Behavior of public debt of the Central Government of Honduras 2002-2012

Abstract

In recent years, public debt is one of the macroeconomic variables of the study and the most critical product of high debt and persistent fiscal deficits in several European countries like Greece, Spain and Italy, among others. Additionally, the changing shape of the US debt and high debt in Japan, coupled with the failure to pay the debt in the case of some Latin American countries, such as Venezuela, Ecuador, Brazil, Mexico, Costa Rica and Argentina, factors affecting their economic performance. The objective of this research is to analyze the behavior of the Public Debt of the Central Government of Honduras in the period 2002-2012 through an explanation of trend, cycles, and composition of components to establish its characteristics, diagnostic indicators and fiscal macroeconomic indicators regarding the public debt of the Central Government. The public debt of the Central Government showed a behavior with ups and downs in the period from 2002 to 2012, initially experiencing a decline from 2005 to 2007 result of the cancellation of the external public debt; but increasing in subsequent years. The causes of indebtedness varied, from 2002 to 2007 resulting from financing of public investment, however the growth from 2008 to 2012 was caused by the increase in current spending, coupled with the global financial crisis and domestic politics of 2009 situations that changed its structure to pass the internal public debt of 10% of the total in 2002, to about 50% in 2012; also borrowing increased its proportion to GDP, worsening the financial situation fiscal scenarios for which Standard & Poor's and Moody's lowered the credit rating on debt investment several times in 2012, a situation that is not conducive to the promotion of investment and economic growth in the long term.

Revista Ciencia y Tecnología No. 17, December 2015 pp.135-159