TITLE VI. THE ECONOMIC REGIME
CHAPTER I. THE ECONOMIC SYSTEM
The economic system of Honduras is based on the principles of efficiency in production and social justice in the distribution of wealth and national income, as well as on the harmonious coexistence of the factors of production that make it possible to dignify labor as the principal source of wealth and as a means of fulfillment of the human being.
The state promotes economic and social development, which must be subject to strategic planning. The law shall regulate the system and process of planning with the participation of the State powers, and political, economic and social organizations shall be duly represented.
In order to realize the function of promoting the economic and social development and complementing the actions of the other agents of this development, the state, with vision of medium and long terms shall in concert with Honduran society design a plan satisfying the exact objectives and the means and mechanisms to achieve them.
Plans of development of the medium and long terms shall include strategic policies and programs that guarantee the continuity of their execution from their conception and approval until their conclusion.
The national plan, plans for comprehensive development, and the programs incorporated in them must be fulfilled by successive governments.
ZONES OF EMPLOYMENT AND ECONOMIC DEVELOPMENT:
The state may establish zones of the country subject to special regimes which shall have juridical personality, and are subject to a special fiscal regime and may incur obligations which do not require the guarantee or collateral of the state in solidarity, and may create contracts until the fulfillment of their timely objectives and during various governments. They shall enjoy functional and administrative autonomy that shall include the functions, abilities, and obligations that the Constitution and the laws confer on the municipalities.
The creation of a zone subject to a special regime is the exclusive power of the National Congress, by a qualified majority, given an approving plebiscite by two thirds in accordance with that established in article five of the Constitution. This requirement is not necessary for special regimes created in zones of low population density. A zone of low population density means those in which the number of permanent inhabitants per square kilometer is less than the average for rural zones calculated by the National Institute of Statistics, which shall issue the corresponding ruling.
The National Congress, upon approving the creation of zones subject to special regimes must guarantee that where appropriate there is respect for the ruling issued by the International Court of Justice of the Hague on the 11th of September, 1992 and that provided in articles 10, 11, 12, 13, 15, and 19 of the Constitution of the Republic regarding the territory. The zones are subject to the national legislation in all topics related to sovereignty, application of justice, national defense, foreign relations, electoral matters, and issuance of identification documents and passports.
The Gulf of Fonseca must be subject to a special regime in accordance with international law, and that established in Constitutional article 10 and this article. The Honduran coasts of the Gulf and the Caribbean Sea remain subject to the same constitutional provisions.
For the creation and operation of these zones the National Congress must approve an Organic Law, which may only be modified, reformed, interpreted or revoked by a favorable two thirds of the members of the National Congress. The celebration of a referendum or plebiscite by the people who inhabit the zone subject to the special regime is also necessary when its population is greater than one hundred thousand inhabitants. The Organic Law shall expressly establish the applicable regulations.
The authorities of the zones subject to special regimes have the obligation of adopting the best national and international practices to guarantee the existence and permanence of the social, economic, and legal environment adequate in order to be competitive at the international level.
In order to solve conflicts within the zones of the country subject to special regimes, the judicial branch through the Council of the Judiciary must create tribunals with exclusive and autonomous competency over them. The judges of the zones subject to special jurisdiction shall be proposed by the special zones before the Council of the Judiciary, who shall appoint judges given prior competition of a proposed list from a special commission formed in the manner described in the Organic Law of those regimes. The law may establish obligatory subjection to arbitration for the solution of conflicts of natural or juridical persons that live within the areas included in those regimes for certain matters. The tribunals of the zones subject to a special judicial regime may adopt judicial systems or traditions from other parts of the world as long as they guarantee equal or better constitutional principles of protection of human rights and have prior approval of the National Council.
The national economy is based on the democratic and harmonious coexistence of various forms of ownership and enterprise.
The State recognizes, guarantees and promotes freedom of consumption, savings, investment, employment, initiative, commerce, industry, contract, business and any others that flow from the principles that underlie this Constitution. However, the exercise of these freedoms may not be contrary to the social interest nor harmful to morals, health, or public security.
The practice of economic activities primarily belongs to individuals. However, the State, for reasons of public order or social interest, may reserve to itself the operation of specified basic industries, ventures, and services affected by a public interest and issue economic, fiscal and public security measures and laws to channel, stimulate, supervise, orient and supplement private initiative on the basis of a rational and planned economic policy.
The basis of the intervention of the State in the economy shall be the public and social interest, and its limits shall be rights and liberties recognized by this Constitution.
Commercial companies shall be subject to the control and supervision of an Office of the Superintendent of Companies, whose organization and operation shall be determined by law.
Cooperatives shall be answerable to the agency and in the form and to the extent established by the pertinent laws.
The State shall order its external economic relations on the basis of fair international cooperation, Central American economic integration, and respect for the treaties and agreements it signs, insofar as they are not opposed to the national interest.
Foreign investment shall be authorized, registered and supervised by the State. It shall supplement and never substitute for national investment.
Foreign enterprises shall be subject to the laws of the Republic.
Small-scale industry and commerce is the patrimony of Honduran nationals and its protection shall be the subject matter of a law.
The law shall regulate and promote the organization of cooperatives of all kinds, without the basic economic and social principles of this Constitution being altered or eluded.
Monopolies, monopsonies, oligopolies, hoarding and similar practices in industrial and commercial activity are prohibited.
The temporary privileges granted to inventors, discoverers or authors as the rights of scientific, literary, artistic or commercial property, patents of invention or trademarks are not considered private monopolies.
The technical and rational exploitation of the natural resources of the nation is declared to be of public utility and need.
The state shall regulate their development in accordance with the social interest and shall establish the conditions for their grant to individuals.
The reforestation of the country and the conservation of forests are declared to be of national importance and collective interest.
The law may establish restrictions, terms or prohibitions for the acquisition, transfer, use and enjoyment of state and municipal property, for reasons of public order, social interest or national expediency.
CHAPTER II. CURRENCY AND BANKING
The issue of currency is the exclusive power of the State, which shall exercise it through the Central Bank of Honduras.
The banking, currency and credit regime shall be regulated by law.
The State, through the Central Bank of Honduras, shall be responsible for the formulation and development of the monetary, credit and exchange policy of the country, duly coordinated with the planned economic policy.
The Central Bank of Honduras shall regulate and approve the granting of loans, discounts, guarantees and other credit operations; commissions, allowances or bonuses of any kind that banking, financing, or insurance institutions grant to shareholders that hold a majority interest, directors, and officers.
In addition, it shall regulate and approve the granting of loans, discounts, guarantees and other credit operations to companies in which the shareholders hold a majority interest.
Any violation of the provisions of this article shall be punished in accordance with such regulations as the Central Bank may issue, without prejudice to any civil or penal liability proceedings resulting therefrom.
CHAPTER III. AGRARIAN REFORM
Agrarian reform is a comprehensive process and an instrument for the transformation of the agrarian structure of the country, aimed at replacing the latifundio and minifundio with a system of ownership, tenure, and use of the land that guarantees social justice in rural areas and increases the production and productivity of the agricultural sector.
The implementation of agrarian reform is declared to be of public need and interest.
Agrarian reform is an essential part of the overall development strategy of the nation and therefore any other economic and social policies that the government may approve shall be formulated and executed in harmony with it, especially those related, inter alia, to education, housing, employment, infrastructure, marketing and technical and credit assistance.
Agrarian reform shall be implemented in such a way as to ensure the effective participation of agricultural workers on an equal footing with other sectors of production, in the process of economic, social and political development of the nation.
It is the duty of the state to adopt measures to protect the rights and interests of the indigenous communities in the country, especially of the lands and forests in which they are settled.
Agricultural production must be preferably aimed at satisfying the food requirements of the Honduran population, within the framework of a policy of adequate supply and fair prices for the producer and the consumer.
The agrarian reform plans of the National Agrarian Institute and the other decisions of the State in agrarian matters shall be formulated and implemented with the effective participation of legally recognized organizations of agricultural workers, farmers, and stock-raisers.
The expropriation of property for the purpose of agrarian reform or for developing and improving communities, or for any other purposes of national interest determined by the law, shall be carried out on the basis of just compensation by cash payments and, where appropriate, agrarian debt bonds. These bonds shall be compulsorily acceptable, shall enjoy sufficient guarantees by the State, and shall have such nominal values, redemption periods, interest rates and other requirements as the agrarian reform law may determine.
The property that may be expropriated for the purposes of agrarian reform or the development and improvement of communities are exclusively rural holdings and the useful and necessary improvements attached to them whose severance may be detrimental to the economic production unit.
CHAPTER IV. FINANCIAL REGIME
The tax system shall be governed by the principles of legality, proportionality, generality and equity, in accordance with the economic capacity of the taxpayer.
CHAPTER V. PUBLIC WEALTH
The public wealth comprises:
- All movable and immovable properties of the State;
- All its active credits, and
- Its net available funds.
The financial obligations of the State are:
- Debts legally incurred for current expenditures or investment outlays originating in the execution of the General Budget of revenues and expenditures, and
- Other debts legally recognized by the State.
Fiscal or public properties may be awarded or transferred only to the persons and in the manner and under the conditions determined by law.
The State reserves itself the power to establish or modify the demarcation of zones for the control and protection of natural resources in the national territory.
The administration of public funds is the responsibility of the executive branch.
For the collection, custody and expenditure of these funds, there shall be a general treasury service.
However, the executive branch may delegate the functions of collector and depository to the Central Bank.
In addition, the law may establish special disbursement services.
The State guarantees the payment of the public debt incurred only by constitutional governments, in accordance with this Constitution and laws.
Any rule or act that violates the provisions of this article shall entail the civil, penal and administrative liability of the offenders, for which there shall be no period of limitation.
The authorizations of external or internal indebtedness of the central government, decentralized agencies and municipal governments, which include State guarantees or endorsements, shall be regulated by law.
Local governments may undertake domestic credit operations under their exclusive responsibility, but they shall require the authorizations specified by special laws.
Public taxation, expenditure and indebtedness shall remain proportionate to the gross domestic product, according to law.
The contracts which the State enters into for the construction of public works, procurement of supplies and services, purchase or rental of goods, must be executed following a public bidding, competition or auction, according to law.
The foregoing provision shall not apply to contracts whose purpose is to meet the needs arising from a state of emergency and those which by their nature can be entered into only with a specified person.
CHAPTER VI. BUDGET
The financial resources of the State are:
- Revenues received from taxes, fees, contributions, royalties, grants or under any other heading;
- Revenues derived from state enterprises, mixed capital enterprises, or those in which the state has an equity participation, and
- Special revenue derived from public credit or any other sources.
All fiscal revenues and expenditures shall appear in the General Budget of the Republic, which shall be voted annually in accordance with planned economic policy and with the annual plans of operations approved by the government.
All regular fiscal revenues shall constitute a single fund.
No earmarked revenue may be created. Nevertheless, the law may earmark revenue for the service of the public debt and order that the proceeds of specified taxes and general contributions be divided between the national treasury and the treasury of the municipalities in predetermined proportions or amounts.
In addition, the law may, in accordance with the planned policy, authorize specified state enterprises or mixed economy enterprises to collect, administer, or invest financial resources derived from the performance of the economic activities incumbent upon them.
No commitment may be made and no payment may be effected that exceeds the appropriations voted in the budget or violates the budgetary rules.
The offenders shall be civilly, criminally and administratively liable.
The executive branch, under its responsibility and provided the National Congress is not in session, may incur loans, change the purpose of an authorized item, or open additional credits for satisfying urgent or unforeseen needs in the event of war, internal disturbance or public disaster, or for meeting international commitments, all of which are to be accounted for in detail to the National Congress at the subsequent legislative session.
The same procedure shall be followed in the case of obligations of the State arising from final judgments for the payment of employment benefits when no budgetary item exists or when such item has been exhausted.
The budget shall be voted by the legislative branch on the basis of the proposal submitted by the executive branch.
The proposed budget shall be submitted by the executive branch to the National Congress within the first fifteen days of the month of September of each year.
The organic budget law shall stipulate all matters relating to the preparation, calculation, execution and liquidation of the budget. When the budget for a new fiscal year has not been voted at the end of the fiscal year, the one corresponding to the previous period shall continue in effect.
The law shall determine the organization and operation of the General Supply Office of the Republic.
The preventive inspection of the execution of the General Budget of Revenues and Expenditures of the Republic shall be the responsibility of the executive branch, which must in particular:
- Check the collection and supervise the custody, commitment and outlay of public funds, and
- Approve all expenditures of public funds, in accordance with the budget.
The law shall establish the procedures and scope of this inspection.
The preventive inspection of decentralized institutions and municipalities shall be carried out in accordance with the provisions of the respective laws.