TEGUCIGALPA Dec 21 Honduras' Congress early on
Saturday approved its biggest fiscal shakeup in over two decades
with a reform expected to generate nearly $800 million in added
revenues each year in a bid to tackle soaring public debt.
Honduras, the second poorest nation in Latin America, has
seen its internal public debt more than quadruple since 2008 to
$2.9 billion, with a deficit that stands at 6 percent of gross
domestic product for two years running.
The debt crisis has kept the government from paying salaries
and bonuses to thousands of public employees, and making
transfer payments to the country's 289 municipalities.
The legislation raises taxes on gasoline and eliminates a
sales tax exemption for dozens of basic consumer goods and
services. Telecommunications services will also face higher
sales tax under the law while an electricity subsidy will be
The law also freezes 2014 budget allocations and transfers
to ministries, cities and state governments at their 2013
levels, while imposing new sanctions on officials who over
The National Party, which holds the presidency and dominates
Congress, pushed the law through before it loses control of the
the legislative body next month.
The party's president-elect Juan Hernandez, who takes
office on Jan. 27, will then be able to keep a campaign promise
not to raise taxes during his administration.