Honduras

THE REPUBLIC OF HONDURAS in Central America was originally part of the Mayan civilization but later came under the domination of Spain. In 1821, Honduras won independence, along with many neighboring countries.

From 1957 to 1982, political power remained mostly in the hands of the military. In 1982, a democratic election established civilian rule. For most of the 1980s, Honduras served as host for the anti-Sandinista Contra movement, which was dedicated to ridding neighboring Nicaragua of its Marxist government. Honduras also proved to be an ally of the leftist guerilla forces of El Salvador.

Honduras is subject to frequent but mild earthquakes. The hurricanes and floods that occur along the Caribbean coastline, however, are often destructive. Such was the case with Hurricane Mitch, which hit [Page 502]Honduras in 1998, killing 5,600 people, causing $2 billion in damage, and devastating the economy.

Because of its status as a Heavily Indebted Poor Country, Honduras has worked with the World Bank and the International Monetary Fund (IMF) to reduce its substantial debt and is making progress toward economic growth. Honduras has also signed a free trade agreement with the United States, a move that is expected to have a significant impact on the Honduran economy. However, high crime rates serve as a deterrent to foreign investors.

Honduras has a vast potential for further development through exploitation of its resources, which include timber, gold, silver, copper, lead, and hydropower. The Honduran economy has become more diverse in recent years, but 34 percent of the labor force are still employed in the agricultural sector. Approximately 45 percent are engaged in services, and 21 percent work in various industries. Unemployment is massive in Honduras, with a current rate of 28.5 percent.

As a result of high unemployment and deteriorating social conditions, around 35,000 citizens leave Honduras each year. Most emigrate to the United States. The Honduran economy is annually boosted by remittances of around $1 billion that workers send back to their families in Honduras. Some estimates suggest that up to 25 percent of these remittances are sent in ways that are outside the control of the Honduran government, so the total may be much higher.

With a per capita income of $2,800, Honduras is one of the poorest countries in the western hemisphere, although it is a lower-middle-income nation by world standards. Income is unevenly distributed, with the richest 20 percent claiming 58.9 percent of income and resources while the poorest 20 percent share only 2.7 percent of income and resources. Honduras is ranked 55 percent on the Gini Index of Human Inequality.

The poverty rate in Honduras is currently 53 percent. Poverty is concentrated in rural areas, where poverty rates are estimated as high as 75 percent. Some 44.4 percent of Hondurans live on less than $2 a day, and 23.8 percent live on less than $1 a day. Around 21 percent of the population are malnourished. Women and children are among the poorest of Hondurans.

Despite high levels of poverty, social spending has declined by as much as 40 percent in recent years, and social programs are vastly underfunded. In 2004 the government launched a three-year poverty reduction program based on IMF guidelines.

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