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Honduras Beyond the Elections: Swift, Necessary Reforms Ahead

By: Guillermo Peña Panting - Dec 13, 2013, 11:42 am

EspañolAs Honduras waits for its electoral tribunal to release the results of the vote recount, it’s almost certain that none of the election results will change. With that aside, the scene is set for the new government to take leaps and bounds and set itself apart from others. For better or worse, expectations have been raised.

To begin with, the (unofficial) president elect, Juan Orlando Hernández of the National Party, will form his administration with a cabinet of 10 ministers and departments, a decrease from 19. This is an attempt to win the trust of the people — sending the message that he knows they have witnessed an increase of the national debt and of bureaucracy; he knows the national budget is used to support public employees; and he knows that since almost 70 cents of each Lempira spent by the government is used to pay for bureaucrats, little is left for the rest of the country.

The National Party currently holds 71 of the 128 seats in National Congress. But with the results of last November’s parliamentary elections, the party will only keep 49 of them. This difficult situation hastens Hernández to use the majority his party still has in the legislative body to speed up the process of certain reforms in order to fulfill campaign promises. Once the representatives change on January 25, no one will know how much time it will take for him to kick-off his new programs.

In addition to transforming the structure of the cabinet, Hernández is expected to reform the functioning of the executive branch. If he is successful, every president thereafter can form his administration to best suit his objectives. He will also have to amend the Organic Law of National Congress in order to work with alliances and new parties.

Regarding labor reforms, the National Hourly Employment Program will become permanent. This program — which allows for hourly hiring, in addition to monthly — has allowed 190,000 people to find their first job or create a secondary source of household income for families, according to official reports. Even with these positive results, it’s necessary to deepen labor reforms so that current regulations can be more flexible.

According to the World Bank, in Honduras the ratio of the minimum wage to the added value per worker is 1.49. It’s imperative that the main features of the upcoming regulations focus on simplification and creativity, to overcome the challenge of creating jobs in the formal economy. Recent official records of the National Institute of Statistics say that 60 percent of the economically active population have employment problems. This leaves nearly 2 million people to work within the informal economy.

Beyond employment, it’s crucial to simplify all procedures necessary to do business in Honduras. This includes not only reducing bureaucracy, but also removing economic obstacles that make complying with regulations too expensive. As long as it’s cheaper to violate the norms than it is to comply with the law and receive government benefits, the informal economy, tax evasion, and corruption will thrive.

There are also great expectations on how the first Employment and Economic Development Zone (ZEDE) will be set up, which is not only a political campaign promise, but a process that has taken three years to institutionalize. These free-market charter cities were described by Newsweek as the most innovative projects that have ccme out of Latin America in the last three decades. Honduras may not be a country internationally known by its innovation, but the ZEDE projects open up the possibility to create the most innovative platforms of governance in the hemisphere. Technology advances rapidly, and Latin-American governments are taking too long to adapt to the changes. With ZEDEs lie the possibility for nimble forms of government that will change with the times.

Two important spheres in which Hernández must also fulfill his promises are security and education. He has always focused on reforming them from Congress; in fact, the country is still trying to catch up to the reforms it has already passed. It’s still up to the legislative body, however, to finish institutionalizing the military police and approve the rules of procedure for the ambitious Primary Law of Education.

With all these possibilities for positive change, it seems necessary to recall the classic phrase, “for things to remain the same, everything must change.” Sometimes changes tear down already-established institutions, but since Honduras has a weak institutional nature, it’s hard for this to happen. In the next two months, a great number of legislative changes will take place, and they will become the last pieces this new president needs in order to fulfill his vision.

Translated by Marcela Estrada.

Guillermo Peña Panting Guillermo Peña Panting

Guillermo Peña Panting is the executive director of Eléutera, a new classical liberal think tank in Honduras. He completed his undergraduate studies at North Carolina State University and his Masters in Economics with Universidad Francisco Marroquín. Follow @GuillermoP_HN.