LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
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On January 27, 2010, Porfirio Pepe Lobo Sosa was inaugurated President of Honduras. Lobo assumed power after seven months of domestic political crisis and international isolation that had resulted from the June 28, 2009, ouster of President Manuel Zelaya. While the strength of Lobos National Party in the legislature should help the government secure approval of its policy agenda, the political crisis left the new President with daunting challenges. The Lobo government faces significant challenges in fostering economic development in one of the hemispheres poorest countries securing international recognition and addressing the high level of domestic political polarization, ongoing human rights abuses, and the deteriorating citizen security situation. The global financial crisis and domestic political crisis took a toll on the Honduran economy as significant declines in export earnings, remittances, and tourism led to a contraction of 2.1 in 2009. Although the economy has picked up in 2010, with expected growth of 2.7, significant challenges remain. 60 of Honduras nearly 8 million citizens live under the poverty line and the country performs poorly on a number of social indicators. The government has little room to address these issues as the countrys fiscal balance has deteriorated in recent years despite benefiting from several debt relief initiatives over the past decade. The international financial institutions, which cut ties to Honduras in 2009, have normalized relations with the Lobo Administration and are providing the country with access to much needed multilateral development financing that should ensure short-term macroeconomic stability. Implementing the economic reforms necessary to improve the countrys long-term fiscal balance will be politically difficult, however, as business groups have opposed revenue enhancing tax reforms and labor unions are pushing for wage increases and against potential cuts to public sector spending.
- Government and Political Science