WT/TPR/S/234 Trade Policy Review 
Page 72 
 
 
IV. TRADE POLICIES BY SECTOR 
(1) AGRICULTURE  
(i) Main features 
1. The agriculture sector grew by an average of 2.7 per cent per year in the period under review 
(2003-2009)1 and remains very important for the Honduran economy.  Although the sector's 
contribution to GDP declined from 14.1 per cent in  2003 to 12.6 per cent in 2009 (Table IV.1), these 
figures do not count the value of agri-business output,  or the production of inputs or services, which 
are included in the industrial and services sectors.2  The authorities believe that the wider agricultural 
sector contributes more than 40 per cent of GDP.3  In 2008, the sector provided work for about 
one third of the country's economically active population. 
Table IV.1 
Agriculture, selected indicators, 2003-2009 
 2003 2004 2005 2006 2007 2008 2009 
Crop farming, livestock breeding, hunting, forestry and 
fisheries:  contribution to real GDP (%) 14.1 14.2 13.1 13.2 13.1 12.7 13.0 
Gross value added in the agricu lture sector at base prices 
(growth rate) 5.4 18.5 16.6 6.7 13.1 18.6 6.6 
        
Employment (% of total) 38.4 37.4 34.9 39.2 34.6 35.5 39.0 
        
Share of agricultural production (%)        
 Coffee 15.2 17.7 20.0 22.2 22.7 22.7 20.1 
 Bananas 6.1 11.1 13.7 12.6 12.5 14.5 8.0 
 Tubers, vegetables, pulses and fr uit  17.0 15.3 14.6 14.6 14.4 14.4 16.0 
 Other crops and farming activitie s 11.1 10.6 9.5 10. 4 10.2 9.8 9.0 
 Beef cattle 16.9 15.3 14.5 14.0 13. 3 12.9 14.0 
        
Exports and re-exports        
 Agricultural products (US$ million) 640.7 779.0 858.9 1,132.9 1,300.7 1,896.9 1,668.0 
 Agricultural products ( % of total exports and re-exports) 64.6 65.2 66.4 60.3 54.4 71.6 58.9 
 Agricultural products (growth rate, %) 1.6 21.6 10.3 31.9 14.8 31.6 17.7 
        
Leading products (% of total exports and re-exports)        
Coffee, unroasted, decaffeinat ed or otherwise;  coffee 
husks and skins 18.4 21.5 25.4 20.7 20.9 23.3 19.3 
Bananas (including plantains), fresh or dried 11.3 11.8 10.5 7.0 6.4 14.4 11.0 
Crustaceans, frozen 4.8 3.7 3.0 8.7 5.3 5.0 4.5 
Palm oil and fractions thereof 5.3 4.4 4.3 2.4 4.6 6.9 4.4 
Wood and wood products 6.0 4.8 3.6 3.6 2.6 2.7 1.6 
Fruit, fresh or dried, n.e.s. 5.1 4.8 4.1 2.9 2.3 2.5 2.5 
        
I m p o r t s         
Agricultural products (US$ million) 512.4 579.7 699.7 706.3 1, 015,9 2,335. 6 1,901.8 
Agricultural products (% of total imports) 16.3 15.7 15.8 14.4 15.6 26.5 30.9 
Agricultural products (growth rate, %) 0.4 13.1 20.7 0.9 43.8 69.8 16.6 
        
Agricultural trade balan ce (US$ million) 128.3 199. 4 159.2 426.6 284. 8 604.7 523.1 
Source : Central Bank, Comtrade. 
 
2. In 2009, the sector generated 59 per cent of the foreign exchange earned from goods exports, 
excluding maquila .4  Agricultural exports increased from US$640 million in 2003 to US$1.668 billion 
                                                      
1 Information provided by the authorities. 
2 According to the authorities, since 2007 the Central Bank of Honduras (BCH) has been using a new 
calculation methodology which gives a substantially smaller share for the agriculture sector. 
3 SAG (2004). 
4 Information provided by the authorities. Honduras WT/TPR/S/234 
 Page 73 
 
 
in 2009;  and, as Honduras is a net exporter of ag ricultural products, the sector trade balance was in 
surplus during the review period.  The leading expo rt products continue to be coffee (33 per cent, 
US$548.5 million), bananas (19 per cent, US$312.7 m illion), palm oil (8 per cent, US$125.5 million) 
and other non-traditional products such as crustace ans and tilapia (10 per cent, US$164.4 million);  
while sugar, fruit, pulses and vegetables jointly acc ount for about 30 per cent of total goods exports 
(excluding maquila ).  The agriculture sector accounted for 17.1 per cent of total goods imported in 
2009, led by maize with an import volume of 407.454 MT.5 
3. Despite its importance as a job creator and fore ign-exchange earner, the Honduran agriculture 
sector has grown erratically since 2003, and it has generated insufficient income.  The sector 
contracted in 2009 (2.9 per cent), continuing the d eclining trend that began in 2008, when it expanded 
by just 0.5 per cent.  In 2009, the production of co ffee, bananas, African palm and staple grains were 
all substantially down, as a result of the drought  and tropical storms caused by the "El Niño" 
phenomenon, further compounded by pests. 
4. The country's agriculture is poorly diversified.  Just five crops (coffee, bananas, maize, sugar 
cane and African palm), together with livestock br eeding, generated 76 per cent of all agricultural 
output in 2009, while coffee and bananas, the leading export crops, accounted for 52 per cent. 
5. Production of the country's most important crop, coffee, expanded steadily through 
2003-2008 and contributed 20 per cent of total agricu ltural output in 2009 - despite a 6.7 per cent dip 
in the latter year owing to inclement weather c onditions.  According to the authorities, the coffee 
sector is passing through a major crisis owing to th e slump in international prices, as new producer 
countries with very low production costs have entere d the market.  In response, Honduras has focused 
on producing high-quality coffee, and this has enabled it to maintain a stable position in selected grain 
markets at competitive costs.  It has also comple mented coffee-growing activities by introducing new 
products (fruit trees, ornamental plants and apic ulture) and new activities (environmental services, 
ecotourism). 
6. Bananas accounted for 6 per cent of total agricultural production in 2009, when output 
contracted by 16.9 per cent as a result of the tropical storms that occurred in late 2008.6  Bananas are 
generally a high-yielding crop in Honduras;  but to maintain a co mpetitive position on the 
international market, the country has had to upgrade plantations in order to reduce the risk of pests 
and diseases;  and it has lowered production costs and sought new export promotion mechanisms. 
7. Staple grains (maize, beans, rice and sorghum) jointly accounted for 11 per cent of crop 
production in 2003-2009.  In the la tter year, cultivation was affected by the "El Niño" phenomenon, 
and production fell sharply (-7.2 per cent).7  Maize is the leading cereal crop, with output of about 
12 million quintals in 2009, followed by beans (1.4 m illion quintals).  Nonetheless, Honduras is a net 
importer of maize.  Despite the protection the count ry gives to this crop (through a price-band system 
and a marketing agreement between producers and agri-business) (see below), producers do not earn 
adequate returns, and this has ge nerated high levels of debt in th e sector.  The main problems stem 
from the application of a differential policy for wh ite and yellow maize, causing market distortions, 
and low levels of technology. 
8. The most important crops produced on an indu strial scale in Honduras are sugar cane, African 
palm and cocoa, which jointly accounted for more than 12 per cent of total agricultural output in 
                                                      
5 Information provided by the authorities based on the Basic Agricultural Survey of November 2009, 
conducted by the National Statistical Institute (INE). 
6 Central Bank of Honduras (2010c). 
7 Central Bank of Honduras (2010c). WT/TPR/S/234 Trade Policy Review 
Page 74 
 
 
2009.  Sugar cane production remained stable betw een 2003 and 2009.  The domestic sugar industry 
consists of seven companies and seven refineries.  These own 49 per cent of cultivated land, while the 
remaining 51 per cent belongs to some 1,600 independent producers.  One of the main problems in this sector is the pricing of refined sugar, based on an agreement between the refineries and 
independent producers that does not seem to reflect the steady rise in production costs. 
9. Fisheries and aquaculture are activities of ma jor potential for Honduras, with shrimps and 
tilapia among the country's main exports (Table IV.1).  Nonetheless, the sector is challenged on several fronts.  The most important fishery stocks (shrimp, lobster and snail) are showing signs of 
exhaustion - mainly because of overfishing, inadeq uate enforcement of the regulations governing 
exploitation of the resource (e.g. failure to respect  close seasons and minimum catch sizes), and the 
use of inappropriate fishing methods and techniques.   Moreover, the fisheries sector still has a very 
fragile and inefficient distribution and marketing st ructure, which, when existing plant and animal 
health regulations are not enforced, makes it  hard to supply a quality seafood product in good 
hygienic-sanitary conditions, either for the domestic or for the international market. 
Agricultural policies 
10. Honduran agriculture is generally a low-productivity activity
8, owing to features of the sector 
itself and macroeconomic factors.  The relevant sector variables include:  deteriorating resources, both land and the existing plantations;  the use of obsol ete technologies;  lack of managerial, promotion 
and marketing capacity among small and medium-sized producers;  lack of credit;  poor coverage of 
agricultural insurance;  lack of an effective and tr ansparent land market;  and inadequate infrastructure 
that makes it impossible to integrate the various links in the production chain.  Honduras also needs 
national technical assistance programmes, information services and post-harvest services (storage and transport) to support its agriculture sector.  Moreover, producers are isolated and lack services to supply inputs or market their produce, particularly in the case of highly perishable goods. 
11. Agriculture has also been affected by adve rse trends in a number of macroeconomic 
variables, particularly the overvalued exchange  rate maintained in Honduras over the period 
2003-2009 (Chapter I), and borrowing costs, where inter est rates on loans to the sector are high in real 
terms (Chapter IV(3)(ii)(a)).  The fact that the nom inal interest rate is well above returns earned by 
the sector explains the high level of debt and paym ent difficulties faced by producers.  In addition, the 
volume of credit available to the sector is insufficien t, since private-sector banks have yet to play the 
dynamic agricultural financing role expected of them. 
12. The goals of Honduran agriculture policy sin ce 2004 have been export promotion and import 
substitution in respect of goods considered necessar y to guarantee food security.  The authorities have 
therefore tried to adopt measures to promote the dom estic production of staple grains to bolster food 
security, combined with other measures to promote e xport crops that help generate foreign exchange 
(coffee, banana, African palm and cocoa).
9 
13. The authorities have attempted to raise sector productivity by improving the functioning of 
the domestic market, setting up a price-stabilization mechanism and applying trade defence measures 
that are "compatible" with the liberalization process (T able IV.2).  Some studies  also suggest the need 
                                                      
8 Official statistics show that the average yield of  maize in 2001 was 1.38 MT/ha., which is extremely 
low by international standards.  The same is true of coffee (0.69 MT/ha.), sugar cane (68 MT/ha.) and bananas 
(19.9 MT/ha.) (SAG, undated b). 
9 SAG (undated b). Honduras WT/TPR/S/234 
 Page 75 
 
 
to increase investment in the sector to enhance produc tivity, for which it is essential to create a system 
of land-holding based on clear and transpar ent rules, backed by legal certainty.10 
14. To promote exports, Honduras has adopted a stra tegy aimed at opening up new markets or 
market niches, by negotiating new free trade agreem ents (FTAs) and prudently managing those signed 
earlier.  The authorities aim to streamline export pr ocedures and make them less costly.  They also 
consider that guaranteeing agricultural health a nd food safety is essential both for export promotion 
and for stimulating the consumption of domestic agricultural products;  hence the policies adopted 
since 2004 in this domain (Table IV.2). 
15. The Central American Agricultural Policy (PACA) , approved in 2007, is an integral part of 
the country's national agriculture policy.  The Mi nistry of Agriculture and Livestock (SAG) is 
currently formulating the Strategic Plan of th e Agrifood Sector of Honduras 2010-2014 (PEAGROH), 
which will contain measures to fulfil the PACA goa ls.  National policy objectives are to promote job 
creation and stable incomes for farmers and farm workers, particularly small-scale farmers, and to guarantee food security in the region.  For that purpose,  the PACA identified five priority areas:  intra- 
and extra-regional trade;  agricultural health and f ood safety;  technological innovation;  financing;  
and risk management.
11 
Table IV.2 
Summary of agricultural measures 
Domains Measures 
Creation and application of a new framework of legal guarantees in 
relation to trade defence 
Strengthening of the domestic commerce system (Regional silos and storage centres programme;  Supply markets and cold store chains programme;  Private sector participation in managing the 
silos of the Honduran  Agricultural Marketi ng Institute (IHMA);  
Creation of credit lines for marketing) 
Launch of the Agricultural Commod ity Exchange (private initiative 
of Agrobolsa) Maintenance and strengthening of competitiveness in the domestic 
market 
Maintenance of other mechanis ms to administer domestic 
agricultural prices: 
- Control and oversight of compliance on basic food basket 
prices; 
- Increased organization and control of agricultural and 
handicraft fairs 
 Redesign of food aid policies 
International trade negotiations  
Simplification of export procedures Export stimulus 
Lowering of port fees and freight costs 
Extension of inspection and approva l procedures for industrial and 
small-scale livestock and farming units for domestic consumption 
and export (creation of the Food Safety Division and consequent 
surveillance in all centres that  produce and process products of 
animal and/or plant origin) 
Fulfilment of phytosanitary conditions for access to demanding markets Improvement of agricultural health and food safety 
Consolidation of the National Codex Alimentarius Committee 
Integration of agrifood chains Constitution of an  agri-business sector that is increasingly 
integrated worldwide.  Seven priority agrifood chains were identified:  staple grains;  fru it and vegetables;  fisheries and 
aquaculture;  livestock;  apiculture;  coffee and cocoa;  and African 
palm 
                                                      
10 Figures published by the United Nations Development Programme (UNDP) show that there are 
65,000 landless peasant-farming families, representing 20  per cent of the total rural population.  Peasant farming 
organizations believe the real figure is even higher - according to COCOCH, there are some 200,000 families 
without land or with farms smaller than 1 hectare. 
11 FAO (2007). WT/TPR/S/234 Trade Policy Review 
Page 76 
 
 
Domains Measures 
Promotion of technological innova tion, diversification and value-
added Agri-business training and development: 
- Revival of technical assistance services for small and 
medium-sized producers of basic food products; 
- Implementation of the Agricultural Education, Training 
and Business Development Service. 
Development of agri-business centres; 
Rural infrastructure development through the National Rural Infrastructure and Irrigation Service; Natural resource sustainability through projects financed with 
external cooperation 
Consolidation of the State financing system (the National 
Agricultural Development Bank (BANADESA) has been strengthened) 
Improvement of credit access conditions 
Strengthening of agricultural insura nce by creating the Agricultural 
Insurance Committee in Hondur as, to reduce the climate and 
biological risks faced by farmers 
Strengthening of guarantee funds 
Design of a strategy and mechanis ms to expand and strengthen the 
non-traditional rural financing sy stem through rural savings and 
loan associations, supported by rural development projects Agricultural and rural financing, a ttraction of investments and risk 
management 
Formulation of mechanisms to lower interest rates 
Access to land Formulation and approva l of the National Land Policy.  The 
National Congress is currently consid ering a bill to exploit idle land 
Institutional reform Efficiency and coordi nation of the public and private sectors 
Source : Government of Honduras, Ministry of Agriculture and Livestock, Política de Estado del Se ctor Agroalimentario y 
el Medio Rural de Honduras . 
 
16. The SAG is responsible for designing and im plementing policies in the agrifood and rural 
sectors, with jurisdiction over both sectoral and multi sectoral policies.  Other institutions involved in 
the agriculture sector include the National Agra rian Institute (INA), IHMA, BANADESA, the State 
Forestry Administration (AFE) and the Honduran Fo restry Development Corporation (COHDEFOR).  
The large number of institutions participating in the design and implementation of agricultural policy 
has generated high administrative costs, but achieve ments have been few owing to difficulties in 
coordinating shared and complementary objectives.  Moreover, on issues that are important for the 
sector, such as macroeconomic policies, tariffs, pricin g, wages, taxation, foreign trade, ownership and 
use of resources, and transport, the SAG is reliant on other State ministries and is often not 
consulted.12 
(ii) Measures affecting imports 
17. Agriculture enjoys higher tariff protection than other sectors.  In 2009, agricultural imports 
(WTO definition) faced an average tariff of 11.1  per cent, compared to applied most-favoured-nation 
(MFN) duties averaging 6 per cent, and an average tariff of 5.1 per cent on non-agricultural products, 
except oil.  On average, the highest rates per WTO category were levied on agricultural products, 
specifically animals and products of animal origin, and dairy products, with tariff rates of 20.2 per 
cent and 21 per cent respectively.  The maximum tariff was 164 per cent,  applied to imports of poultry 
meat under Harmonized System (HS) headings 02.07 .13 and 02.07.14.  The second highest rate was 
55 per cent on cigarettes (HS 24.02.20.00.00). 
18. Honduras implements a system of price bands on  seven tariff lines, covering products such as 
yellow maize, white maize, grain sorghum, mai ze flour and other worked grains (Table IV.3).13  The 
                                                      
12 The ministries in question are:  Industry and Trad e, Finance;  the INA, Tr ansport, Public Works and 
Housing and Natural Resources,  the Interior and Justice. 
13 Regulations on the Marketing of Agricultural Products (Decision No. 0105-93 of 26 February 1993). Honduras WT/TPR/S/234 
 Page 77 
 
 
price band system operates as a seasonal tariff that va ries according to international benchmark prices.  
Its main aim is to cushion the domestic-market effect s of wide swings in international prices.  The 
IHMA administers the system and monitors price tren ds.  Each year the band's ceiling and floor prices 
are set before the first harvest, on the basis of world prices for the product in question over the 
previous 60 months.  Every January, the IHMA Executive Committee approves the limits of the band 
and submits them to the Agricultural Development C ouncil.  The limits remain in force for 12 months 
from 1 September each year.  If the world price falls below the floor benchmark price, the import tariff of 15 per cent is raised ad valorem  by the percentage difference between the two prices.  The 
regulations specify that the sum of the MFN tari ff and the surcharge must not exceed the bound tariff 
rate. 
19. Some of the products included in the price-ba nd system are also subject to "absorption 
agreements".  There is a "purchase and sale agreem ent" between producers and processors of staple 
grains, which allows grains to be imported with  preferential tariffs as low as 0 per cent.  These 
agreements vary according to domestic supply estim ates.  In the case of white maize (HS 1005.90.30), 
a processor who buys one quintal on the domestic mark et can import three quintals tariff-free;  in the 
case of yellow maize (HA 1005.90.20), one quintal  purchased on the domestic market gives a 
tariff-free import entitlement of four quintals.
14  In the case of rice, the quantity that each firm can 
import duty-free is proportionate to its purchase of domestic production.  Products imported tariff-free 
have to be processed and cannot be sold on th e domestic market as whole grain for human or 
industrial consumption to an industry that is not a party to the agreement. 
Table IV.3 
Products subject to price bands, 2010 
  Tariff Rate 
(%) 
 Code Description MFN Bound 
10059020 Yellow maize 15 45 
10059030 White maize 15 50 
10070090 Other 15 45 
11022000 Maize flour 15 35 
11031310 Pre-gelatinized maize flour 15 35 
11031390 Other groats of maize 15 35 
11042300 Other grains of maize, worked 5 35 
Source : WTO estimates on the basis of data supplied by the authorities. 
 
20. While Honduras does not apply tariff quotas for agricultural products, it does apply 
preferential quotas for a number of agricultural pr oducts under bilateral agreements (Chapter II). 
21. Food products in the basic shopping basket, along with agricultural inputs (such as 
agrochemicals, agricultural machinery and tools) ar e exempt from sales tax, which is generally levied 
at 12 per cent, except for certain alcoholic beverag es, cigarettes and other processed tobacco products, 
which are subject to a 15 per cent rate.  Many of th ese exemptions are applied to agricultural products 
of domestic origin only (fruit, meat and fish, fo r example) or products that contain domestic raw 
material (such as dairy products and fruit juices) (Table AIII.1).  According to the authorities, the 
exemptions apply to imported and domestic produ cts alike, since Honduras is required to give 
national treatment as a WTO member.  Moreover, the Constitution provides that in the event of conflict between an international treaty or convent ion and domestic law, the former shall prevail.
15 
22. Honduras maintains a system of automatic and non-automatic import permits, with a view to 
protecting plant and animal health.  The importation of products and by-products of plant and animal 
                                                      
14 Decision No. 7 36-2009 of 22 October 2009  and Decision No. 867- 2009 of 4 December 2009. 
15 Article 18 of the Constitution of the Republic. WT/TPR/S/234 Trade Policy Review 
Page 78 
 
 
origin also requires a non-automatic import permit, th e purpose of which is to ensure that plant and 
animal products have been the subject of adequa te inspection procedures and do not pose a potential 
risk as carriers of pests and diseases. 
(iii) Measures affecting exports 
23. In 2001 Honduras adopted the "Agricultural e xport zones" (ZADE) regime to promote 
agricultural exports.16  Such zones can be set up in any part of the country, for the purpose of 
promoting agricultural production exclusively fo r export, by establishing "agricultural export 
enterprises".  The enterprises covered by this regi me are exempt from all customs duties and other 
domestic taxes levied on the goods they import and/or export;  they are also exempt from income tax.  
Firms in the ZADE regime could sell their produc ts in Honduras whenever domestic production was 
insufficient, upon payment of the corresponding tari ff duties and other taxes.  This regime has now 
been suspended, however, and the au thorities report that there is curre ntly only one beneficiary firm 
that exports 100 per cent of its production.17 
24. During the period 2004-2008, Honduras notified the WTO that it was not subsidizing its 
agricultural exports.18 
25. Agricultural exports are promoted through the Agricultural Business Promotion Centre 
(CPNA), whose priorities are to disseminate market  information, facilitate marketing, and provide 
financing for exporters.19 
26. Honduras does not set minimum export prices or  impose export taxes.  Coffee is the only 
export product subject to an export levy, under whic h, for every quintal of coffee exported, exporters 
must pay US$13.25 to the Honduran Coffee Institute (IH CAFE).  Part of the proceeds is used to pay 
the coffee sector debt and finance a trust fund to revive the sector20;  the levy can be deducted as an 
expense against income tax.21 
(iv) Measures affecting production 
27. Honduras notified a list of support measures fo r the agricultural sector for 2001-2005 and 
2006-2007, together with amendments to other measures and the introduction of some new ones.22  
Table AIV.1 also lists a number of agriculture support programmes. 
28. The programmes implemented by the SAG to  promote rural development include the 
National Agrifood Development Programme (PRONAGR O);  the National Fisheries and Aquaculture 
Programme (PRONAPAC) and the National Sustainable Rural Development Programme (PRONADERS). 
                                                     
 
16 Decree No. 233-2002 of 1 February 2002. 
17 Decree No. 51-2003 of 10 April 2003. 
18 WTO documents G/AG/N/HND/27 of 28 November 2008, and G/AG/N/HND/28 of 
10 August 2009. 
19 SAG (undated b). 
20 The Law on Financial Recovery of the Coffee Se ctor, Decree No. 152-2003 of 17 September 2003 
and Decree No. 56-2007 of 8 May 2007. 
21 The export duty of US$13.25 is used as follows:  US$2.75 as a contribution to IHCAFE and the 
Coffee Sector Fund (Decree No. 213- 2000);  US$0.5 for loan repayment (Decree Law No. 292 297-2002); 
US$9 for the Producer Trust Fund and Voluntary Capitalization Fund (Decree No. 152-2003 and Reform 
No. 56-2007);  and US$1 to repay other debt (Decree No. 143-2008). 
22 WTO documents G/AG/N/HND/16 to 23, of 28 September 2004 to 19 October 2007;  and 
G/AG/N/HND/17 to 26, of 28 July 2004 to 28 November 2008. Honduras WT/TPR/S/234 
 Page 79 
 
 
29. PRONADERS has the following aims:  to improve  the quality and coverage of the various 
public and private services offered to poor rural populations (through collabor ation and partnerships 
with various rural entities and peasant farmer  organizations, as well as local and regional 
non-governmental organizations (NGOs);  to fund in itiatives in rural areas to create jobs and thus 
raise income levels;  to promote food security;  and to manage natural resources more rationally.23  
The aim of PRONAGRO is to modernize production processes and thus increase the competitiveness 
of the various agricultural activities, organizi ng producers in agrifood chains in each production 
sector.  Agrifood chains are currently being developed in seven sectors.24 
30. The implementation of PRONADERS25 began in 2000.  It seeks to help poor communities in 
areas of high agro-ecological vulnerability to adop t "sustainable" production techniques that protect 
natural resources and promote food security.26  One of its pillars is the Special Programme for Food 
Security (PESA).27  Several institutions were created to implement PRONADERS:  the National 
Directorate for Sustainable Rural Developm ent (DINADERS), responsible for project 
implementation;  and the National Sustainable Rural Development Fund (FONADERS), which was set up to administer funds for investment in rural development.  FONADERS has mechanisms 
enabling it to serve as an intermediary for public  or private financial institutions at the rural 
community level, to implement social and production projects for rural development. 
31. Apart from these general programmes, the Govern ment is implementing a number of support 
strategies which differ according to the scale of opera tions.  Small producers are assisted through the 
Bond for Productive Solidarity and Direct Assistance  for Rural Development Projects, which consists 
of a grant of inputs (seeds and fertilizers) for planting maize, beans, rice or sorghum.  For medium- 
and large-scale producers, public and private banks  offer special credit lines, for example through 
BANADESA and the Alternative Rural Financing System (SIFAR). 
32. Through the assistance programme for less privileged producers - Second Kennedy 
Round (2KR) - financed with external assistance,  "less privileged producers" have the chance to 
obtain agricultural equipment and inputs, such as  fertilizers, pesticides and machinery, which 
supposedly makes it possible to increase productivity at below market prices.  According to the 
authorities, since 1997, the subsidy has been wholly used to purchase fertilizers, particularly urea, 
which has then been sold to sma ll-scale producers of staple grains (rice, maize, beans and sorghum) at 
a subsidized price.  The authorities argue that this  measure does not create distortions in the domestic 
fertilizer market, since the amounts purchased with th e monetary grant represent only between 6.5 and 
8 per cent of total fertilizer supply.  In 2008, th e SAG received a grant equivalent to US$4.1 million 
(L 78.3 million), which was used to purchase 2, 721 tonnes of NPK and 2,224 tonnes of urea, which 
were sold in full at a price of L 245.00 per quintal of urea and L 304.00 per quintal of the NPK formula.  Producers of export crops such as coff ee, citrus fruits and African  palm are not eligible 
for this programme.
28 
33. Food security (defined as the availability of f ood, and access to it, in sufficient quantity and 
quality) is one of the issues covered in the Nationa l Development Plan.  Staple grains (rice, beans, 
soybeans, sorghum and wheat) are the main food pr oducts consumed by the Honduran population.  
                                                      
23 SAG (undated c). 
24 SAG (undated d). 
25 Decree No. 12-2000, Official Journal of 5 May 2000. 
26 SAG online information, National Sustainable Rural Development Programme (PRONADERS).  
Viewed at:  http://www.sag.gob.hn/leydetranspare ncia/doc/ATRIBUCIONES/AT RIBUCIONESporciento20D 
Epor ciento20PRONADERS,por ciento20DINADERS,por ciento20FONADERS.pdf. 
27 FAO (undated). 
28 SAG (undated a). WT/TPR/S/234 Trade Policy Review 
Page 80 
 
 
The 1989 Law to Promote Staple Grain Production w as introduced to stimulate and ensure adequate 
domestic supply of staple grains.29  This law created the National Staple Grains Board, tasked with 
developing programmes to promote the production of staple grains and forecast domestic demand and 
exportable surpluses.30  To guarantee a secure price to the producer and a fair price to the consumer, 
the SAG establishes purchase agreements between agri-business and maize, sorghum and rice 
producers, setting quotas for purchase commitments and guaranteed minimum prices.  As a result of the policies implemented in 2005-2010, the pr oduction of staple grains has increased.
31 
34. The National Basic Products Supply Company (BANASUPRO) arose out of a programme 
implemented in 1974 by the National Development Bank (now BANADESA);  and in 1980 it was set 
up as an autonomous organization selling products in  the basic shopping basket to regulate their 
prices.32  The Consumer Protection Law calls for a pri ce setting and stabilization plan to be designed 
for items in the basic "seasonal demand" shopping  basket.  In 2007, with a view to controlling 
speculation, Honduras established a mechanism for controlling the prices of essential consumer goods 
in the basic shopping basket.  Some 25 products, in cluding rice, beans, sugar, salt, vegetable oil, 
butter, wheat flour, maize flour, eggs, milk, gr ound coffee and chicken, were subject to price 
monitoring.  Ceiling prices were set on the basis of prices recorded on 1 September 2007 in the 
Farming and Craft Fair organized by the Ministry of Industry and Trade.33  These prices were initially 
set for a six-month period, which could either be shor tened if trade was "regularized" or extended if it 
was not "regularized".  According to the authoriti es "trade regularization" depended on supplying the 
domestic market.  The issue of price fixing has not been raised again since 2007. 
35. Given the importance of coffee as an expor t product, in 2000 the National Coffee Council 
(CONACAFE) was set up to formulate a national coffee industry policy.34  The Council also has the 
following powers:  set coffee production targets in th e light of international commitments undertaken 
by Honduras, which in the case of organic/ecological  coffee exports consists of respecting the quality 
standards set by the Interna tional Federation of Organic Ag riculture Movements (IFOAM), a 
worldwide certification organization based in Ge rmany; adopt control and emergency measures to 
protect coffee production;  and establish a domesti c coffee consumption policy, with the aim of 
keeping domestic market prices stable.35 
36. IHCAFE and the National Coffee Fund are res ponsible for implementing coffee industry 
policy.36  Coffee producers have to register in IHCA FE to be eligible for preferential loans, 
e.g. following Hurricane Mitch, and for other incentives37 provided under the following programmes:  
National Coffee Industry Renewal Programme;  National Fertilization Programme;  National 
Programme for Integrated Management of the Coffee Berry Borer ( Broca );  Agroforestry Programme;  
Income Diversification Programme and the Sm all-scale Producer Support Programme.  In 2003, 
IHCAFE set up a trust fund to provide debt relief to  coffee producers.  This was financed from the 
                                                      
29 Decree No. 65-89, Official Journal of 25 May 1989. 
30 Decision No. 648-98, Official Journal of 28 April 1998.  Viewed at:  
http://faolex.fao.org/ docs/pdf/hon18438.pdf. 
31 Information provided by the authorities. 
32 Executive Decision No. 239 of 23 July 1974, Law on the National Basic Products Supply Company;  
Decree-Law No. 1049, Official Journal of 13 August 1980;   Central American Institute of Public Administration 
(ICAP), Banasupro.  Viewed at:  http://www.sefin.gob.hn/portal_prod/data/2007/DGID/Indicadores 
Institucionales/banasupro.pdf. 
33 Law Controlling Prices in the Basic Shopping Basket, Decree No. 113-2007 of 30 October 2007. 
34 Decree No. 145-2000, Official Journal of 21 November 2000. 
35 Decree No. 145-2000, Official Journal of 21 November 2000. 
36 Decree No. 145-2000, Official Journal of 21 November 2000. 
37 Decree No. 84-99, Official Journal of 5 June 1999. Honduras WT/TPR/S/234 
 Page 81 
 
 
Coffee Producer Reactivation Fund38 and is capitalized through a levy of US$9 per quintal of coffee 
exported. 
37. To promote the creation of cooperatives, the Ag ri-business Co-operatives of Agrarian Reform 
are exempt from tariff duties, including customs duties and other taxes on agricultural machinery and 
agricultural inputs that are essential for their ope rations, provided the items in question are not 
produced in Honduras under adequate  conditions of price, quantity and quality.  These firms also 
enjoy a 10-year renewable exemption from in come taxes and local and municipal taxes.39 
38. With the aim of promoting agricultural and agri-business investment projects to revive 
agricultural production, the Special Law on Agricultu ral Investments and Rural Job Creation exempts 
"certain" new investment projects from the net assets tax.40 
39. The National Agricultural Development Bank (B ANADESA) is a State institution created in 
198041, which specializes in lending to medium- and sm all-scale farmers, traders, industrialists and 
producers generally.  It offers savings and lo an facilities and also administers trust funds.42  
BANADESA offers financing for staple grains, ve getables, coffee, livestock, poultry, fisheries, 
industry, trade, African palm, irrigation, machinery and other sectors. 
40. The agricultural sector is currently experien cing major difficulties in meeting its debt 
obligations (35 per cent delinquency rate).  Appa rently, neither BANADESA nor the private banks 
have been able to provide the financing needed for the sector to function adequately.  Between 2003 
and 2009, lending to agriculture decreased from 11 .8 per cent to 4.6 per cent of total credit43;  only 
7 per cent of producers have bank loans.  In particular, sector financing problems stem from:  
(i) insufficient access to credit;  (ii) high real interest rates;  (iii) insufficient medium- and long-term 
funding;  (iv) high transaction costs;  (v) agricultu ral risk;  and (vi) inflexibility among banks with 
regard to collateral and fi nancing conditions generally.44 
(2) MANUFACTURING SECTOR  
(i) Main features 
41. Between 2003 and 2009 the manufacturi ng sector grew at an average real rate of 3.3 per cent 
per year, which was somewhat less than the 4.5 per cent growth achieved by the economy as a whole.  
Accordingly, the share of the manufacturing sector  in total real GDP fell from 21.9 per cent to 
19.7 per cent in this period.  The main branches of Honduran manufacturing industry are food, beverages and tobacco, and textiles, cl othing and leather;  jointly they  contribute 76.5 per cent of total 
value added by the sector.  The sector provided em ployment for 426,529 people in 2008 (373,304 in 
2003), in other words 14.3 per cent of the country's economically active population.
45 
                                                      
38 Law on Financial Revitalization of the Coffee Sector, Decree No. 152-2003 of 17 September 2003. 
39 Decree No. 101-87, Official Journal of 22 August 1987. 
40 Decree No. 322-98, Official Jour nal of 20 January 1990 and Decree No. 20-99, Official Journal of 
7 May 1999. 
41 Decree-Law No. 903 of 24 March 1980;  Decree No. 982 of 6 September 1980;  BANADESA online 
information.  Viewed at:  http://www.fao.o rg/ag/ags/agsm/Banks/banks/honduras.htm. 
42 BANADESA online information.  Viewed at:  http://www.banadesa.hn /misionvision.html. 
43 Information provided by the National Banking and Insurance Commission;  Central Bank of 
Honduras. 
44 SAG (2004). 
45 Central Bank of Honduras (2009b). WT/TPR/S/234 Trade Policy Review 
Page 82 
 
 
42. Manufactures have maintained a  relatively stable  share of almost one quarter of total exports 
(excluding maquila  exports) in recent years (Table AI.1).  The leading exports of general 
manufactured goods are chemicals and other semi-ma nufactured products such as boxes, crates, paper 
and paperboard, plastics and articles thereof, waste and scrap of precious metal, and textiles.  About 
three quarters of total Honduran imports (excluding maquila ) are manufactured products, particularly 
machinery and transport material and chemicals (Chapter I(3)(i)). 
43. The average MFN tariff applied to manufactured products (Major Division 3 of ISIC Rev.2) 
is relatively low at 5.9 per cent.  Nonetheless, a br eakdown of the level of ta riff protection applied to 
the different branches of industry shows that tariffs are used as tools of industrial policy, particularly 
in the case of industries producing food, beverag es and tobacco, textiles and clothing, and wood and 
wood products (Chart IV.1). 
44. Honduras also uses tariff escalation in order to provide various branches of manufacturing 
industry with a higher level of protection against competition from imports (Chapter III(2)(iv)).  The 
use of tariffs as instruments of industrial polic y raises the price of the products concerned and 
discourages the flow of resources towards production of other goods, including those for export.  The 
cost of protecting the food and beverages industry can be particularly high for households living in 
poverty, which spend a high proportion of their income on such products. 
45. Other measures to promote development of the manufacturing sector in Honduras include 
special export regimes (Chapter III (2)(iv)) and export marketing support (Chapter III(2)(vi)). 
46. The National Competitiveness Programme ( Honduras Compite ), set up in 2002, aims to 
promote areas which the authorities consider to of fer considerable development potential, such as 
forestry, agri-business, tourism, light assembly, te xtiles and clothing (Chapter II(5)).  The National 
Competitiveness Commission (CNC), is responsible for developing strategies to implement the 
National Competitiveness Programme, which receiv es financial support from the Inter-American 
Development Bank (IDB) and the World Bank. Honduras WT/TPR/S/234 
 Page 83 
 
 
0.010.020.030.040.050.060.070.0
311 312 313 314 321 322 323 324 331 332 341 342 351 352 353 354 355 356 361 362 369 371 372 381 382 383 384 385 390 4100.010.020.030.040.050.0160.0170.0
Calculations made by the WTO Secretariat on the basis of data supplied by the authorities.International Standard Industrial Classification of All Economic Activities, Rev.2
Source :Description
311   Food manufacturing
312   Other food products and animal feeds
313   Beverage industries
314   Tobacco manufacture
321   Manufacture of textiles
322   Manufacture of wearing apparel, except footwear323   Manufacture of leather and products of leather, except              
footwear and wearing apparel
324   Manufacture of footwear, except vulcanized or moulded 
rubber or plastic footwear
331   Manufacture of wood and wood products, except furniture
332   Manufacture of furniture and fixtures, except primarily of 
metal341   Manufacture of paper and paper products
342   Printing, publishing and allied industries
351   Manufacture of industrial chemicals
352   Manufacture of other chemical products, including 
pharmaceuticals
353   Petroleum refineries
354   Manufacture of miscellaneous products of petroleum and coalDescription
355   Manufacture of rubber products, n.e.c.
356   Manufacture of plastic products, n.e.c.
361   Manufacture of pottery, china and earthenware
362   Manufacture of glass and glass products
369   Manufacture of other non-metallic mineral products
371   Iron and steel basic industries372   Non-ferrous me tal basic industries
381   Manufacture of fabricated metal products, except 
machinery and equipment
382   Manufacture of machinery except electrical, including 
computers
383   Manufacture of electrical machinery, apparatus, 
appliances and supplies384   Manufacture of transport equipment
385   Manufacture of professional and scientific equipment
390   Other manufacturing industries
410   ElectricityChart IV.1
MFN tariffs applied by Honduras in 2009, by ISIC major groups
Percentage
AverageMaximum
Minimum
 WT/TPR/S/234 Trade Policy Review 
Page 84 
 
 
(ii) Maquila  industry46 
47. Since approval of the legal framework in 1987 , which allows exemption from direct and 
indirect taxes and duty-free importation of in puts for the production of export goods, the maquila  
industry has played a key role in generating foreign exchange, employment and investment.47  Like its 
counterpart in countries that pioneered the scheme to tackle problems of employment and poverty, the 
Honduran maquila  industry enjoys significant incentives, in particular exemption from taxes and 
import duties (Chapter III(4)(i)). 
48. In 2009, the Honduran maquila  industry consisted of 289 firms (273 in 2003) which 
generated a gross output value of L 78.941 billion, far outstripping the L 49.704 billion generated in 
2003 (Table IV.4).  Although the maquila  sector has been receiving an ever-smaller share of foreign 
direct investment (FDI) in recent years, it acc ounted for 22.6 per cent of total FDI inflows into 
Honduras between  2004 and 2009 (Table I.3).  Nearly half of this came from United States enterprise 
capital, followed by Asian and Europ ean capital.  Most Honduran-owned maquila  enterprises are 
engaged in commercial activities and the provision of services to other firms.48 
Table IV.4 
Main indicators relating to the maquila  industry, 2003-2009 
 2003 2004 2005 2006 2007 2008 2009a 
Number of firms 273 294 306 313 342 309 289 
Number of employees 114,237 119,946 125,224 130,145 134,007 121,700 104,048  
Wages (millions of lempiras) 7,079 8,253 9,972 11, 173 11,848 12,428 10,574  
Gross production value (millions 
of lempiras) 49,704 61,889 70,939 74,715 85,329 88,124 78,941  
Intermediate consumption 
(millions of lempiras) 40,139 50,788 57,041 59,156 68,248 70,014 62,757  
Gross value added (millions of 
lempiras) 9,563 11,111 13,898 15,558 17,081 18,108 16,184  
Gross value added/GDP 6.7 6.9 7.6 7.5 7.3 6.8 5.9 
a Estimated figures. 
Source :  Central Bank of Honduras (2009), Actividad Económica de la Industria  de Bienes para Transformación 
(Maquila) y Actividades Conexas en Honduras 2008 , Tegucigalpa;  and information from the authorities. 
 
49. The maquila  industry has grown rapidly in recent years, with gross value added rising from 
L 9.563 billion in 2003 (6.7 per cent of GDP) to L18.108 billion in 2008 (6.8 per cent of GDP).  
Employment also increased between 2003 and 2008 , although significantly less than value added, 
which points to a marked increase in maquila  productivity during the period.49  This trend may also 
reflect the more intense competition faced by Honduran maquila  companies in the United States 
market, partly as a result of the elimination, under the WTO Agreement on Textiles and Clothing, of the import quota regime.  Nonetheless, for 2009, gross value added was estimated to amount to 
                                                     
 
46 The term " maquila industry " as used in this report means enterprises operating under special 
regimes:  Free zones (ZOLI), the Temporary Import Regime (RIT) and Export Processing Zones (ZIP). 
47 Maquila  companies also make sizeable contributions to the Honduran Social Security Institute, 
60 per cent of whose revenue comes from the free zones, and to the National Vocational Training Institute.  In 
addition, maquila  enterprises boost municipal tax revenue, thanks mainly to local consumption by maquila  
workers. 
48 Central Bank of Honduras (2009). 
49 The Honduran maquila  industry has been vertically and horizontally integrated, moving from simple 
garment assembly to the production of knitted fabrics and other raw materials, along with distribution and logistics, among other services. Honduras WT/TPR/S/234 
 Page 85 
 
 
L 16.184 billion (5.9 per cent of GDP), mainly owing to the slackening of demand in the United 
States market, which absorbs about th ree quarters of all the country's maquila  exports. 
50. The vast majority of Honduran maquila  enterprises are textile and clothing firms that 
generated a gross output value of L 62.725 billion in 2009 (Table IV.5), that is, 79.5 per cent of the 
total.  The high concentration of maquila  enterprises in garment-making activities, and the rules of 
origin that such enterprises have to satisfy to gain preferential access to certain foreign markets, limit 
the extent to which they can create links with the rest of the domestic industry.50  Nonetheless, some 
of the preferential trade agreements to which Honduras is a party, including the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA), have rules of origin 
that may promote greater local value added, such as the "yarn forward" rule of origin.  As a result, 
many textile companies have set up business in Hondur as to produce part of the fabrics consumed in 
DR-CAFTA countries.
51 
51. In 2009, 8.9 per cent of Honduran maquila  enterprises were factories making auto parts and 
accessories, compared to 4.1 per cent in 2003, reflecting growing demand from United States car assembly plants.  The others were factories ma king metal products, furnitu re, rubber and plastic 
products, or food and tobacco manufacturers (Table IV.5). 
Table IV.5 
Breakdown of gross production value of the maquila  industry, 2003-2009 
(Millions of lempiras) 
Activity 2003 2004 2005 2006 2007 2008 2009a
Manufacture of textile products, garments, fur dr essing and dyeing 44,014 53, 229 58,281 58,782 66, 612 70,302 62,725 
Manufacture of automobile electrical system s and parts 2,051 4,310 6,478 8,406 9,732 8,927 7,089 
Other manufacturing industries and r ecycling 774 878 1,040 1,318 1,847 1,887 1,925 
Manufacture of rubber and plastic pr oducts 799 1,037 1,388 1,523 1,570 1,151 1,253 
Manufacture of food products 488 693 709 1,308 1,402 1,257 1,400 
Manufacture of tobacco products  735 816 1,057 1,184 1,371 1,255 1,134 
Commerce 361 325 659 732 1,026 1,106 1,144 
Production of  wood, and manufacture of wood and cork products, 
except furniture 87 84 445 521 577 506 492 
Business services 111 163 249 279 438 583 592 
Manufacture of paper and pa per products 189 243 514 496 450 658 669 
Manufacture of chemicals and chemical products 51 62 74 126 251 279 302 
Cultivation of other agricultura l products, excluding bananas and 
coffee 44 59 45 40 53 213 216 
Gross production value 49,704 61,899 70,939 74,714 85,329 88,124 78,941 
a Preliminary data. 
Source : Central Bank of Honduras (2009), Actividad Económica de la Industria de  Bienes para Transformación (Maquila) 
y Actividades Conexas en Honduras 2008 , Tegucigalpa;  and information from the authorities. 
 
                                                      
50 Experience in other countries suggests that maquila  clothing activities generate fewer links with the 
rest of the domestic industry than othe r activities such as the pr oduction of electrical and electronic appliances.  
This is partly because garment-making employs a large number of unskille d workers (WTO, 2003). 
51 According to the authorities, Honduras is the worl d's largest importer of yarn from the United States. WT/TPR/S/234 Trade Policy Review 
Page 86 
 
 
(3) SERVICES 
(i) Main features 
52. In 2009, the services sector accounted for about  53 per cent of GDP, up from 48.1 per cent in 
2003.  The leading subsectors in terms of contributi on to total value added in  2009 were financial 
services, commerce and communications, in decreasing or der of importance.  The configuration of the 
sector has changed since 2003, when it was led by commerce and financial services (Chart IV.2). 
Chart IV.2
GDP share of the various serv ice subsectors, 2003 and 2009
Percentages of total services at constant 2000 prices
2003 2009
Commerce
21.7%
Hotels and 
restaurants
4.7%
Transport
7.0%
Telecommunications
8.0%
Financial services
13.2%Home 
ownership
9.1%Real estate 
activities
7.6%Public 
administration
11.0%Education 
services
9.4%Social and health 
services
4.0%Community
4.4% Commerce
15.5%
Hotels and 
restaurants
3.8%
Transport
6.0%
Tele-
communications
13.1%
Financial 
services
21.9%Home ownership
7.0%Real estate 
activities
6.7%Public 
administration
9.2%Education services
8.2%Social and 
health services
4.6%Community
4.0%
Source:   Central Bank of Honduras.
 
53. According to the Central Bank of Honduras ( BCH), the activities that helped cushion the 
economic contraction in 2009 were telecommuni cations, which grew by 11 per cent;  public 
administration and defence, which expanded by 6.9 per cent as a result of wage increases for civil 
servants;  education services which grew by 6.8 per cent, also on account of pay rises for teachers;  and social and health services, which increased by 7 per cent.
52 
54. Honduras is a net importer of services (Chart IV.3), and its services balance showed a deficit 
of US$193 million in 2009, e quivalent to 1.3 per cent of GDP.  This is US$117 million less than the 
shortfall recorded in 2008, which itself reflected a 33.2 per cent reduction in transport costs (import 
freight) and a 10.6 per cent reduction in travel.  Exports classified as "Other services" also helped close the gap - in particular, telecommunication services, following the entry of a fourth mobile 
telephony operator in the domestic market in late 2008, which triggered an increase in call services. 
                                                     
 
52 BCH (2010). Honduras WT/TPR/S/234 
 Page 87 
 
 
55. Honduras' Schedule of Specific Commitments under the WTO General Agreement on Trade 
in Services (GATS) is limited to commitments in only four of the 12 services categories.  Honduras 
accepted specific commitments in the areas of busin ess services, financial services, tourism services 
and travel and transport-related services53;  and in 2005 it undertook commitments on communication 
services under Article XXI of the GATS (Table AIV.2).54 
56. As regards horizontal commitments, Honduras in troduced a series of restrictions on foreign 
investment, such as giving due consideration to the impact of commercial presence on local economic 
activity and employment, when authorizing the estab lishment of a foreign enterprise.  In addition, 
foreign investors may not engage in small-scale indus try and trade;  and foreign enterprises must use 
their commercial presence to help train Honduran pers onnel in their respective areas of expertise.  A 
ceiling of 10 per cent is set for the number of fore ign workers in an enterprise, who may not receive 
more than 15 per cent of total wages paid.  Las tly, a territorial restriction is imposed on foreign 
investment, stipulating that land located in certain  sensitive areas, such as border or coastal zones, 
may only belong to companies consisting wholly of  partners of Honduran nationality (whether by 
birth or by naturalization), or to State institutions. 
57. Honduras' Schedule of MFN Exemptions includes horizontal exemptions for members of the 
Central American Common Market (CACM), as we ll as exemptions in the specific sectors of 
financial services, telecommunications and land tr ansport.  The latter aim to facilitate regional 
integration of the services in question.  In the professional services sphere, a general exemption was 
established giving the authorities discretion to grant permits on a reciprocal basis. 
58. Honduras took part in the negotiations on financ ial services and accepted the Fifth Protocol to 
the GATS, which was incorporated into its domestic  legislation by Legislative Decree No. 60-99.  
Honduras did not participate and did not s ubmit any offer in negotiations on basic 
telecommunications services, but in 2005 it accepted commitments in this area.55 
59. The CACM and some of the agreements si gned by Honduras have provisions on services:  
specifically those with Chile (Central America-Chile FTA);  Mexico 
(Honduras-Guatemala-El Salvador-Mexico FTA);  Pa nama (Panama-Honduras FTA);  Chinese Taipei 
(Honduras-El Salvador-Chinese Taipei FTA);  the Do minican Republic (Central America-Dominican 
Republic FTA);  DR-CAFTA (Dominican Re public-Central America-United States FTA) 
(Chapter II). 
                                                      
53 WTO documents GATS/SC/38 and Suppl.1 of 15 April 1994 and 26 February 1998, respectively. 
54 WTO document GATS/SC/38/Suppl.1 of 26 February 1998. 
55 WTO document GATS/SC/38/Suppl.2 of 16 September 2005. WT/TPR/S/234 Trade Policy Review 
Page 88 
 
 
Chart IV.3
Trade in services, 2003 and 2008a
2003 2008
(a)    Ex ports
(b)    Imports
Source:   Central Bank of Honduras , Balance of Pa yments.Business Services
2.6%Maritime
4.7%
Air
2.9%
Communications
21.4%Insurance
3.0%
Travel
70.6%Other
3.7%
Other 
services
24.7%
Travel
61.6%Other 
services
30.7%
Transport
49.6% Transport
58.5%Other 
services
21.5%Other 
services
17.0%Transport
7.6%Maritime
3.9% Air
0.7%
Communications
19.8%Insurance
2.8%Business Services
0.8%Other
1.3%
Transport
4.7%
Maritime
30.7%
Air
9.5%
Land
9.3%Communications
2.7%Insurance
1.0%Royalties
2.5%Business services
6.4%Other
8.9%
Travel
28.9%Travel
24.5%Maritime
35.2%
Air
10.6%Land
12.7%Communications
6.4%Insurance
5.5%Royalties
1.5%Business services
1.1%Other
2.6%Total services: US$591 million Total services: US$877 million
Total services: US$753 million Total services: US$1,187 million
a  Latest information available.
 Honduras WT/TPR/S/234 
 Page 89 
 
 
(ii) Financial services 
60. The financial services sector (including insurance and related services) has contributed a 
growing share of GDP since 2003 (Chart IV.2). 
61. As at 31 December 2009, the national financia l system consisted of the Central Bank of 
Honduras (BCH);  17 commercial banks;  one State bank (BANADESA);  11 financial companies;  
two foreign bank representative offices;  two second-tie r banks;  one credit card issuer and three credit 
card processors;  one private pension fund and fi ve public pension funds;  five general deposit 
warehouses;  five private development-finance institu tions;  the stock market and nine brokerages;  
seven foreign exchange bureaux;  two risk-rating agencies and two risk centres;  and 12 insurance 
companies.56 
62. The financial system is supervised by  th e Central Bank of Honduras (BCH) and the National 
Banking and Insurance Commission (CNBS).  The latter is divided into three supervisory authorities:  
Insurance and Pensions;  Securities and Other Ins titutions regulating the stock market;  and Banks, 
Financial Companies and Savings and Loan Associations. 
63. Since the last review in 2003, the most important regulatory changes in the Honduran 
financial system have been the adoption of the Fi nancial System Law, the Credit Card Law and the 
Law on the Honduran Production and Housing Bank, an d the reform of the Law to Combat Asset 
Laundering.  The insurance sector continues to be regulated by the Law on Insurance and Reinsurance 
Companies and the Stock Market Law (Table IV.6). 
64. Honduras took part in the negotiations on financ ial services and accepted the Fifth Protocol to 
the GATS, which was incorporated into its domestic legislation by Legislative Decree No. 60-99.  It 
also adopted specific commitments on insurance ser vices and a number of banking services.  In the 
insurance sector, the commitments cover life and ge neral insurance services, as well as reinsurance 
and other auxiliary services.  Supply modes 1, 2 an d 4 have been left unbound, whereas market access 
to provide services through commercial presence is s ubject to an economic needs test, with foreign 
ownership limited to 40 per cent.  There are no restrictions on commercial presence to supply 
auxiliary insurance services.  Specific commit ments on banking services only cover the following 
services:  deposit taking;  the granting of loans;  factoring operations;  the issuance, acceptance, negotiation and confirmation of le tters of credit and documentary credit;  supply and transfer of 
financial information, and the pr ocessing of financial data.  In all cases, cross-border supply and 
consumption abroad have been left unbound.  Commercial presence to supply banking services 
(except those involving the provision of financial info rmation) is subject to an economic needs test 
and the requirement to set up a closed-end public limited company, whose founding shareholders 
must be natural persons.  The opening of fore ign bank branches is unbound.  According to its 
schedule of MFN exemptions, the opening of agencies or branches of foreign banks is subject to a 
reciprocity requirement.  Honduras has also grante d MFN exemptions to CACM countries for the free 
transfer of capital, as well as facilities for setti ng up and operating banks, insurance companies and 
other financial entities. 
                                                     
 
56 CNBS (2009a). WT/TPR/S/234 Trade Policy Review 
Page 90 
 
 
Table IV.6 
Financial legislation, 2009 
Decree/Agreement No. Descriptio n Date of entry into force 
Decree No. 3-2008 Amendments to the Law to Combat Asset Laundering of 2008 30/01/2008 
Decree No. 106-2006 Credit Card Law 23/10/2006 
Decree No. 6-2005 Law on the Honduran Production and Hous ing Bank 1/04/2005 
Decree No. 129-2004 Financial System Law 24/09/2004 
Decree No. 51-2003 Tax Equity Law 3/04/2003 
Decree No. 319-2002 Law on the Optional Complementary Regi me for the Management of Private 
Pension Funds 17/09/2002 
Decree No. 45-2002 Law to Combat Asset Laundering 03/06/2002 
Decree No. 194-2002 Financial Equilibrium  and Social Protection Law 15/05/2002 
Decree No. 22-2001 Law on Insurance a nd Reinsurance Institutions 01/09/2001 
Decree No. 8-2001 Securities Market Law 09/06/2001 
Decree No. 53-2001 Law on Deposit Insurance in Fina ncial System Institutions (FOSEDE) 30/05/2001 
Decree No. 229-2000 Law Regulating Private Development Institutions Engaging in Financial 
Activities 01/11/2000 
Decree No. 53-97 Law on the National Production and Housing Fund 04/06/1997 
Decree No. 155-95 Law on the National Ba nking and Insurance Commission 08/12/1995 
Decree No. 170-95 Law on Financial System Institutions 16/11/1995 
Decree No. 137-94 Law on the Net Assets Tax 28/10/1994 
Decree No. 16-92 Law on Foreign Exchange Bureaux 24/02/1992 
Decree No. 167-91 Law on the Social Housing Fund (FOSOVI) 16/12/1991 
Decree No. 108-90 Law on Foreign Exchange Export Earnings 08/10/1990 
Decree No. 903 Law on the National Agricultural Development Bank (BANADESA) 28/03/1980 
Decree No. 14 Registration of Non-Bank Lenders 09/01/1973 
Decree No. 138 Law on Retirement and Pensions of  Government Employees and Officials 07/04/1971 
Decree No. 128 Amendment of Article 6 of Legi slative Decree No. 51 of 1 February 1950 22/11/1966 
Decree No. 53 Law on the Central Bank of Honduras 03/02/1950 
Decree No. 51 Monetary Law 03/02/1950 
Source : Central Bank of Honduras. 
 
(a) Banking 
Regulatory framework 
65. Since the last review in 2003, one of the most important regulatory changes in the Honduras 
banking system has been the adoption of the Financial System Law which, on entry into force in 2004, repealed the Law on Financial System Institutions.
57  Like its predecessor, the new law 
regulates the organization, establishment, operation,  merger, transformation and liquidation of banks 
and other financial institutions.58  The financial institutions governed  by this law include public and 
private banks, savings and loan associations, fi nancial companies and any other institution that 
habitually and systematically engages in the ac tivities governed by the law.  Financial system 
institutions are covered by the provisions of this  new law and the Law on the National Banking and 
Insurance Commission, the Central Bank Law, th e Law on Deposit Insurance in Financial System 
Institutions, and the Monetary Law, as well as by th e regulations and resolutions issued by the 
National Banking and Insurance Commission (Table IV.6 ).  Honduras also has special laws regulating 
the Workers Bank ( Banco de los Trabajadores ), even though this is a commercial bank, as well as 
public institutions operating in the financial system. 
                                                      
57 Financial System Law, Decree No. 129-2004 of 24 September 2004. 
58 The law repealed the previous Law on Banking Institutions of 1 September 1955, and the Law on 
Savings and Loan Associations of 13 January 1976. Honduras WT/TPR/S/234 
 Page 91 
 
 
66. The banking system is supervised by the BCH and CNBS.  The latter authorizes the 
establishment and merging of financia l institutions, subject to approval by the BCH.  Applications for 
authorization require at least 10 per cent of the minimum capital of the prospective company to be 
deposited with the BCH or invested in governme nt securities.  The CNBS may withdraw its 
authorization if the institution has not started ope rations within six months.  Private financial 
institutions must be set up as closed-end public li mited companies with their capital divided into 
registered shares (Table AIV.3). 
67. CNBS authorization is needed for share transfer s that imply a change in the control of the 
institution or when a given shareholder obtains a 10 pe r cent share, or more, of the registered capital. 
68. Financial system institutions authorized to  operate in Honduras may set up branches, 
agencies, or other vehicles for supplying financ ial services anywhere in the Republic.  The 
CNBS must be notified of the ope ning or closure of agencies and can  place restrictions on or prohibit 
the opening of an agency if the capital or reserv es are insufficient.  The opening of subsidiaries of 
financial institutions or representative offices abroad  requires authorization from the CNBS, subject to 
the opinion of the BCH. 
69. Foreign financial institutions may establish or acquire a bank, or operate in Honduras through 
branches, domiciled subsidiaries and representative offices59, provided there is reciprocity in the 
country of origin, and if authorized by the CNBS , subject to a favourable opinion by the BCH based 
on the prevailing macroeconomic conditions.  Forei gn financial institutions are subject to national 
laws and may not invoke rights arising from  the laws of their country of origin. 
70. On the advice of the BCH, the CNBS sets the mi nimum level of capital required for financial 
system institutions to start operations, the amount in  question being reviewed every two years.  In 
2009, the BCH set the minimum capital requireme nt at L 300 million for commercial banks;  
L 70 million for savings and loan associations;  and L 50 million for financial companies.60 
71. The Commission sets prudential standards for fina ncial system institutions, and the BCH uses 
mechanisms (reserve requirements or open market operations) to ensure the "necessary" levels of 
liquidity in the economy.  Accordingly, financial sy stem institutions maintain reserves in the form and 
proportions specified by the BCH, depending on the ratio between assets and liabilities. 
72. Financial system institutions must at all times comply with the minimum capital adequacy 
ratio established by the CNBS, based on international standards.  In the event of a 25 per cent fall in 
capital and capital reserves, the institution is re quired to recover that amount within a maximum 
period of one year.  The CNBS may declare the compulsory liquidation of a financial institution 
whose capital adequacy ratio is under 60 per cent of the specified level.61 
73. Banks are required to notify the CNBS if they in tend to make investments amounting to 5 per 
cent of their registered capital or more.  A bank's total investments may not exceed 20 per cent of its 
capital and reserves;  nor may it invest more than 40 per cent of its capital and reserves in movable 
property, equipment or real estate.  Banks domicile d in Honduras require prior authorization from the 
BCH to extend loans to natural or legal persons  domiciled abroad;  and they are prohibited from 
making loans to enable the borrower to pay wholly or partially for shares in the lending institution.  
The laws also limit the amount of credit that can be granted to related parties. 
                                                      
59 WTO document GATS/SC/38/Suppl.1 of 26 February 1998. 
60 Resolution No. 633/12.05.2009. 
61 WTO (2003). WT/TPR/S/234 Trade Policy Review 
Page 92 
 
 
74. Deposits with domestic or foreign private banks , savings and loan associations or finance 
companies are covered by deposit insurance.62  The maximum cover for deposits in either national or 
foreign currency, as at December 2009, was L 183, 000 per depositor and pe r financial institution.63  
The State guarantees State-owned banks. 
Features and performance 
75. In 2009 the Honduran banking system consiste d of the BCH, 17 commercial banks, one State 
bank (BANDESA), 11 financial companies, tw o representative offices of foreign banks, 
two representative offices and two second-tier banks.  The number of commercial banks has remained 
broadly stable in recent years, dropping from 19 in 2002 to 17 in 2009 following a number of 
mergers.64  In 2009 six entities managed 76.5 per cent of total commercial bank assets (73.7 per cent 
in 2008).65,66  According to the CNBS, the sector h as become more concentrated since 2007.67  I n  
2009, the banking industry was mostly owned by Honduran nationals, who controlled roughly 
62.2 per cent of total bank assets.  In 2009, ei ght commercial banks were controlled by foreign 
investors.  The only functioning State bank is BANADESA, which specializes in lending to the agriculture sector. 
76. As at 30 November 2009, the total assets of the 17 commercial banks amounted to 
L 217.369 billion, which is L 6.528 billion (3.1 pe r cent) higher than the L 210.841 billion recorded 
on 30 November 2008, although the increase is less than the previous year-on-year rise.  The majority 
of bank assets (73.2 per cent) are held in local currenc y, with just 26.8 per cent in foreign currency.  
These banks manage 96.4 per cent of total assets in  the national financial system.  Lending remains 
the main activity of commercial banks:  the loan por tfolio represents 61.1 per cent of total assets;  
investments account for 14.7 per cent, and cash and other liquid assets are third in importance at 
9.7 per cent. 
77. In 2009, net lending grew by 0.5 per cent, compared to 14.7 per cent in 2008.
68  Credit 
operations in local currency increased by 6.4 per cent, while foreign currency lending was down by 
3.8 per cent.  Consequently, local currency operatio ns accounted for 70.7 per cent of total lending, 
while the foreign currency portfolio shrank from 29 .3 per cent to 25.1 per cent in the same period 
(2008-2009).  The real-estate sector absorbed 33.5 per cent of the loan portfolio (compared to 31.4 per 
cent in November 2008), for an amount of L 41.91 0 billion, maintaining the dominance it has had 
since 2006.  Lending to that sector is followed by  consumer credit and loans to industry accounting 
for 15.3 per cent (L 19.141 billion) and 15.7 per cent (L 19.641 billion) , respectively (Table IV.7).  
Commercial credit grew by just 3.9 percentage points,  to represent the fifth largest share at 11.6 per 
cent.  In 2009, the agriculture sector only received 5.2 per cent of total credit extended by commercial 
banks (down from 10 per cent in 2003).  According to th e authorities, this reflects the fact that banks 
are not interested in lending to the agriculture sector  because they consider the risks to be too high.  
                                                      
62 The Law on Deposit Insurance in Financial System Institutions (Decree No. 53-2001) established the 
Deposit Insurance Fund (FOSEDE) to guarantee the public's  deposits in the event of the winding-up of a bank or 
its compulsory liquidation. 
63 Resolution No. 211/25.01.2010. 
64 Since 2003, a number of financial institutions have undergone voluntary liquidation, either selling 
their portfolio to other banks or through merger and acquisition processes.  There were no compulsory 
liquidations that would generate fiscal costs. 
65 CNBS (2009b). 
66 CNBS (2009a). 
67 CNBS (2009b). 
68 As at 30 November 2009, the loan  portfolio amounted to L 132.7465  billion, representing net growth 
of L 618.1 million. Honduras WT/TPR/S/234 
 Page 93 
 
 
The quality of the loan portfolio worsened in 2008 and 2009.  Arrears in the banking system portfolio 
rose from 5 per cent in November 2008 to 5.9 per cen t in November 2009, representing an increase of 
L 1.148 billion in absolute terms.69 
Table IV.7 
Trends in the commercial banking sector's ne t loan portfolio and deposits received, 2003-2010 
(Millions of lempiras and percentages) 
 2003 2004 2005 2006 2007 2008 2009 2010a 
A s s e t s          
Total loans 42,613 49,668 60,331 81,496 109,111 123,658 125,105 125,414 
US$ equivalent 2,456 2,728 3,204 4,312 5,773 6,544 6,621 6,637 
         
Loans by economic sector (% of total loans)         
Agriculture 11.8 9.3 6.7 5.5 4.5 5.0 5.2 4.6 
Industry 19.5 20.3 19.6 18.9 16.0 16.5 15.3 15.0 
Services 11.2 10.8 11.2 11.8 12.1 13.0 12.2 12.2 
Real estate 18.7 19.1 19.0 23.3 26.1 31.9 33.5 33.9 
Commerce 15.8 16.0 18.7 17.8 17.8 11.0 11.6 11.8 
Consumption 13.0 13.4 13.3 15.1 16.5 16.5 15.7 15.6 
Other 10.0 11.1 11.5 7.6 6.9 6.1 6.5 6.9 
         
Total deposits in national and foreign 
currencyb 54,712 65,765 78,460 98,612 119,261 126,758 131,462 137,113 
US$ equivalent 3,154 3,612 4,167 5,218 6,310 6,709 6,957 7,257 
         
Maximum interest rates (% per year)         
Lending 20.3 19.4 18.4 16.6 16.5 20.0 18.9 18.9 
Deposit 11.2 11.0 10.8 8.0 8.1 11.8 10.7 10.7 
a Figures at 30 November 2009. 
b Includes time deposits, demand deposits and savings deposits. 
Source : National Banking and Insurance Commi ssion;  Central Bank of Honduras. 
 
78. In November 2009, the total capital of commerc ial banks amounted to L20.714 billion.  This 
represents an increase of 5.7 per cent (L 1.113 billion) in relation to the November 2008 figure, 
mainly reflecting operating profits and to a lesser extent the fact that a number of banks took on 
subordinated debt and received cash injections from th eir shareholders.  The solvency of the banking 
system, as measured by the capital adequacy ratio  (CAR), in November 2009 was 14 per cent, 
0.5 percentage points above the November 2008 valu e (13.5 per cent) and four percentage points 
above the 10 per cent required by the CNBS, in li ne with international standards.  In 2004, the 
Commission updated the capital adequacy standards of financial system institutions, to define the 
components of capital in line with the best inte rnational practices, for example by excluding asset 
revaluations from the figure.  In addition, risk-asset  weightings have been increased, most notably to 
150 per cent on bank loans subject to exchange-rate ri sk, where the borrowers do not generate foreign 
exchange. 
79. Interest rates are generally determined by ne gotiation between financial system institutions 
and their customers, in the light of prevailing ma rket conditions;  but the Central Bank regulates them 
when economic circumstances so justify (for exampl e when there is no competition).  The maximum 
lending rate has been trending upwards owing to infla tionary pressures, particularly in 2008, to reach 
a level of 35.2 per cent in that year;  whereas the deposit rate fell in 2004-2007  before rising again in 
2008.  Financial spreads widened during the review period, suggesting inefficiencies in the banking 
system or high rates of bank profit. 
80. In 2008, the CNBS approved mechanisms to he lp the banking sector mitigate the effects of 
the global financial crisis and distress among dom estic borrowers.  The BCH also implemented a 
                                                      
69 CNBS (2009a). WT/TPR/S/234 Trade Policy Review 
Page 94 
 
 
differential policy on reserve requirements to attr act funds in local and foreign currency, and in 
accordance with the loan po rtfolio of the banking system.  This measure aimed to mitigate the effects 
of the crisis on financial markets and, in particul ar, maintain sufficient liquidity in the financial 
system to enable productive sectors to gain access to credit, and not  just the consumer and commerce 
sectors.70  In 2009, the differentiated reserve ratio wa s abandoned, and a single rate of 6 per cent in 
local currency was re-established for all financial system institutions (Resolution No. 327-7/2009) to 
reduce excess liquidity in the system. 
81. Prior to 2001, financial instituti ons could make loans to relate d parties for up to 120 per cent 
of their capital.  The 2001 reform to the Financial Sy stem Institutions Law lowe red this limit to 30 per 
cent.71 
(b) Insurance 
Regulatory framework 
82. The insurance sector is regulated by the CNBS through the Insurance and Pensions 
Supervisory Authority, which over sees and periodically inspects insu rance companies authorized to 
operate in Honduras.  The Social Security Institutes veri fy the solvency of institutions in terms of their 
assets and reserves available to cover risks, in relation to the policies they issue. 
83. Insurance and reinsurance activities are governed  by the Law on Insurance and Reinsurance 
Institutions (Decree No. 22-2001 enacted on 1 Septem ber 2001).  Insurance companies are classified 
in three groups, according to the pr oduct offered:  (a) life insurance;   (b) general insurance;  and 
(c) all-risk insurance;  in addition to reinsuran ce companies.  Personal accident insurance is reserved 
for companies specializing in life insurance polici es and those offering all-risk insurance.  An 
insurance company cannot reinsure. 
84. Setting up an insurance company requires author ization from the BCH, subject to the opinion 
of the CNBS.  The BCH may deny authorization fo r reasons of national interest.  All insurance 
institutions setting up in Honduras must be establis hed as closed-end public limited companies with 
their capital divided into registered shares;  the sh areholders may be natura l or legal persons.  The 
BCH sets the minimum capital requirement, which de pends on the type of insurance being supplied 
by the company in question:  L 25 million for insurance institutions offering life and general 
insurance policies;  L 50 million for those offering both types of insurance;  and L 70 million for reinsurance companies.  The minimum capital must be  entirely paid before the institution starts to 
operate. 
85. Foreign companies offering insurance and re insurance policies may operate in Honduras 
through branches, subject to prior authorization by  the BCH, having regard to the conditions of the 
company and general and local economic needs.  Such enterprises have to establish themselves 
locally, either as closed-end public limited companies or as mutual companies.  In the former case, the 
shares must be registered and at least 60 per cen t of the company's equity must be owned by 
                                                     
 
70 The national currency reserve re quirement in December 2008 was 0. 0 per cent for banks in which at 
least 60 per cent of the local currency  loan portfolio was concentrated in productive sectors, and 12 per cent for 
banks lending in lesser proportion to productive sectors.  The equivalent figures for the reserve ratio in foreign 
currency were 9 per cent for banks lending at least 60 per cent of their portfolio to pr oductive sectors, and 24 per 
cent where the proportion of such loans was lower (BCH, 2009). 
71 WTO (2003). Honduras WT/TPR/S/234 
 Page 95 
 
 
Hondurans.72  According to the authorities, this provision prevailed prior to the 2001 Law on 
Insurance and Reinsurance Institu tions, which does not set limits on shareholder participation.  
Nonetheless, the capital of the parent company mu st be sufficient to meet the commitments and 
responsibilities undertaken by its subsidiaries in Honduras.  Accordingly, the BCH authorizes the 
investment only if there are regulators in th e parent company's home country which apply 
international standards or standards that are simila r to or stricter than those used in Honduras.  
Moreover, by way of a guarantee, at least 10 per cent of the prospective company's minimum capital 
must be deposited with the BCH or invested in  government securities, this amount being refunded 
once the application has been approved.  The opening of subsidiaries of Honduran insurance 
companies abroad also requires BCH approval. 
86. Subject to the opinion of the CNBS, the BCH  may authorize mergers between insurance 
companies and the transfer of shares by natural or legal persons.  Mergers are not authorized if the 
resultant new company could restrict free competitio n in the markets in which it participates.  Nor 
may insurance and reinsurance companies merge if  the new company intends to operate in both 
markets.  The CNBS must be notified when any natural person acquires shares for a value which, 
when added to the value of shar es in the institution already owned by that person, exceeds 10 per cent 
of the subscribed and paid up capital. 
87. Insurance companies may offer some banking services, including certain types of credit to 
natural or legal persons living in Honduras.73  The amount of the loan extended to a single individual 
or legal entity may not exceed 20 per cent of the cap ital and capital reserves that the company is 
required to maintain for prudential reasons. 
Features and performance74 
88. As at 30 November 2009 there were 12 insu rance companies in Honduras, of which seven 
were under foreign control.  The State has no st ake in the insurance sector.  Total net premiums 
decreased in 2009, mainly as a resu lt of a slowdown in the damage in surance segment (7.2 per cent).  
Premiums in the other segments of life insurance and accident and illness insurance grew by 4.6 per 
cent and by 10 per cent, respectively (Table IV.8). 
Table IV.8 
Total premiums by segment, 2003-2009 
(Millions of lempiras) 
Segments 2003 2004 2005 2006 2007 Nov. 
2008 Nov. 
2009 
Life 590.3 667.2 740.4 920.3 1,143.8 1,253.1 1,310.2 
Individual life 216.8 240.0 294.4 344.6 414.0 432.6 440.7 
Group life 373.4 426.9 445.3 574.8 729.2 819.5 868.8 
Other life insurance 0.1 0.3 0.7 0.9 0.7 1.0 0.6 
Accident and illness 458.6 501.4 564.1 644.5 745.8 778.2 856.3 
Damage 1,699.2 1,846.1 2,043.8 2,168.0 2,649.8 2,596.3 2,408.7 
Fire and related lines 745.4 758.9 962.5 949.5 1,055.9 975.3 995.7 
Vehicles and automotive 595.9 650.3 722.7 796.7 991.3 1,030.2 965.9 
Other general insurance 357.9 436.8 358.6 421.8 602.5 59.8 447.1 
Sureties 42.8 37.5 48.8 57.0 135.0 108.4 49.5 
Total 2,790.9 3,052.1 3,397.0 3,789.8 4,674.4 4,736.0 4.624.7 
                                                      
72 WTO documents GATS/SC/38/Suppl.1 of 26 February 1998 and S/DCS/W/HND/Rev.1 of 
16 September 2005. 
73 For example, they can extend credit secured by assets or collateral up to a certain limit;  they may 
also provide mortgage-secured loans, repayable in regular instalments with terms not exceeding 25 years. 
74 CNBS (2009a). WT/TPR/S/234 Trade Policy Review 
Page 96 
 
 
Source : CNBS (2009), Boletín Mensual de Estadísticas  del Sistema Financiero y Seguros .  Viewed at:  
http://ftp.cnbs.gov.hn/bole tines/BE_SF_Nov2009.pdf;  and informa tion provided by the authorities. 
 
89. In 2009, the total assets of insurance compan ies amounted to L 8.466 billion, 7.9 per cent 
above the L 7.842 billion recorded at 30 November  2008.  As is the case in the commercial banking 
sector, the insurance sector is also highly con centrated: 64.1 per cent of assets are managed by 
four institutions (Table IV.9);  and 74.7 per cent of premium income (equivalent to L 3.455 billion) at 
30 November 2009 was received by five insurance companies. 
Table IV.9 
Honduras, insurance market, 2003-2009 
Market share by type of insurance 
 Company Percentage 
of foreign 
capital Type of 
insurancea 
2003 2004 2005 2006 2007 2008 2009 
Seguros HSBC, S.A. 85.7 3 21.4 22.5 23.5 22.6 21.8 20.9 16.1 
Pan American Life Insurance Company 100.0 3 13.6 14.3 15.0 13.6 13.4 13.0 13.2 
Aseguradora Hondureña Mundial 98.1 3 9.0 8.2 8.4 7.1 8.9 7.8 8.9 
Compañía de Seguros Interamericana 
S.A. 0.0 2 14.2 12.9 11.4 13.0 12.5 14.6 15.6 
American Home Assurance Company 100.0 3 3.5 2.5 2.5 2.7 2.3 3.8 2.3 
Seguros Continental, S.A. 0.0 3 7.5 7.5 9.0 8.9 9.1 9.1 10.3 
PREVISA 0.0 3 2.3 1.7 n.a. n.a. n.a. n.a. n.a. 
Seguros Atlántida, S.A. 0.0 3 19.6 20.0 19.3 20.0 19.1 17.7 18.6 
Seguros Crefisa. S.A. 0.0 3 54 6.3 6.7 6.4 6.3 5.6 5.3 
Equidad, Compañía de Seguros, S.A. 0.0 3 1.4 2.1 2.1 2.2 2.3 2.2 2.6 
Seguros del País, S.A. 37.5 3 2.0 2.0 2.1 2.3 3.2 4.0 3.9 
Citi Seguros de Honduras, S.A. 100.0 3 n.a.  n.a. n.a. 1. 2 1.1 1.4 2.2 
Seguros Lafise Honduras, S.A 100.0 3  n.a. n.a. n.a. n.a. n.a. n.a. 1.0 
n.a. Not available. 
a The Law on Insurance and Reinsurance In stitutions classifies companies as follo ws:  Group 1:  Personal insurance;  
Group 2:  Damage insurance;  Group 3:  Personal and damage insurance. 
Source : Honduran authorities. 
 
(iii) Telecommunications 
Institutional and regulatory framework 
90. The institutional and regulatory framework governing the teleco ms market has not changed 
much since the last review of Honduras in 2003.   The 1995 Framework Law on Telecommunications, 
together with its 1997 update, and the Genera l Regulations of the Framework Law on the 
Telecommunications Sector, among others, are the main laws governing this sector in Honduras 
(Table IV.10).75 
                                                      
75 Decree Law No. 185-95 of 31 October 1995;  Update of the Framework Law on the 
Telecommunications Sector, Decree No. 118-97 of 25 October 1997. Honduras WT/TPR/S/234 
 Page 97 
 
 
Table IV.10 
Main legislation on telecommunications, 2010 
Legal instrument Scope 
Framework Law on the Telecommunications Sector (Decree 
No. 185-95), amended by Decree No. 118-97, of 
25 October 1997 Establishes rules governing telecommunications services 
General Regulations of the Framework Law on the 
Telecommunications Sector (Decision No. 89/97, amended by Decision No. 141-2002) Specifies the scope of the la w and lays down supplementary 
provisions and rules on rates and operating charges for telecom services 
Interconnection Regulations (Resolution No. 1053/98), recently amended by Resolution No. NR008-03 of 25 March 2003 Establishes the technical, economic and administrative conditions 
governing interconnection and acce ss to public telecom service 
networks 
Regulations on Telecommunications  Services Rates and Costs 
(Resolution No. NR028/99 of 22 December 1999) Contains supplementary provisions and rules on rates and operating 
charges for telecom services in Honduras 
Interconnection Regulation No. NR008/03 of  25 March 2003 Regulates the technical, ec onomic and administrative conditions 
governing access to and interconnec tion between the networks of 
public telecom services provided in Honduras 
Resolution No. NR018/03 of 21 November 2003 Regulates  relations between the Honduran Telecommunications 
Corporation (HONDUTEL) and sub-operators, and between 
sub-operators and their users, CONATEL, other sub-operators and 
other telecom services operators.  As a result CONATEL has exclusive authority to regulate an d inspect the operation of telecom 
services provided by HONDUTEL, its associates and private 
individuals, pursuant to the Framework Law on the Telecommunications Sector and its General Regulations 
Decree No. 159-2003 Approves the programme fo r the expansion and modernization of 
telecommunications, to be known for all purposes as:  "Telefonía para 
todos - Modernidad para Honduras " [Telephony for all - Modernity 
for Honduras] 
Decree No. 326-2005 of 24 January 2006 Approves Executive  Decision No. 21-2005 of 14 October 2005, which 
contains the Annex on Basic Telecommunications to the 
WTO General Agreement on Trade in  Services, together with the 
schedule of commitments on telecommunications 
Decree No. 366/2005 of 2 February  2006 Approves the concession cont ract for HONDUTEL to provide 
personal communications services in the Republic of Honduras 
Decree No. 367/2005 of 3 February  2006 Approves the concession cont ract for HONDUTEL to provide 
telephony, public telephone, telegraph, telex, and carrier services in 
the Republic of Honduras 
Source : CONATEL.  Online information at  http://www.conatel.hn/IRI.aspx. 
 
91. The President of the Republic formulates te lecommunications policies, and the National 
Telecommunications Commission (CONATEL), established in 1995, regulates the sector.  Since its 
last review, Honduras has attempted to implemen t a policy to promote telecom services under a 
market regime, making it possible to expand the supply of services and thus promote national 
economic development.  In 2003, the authorities concluded that unsatisfied demand for telecom 
services was having a negative effect on the economy76, and on 24 October of that year the " Telefonía 
para todos - Modernidad para Honduras " programme was approved.  This aimed to increase the 
supply of fixed telephony services and improve th e quality of services that only the State telecom 
operator, HONDUTEL, was authorized to provide, by  allowing private firms to participate as 
sub-operators.77  Under the law, HONDUTEL would remain  the sole operator of international 
long-distance telephony services until the end of its ex clusive concession in 2005;  but in practice it 
continues to enjoy exclusive rights to this day. 
92. In the Uruguay Round, Honduras did not unde rtake any specific commitments on basic 
telephony or other telecommunications services in its GATS Schedule of Specific Commitments.78  
                                                      
76 Decree No. 159-2003.  CONATEL on line information.  Viewed at:  
http://www.conatel.hn/Doc/Decretos/DECRETO_LEGISLATIVO_159_200.pdf. 
77 Sub-operators are entitie s that receive rights from CONATE L to directly provide the public 
telecommunication services authorized to HONDUTEL. 
78 WTO document GATS/SC/38 of 15 April 1994. WT/TPR/S/234 Trade Policy Review 
Page 98 
 
 
One of the most important changes in the telecom regulations in Honduras, since the last review in 
2003, is the unilateral acceptance of commitme nts on telecom services in 2005 within the 
GATS framework.79  Nonetheless, in its schedule of MFN exemptions, Honduras included 
exemptions in relation to telecom services to be nefit CACM member countries, with a view to 
facilitating regional integration of telecommunication systems.80 
93. Providing telecom services requires a concession, a permit, or a registration, depending on the 
type of service (Table IV.11).81  These are all issued by CONATEL.  If the service entails use of the 
radio spectrum, a licence is required in addition to the aforementioned authorizations.  This is also 
granted by CONATEL for the same period as the c oncession, permit or registration.  As a rule, 
concessions and licences are granted without exclusive rights, unless financial or technical reasons 
warrant the temporary granting of exclusivity to a limited number of operators. 
94. There are certain restrictions on the participa tion of foreign operators in providing telecom 
services;  and foreign Governments may not directly supply such services.  In addition, "except for the 
State of Honduras, no operator or any of  its partners with a 10 per cent sh are or more, or an affiliate or 
subsidiary thereof, or a person belonging to the sa me economic group, may directly or indirectly hold 
more than 10 per cent of the capital of a firm that is authorized to provide these services."82 
95. CONATEL is also responsible for implementing competition policy in the sector, 
investigating and sanctioning the violati ons specified in the Framework Law on the 
Telecommunications Sector and the respective Regulations (Chapter III(4)(ii)(a)).  The law also prohibits practices that restrict or distort compe tition, such as price fixing, restricting the entry of 
competitors or dividing up the market.  A practice will be deemed restrictive if the agreements in 
question produce the aforementioned effects, grant a discriminatory preference to the detriment of competitors or result in an abuse of domin ant position to gain a market advantage. 
Table IV.11 
Requirements for the provision of telecommunications services 
Service Type of 
requirement Term Rate Procedure 
Carrier and basic end-user public 
telecommunications services Concession No longer than 
25 years, renewable, non-transferable Accepted according 
to the best economic and technical bid Competitive bidding 
Supplementary end-user, 
radiocommunication, broadcasting and 
private network services, as well as private 
services Permit 15 years, renewable, 
non-transferable Pursuant to 
resolutions governing 
current rates.  The 
currently applicable resolutions are:  
NR009/07, of 
7 December 2007, for broadcasting 
services;  and 
NR010/09, of 25 October 2009, for 
other telecom 
services Upon request, 
No. 148 of the 
General Regulations 
of the Framework Law on 
Telecommunications 
Services is applied. 
                                                      
79 Decree No. 326-2005 of 24 January 2006 and WTO document GATS/SC/38/Suppl.2 of 
16 September 2005. 
80 WTO document GATS/EL/38 of 15 April 1994. 
81 Article 14 of the Telecommunications Law of 5 December 1995. 
82 WTO document GATS/SC/38/Suppl.2 of 16 September 2005;  and Decree No. 326-2005 of 
24 January 2006. Honduras WT/TPR/S/234 
 Page 99 
 
 
Service Type of 
requirement Term Rate Procedure 
Value-added services Registration Five years, 
renewable, 
non-transferable Pursuant to 
resolutions governing 
current rates.  Currently the 
applicable resolution 
is NR010/09, of 25 October 2009. When there is 
concurrent interest 
among two or more applicants and there 
is limited spectrum 
availability, the authorization is 
awarded through 
competitive bidding.  This is in line with the Government 
Procurement Law, 
and, in particular, the Telecommunications 
Law.  Pursuant to 
General Regulation No. 89/97. 
Source : Framework Law on the Telecommunica tions Sector, Decree No. 185-95. 
 
96. CONATEL issues regulations and technical standa rds, as well as parameters for setting the 
various telephone charges.  It also regulates rate s when competitive conditio ns are lacking for the 
supply of public services.83  As there is no competition in fi xed and mobile telephony services, the 
rates for telecommunications services are in practic e set through a maximum price system, which is 
adjusted periodically.  The maximum rates are calcu lated using formulas contained in the Regulations 
on Telecommunications Service Rates and Costs (RTCST). 
Features and performance 
97. Since the last review, the telecom sector's contribution to GDP has increased from 4.3 per 
cent in 2003 to 8.5 per cent in 2009.  The number of fixed lines in service rose from around 335,434 
in 2003, to more than 825,769 in 2008, while the number of mobile phone subscribers grew from 
379,362 to 6.1 million in the same period (Table IV.12). 
98. The sole operator authorized to provide in ternational long-distance telephony services in 
Honduras is still HONDUTEL, which is an autonomous decentralized State enterprise created in 1976 
to provide telecommunication services and information technologies at competitive prices and quality 
levels in Honduras.84  Since 2000, there has been an inten tion to privatize the institution, but it 
remains in State hands.  Since 2003, HONDUTEL has signed marketing contracts with national or 
foreign natural or legal pers ons to provide fixed telephon y services as sub-operators.85  The number of 
sub-operators grew from four in 2003 to 22 in May 2010.86 
99. The Framework Law on the Telecommunications Sector gave HONDUTEL exclusive rights 
to provide basic telecommunications services until D ecember 2005, with an ob ligation to continue 
providing telegraphy services in places where there was no other means of communication.  In 2005, 
CONATEL granted HONDUTEL a non-exclusive concessi on to supply the carrier service and basic 
end-user telephony, public tele phone, telex and telegraphy services, as well as the mobile phone 
service.  In practice, however, exclusivity is ma intained for international long-distance telephony, 
                                                      
83 Article 12, General Framework Law on the Telecommunications Sector. 
84 Organic Law on the Honduran Telecommunications Corporation, Decree-Law No. 341 of 
4 June 1976. 
85 Decree No. 159-2003.  CONATEL on line information.  Viewed at:  
http://www.conatel.hn/Doc/Decretos/DECRETO_LEGISLATIVO_159_200.pdf. 
86 Information provided by the authorities. WT/TPR/S/234 Trade Policy Review 
Page 100 
 
 
since CONATEL has not yet issued regulations enab ling other operators to provide this service 
(Table IV.12). 
100. According to the commitments undertaken by  Honduras in the WTO, until 2005, foreign 
companies could obtain concessions to provide local telephony and nati onal long-distance, 
international telephony, public telephone, and telex and telegraphy services, among others, as 
sub-operators.87  Since that date, there has been no rest riction on foreigners operating in the sector, 
except for the restrictions inscribed by Honduras in its horizontal commitments.  The provision of 
fixed telephony services requires authorization fro m HONDUTEL, for which a technical profile has 
to be submitted, together with the intended timef rame for starting operations and bank guarantees to 
cover potential network damage.  Once HONDUTEL issu es the marketing authorization, this is sent 
to CONATEL, which issues a registration.  Commercia l authorizations are valid for five years.  
Foreign companies may set up in Honduras to provi de fixed telephony services;  but, according to the 
authorities, this is not a profitable service. 
101. The number of authorized mobile telephony ope rators increased from two in 2003 to three in 
May 2010.  Foreign companies face no restrictions  on providing mobile telephony services, but they 
must participate in the international bidding process described in Article 121 of the General 
Regulations. 
102. In 2003, fixed telephony charges, except for lo cal calls, had fallen in nominal terms, for both 
international and national long-distance services.  Nonetheless, they remained high by world 
standards, especially for long-distance internati onal calls.  In 2003, the authorities declared their 
intention to reduce the subsidy component in loca l calls.  Apparently this service is still being 
subsidized. 
Table IV.12 
Telecommunications indicators, 2003-2009 
Service 2003 2004 2005 2006 2007 2008 2009a 
1. Public telecommunications 
services operators        
Local fixed telephony 
 Authorized operators 1 1 1 1 1 1 1 
Local fixed telephony 
 Authorized sub-operators 4 37 45 64 68 73 37 
Mobile telephony 
 Authorized operators 2 2 2 2 3 4 4 
National long-distance telephony 
 Authorized operators 1 1 1 1 1 1 1 
National long-distance telephony 
 Authorized sub-operators 4 31 45 64 68 73 37 
International long-distance telephony 
 Authorized operators 1 1 1 3 1 1 1 
Data transmission and switching 
 Authorized operators 22 27 27 25 27 31 30 
Internet service providers (ISPs) 
 Authorized operators 58 65 74 60 74 86 63 
2. Fixed telephony        
Number of fixed lines in service 335,434 387,314 493,680 713,597 821,357 825,769 716,631 
Density of fixed lines in service 
(Telephones/100 inhabitants) 4.81 5.50 6.94 9.75 10.90 10.70 9.09 
3. Fixed telephony rates (US$)        
Local household installation costb 19.95 19.01 18.39 26.27 26.27 26.27 26.27 
Local business installation cost  48.46 46.17 44.67 52.57 52.57 52.57 52.57 
Monthly rate for household lines 2.28 2.17 2.1 2.1 2.1 2.1 2.1 
Monthly rate for business lines 5.7 5.43 5.26 5.26 5.26 5.26 5.26 
                                                      
87 Decree No. 159-2003 of 7 October 2003 and WTO document GATS/SC/38/Suppl.2 of 
16 September 2005. Honduras WT/TPR/S/234 
 Page 101 
 
 
Service 2003 2004 2005 2006 2007 2008 2009a 
Cost of local call per minute 0.02 0.019 0.0184 0.0184 0.0184 0.0184 0.0184 
Cost of national long-distance call per 
minute 0.0918 0.0875 0.0846 0.0846 0.0846 0.0846 0.0846 
Cost per minute of international 
long-distance call to the United States 0.84 0.84 0.84 1.24 1.24 1.24 1.24 
Cost per minute of international 
long-distance call to the rest of the 
world 1.42 1.42 1.42 1.24 1.24 1.24 1.24 
4. Mobile telephony        
Number of cellular subscribers 
(million) 0.38 0.7 1.2 2.2 4.1 6.1 8.3 
Teledensity 
(telephones/100 inhabitants) 5.43 10.04 18.01 30.61 55.52 79.56 100.53 
a At 31 December 2009. 
b Single payment for the installation (activation) of the telephone service, excluding terminal equipment. 
c Average international long-distance rate for automatic (non-operator-assisted) calls. 
Source : CONATEL. 
 
(iv) Transport 
(a) Maritime transport 
103. There have been no significant changes in th e port infrastructure in Honduras since 2003, nor 
in the institutional regulatory framework governing this sector. 
104. Honduras has five public ports operate d by the national port company, Empresa Nacional 
Portuaria  (ENP):  Puerto Cortés, Puerto de Tela, the La Ceiba Cabotage Port, Puerto Castilla and San 
Lorenzo on the Pacific coast.  The ENP also provi des berthing and unberthing services at the Omoa 
municipal harbour for vessels transporting propane gas.  In the Bahía Islands, a private firm holds a 
25-year concession to manage the port of Roatán.  Pu erto Cortés, Puerto Castilla, La Ceiba and Tela 
are located on the country's Atlantic coast, while Sa n Lorenzo is on the Pacific in the south of the 
country. 
105. Puerto Cortés is the country's busiest port and pr ovides the best services.  In 2002 it handled a 
total of 5.8 million tonnes of freight, 4 million tonnes in imports and 1.8 million in exports.  Traffic 
through the port has grown continuously since th en to reach levels of around 7.5 million tonnes in 
2005 and 8.6 million tonnes in 2008.  In 2008, the port handled more than 80 per cent of the country's 
total freight traffic (Table IV.13).  Puerto Cortés is located close to industrial zones and cities and 
provides other facilities such as banking services, co ld stores, free zone and Container Security 
Initiative (CSI) certification.  It also serves as a transit port to El Salvador and Nicaragua.88 
106. The ENP has jurisdiction over all maritime por ts in Honduras, which are State property.89  It 
is an autonomous public sector institution with excl usive rights to administer and operate ports and 
provide services in all Honduran ports, as well as ex clusive authority to provide merchandise custody, 
management and storage services, and to provide mooring services to vessels in Honduran ports.  
Nonetheless, ENP may also subcontract with private firms.  Apparently, the provision of port services 
is not subject to any nationality restrictions, ex cept for piloting services which can only be provided 
                                                      
88 AmCham Honduras (2006). 
89 The ENP is a decentralized institu tion of the Honduran Government, established by Decree No. 40 of 
14 October 1965. WT/TPR/S/234 Trade Policy Review 
Page 102 
 
 
by the ENP.  The ENP manages the main ports:  Puer to Cortés, La Ceiba, Puerto Castilla, Puerto de 
Tela and San Lorenzo;  the othe rs are run by concession-holders.90 
Table IV.13 
General freight movements, 2007-2008a 
(Metric tonnes) 
 Total ports Puerto Cortés Other portsb 
Freight 2007 2008 2007 2008 2007 2008 
General exports 1,807,167 1,925,789 1,247,576 1,389,533 559,591 536,256 
Free-zone exports 366,913 446,728 402,194 436,721 3,866 3,724 
Total exports 2,787,050 3,045,094 2,177,752 2,408,318 648,445 630,493 
Total imports 7,032,163 7,430,751 5,511,806 5,748,123 1,114,297 1,242,183 
Merchandise in transit 366,913 446,728 320,948 370,835 45,965 75,893 
Total merchandise 9,819,213 10,475,845 8,010,506 8,527,276 1,808,707 1,948,569 
a Most recent information 
b Includes Puerto de Tela, La Ceiba,  Puerto Castilla and San Lorenzo. 
Source : Empresa Nacional de Transporte . 
 
107. The ENP continues to set the charges for pub lic port services and related activities, including 
cabotage.91  In some situations, services provided by the ENP to central government, to social welfare 
bodies and the armed forces may be totally or partially exempted from these charges.92 
108. The Directorate-General of the Merchant Marine (DGMM), created in 1994 within the 
Ministry of Public Works, Transport and Hous ing (SOPTRAVI) continues to serve as the Honduran 
maritime authority.93  It designs maritime transport policies and is responsible for maritime security 
and environmental protection, and for fulfilli ng international regula tions and agreements.94 
109. The Organice Law on the National Merchant Marine, Decree No. 167-94 of 
4 November 1994, and the Maritime Transp ort Regulations (Decision No. 000764 of 
13 December 1997) continue to provide the framewo rk for regulating the National Merchant Marine 
and maritime activities generally. 
110. Although maritime traffic is open to vessels of an y country, bilateral agreements containing 
cargo-sharing clauses may be concluded with othe r countries in exceptional circumstances and on 
reciprocal terms;  the market is open to national shipping companies from other Central American 
countries on a non-discriminatory basis.95 
111. Commercial cabotage is reserved for Honduran me rchant vessels.  However, where there are 
none available, the DGMM may authorize foreign me rchant vessels to provide cabotage services in 
Honduras.  In such cases, preference will be given to  vessels flying the flag of a Central American 
country.  In practice, no foreign vessels are currently registered to provide cabotage services. 
112. The vessel registration system has not changed since the previous review in 2003.  The 
DGMM's Vessel Registration Department keeps three regi sters:  the Register of large vessels;  the 
                                                      
90 Empresa Nacional Portuaria  (ENP) online information.  Viewed at:  
http://www.enp.hn/web/index2.html. 
91 Empresa Nacional Portuaria (2006). 
92 Decree No. 981 of 6 August 1981. 
93 Legislative Decree No. 167-94. 
94 DGMM online information, Políticas .  Viewed at:  
http://www.marinamercante.hn/?lang=es&articulo=1002. 
95 Maritime Transport Regulations. Honduras WT/TPR/S/234 
 Page 103 
 
 
Register of small vessels and the Register  of owners, charterers and shipowners.96  Although the 
registers are open to Honduran and foreign vessel s, any vessel registered in Honduras becomes a 
Honduran vessel and is temporarily subject to Hondur an legislation as long as it is registered in the 
country.  The navigating permit, valid for four years, proves the vessel's nationality.  There is also a 
register of vessels of less than five tonnes. 
113. A Register of Shipping Companies is also kept for firms engaging in domestic maritime 
traffic and cabotage (first section of the register) and firms engaged in fo reign maritime traffic 
(second part).  Registration is only mandatory for H onduran firms;  international shipowners are not 
required to register, but they may do so if they ope rate in Honduras.  To be able to provide domestic 
maritime and cabotage services, shi pping companies must be estab lished and domiciled in Honduras, 
and 51 per cent of their registered capital must be he ld by Honduran nationals and be included in the 
Register of regular cabotage lines. 
114. Honduran legislation allows maritime transport services to be provided by firms participating 
in maritime conferences or consortia (Article 43 of  the Maritime Transport Regulations).  Where a 
conference includes a traffic-sharing agreement, all Honduran enterprises have an equal right to take 
part as a single national group.  Where the confer ence concerns international traffic, domestic 
regulations provide that Honduran companies and tho se of the other contracting party shall share the 
amount of cargo and the volume of trade generated equally.  If firms from third countries participate, 
these may obtain around 20 per cent of the traffic generated on the route.97 
115. National or foreign natural or legal persons wish ing to provide towing, maritime agency, ship 
and cargo broking, dredging, underwater, maritime  accounting, salvage and maritime communication 
services must be listed in the Register of companies providing maritime services, kept by the DGMM. 
116. Honduras is a member of the Central Amer ican Maritime Transport Commission 
(COCATRAM) and of the Operational Network for Regional Cooperation between Maritime 
Authorities in Central America and th e Dominican Republic (ROCRAM-CA). 
117. Honduras did not make any commitments on maritime transport under the GATS. 
(b) Air transport 
118. As is the case with maritime transport, air transport policy is the responsibility of 
SOPTRAVI, whose aviation department, the Directorate-General of Civil Aviation (DGAC) coordinates, supervises and regulates air transport, ci vil aviation, airports, and air navigation safety.  
The Ministry of Industry and Trade regulates and supervises competition issues;  and the National 
Aviation Council (CAN) makes recommendations to  the Government on the aviation policy to be 
pursued under the Civil Aviation Law guidelines. 
119. Honduras has four international airports:  Tonc ontín in Tegucigalpa;  Ramón Villeda Morales 
in San Pedro Sula;  Golosón in La Ceiba;  and Juan Manuel Gálvez in Roatán on the Bahía Islands.  
Six other airports receive domestic flights.  Most  international traffic, both passengers and freight, 
goes through the airports of Tonc ontín and Ramón Villeda Morales.
98 
                                                      
96 DGMM online information, Registro de Buques .  Viewed at:  
http://www.marinamercante.hn/?lang=es&categoria=5. 
97 WTO (2003). 
98 Information provided by the authorities. WT/TPR/S/234 Trade Policy Review 
Page 104 
 
 
120. All civil airports and aerodromes in Honduras are controlled, inspected and supervised by the 
DGAC.99  Nonetheless, a private firm, Interairports, manages the four international airports100 under a 
20-year renewable concession, which came into force on 1 October 2000 following an international 
competitive bidding process.101  The DGAC supervises and manages the technical aspects of the 
concession contract. 
121. The contract sets both aviation rates and passe nger fares.  The former cover national and 
international landing fees, parking, illu mination and use of the boarding bridge.102  Passengers have to 
pay departure taxes of L 31.93 on domestic flights and US$34.07 on international flights;  the latter 
includes a US$2 airport fee in respect of agricultu ral health services and US$3 for migration taxes.103  
Payment may be made in the lempira equivalent at the official exchange rate. 
122. Aircraft, engines and all types of spare parts used in aircraft maintenance can be imported 
duty-free under the temporary import regime.  In 200 1 a maximum tariff of 1 per cent was established 
for aviation fuel and lubricant imports, but the current rate is 0 per cent.104  Aviation fuel is exempt 
from the tax on petroleum products, but kerosene for jet engines is subject to a tax of US$0.0300 per 
litre. 
123. Air transport is governed by the following in struments:  the Constitution;  international 
treaties and conventions ratified by Honduras105;  the Civil Aviation Law and its regulations, which 
repealed the previous Civil Aviation Law (Decr ee No. 146-1957);  the Open Skies Law (Decree 
No. 23-2000) and the Decision on Liberalizing Fares (Decision No. 26-94). 
124. The Civil Aviation Law aims to facilitate market access, protect free competition and promote 
aviation technology in Honduras, giving priority to the establishment of factories making aircraft and 
spare parts and aviation workshops.106  The Law aims to establish a legal framework in the hope that 
Honduras will attain the technological level needed to  set up factories for the production of aircraft 
and spare parts.  For the time being, only avia tion workshops have been certified, for which purpose 
technical aviation personnel have been trained and pr ocedures have been defined for setting them up.  
There are currently several aviation workshops in Honduras, as well as a number of maintenance 
organizations approved abroad.107  The regulations to the Civil Aviation Law define the methodology 
and procedures for applying the provisions contained in the Law108, which applies to all natural or 
legal persons, whether national or foreign, who undertake civil aviation activities, either by using 
Honduran airspace or by exploiting infrastructure. 
                                                      
99 Regulations of the Aviation Law. 
100 Airports of Honduras.  Viewed at:  http://www.int erairports.hn/. 
101 WTO (2003). 
102 Aviation rates.  Viewed at:  ht tp://www.interairports.hn/sps.htm. 
103 Annex 5(d) of Decree No. 46-2000m of 30 June 2000. 
104 The Law to Promote Passenger and Freight Air Transport and the Tourism Sector, Decree 
No. 216-2001 of 20 December 2001, and in formation provided by the authorities. 
105 The conventions ratified by Honduras are:  the Convention on International Civil Aviation (the 
Chicago Convention) (1953);  the Warsaw Convention (1993);  the Convention on Offences and Certain Other 
Acts Committed on Board Aircraft (Tokyo Convention) (1963);  the Convention for the Suppression of Unlawful Seizure of Aircraft (Hague Convention) (1970);  the Convention for the Suppression of Unlawful Acts 
against the Safety of Civil Aviation (Montreal Convention) (1971);  the Protocol for the Suppression of 
Unlawful Acts of Violence at Airports Serving Interna tional Civil Aviation (1988);  and the Convention on the 
Marking of Plastic Explosives for the Purpose of Detection (2003). 
106 Decree No. 55 of 5 May 2004. 
107 Information provided by the authorities. 
108 Regulations of the Civil Aviation Law, Decision No. 00645-A of 6 October 2005. Honduras WT/TPR/S/234 
 Page 105 
 
 
125. The DGAC is responsible for issuing operatin g certificates for public and private air 
transport, auxiliary services and infrastructure;  and it monitors competition in the air transport sector.  
The Ministry of Industry and Trade (SIC) regulates relations between the airline and its customers;  
and, in the case of foreign firms, it evaluates competitiveness in providing an air transport service, 
provided conditions are met for setting up a branch in Honduras;  and it grants the permits needed to 
pursue that activity in the country.  It also deals with complaints of "excessive" increases in air fares 
and ensures that the principle of free competiti on is upheld in commercial air transport policy, 
avoiding abuses that could result in competitive conditions that prove ruinous or anti-economic. 
126. To operate any public air transport service, wh ether domestic or intern ational, an operating 
certificate must be obtained from the DGAC.  These are issued for between one and 10 years, 
depending on the type of permit, a nd are renewable.  Foreign firms require authorization to trade in 
Honduras, which is issued by the SIC, pursuant to the Commercial Code.109  Operating certificates are 
granted on a reciprocal basis110 and may not confer ownership or exclusive rights over the use of any 
airspace, airport or auxiliary navigation service.  Be fore starting operations in Honduras, air transport 
operators, whether national or foreign, must desi gnate a permanent representative in Honduras and 
notify the aviation authorities thereof. 
127. Honduras has adopted an open-skies policy and gr ants the five freedoms of the air to all 
countries without restriction, for scheduled and no n-scheduled international commercial air services. 
128. To operate within Honduran territory, all aircra ft must have certificates of registration and 
airworthiness.  The airworthiness certificate attests to an aircraft's technical condition.  Honduras 
accepts the certificates granted by a foreign c ountry provided they are in accordance with 
international standards. 
129. The DGAC maintains and administers the Nati onal Aviation Register.  Only Honduran 
natural or legal persons may register aircraft fo r use in public air transport services or paid air 
transport work in the National Aviation Register.111  However, private service and industrial aircraft 
used for unpaid air services may be registered eith er by nationals or by foreigners domiciled in 
Honduras.  Public air transport services between tw o points in national territory are reserved for 
Honduran firms, as are cabotage services, for the tr ansport of both passengers and merchandise.  A 
firm is considered Honduran if at least 51 per cent of its capital is held by na tural or legal persons of 
Honduran nationality, and effective control and ma nagement are also in Honduran hands.  Honduran 
firms may operate with foreign-registered aircraft, subject to DGAC approval.112 
                                                      
109 Article 308 of the Commercial Code, amended by the Administrative Simplification Law 
(Legislative Decree No. 255-2002) provide s that foreign companies wishing to engage in commercial activity in 
Honduras are required to:  show that they are legally c onstituted under the law of the country in which they were 
incorporated;  demonstrate th at, under that law and under their articles of association, they can create branches, 
fulfilling the requirements contained in the Honduran Code ;  maintain at least one permanent representative in 
Honduras;  constitute sufficient capital for the mercantile activity it is intended to undertake, which may not be 
less than the amount demanded of Honduras companies;  demonstrate that all their goals are legitimate and that, in general, they do not contravene public order;  and submit to national laws." 
110 Article 116 of the Civil Aviation Law. 
111 Article 59 of the Civil Aviation Law. 
112 Article 131 of the Civil Aviation Law. WT/TPR/S/234 Trade Policy Review 
Page 106 
 
 
130. There are certain restrictions on the use of foreign investment to establish airlines in 
Honduras.  Public air transport services between tw o points in national territory are reserved for 
Honduran firms.113 
131. Honduras has signed bilateral agreements on th e provision of air transport services with 
Belize, Cayman Islands, Costa Rica, Ecuador, El Salvador, Guatemala, Italy, Mexico, Nicaragua, 
Panama, Puerto Rico and Spain.  It has not yet ratified the Open Skies Agreement with the United 
States.  In 2006, Honduras signed the Cooperation Ag reement for the Facilitation and Development of 
Air Transport Operations between the Governments of the Republic of Guatemala, the Republic of 
Honduras, the Republic of El Salvador  and the Republic of Nicaragua. 
132. The Honduran Airlines Association (ALAH) exis ts to safeguard the safety and comfort of 
national and international airlines and of third parties to ensure greater safety in the aviation sector.  In 
2010 the following airlines were flying the Honduran flag:  Aerocaribe de Honduras, Aerolínea Sosa, Isleña de Inversiones, Rollins Air, Aéreo Vías Centroamericanas, Operadora de Turismo Castillo 
Mourra, Línea Aérea Nacional Hondureña, Aviation Pa rtners and Roatán Air Services.  The following 
foreign airlines currently operate in Honduras:  Taca International, American Airlines, Copa, 
Continental, AVIATECA, Spirit Airlines, Aeroméxi co, Transportes Aéreos Guatemaltecos, Delta 
Airlines, Cayman Airways, AirTahoma, United Pa rcel Services, Amerijet Internacional and Maya 
Island Air. 
133. Air fares may be freely determined for both natio nal and international air transport, in the 
freight, mail and passenger modalities.
114 
134. Aviation technicians must possess the legally required "permits and authorizations" to be able 
to fulfil their functions in Honduras;  and forei gn nationals require special permits to work as 
technicians in the country.  These are only granted if it is proven that no Honduran national can perform the task in question, if the foreign nationa l holds the relevant "permits and authorizations" 
issued in his country of origin, and if that count ry accords reciprocal treatment to the "permits and 
authorizations" issued by Honduras.  The special permit is granted for three months, during which 
Honduran personnel must be trained. 
135. Honduras belongs to the Central American  Air Navigation Services Corporation 
(COCESNA), established in 1960 as a Central Ameri can integration organization.  COCESNA holds 
exclusive rights to provide the following services:  ai r traffic control;  aviation telecommunications;  
aviation information;  radio assistance for avia tion;  aviation safety;  and aviation training.
115 
136. Regarding commitments under the GATS, H onduras bound repair and maintenance services 
with respect to market access and national treatment for mode 2 (consumption abroad) and mode 3 (commercial presence). 
 
                                                     
 
113 For a firm to be considered Honduran, at least 51 per cent of its capital must belong to natural or 
legal persons of Honduran nationality, and effective control of the firm and its management must be in Honduran hands. 
114 Decision on Liberalizing Fares, Decision No. 26-94. 
115 Articles of association of the Central American Air Navigation Services Corporation.  Current 
articles of association amended in 2001.  Viewed at:  http://www.cocesna.org/pagina.php?id=55&lng=0. Honduras WT/TPR/S/234 
 Page 107 
 
 
REFERENCES 
 
 Honduran American Chamber of Commerce (AmCham) (2006), Honduran Ports .  Consulted at:  
http://www.amchamhonduras.org/puertos_en.asp. 
 Central Bank of Honduras (BCH) (2009a), Actividad Económica de la Industria de Bienes para 
Transformación (Maquila) y Activi dades Conexas en Honduras 2008  (Economic activity of the goods 
processing industry ( maquila ) and related activities in Honduras, 2008), Tegucigalpa. 
 
BCH (2009b), Honduras en Cifras 2006-2008  (Honduras in figures 2006-2008), Tegucigalpa. 
 BCH (2009c), Memoria Anual 2008  (Annual Report 2008), Tegucigalpa. 
 BCH (2010a), Bienes para Transformación, Enero-Septiembre 2009  (Goods for processing, 
January-September 2009), Tegucigalpa. 
 BCH (2010b), Memoria Anual 2009  (Annual Report 2009), Tegucigalpa. 
 BCH (2010), Memoria Anual 2009  (Annual Report 2009), Tegucig alpa.  Consulted at:  
http://www.bch.hn/download/mem oria/memoria_anual_2009.pdf. 
 Inter-American Development Bank (IDB) (2008), IDB Country Strategy with Honduras , January, 
Washington, D.C.  Comisión Nacional de Bancos y Seguros (Nati onal Banking and Insurance Commission, CNBS) 
(2009a), Boletín Mensual de Estadísticas  del Sistema Financiero y Seguros  (Monthly bulletin of 
financial and insurance system statistics).  Consulted at:  http://ftp.cnbs.gov.hn/boletines/BE_SF_Nov2009.pdf.  CNBS (2009b), Memoria 2008  (2008 Report), Tegucigalpa.  Consu lted at:  http://www.cnbs.gov.hn/. 
 
Empresa Nacional Portuaria (Nationa l Port Enterprise, ENP) (2006), Régimen Tarifario de la 
República de Honduras  (Tariff regime of the Republic of Honduras).  Consulted at:  
http://www.enp.hn/web/Descargas/REGL AMENTO%20TARIFARIO%202006.pdf. 
 
Food and Agriculture Organization of the United Nations (FAO) (2007), Política Agrícola 
Centroamericana (PACA) 2008-2017:   Una agricultura competitiva e integrada para un mundo 
global  (Central American Agricultural Policy (PACA) 2008-2017 (Competitive and integrated 
agriculture for a globalized world).  Consu lted at:  http://www.infoagro.go.cr/documentos 
pdf/Politica_Agricola_Centroamericana.pdf.  
FAO (undated), ¿Qué es el PESA?   (What is the Special Programme for Food Security (SPFS)?).  
Consulted at:  http://www.pesacentr oamerica.org/pesa_honduras/hon.htm. 
 International Monetary Fund (IMF) (2008), Honduras:  Request for Stand-By Arrangement , July, 
Washington, D.C. 
 
IMF (2010), World Economic Outlook , April, Washington, D.C. 
 World Trade Organization (WTO) (1999), Trade Policy Review - Honduras , Geneva. WT/TPR/S/234 Trade Policy Review 
Page 108 
 
 
 
WTO (2003), Trade Policy Review - Honduras , Geneva. 
 WTO (2010), Trade Policy Review - El Salvador , Geneva. 
 
Republic of Honduras (2010), Visión de País 2010-2038 y Plan de Nación 2010-2022  (Country vision 
2010-2038 and national plan 2010-2022), Tegucigalpa.  Ministry of Agriculture and Livestock (SAG) (2004), Sector Agroforestal y Medidas Prioritarias 
2004-2006 - Metas 2007-2015  (Agroforestry sector and priority measures 2004-2006 - Goals 
2007-2015), Tegucigalpa.  SAG (undated a), Cooperación Financiera:  Cooperación Financiera No Reembolsable, Programa de 
Asistencia a los Produc tores Menos Privilegiados  (Financial cooperation:  Non-refundable financial 
cooperation, assistance programme for least privile ged producers) (Second Kennedy Round - 2KR).  
Consulted at:  http://www.sag.gob.hn/index.p hp?Itemid=834&id=1592& option=com_content 
&task=view.  SAG (undated b), Política de Estado del Sector Agroalim entario y el Medio Rural de Honduras 
2004-2021  (State policy for the agri-food sector a nd rural environment in Honduras 2004-2021), 
Tegucigalpa. 
 SAG (undated c), Programa Nacional de Desarrollo Local  (National programme for local 
development, PRONADEL).  Consulted at:  h ttp://www.sag.gob.hn/index.php?option=com_content 
&task=view&id=1759&Itemid=111.  
SAG (undated d), Programa Nacional de Desarrollo Agroalimentario  (National agri-food 
development programme, PRONA GRO).  Consulted at:  
http://www.sag.gob.hn/index.php?option=com_ content&task=view&id=73&Itemid=111. 
 Secretariat for Central American Economic Inte gration (SIECA) (2009), "La Unión Aduanera 
Centroamericana" (The Central Ameri can Customs Union).  Consulted at:  
http://www.sieca.org.gt/site/VisorDocs.as px?IDDOC=Cache/17990000003052/ 17990000003052.swf. 
 United Nations Conference on Trade and Development (UNCTAD) (2009), World Investment 
Report 2009 , Geneva.