Honduras’ Accession to Andean Development Corporation (CAF) Published Despite Lack of Congress Approval
TEGUCIGALPA – The decree of accession of Honduras to the Andean Development Corporation (CAF) has been published in the Official Gazette, despite not being approved in the National Congress of the Republic.
The controversial decree, which received 66 votes in favor in the Legislature on May 16, faced difficulties in reaching a consensus among different political benches.
In an attempt to push the approval, the president of Congress, Luis Redondo, called on deputies to endorse the act of adhesion to Banco Andino on July 12, but it did not receive the necessary endorsement.
During the legislative session, 55 deputies voted in favor of the CAF accession, while 70 opposed it and there was one abstention.
Nevertheless, Redondo announced that he would send the decree to President Xiomara Castro for her sanction, with the intention of formalizing Honduras’ integration into the multilateral entity.
It is worth mentioning that President Castro had already met with Sergio Díaz-Granados, president of CAF, on July 18 and held meetings with representatives of the Inter-American Development Bank (IDB).
This act has drawn criticism from experts and political opposition, who argue that the laws were manipulated and see it as a symptom of dictatorship.
Analyst José Luis Moncada stated, “A negative message as a country, there is no legal certainty, Congress was clear in not approving the CAF accession act, but [Luis Redondo] and [Xiomara Castro] believe that the law is interpreted by them.”
Raúl Pineda Alvarado, a political expert, criticized the opposition party’s concept of imperial democracy and highlighted the damage it causes to the country.
Deputy Maribel Espinoza of the Salvador Party of Honduras (PSH) questioned the basis of sanctioning the decree, stressing that legitimacy and legality should prevail.
The Development Bank of Latin America, also known as Corporación Andina de Fomento (CAF), is a multilateral bank headquartered in Caracas, Venezuela. Founded in 1968, its mission is to promote economic and social development in the region while aiming to become the green and blue bank.
CAF will serve as a new source of financing for Honduras’ public and private sectors. However, one concern is the high interest rate of financing compared to other development financial institutions like the IDB and the World Bank.
CAF provides a range of financial services to its shareholder countries, including loans, guarantees, equity investments, and technical and financial assistance.
With Venezuela, Argentina, Brazil, Colombia, and Chile among its partner countries, Honduras is the latest nation to ratify its incorporation into CAF. Additionally, 13 private banks in the region are part of the corporation.
Honduras is expected to disburse $470 million over a span of 10 years, with interest rates ranging from 5% to 7%, higher than those offered by other development banks which typically vary between 1.25% and 6%.