needed extraordinary measures for extraordinary circumstances in an unprecedented situation,” Midence said. “In a way, we’re more like firefighters than engineers.”

On March 31, debt relief measures ended, according to the banking and insurance commission (CNBS), although banking association Ahiba had requested a three-month extension. Access to loans is now more difficult.

And months of minimum wage negotiations have still not yielded results as unions and the private sector have asked for labor ministry mediation. The private sector is offering a 4% increase while unions are asking for 6-8% more, depending on the industry.

The current average monthly minimum wage is 10,022 lempiras (US$417), according to the government. 

In March, labor minister Olvin Villalobos said 2020 unemployment was better than expected at 10.9%, up from 5.7% registered in 2019.

Midence has promised a tight fiscal policy and adherence to IMF guidelines, so Honduras can refinance its debt.

“What we’re talking about now, in the context of this crisis, we are talking about a reconstruction and sustainable development plan,” he said.

A US$790mn infrastructure plan to repair the damage caused by hurricanes Eta and Iota is part of such sustainability efforts. 

While the World Bank predicted a 4.5% GDP rebound this year, the political landscape remains uncertain. President Juan Orlando Hernández is linked to a drug trafficking trial and his brother received a life sentence in another trial. Not even an orderly change of government in November is certain.

Central bank president William Cerrator already said it will be “difficult” to attract external investment.

Natural disasters represent another risk.

“The impact of the hurricanes was US$2bn. We’re hoping that we will be able to increase social expenditure and have greater social investment but the game changer here would be the vaccination,” Midence said.

Photo credit: Honduras government