Honduras Returns to the World Bank’s Arbitration Court With an Eye on Investors

HONDURAS · ECONOMY

The Honduras ICSID return puts the country back inside the World Bank’s arbitration system after 18 months outside it. The government of Nasry Asfura calls it the foundation of an investment push that next week could carry an energy reform through Congress.

Back at the World Bank’s court

ICSID is the International Centre for Settlement of Investment Disputes, the World Bank body where foreign investors can sue states. Honduras had belonged to it for 35 years.

The previous president, Xiomara Castro, pulled the country out in February 2024, calling the system biased toward corporations. The withdrawal took effect on 25 August that year.

Asfura reversed the decision in his first weeks in office. He signed the convention in Washington on 6 March, Honduras deposited its ratification on 17 July, and Honduras ICSID membership took effect on 16 August.

World Bank president Ajay Banga called the move a clear signal that Honduras is open for business. Lawyers and analysts have echoed that reading; more than 50 civil-society groups instead called it a “signal of submission” to foreign capital.

The claim that hangs over the return

The Honduras ICSID return comes with baggage. The investors behind Próspera, a charter city on the island of Roatán, are still pursuing the state in arbitration.

The claim originally reached US$10.775 billion, close to 40% of the Honduran economy. The investors cut it to US$1.63 billion last October, and the case has run for more than three years without a ruling on the merits.

The dispute began when Castro’s government repealed the special economic zones known as ZEDEs. For potential investors, how Honduras handles this case will prove what the Honduras ICSID membership is worth.

The energy reform’s decisive week

Congress will concentrate next week on the energy bill Asfura sent in late May, and it could pass. The reform rewrites 12 articles of the 2013 electricity industry law.

Its centrepiece is the split of the state utility ENEE into three state-owned companies, for generation, transmission and distribution, under ENEE as the parent. An independent operator would run the grid and the wholesale market.

The case for it is financial. ENEE loses around US$600 million a year; in the first quarter of 2026 alone the hole was 4,049 million lempiras (about US$151 million), and Asfura puts monthly losses at 1,200 to 1,500 million lempiras (US$45 to 56 million).

The US State Department publicly backed the reform in June. The opposition Libre party calls it privatisation by instalments, and the ENEE workers’ union wants guarantees written into the text.

A double currency shock at the wrong moment

The politics would be easier if households were not squeezed. The dollar has broken through 27 lempiras for the first time, as we reported on Sunday, and a globally strong dollar compounds the slide.

Honduras imports its fuel and much of its food, so a weaker lempira lands directly in shop prices. The government is spending around 49 million lempiras (about US$1.8 million) a week on a temporary fuel subsidy to soften the blow.

The cushion is remittances, which bring in roughly US$7.7 billion a year from Hondurans abroad. That inflow supports the peso-poor, dollar-rich households that dominate the countryside.

The Dominican handshake

Asfura has also been building regional alliances. He met Dominican president Luis Abinader in Cali on 7 August, at Colombia’s presidential inauguration.

The two agreed to open a new stage of cooperation covering trade, security, air connectivity and coordination on the Haiti crisis, according to official statements. Asfura also asked for Dominican backing for Honduras’s 2029 Central American and Caribbean Games.

For a government selling stability to foreign capital, friends matter. The Dominican Republic is the region’s growth star, and a direct line to Santo Domingo fits the same investor-facing strategy as the Honduras ICSID return.

What to watch from here

The first test is the energy vote itself. The bill has already survived one debate and a long negotiation; passage next week would be Asfura’s biggest legislative win.

The second is the lempira. If the currency keeps sliding, the fuel subsidy bill grows, and the fiscal room for the investment agenda shrinks with it.

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