Orlando Sierra/Sputnik

Xiomara Castro

By Michael D McDonald / Bloomberg News

BOSTON
Petroleumworld 11 30 2021

Xiomara Castro was elected president of Honduras in a landslide, pledging to tax the rich, overhaul the nation’s “failed neoliberal model” and possibly end its alliance with Taiwan.

Castro’s victory for the leftist Libre Party makes her the nation’s first female president and ends 12 years of conservative rule by the scandal-hit National Party.

With just over half of votes tallied, Castro had 53% support, compared to 34% for ruling party candidate Nasry Asfura. Asfura conceded and congratulated Castro on her win, and U.S. Secretary of State Anthony Blinken also congratulated her.

Castro, 62, wants to tax large fortunes, introduce a new welfare payment for poor households and senior citizens, and allow the central bank to lend to the treasury in emergencies. Holders of the nation’s dollar bonds have been trying to gauge just how radical a government led by Castro might be.

Her comments that capitalism hasn’t worked for most Hondurans spooked some investors, though a top aide says that Costa Rica’s social democracy is a better role model than the socialist regimes of Cuba and Venezuela.

Crime, poverty and natural disasters have made Honduras one of the main sources of migration at the U.S. southern border, which has become one of the biggest crises faced by the administration of President Joe Biden. A record 321,000 Hondurans were detained in the U.S. in the 2021 fiscal year that ended in September following back-to-back hurricanes at the end of 2019 and a stagnant economy after pandemic lockdowns. That’s a 22% increase over the same period a year earlier.

Hugo Noe Pino, an economist who worked on Castro’s government plan, said that the candidate would consider a plan with the International Monetary Fund if the conditions were right, and if the pace at which the deficit would be cut were not too onerous.

Honduras is one of the 15 remaining countries that has full official diplomatic relations with Taiwan rather than with the People’s Republic of China. Castro floated the idea of switching to Beijing if she wins, though Noe Pino said this isn’t a done deal and that local business groups have expressed concerns over the idea, which need to be taken into account.

Honduras’s 2030 dollar bond touched a record low to trade at 99.7 cents on the dollar last month as Castro’s campaign gained momentum.

The outgoing government of President Juan Orlando Hernandez, who leaves office in January, has been plagued by scandal and accusations of ties to organized crime, especially after his brother was sentenced to life in prison in the U.S.

Juan Antonio Hernandez was convicted in 2019 after a trial featuring evidence that he worked with traffickers from Colombia and Mexico to turn Honduras into a major hub for cocaine bound for the U.S. The ruling party used to be closely allied with the U.S., though Hernandez’s conviction has soured this relationship.

Hernandez said the charges were “outrageous”, and based on “the false testimonies of confessed murderers.”

The economy will expand 4.9% this year, after a 9% slump last year, according to a forecast from the IMF.

“We need a government that is concerned about education and creating job opportunities in the country for everyone, not just their friends in power,” said Yosselin Mejia, a 26-year old teacher who voted for Castro.

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By Michael D McDonald from Bloomberg News.

bloomberg.com 11 30 2021

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