Roberto Lagos considered that a sovereign bond is not the way to solve the crisis, on the contrary, he predicted that it will be a bigger problem for Honduras.
Honduran economist Roberto Lagos warned that possibly in a few months the Honduran government will try to solve the foreign exchange crisis, which has been hitting the country since 2023, with a sovereign bond.
According to Lagos’ forecast, this bonus would be implemented in less than two months; however, he pointed out that it is not the way to solve the crisis, on the contrary, he predicted that it will be a bigger problem.
“What’s going to happen is that you’re going to try to place a sovereign bond to try to solve the crisis ( … ). In September the government will try to place a sovereign bond ( … , that’s not the way to solve the issue of reserves,” he said in TN5 stellar issue.
Roberto Lagos explained that a sovereign bond “is like an artificial mechanism that is basically like you applying for a loan in dollars, placed it in your account and the reserves are still consumed by the need for the country.”
A sovereign bond is a type of bonus issued by a national government to finance its expenses and projects.
When a government issues a sovereign bond, it is borrowing money from investors in exchange for promising to pay them interest periodically and returning the principal amount to the bond maturing.
Black market
The Central Bank of Honduras (BCH) warned that there is currently a black market in foreign exchange.
In that regard, the economist said that the uncertainty that has arisen as a result of the shortage of foreign exchange “forces the population to want to have greater access to the dollars and look for options.”
He reiterated that there are dollars in the Honduran economy; however, he predicted that “a seasonal problem is coming” in the coming months, in which the demand for dollars to meet the demand for products during the Christmas season must be met.
Shortage of dollars in Honduras
High demand and limited supply of dollars have led to a shortage of foreign exchange, making it difficult for companies and individuals to obtain the dollars needed for their international transactions.
Currency shortages have led to the growth of a black market, where the dollar is trading at much higher rates than the official exchange rate. This has led to market distortions and encouraged illegal activities.
This article has been translated after first appearing in Tunota