Honduras

Involvement in the Nation's Economy

Members of the Honduran army's 2d airborne battalion prepare for parachute jump operations.
Courtesy Department of Defense, Still Media Records Center

In addition to the legislated budget, the military also receives an income of about US$40 million annually from its own network of businesses, as well as from revenue generated through its control of the merchant marine, immigration services, police, automobile registrations, border check points, customs, seaports, and airports. In the early 1990s, new corporate investments made by the military averaged US$20 million annually. In the face of steep cutbacks in foreign military aid, these investments have taken on a new significance for the long-term survival of the armed forces. Most military investments are administered by the IPM, which is headed by the chief of the armed forces and managed by 100 retired military officers, who control a team of 3,000 civilian technicians and executives, and 10,000 other employees.

IPM's profits, which never come under the control of civilians and the normal budgetary process, go directly to the military and its retirement funds. These funds provide pension income to 7,000 retired civilian personnel and officers, some of whom, depending on rank and length of service, receive incomes of more than US$100,000 per year. This income is considerable in a country where in 1992 the average per capita income was only about US$650.

Military-owned businesses include the nation's most modern funeral home called San Miguel Archangel; the eighth largest bank in the country, Bank of the Armed Forces (Banco de las Fuerzas Armadas--Banffaa), which offers credit cards and loans to the public; plus a real estate agency, a stock brokerage firm, an insurance company, cattle ranches, radio stations, and scores of other enterprises. IPM also makes available Previcard, a credit card for the exclusive use of the military, with backing from Master Card. IPM is diversifying its holdings at a rapid rate. In 1991 IPM acquired the country's largest cement factory, the Honduran Cement Industry (Industria Cementera de Honduras Sociedad Anónima--Incehsa), which it purchased from the government for US$20 million. In 1993 IPM was well on its way to controlling the distribution of cement in Honduras. IPM provided financial backing for the army's plan to buy the state-owned Honduran Telecommunications Enterprise (Empresa Hondureña de Telecomunicaciones--Hondutel), valued at US$160 million and one of the government's most profitable businesses. Military businesses do not pay the normal import duties on goods or business taxes on their profits, allowing military enterprises to operate at much lower costs than their civilian competitors. Individual officers also are allowed to own and operate their own firms, and these too are growing in number. Civilian businesspeople have complained that the military's growing intrusion into the private sector constitutes unfair competition and that it erodes the spirit of free enterprise in the country. So far, docile civilian leaders, long-accustomed to seeing top military officers use their posts to gain wealth, have done little to curb the expansion of the military's business empire.

Data as of December 1993

Honduras - TABLE OF CONTENTS