Honduras’ accession to CAF on hold after failure to ratify the agreement

By Fátima Romero

The ratification of Honduras’ accession as the twenty-first country to join the Development Bank of Latin America (CAF) is still on hold following the lack of support from opposition deputies.

In April 2022, Honduras expressed its interest in becoming “as soon as possible” a full member of CAF; its entry was unanimously approved in August.

On May 16, the National Congress approved the ratification of Honduras’ accession to the CAF with 66 out of 128 votes, despite the opposition of the National Party, the Salvador Party of Honduras (PSH), and some parliamentarians of the Liberal Party.

According to the legislators, the main reason for the refusal to approve the accession agreement is that it would imply the disbursement of US$470 million over nine years.

The agreement suggests that in the first year, the country would buy US$6 million in shares, and with that purchase, it would have access to credits with an interest rate of 7.05%.

The CAF celebrated the incorporation of Honduras by tweeting, “an important step that underlines our joint commitment to sustainable development and regional integration”.

PARLIAMENTARIANS RATIFY THEIR POSITION

On Wednesday, May 17, parliamentarians who had voted in favor of the accession decided not to ratify the act in the following legislative session.

Hence, the agreement was without value and effect, said Marlon Lara, deputy of the Liberal Party, to journalists in the Honduran capital.

Through a communiqué, the Liberal Party pointed out that it had found “elements that require a deeper analysis and are indispensable for a final decision”.

Also, the representative of the National Party, Nelson Márquez, said that acceding to the regional initiative would mean “requesting credits that will further indebt the country”.

In the Central American country, the Tax Justice Law, a project sent by the Executive Branch that seeks to “build a fairer and more equitable tax system”, is being socialized.

In the same session on Tuesday night, the director of the Revenue Administration Service (SAR), Marlon Ochoa, spoke about the law initiative.

The official began his intervention by saying that the last three legislatures (2010, 2014, 2018) of the National Congress had been “a window of paperwork for corrupt businessmen and politicians”.

For the representative of the Liberal Party, Mario Segura, Ochoa’s “attacks” made the legislators who had lent their vote to approve the adhesion of Honduras to the CAF change their opinion.

This position of the Liberal bench led the board of directors of the National Congress to suspend the session until next week, allowing time to seek consensus and ratify the minutes.

The president of the National Congress, Luis Redondo, said that the accession agreement had already been socialized “with enough time”, even with CAF representatives, who met with deputies and company representatives.

“New financing organizations from the European Union and our region will likely come here, the world is changing, and we have to make decisions about it”, said Redondo.

The head of the Legislative said they hope the CAF funds can finance micro, small, and medium enterprise projects.

With information from Bloomberg

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