In November, the Honduran Council of Private Enterprise (COHEP) presented socioeconomic and political indicators for Honduras relative to the rest of Central America, inviting reflection on what the country needs to achieve prosperity. Honduras stands out in the International Monetary Fund’s economic growth projections, with 3.8 percent for 2025 and 3.5 percent for 2026—versus the regional estimate of 3.5 percent and 3.3 percent. However, other indicators call its development capacity into question.
Honduras, together with Guatemala, has the highest poverty rates in Central America, according to the World Bank. In these countries, 62.9 percent and 56 percent of households, respectively, live on less than US$6.85 a day. Likewise, in the World Justice Project’s Rule of Law Index, Honduras has the worst performance in the region, with a score of 0.41 out of 1. The Central American average is 0.47, and Costa Rica leads with 0.62. This index measures countries’ ability to attract investment based on their business climate, economic stability, financial services, and institutional governance.
These figures show that one of Honduras’s greatest challenges is addressing immediate local needs while simultaneously strengthening governance and the business environment. One viable solution would be to promote effective decentralization in the country. Although there remain challenges along this path, San Pedro Sula Mayor Roberto Contreras contends that decentralization supports municipal governance and is “definitely the solution to all of the country’s problems.”
The State Decentralization Law, passed by Tegucigalpa in 2021, is a touted effort to modernize the state and promote a higher level of democracy and citizen participation. The hoped-for outcome was improved delivery of public services, adapting them to the needs of each region. However, political and structural factors have limited the full exercise of local autonomy. Although decentralization processes began approximately 30 years ago, progress has been gradual and uneven. Notable advances have been made in sectors such as water and education, but major challenges remain, especially in the medical sector.
Getting the House in Order
Although there is a framework for transferring powers, resources, and functions from the central government, the reality on the ground looks different. Discretion over decentralization has become a political weapon to blackmail local authorities that oppose the government of the day, to the detriment of the population. Therefore, to ensure that decentralization works effectively, it is important to address these four challenges:
1. Lack of Political Will
The central government and ruling political parties frequently resist ceding power, control, and spending to local levels. Centralization gives them greater discretion when allocating resources and executing projects, which can be used for clientelist or political purposes. The lack of political will is evident in the slow issuance of regulations, insufficient budget allocations, and the reversal of previously transferred powers based on political convenience. Voters must prioritize decentralization and make their preference known.
2. Lack of Resources
Smaller and more rural municipalities lack a solid financial base to take on new responsibilities, so they continue to delegate their management and services to the central government. This keeps more complex sectors, such as medical care, concentrated in Tegucigalpa.
3. Need for Technical Training
Assigning new powers requires strong technical and administrative capacities that are not always present in local governments. Managing services such as medical care and education demands staff trained in planning, public administration, finance, monitoring, and evaluation.
Many municipalities, lacking the budget to hire or train such personnel, struggle to manage the functions transferred to them, which leads to deficient services and setbacks in the quality of public management.
4. Resistance to Delegation
Institutional actors and interest groups—among them the central government and officials from ministries and agencies—oppose decentralization because it reduces their budgets, staff, decision-making power, and political influence.
Public-sector unions, especially in medical care and education, often resist allowing municipalities to manage their staff and working conditions. They fear local governments will disregard union agreements, politicize appointments, or lack the financial capacity to meet payroll.
To ensure that projected economic growth turns into real development for Honduras, it is important to promote the decentralization of resources and public management. This would allow local authorities to address needs and promote opportunities in a more targeted way, while citizens can demand more genuine and closer accountability.
