Not much progress in Honduras.

Here is the kind of severe weather event that the Honduran economy cannot deal with without serious disruption. "Overflowing rivers in Honduras caused by intense rain isolated more than 20,000 people on Tuesday and forced the evacuation of thousands more, a senior rescue worker said." The quote is taken from a March 6, 2007 Reuters filing from Tegucigalpa.

The torrential rains-not a hurricane or some other headline making disaster-went on for two more days and damaged four bridges and 12 sections of highway. Reuters provided no information about the recovery period from the rains, but it is likely to be protracted.

This is an illustration of how fragile the Honduran economy is. Any infrastructure damage is far more serious in Honduras than it would be in a country with a redundant road network, and the resources to respond quickly to infrastructure rehabilitation.

The International Monetary Fund (IMF) reported on February 21, 2007 that the Honduran government was making some progress on improving the country's infrastructure. The IMF, "Supported the authorities' strategy to allow private participation in infrastructure projects."

This seems like a mild endorsement of an even milder government effort to address the nearly overwhelming problem of poor infrastructure.

There is little help to be expected from Honduras's growth prospects. According to IMF statistics, Honduran GDP grew 4.2 percent in 2005. The IMF estimates 2006 growth at 4.5 percent and says that GDP will expand another 4.5 percent in 2007. As a rule of thumb, most observers feel that GDP in a developing country must grow at least 6.0 percent a year to even begin to add to a country's consuming middle class.

Consumers in Honduras can take some measure of hope from the fact that inflation appears to be under control. It is running about 5.0 percent. But the IMF says, "Directors [at the IMF] welcomed the reduction of inflation to historically low levels. However, the strong economic expansion, combined with a weakening fiscal policy and an easing of monetary policy, cloud the inflation outlook."

Corruption in Honduras is a serious problem, as it is in many countries in the Latin American region. In January 2007 the government took steps to deal with the situation, and the IMF commended the "reduction of red tape." The IMF also commended, "The new transparency law aimed at improving governance and accountability." This same law, though, was the subject of a scathing review distributed on the Inter Press Service (IPS) news wires. A professor quoted in the IPS story said, "Everything points to the law on transparency being a joke." A local reform organization estimated corruption cost Honduras us$2-million per day.

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