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Honduras 'no longer functioning' after plunging over fiscal cliff

Jorge Cabrera / Reuters

A woman shows a placard to riot police during a protest outside the National Congress in Tegucigalpa on Thursday. Thousands of teachers and activists of the National Front of Popular Resistance marched.

TEGUCIGALPA, Honduras — Street surveillance cameras in one of the world's most dangerous cities were turned off last week because Honduras' government hasn't paid millions of dollars it owes. The operator that runs them is now threatening to suspend police radio service as well.

Teachers have been demonstrating almost every day because they haven't been paid in six months, while doctors complain about the shortage of essential medicines, gauze, needles and latex gloves.



This Central American country has been on the brink of bankruptcy for months, as lawmakers put off passing a budget necessary to pay for basic government services. Honduras is also grappling with $5 billion in foreign debt, a figure equivalent to last year's entire government budget.

"There are definitely patients who haven't been able to get better because of this problem," said Dr. Lilian Discua, a pediatrician. "An epileptic who doesn't take his medicine will have a crisis. This is happening."

The financial problems add to a general sense that Honduras is a country in meltdown, as homicides soar, drug trafficking overruns cities and coasts and the nation's highest court has been embattled in a constitutional fight with the Congress.

Many streets are riddled with potholes, and cities aren't replacing stolen manhole covers. Soldiers aren't receiving their regular salaries, while the education secretary says 96 percent of schools close several days every week or month because of teacher strikes.

Some government offices must close because they don't have ink to take fingerprints. The country's national registration agency has been shuttered for 10 days because of unpaid salaries.

"In many ways, the state is no longer functioning," said Robert Naiman, policy director of Just Foreign Policy, a Washington D.C.-based organization aimed at reforming U.S. foreign policy. "If they keep not paying their soldiers, those soldiers are probably going to stop being soldiers and maybe take some other action."

Experts say a mix of government corruption, election-year politics and a struggling economy has fueled the crisis.

Jorge Cabrera / Reuters

Demonstrators march toward the National Congress in Tegucigalpa on Thursday. Among them are teachers who say they haven't been paid in six months.

Although Congress goes on recess Friday, lawmakers have only partially passed a budget to pay some of state employees and contractors. That leaves undecided the budgets of autonomous institutions such as utilities and the port authority.

The institutional paralysis has also spread to the justice system. The Constitutional Chamber of the Supreme Court has not met for a month and a half because President Porfirio Lobo accused the magistrates of being part of a conspiracy to overthrow him

The government and the ruling bloc have at least one idea to solve the fiscal crunch: They've introduced a bill that would create the country's first sales tax while eliminating tax breaks for companies that import goods.

The bill's supporters predict it will generate an additional $1.2 billion in revenue, which would double the government's yearly tax intake.

Some families have survived the government vacuum with remittances sent by some of the 1 million Hondurans living in the United States. Their money equals 19 percent of the country's gross domestic product, according to the World Bank.

Yet it isn't enough for government workers such as teacher Daniel Espunda, who have lost paychecks to the political crisis.

"Now they owe me five months of salary. January will be the sixth I haven't been paid," Espunda said. "No one says anything about when the payday will come."