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Source: Dow Jones Newswires Vina del Mar, Chile
By: Julian Dowling
Honduras' recent army-backed coup could cost the poverty-stricken Central American country $450 million in financing from international organizations this year, Rebecca Santos, the finance minister in exile, said Friday. The de facto government, led by interim leader Roberto Micheletti, is "illegal" and the "legitimate government" of President Manuel Zelaya must be reinstated "immediately" to restore international confidence in Honduras, said Santos, speaking on the sidelines of the Second Meeting of Finance Ministers of the Americas. Without funding from multinational organizations and foreign countries, many of Honduras' social programs and public investments could be in jeopardy, said Santos.
The World Bank has already said it is halting all loans and grants to Honduras. "We are taking a pause until there is greater clarity on the legal status of the government," said the World Bank's president Robert Zoellick in Vina del Mar. The World Bank has a portfolio of $400 million in Honduras for 16 programs related to rural development, health and cash transfers for poor people. Of this amount, $270 million has not yet been distributed and is on hold until the legality of the government is resolved. "We are not presenting any new projects to the board until there is a solution," said the World Bank's Manager External Affairs Latin America and the Caribbean, Sergio Jellinek.
The Inter-American Development Bank President Luis Alberto Moreno has also said the lender would not be providing any new credits to Honduras, while the United States has suspended aid pending a legal decision on whether to cut aid in response to the coup. The economy of Honduras, one of the five poorest countries in Latin America and the Caribbean, has been hurt by the credit crunch and high oil prices last year. It has slashed its gross domestic product growth forecast for 2009 to 2% from 4.3% in 2008, said Santos.
"We need to grow more than that given the needs of our growing population," she said. Before the coup, Honduras had turned to help from its neighbors, including Venezuela, which in turn generated internal criticism of President Zelaya's government. In response to soaring fuel import bills, Honduras joined the PetroCaribe agreement giving it access to subsidized Venezuelan fuel at attractive financing conditions. Honduras was also negotiating financing from Brazil and Mexico for power generation and public infrastructure projects, said Santos.
"At a time when the flow of aid from multilateral organizations is being limited, these agreements are important," said Santos. But these agreements are in doubt unless the "legitimate government of President Zelaya is restored immediately," said Santos. The de facto government has proposed bringing forward national elections to resolve the political uncertainty, but this option is illegal because the government has no legitimacy, said Santos.
Zelaya's term ends in January 2010. In the meantime, Santos supports diplomatic efforts by the Organization of American States to find a solution to the crisis. Santos, who cannot return to Honduras due to the current situation, said she felt "overwhelmed" by the international support shown for her government at the meeting in Chile. "Chile knows what it's like to go through situations like this... we know we are not alone," said Santos, referring to the army-backed coup that toppled the elected government of President Salvador Allende in 1973. |