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Honduras ROLE OF GOVERNMENT
Fiscal Policies
Throughout the 1960s and most of the 1970s, the
military-led
governments of Honduras ran a state-sponsored and
state-financed
economy. The governments provided most guarantees for
loans to a
strong but patronage-dominated and somewhat corrupt public
sector
that included recipients of graft extracted from foreign
and
domestic investors, and to costly state-developed
enterprises. By
1989 and the election of President Callejas, however, a
heavy toll
had been taken by regionwide economic recession, civil war
in
neighboring countries, the drying up of most external
credit, and
capital flight equaling more than US$1.5 billion. Callejas
began to
shift economic policy toward privatizing government-owned
enterprises, liberalizing trade and tariff regulations,
and
encouraging increased foreign investment through tax and
other
incentives. The Callejas administration did not seek less
government control. Rather it changed the government's
objectives
by focusing on reducing public-sector spending, the size
of the
public-sector work force, and the trade deficit. Overall
economic
planning became the responsibility of the National
Superior
Planning Council, directed by the minister of economy and
commerce.
President Callejas, a United States-trained economist,
brought new
professionalism and technical skills to the central
government as
he began the arduous task of long-term economic reform.
Data as of December 1993
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