Agreement 577-2024

Approval of the General Guidelines of Budget Policy for the formulation of the draft Budget 2025.- These "General Guidelines of Budget Policy for the formulation of the draft Budget 2025" (hereinafter, the "Guidelines") are approved, which shall serve as a framework of reference for the preparation of budgets of institutions of the Public Sector for the fiscal year 2025. These guidelines are oriented to guarantee the financing of the priorities of the Democratic Socialist Government in accordance with the strategic axes, results and indicators defined in the strategic planning for each Sectoral Cabinet, as well as fiscal sustainability and the improvement of the quality of spending.

Objectives of the General Guidelines of Budget Policy for the formulation of the draft Budget 2025.- 2.1. Main Objective: to identify the budgetary space for the financing of priority programs of the Government of the Republic and unavoidable expenses. 2.2. Secondary Objectives:

• a)

  To ensure compliance with the pre-assigned global ceilings for budget formulation for fiscal year 2025 by institutions of the Public Sector, in accordance with what is established in the Medium-Term Fiscal Framework (MMFMP) 2025-2028 and the Fiscal Responsibility Law (LRF).

• b)

  To achieve efficient allocation of resources in programs, subprograms, projects, activity/work, which must be aligned with the policies, priorities, objectives and goals established in the strategic and operational planning of the Government of the Republic.

• c)

  To ensure adequate articulation and consistency between the strategic and operational planning of each institution of the Public Sector with the formulation of its budgets and plans for purchases and contracting, as tools that allow efficient allocation and use of public resources. Consequently, budget allocations must be strictly adhered to the planning of each institution, with the objective of having more efficient and effective interventions and avoiding delays in budget execution due to procedures for requesting budget modifications.

• d)

  To formulate programs and projects with a medium-term perspective 2026-2027.

• e)

  To facilitate the process of identification and monitoring of programs and/or projects to ensure compliance with policies and strategic axes established in the Government's strategic plan, including among others the gender approach, climate change, etc., to make results visible in favor of the population.

Scope.- The provisions established in these Guidelines are mandatory for all institutions that make up the Public Sector, as described in Article 2 of the Organic Budget Law.

Procedure of planning and budget formulation.- 4.1. Strategic and operational institutional planning: a) Government Strategic Plan (PEG): Institutions of the Public Sector must carry out the planning of their activities and functions within the framework of the Government Strategic Plan (PEG). The Secretary of State in the Office of Strategic Planning (SPE) shall register in the Integrated Financial Administration System (SIAFI-Ges) the cabinets, strategic axes, objectives of the strategic axis and sectoral results of the PEG (Plan for the Construction of the Democratic Socialist State and the Integral Development of the Honduran People 2022-2026) and advance in the context of the Sustainable Development Goals (SDGs). b) Preparation of Institutional Strategic Plans (PEI) and Annual Operating Plans (POA): Institutions of the Public Sector must formulate their Institutional Strategic Plans (PEI) and Annual Operating Plans (POA) applying the following: 1. Take into account the three cross-cutting axes defined by the National System of Social and Economic Development Planning of Honduras (SNPDH): Territorial development, gender approach and human rights and link to the Government Strategic Plan (PEG), the National Agenda of the Sustainable Development Goals 2030, the long-term planning instruments, and to current public policies. 2. Formulate according to the methodology established by the Secretary of State in the Office of Strategic Planning (SPE), through its Institutional Planning Directorate. The PEI and POA of the institutions of the Public Sector must be aligned with the Government Strategic Plan (PEG). The PEI serve to specify, based on the legal mandate and based on the political mandate, the lines of action that each public institution will develop to achieve the committed goals, public policies defined in the development agenda (territorial or sectoral) agreed upon among different relevant development actors. Likewise, the PEI allow the articulation of long-term planning with medium-term planning, through the planning of operations (POA) that responds to the short term. The SPE shall provide technical assistance to all institutions of the Public Sector in the formulation of their PEI and POA and shall carry out their respective validation. The SPE shall provide the guidelines for the formulation of the POA and the planning matrix tool 2025 (value chain) to the institutions of the Public Sector. Subsequently, the institutions must send the POA 2025 planning matrix to the SPE within the dates scheduled in the calendar of activities of the 2025 budget process. The Institutional Planning Directorate of the SPE shall issue the technical opinion of validation of the PEI and POAs of all institutions of the Public Sector in budget formulation. Once validated by the SPE, the loading in SIAFI will proceed. For all institutions of the Central, Decentralized and Deconcentrated Administration that after formulating their PEI require an update of it, they must send it to the SPE for review and validation before April 30, 2025. The SPE through the Directorate of Economic and Social Studies shall conduct monitoring, follow-up and evaluation of short, medium and long-term instruments contained in the national planning. Each institution must make use of the budget formulation manuals of the Integrated Financial Administration System (SIAFI-Ges) for the registration of the PEI and POA, which must include: Mission, vision, strategic objectives, institutional results, operational objectives, production, goals, indicators, target population and budget. The PEI and POA must be validated by the SPE prior to their registration in SIAFI-Ges; the SPE shall verify in the system what was loaded by each institution, and in case of inconsistencies, the SPE shall apply the reversal function in SIAFI-Ges until the inconsistencies are corrected. c) Definition of goals: the goals must be prepared by each institution of the Public Sector, which must be incorporated in the Institutional Strategic Plans (PEI) and Annual Operating Plans (POA), and be aligned with the priorities established in the PEG (Plan for the Construction of the Democratic Socialist State and the Integral Development of the Honduran People 2022-2026). d) Preparation of the Annual Plan of Purchases and Contracting (PACC): The Annual Plan of Purchases and Contracting (PACC) consolidates all the identified and approved needs, and constitutes the base document for the allocation and justification of resources in the annual draft budgets submitted by each institution. Institutions of the Public Sector must formulate their PACC in compliance with the following: 1. They must adhere to the guidelines established by the Regulatory Office of Contracting and Acquisitions of the State (ONCAE), using the methodological guide and the thresholds and contracting methods corresponding. 2. They must establish the inputs required to meet the goals established in the Annual Operating Plan (POA), detailing the budget objects and budget allocations that will apply to each of the contracting. The POA must be prepared so that there is a direct relationship and linkage with the POA, other plans and budgets, including budgets that correspond to declared emergencies. 3. They must be formulated on the basis of the POA, in a manner that expedites budget transfers to each institution. 4. They must be formulated observing the principle of fiscal responsibility and applying the principles established in the State Contracting Law: Efficiency, publicity and transparency, equality and free competition, planning, effectiveness, and good governance, best value for money, simplification and economy in the process. 4.2. Review of Administrative and Programmatic Structures: Each institution must review the administrative structures: Administrative Management, executing units and programmatic structures (programs, subprograms, projects, activities, works), in order to ensure that they: (

• i)

  are linked with the strategic axes, goals and indicators established in the Government Strategic Plan (PEG); (

• ii)

  respond to the medium and short-term products within the Institutional Strategic Planning (PEI), the Annual Operating Plan (POA) and their impact on the population; and, (

• iii)

  reflect the budget allocations, products and benefits projected in favor of the Honduran population, considering cross-cutting aspects of gender, human rights and territorial development. Prior to the corresponding budget approval of the Secretary of State in the Office of Finance (SEFIN), the Secretary of State in the Office of Strategic Planning (SPE), may recommend adjustments in the existing programmatic structures for better institutional planning. The programmatic structures of each of the institutions must be linked to the Government Strategic Plan (PEG) and its cross-cutting axes, with the purpose of allowing their appropriate monitoring. The Secretary of State in the Office of Finance (SEFIN), through the General Budget Directorate, shall be in charge of the authorization of the programmatic structures, which must be previously validated by the Secretary of State in the Office of Strategic Planning (SPE), through the Institutional Planning Directorate. 4.3. Review of Available Budget Classifiers: Institutions of the Public Sector must review the revenue items and budget objects used in the process of formulating their budgets based on the Budget Classifiers Manual in force, with the purpose that the budget allocation is correct and precise and the quality of spending is improved. The Secretary of State in the Office of Finance (SEFIN), through the General Budget Directorate shall conduct the corresponding monitoring of the budget formulation, to ensure that institutions make proper use of the classifiers. If inconsistencies are identified, they shall be reported to the institution so that it may proceed to make the pertinent adjustments. If the institution does not correct in the stage that is within its competence, the Secretary of State in the Office of Finance (SEFIN), through the General Budget Directorate shall make the corresponding adjustments. 4.4. Budget Ceilings at the Institutional Level: In accordance with the provisions of the Organic Budget Law, it is the responsibility of the Secretary of State in the Office of Finance (SEFIN), to set the budget ceiling for each institution of the Public Sector for fiscal year 2025, as well as to make the estimation of the Medium-Term Budget Framework, for the period 2025-2027. Once the budget ceilings are notified to the institutions of the Public Sector and are available in the SIAFI-Ges system, all institutions shall proceed to distribute the allocations in accordance with the approved administrative structure (administrative and executing units), approved programmatic structures, source of financing and types of expenses for the registration of the Budget draft. For these purposes, institutions must continue applying the established Zero-Based Budget methodology, which consists of justifying and documenting all real expenses required to achieve expected results in the short and medium term and thus break with the incremental budgetary inertia handled historically. When making the distribution of the ceilings assigned for fiscal year 2025 and the medium-term 2026-2027, institutions of the Public Sector must: a) Distribute allocations in a manner that guarantees compliance with the Institutional Strategic Plan (PEI), the Annual Operating Plan (POA) and the Annual Plan of Purchases and Contracting (PACC), which have been previously approved by the Secretary of State in the Office of Strategic Planning (SPE) and the Secretary of State in the Offices of Transparency and Fight Against Corruption (STLCC), through ONCAE. The plans described above must be reflected in the "SIAFI-Ges" system. b) Consider the budget allocations that correspond to expenses that have an impact in the year of formulation (fiscal year 2025), as well as in the medium-term (2026-2027), such as: Allocations for projects that have a duration longer than the fiscal year and all expenses that correspond to the total billing of the year for public utilities. c) In case of final judicial demands, make the corresponding provision. Institutions of the Public Sector must consider that spending ceilings do not constitute an acquired right and are subject to variations in income and financing projections. 4.5. Formulation of Budget Draft: Budget draft must be constructed: a) Within the framework of the assigned institutional ceilings, identifying all internal spaces that must be allocated to the priorities and cross-cutting axes of the PEG, for the benefit of the Honduran people for fiscal year 2025 onwards. b) On the basis of the results of the application of the expense review methodology (expense review), regarding the results to date of all budgetary programs for fiscal year 2024. The expense review methodology (expense review) consists of evaluating the physical and financial progress to date, including the review of programmatic structures of programs, support projects and productive, production goals, plan of purchases and contracting, allocation of resources linked to final products linked to government priorities, levels of execution achieved to date, etc. The results of the application of this methodology will allow institutions to make a better distribution of resources according to the assigned ceiling, which allows them to address the priorities of the strategic and operational plan. The General Budget Directorate of SEFIN, together with the Institutional Planning Directorate of SPE and ONCAE, shall provide technical assistance to institutions in the application of this expense review (expense review) methodology, within the scope of their competencies.

General Guidelines.- Institutions of the Public Sector must adhere to the following guidelines for the formulation of their respective budget drafts. 5.1. Government Priorities: The Government of the Republic defined sectors and strategic axes, objectives of the strategic axes and sectoral results, with their indicators and goals to achieve in the short, medium and long term, which have three cross-cutting axes, gender, human rights and territorial development. Below the priorities defined by each sector: a) Economic Sector: It has 5 strategic axes, which are: (1) economic, fiscal and monetary policy; (2) agricultural development and food sovereignty; (3) fair trade and sustainable tourism; (4) energy; and, (5) dignified employment. As results highlighted are: (i) The approval of a tax reform of a progressive, fair and equitable nature that creates a new model of exemptions to attract investments and generate jobs; (ii) the integration into the Single Treasury Account of the State of resources from tax collection, debt restructuring and renegotiation of public debt; (iii) the eradication of price speculation, especially of essential products; (iv) the reform of the State Contracting Law; and, (v) the application of credit access mechanisms for the population, among others. The management of this sector will also ensure the approval of the energy policy 2023-2038, to achieve universal access to electricity in 7 years, advance in the management processes for the start of the construction of dams, approve the Law of reforms to the sector and recover the National Telecommunications Company (HONDUTEL). b) Social Sector: It has 6 strategic axes, which are: (1) protection and social welfare; (2) universal public education with quality; (3) universal comprehensive and free public health; (4) culture and heritage of the peoples; (5) childhood, youth and women; and, (6) sports and recreation. As results for this sector it is envisioned: (i) the capacity to assist the most vulnerable population through a comprehensive system of protection and social welfare; (ii) to ensure a public, free, universal educational system; (iii) to guarantee a single system of universal and free public health, with emphasis on prevention, access to medicines, treatments, and immediate procedures; (iv) to promote arts and culture in general, through support for individual and collective creators. c) Infrastructure Sector: It has 3 strategic axes, which are: (1) logistical infrastructure and transport; (2) universal housing, water and sanitation; and, (3) communications. As results for this sector it is envisioned: (i) to ensure the improvement of connectivity (maintaining the national road, port and airport network to support production and promote economic growth); (ii) to facilitate access to dignified housing, expand the coverage of drinking water and sanitation and internet in rural, urban and suburban areas; and, (iii) to improve the installed capacity of aqueducts and sewers. d) Natural Resources Sector: Its strategic axis consists of natural resources and sustainable and sovereign environment. As sectoral results it is envisioned: (i) to nationalize strategic natural resources such as petroleum and rare earths; (ii) to reverse deforestation and forest degradation due to illegal logging; (iii) to recover water recharge areas; (iv) to regulate artisanal mining; and, (v) to establish free, prior and informed consultation for peoples and communities. e) Security, Defense and Governance Sector: It has 5 strategic axes, which are: (1) risk management; (2) citizen security; (3) defense; (4) transparency and fight against corruption; and, (5) human rights. As results it is envisioned: (i) the protection of life, physical integrity and property of the population; (ii) risk management; (iii) the implementation of a model of citizen security and community policing that prevents crime and dismantles drug trafficking and organized crime networks, to drastically reduce violence and crime rates; (iv) to promote rehabilitation and social reintegration of those deprived of freedom; and, (v) to strengthen actions to promote integrity, transparency and fight against corruption, using audit systems and the capacities of investigation and administration of justice, promoting the following controls: Number of public servants under the civil service regime trained and, annual performance evaluation of public servants. f) International Relations Sector: Its strategic axis consists of international relations and migration. As results it is envisioned: To create new international relations with other countries and strengthen existing relations under conditions of independence, solidarity and complementarity. 5.2. Cross-Cutting Axes: The Government defined three (3) cross-cutting axes for the planning of governmental activities, so institutions of the Public Sector must consider them in the formulation of their budgets. Below each of the cross-cutting axes: a) Gender: In the Bicentennial Government Plan to Refound Honduras, the gender approach is established as a cross-cutting axis, in the design, implementation and evaluation of policies, plans and budgets of the Public Administration. Gender-Sensitive Budget (PSG) is a democratic tool of affirmative action in the allocation of public resources to implement actions to close the gap of discrimination between men and women, ensuring that funds are used equitably from a gender perspective. For the formulation of planning and budget with a gender approach, the following guidelines must be considered: 1. Incorporate in the Institutional Strategic Plan (PEI), at the level of objectives and results, the commitment to reduce gaps and substantive inequality between women and men. 2. In the Annual Operating Plan (POA), contemplate products and activities/work with budget allocations, under the logic of the public value chain and production, that account for concrete actions to achieve gender equality in each institution of the Public Sector, which must be identified and marked in the budget. In order to improve transparency and accountability regarding the use of public funds destined for gender, this marking must be published on the Honduras Investments website. 3. Apply the gender approach as an analytical tool, which allows identifying existing inequality gaps from programs, projects, services and activities carried out by institutions of the Public Sector, making information visible disaggregated by sex, ethnicity, age, department, municipality, among others. 4. Institutions of the Public Sector in coordination with the Secretary of State in the Office of Women's Affairs (SEMUJER) must design, define and apply gender, human rights and multiculturalism indicators, which allow visualizing progress in the implementation of policies, plans, programs and projects, with emphasis on the National Policy for Women and the National Plan Against Violence Against Women, aligned with the Government Strategic Plan (PEG). 5. Conduct an investment analysis in gender that involves evaluating the progress of policies, programs and/or projects that impact the reduction of gender gaps. 6. Within the framework of open government and transparency and accountability policies, the results and achievements in meeting equal opportunities and gender justice will be published, through platforms and means of communication. 7. The implementation of the National Policy for Women in institutions of the Public Sector shall be promoted from the creation of budget structure and human resources for the formation of gender units; for which, institutions of the Public Sector must make the respective provision of resources identified within the assigned budget. 8. Resources invested for the reduction of gaps must comply with the regulations of budget formulation and execution. 9. To comply with Article 8 of the Regulation of the Law on Equal Opportunities for Women (LIOM), regarding the creation of the Gender Unit, with its respective budget that allows its operation to ensure the implementation of the National Policy for Women. The institution that fails to comply with this article shall be sanctioned in accordance with Article 72 of the aforementioned regulation. 10. Institutions that are part of the Mujer Ciudad Program must incorporate in their planning and budget an activity/work that includes the resources allocated to the different modules of Mujer Ciudad. The Secretary of State in the Office of Women's Affairs (SEMUJER) in coordination with the Secretary of State in the Office of Strategic Planning (SPE) must ensure that institutions of the Public Sector comply with the provisions contained in this article. b) Human Rights: In the Bicentennial Government Plan to Refound Honduras, the human rights approach is established as a cross-cutting axis so that in all its programs, projects and policies, the final impact falls on the protection and promotion of the rights of the human person. Within the scope of its competencies, the Secretary of State in the Office of Human Rights (SEDH) shall define the guidelines and methodology to be used in the formulation of the budget for fiscal year 2025. Notwithstanding the foregoing, institutions of the Public Sector must consider the following general guidelines in planning and budget formulation with a human rights approach: 1. Incorporate in the Institutional Strategic Plan (PEI) at the level of objectives and results the cross-cutting axis of human rights. 2. In the Annual Operating Plan (POA), contemplate products and activities/work with budget allocations, under the logic of the public value chain and production, that account for concrete actions for the promotion and fulfillment of human rights in each institution of the Public Sector, which must be identified and marked in the budget. 3. Apply the human rights approach as an analytical tool, that allows identifying applicable improvements to programs, projects, services and activities carried out by institutions of the Public Sector. 4. Institutions of the Public Sector in coordination with the Secretary of State in the Office of Human Rights (SEDH) must design, define and apply human rights indicators that allow visualizing progress in the implementation of policies, plans, programs and projects, with emphasis on human rights and aligned with the Government Strategic Plan (PEG). 5. Conduct an investment analysis in human rights that involves evaluating the progress of policies, programs and/or projects that impact the promotion and protection of human rights. 6. Resources invested for the promotion and protection of human rights must comply with the regulations of budget formulation and execution. The SEDH in coordination with the SPE must ensure that institutions of the Public Sector comply with the guidelines defined for this cross-cutting axis. c) Territorial Development: The Bicentennial Government Plan to Refound Honduras establishes as a cross-cutting axis the territorial development approach for comprehensive management in the design, implementation and evaluation of policies, plans and budgets of the public administration. The Secretary of State in the Office of Strategic Planning (SPE) proposes territorial development as the improvement of conditions and quality of life of the Honduran population guaranteeing the necessary conditions for the convergence of social, economic, political, environmental and cultural factors, which give rise to the creation of public policies and strategies in a coordinated manner among different territorial actors, starting from the dynamics and particularities of each territory with the aim of reducing territorial inequalities. Planning from a territorial development approach seeks to reduce structural imbalances in the national territory that generate development gaps and are expressed in social, economic, political inequalities that accelerate environmental deterioration and living conditions of the population. The territorial development approach promotes the comprehensive, strategic and efficient management of the nation's resources (human, natural, technical and financial) to promote equitable and sustainable development, adapting state interventions to the characteristics and specific priorities of the territories. The territorial development approach must be reflected in all planning instruments as a determinant for making interventions and guiding public, social and productive investment conceived from and for the territory, this implies an analysis oriented to the reduction of territorial inequalities. For the formulation of planning and budget with a territorial development approach, government institutions must consider the following guidelines: 1. When carrying out any intervention in the territories, it is essential that institutions of the Public Sector from their strategic planning incorporate a situational diagnosis for the contextualization of the current state of the territories and areas of institutional influence, taking into consideration the following minimum criteria:

• •

  Identification of human, social, organizational, natural, economic and biophysical capital that the institution and the territory have.

• •

  Identification of central problems of the territory that it is responsible for addressing as an institution, in accordance with its institutional functions, sectoral objectives and government priorities.

• •

  Collection, systematization and analysis of statistical data, internal and external documentary diagnosis and regulations that exist regarding the central problems that exist in the territory.

• •

  Mapping of key actors of the territory in relation to the area of intervention, theme and sectoral cabinet of the institution.

• •

  Detailed spatial and geographical identification of what the institution is doing to mitigate or resolve territorial problems and strengthen the potentialities of the territories and improve living conditions. 2. By knowing the resources, potentialities and limitations of both the territories and the institution, strategies must be formulated to address problems through:

• •

  Definition of measurable, achievable, relevant objectives with a temporal framework to effectively respond to territorial needs and national guidelines, such as the Government Strategic Plan and the National Agenda ODS 2030.

• •

  Incorporate in the physical and financial programming of the Annual Operating Plan (POA) in its products, activities and budget allocations, which allow the identification of progress and achievements of the territorial development approach in each institution of the Public Sector. 3. Implement internal monitoring, monitoring and evaluation mechanisms that describe the effects, measure the results and assess the impacts generated in the implementation of policies, plans, programs and projects. 4. Through the budget actions of policies, plans, programs and projects linked to the Government Strategic Plan and the National Agenda ODS 2030, the inputs will be obtained to identify the resources invested, evaluate the fulfillment of the territorial development approach and the impacts generated in the territory. The Secretary of State in the Office of Strategic Planning (SPE) in coordination with the Secretary of State in the Office of Finance (SEFIN) shall certify that public institutions have complied with the guidelines contained in this article. 5.3. Medium-term budget framework: The Secretary of State in the Office of Finance (SEFIN) shall set the estimation of the medium-term budget framework for the period 2025-2027, with the objective that institutions of the Public Sector prepare their medium-term institutional budget frameworks, including income and expenses according to economic classifier.

Specific Guidelines.- Institutions of the Public Sector must adhere to the following guidelines for the formulation of their respective budget drafts. Annex A of these guidelines contains the applicable concepts and definitions to revenues and expenses. 6.1. Budget policy guidelines for Revenue: Revenues shall be subject to the following general policies: a) The budget does not provide for new taxes. b) The Revenue Administration Service (SAR) and the Honduran Customs Administration (AADH) shall continue to apply measures to modernize the institutions, combat evasion and improve collection. c) With regard to exemptions: strict control must be exercised over compliance with the requirements and obligations established for each regime, in the Tax Code, the Fiscal Responsibility Law (LRF) and other applicable regulations, in relation to: 1. Commitments and objectives for the generation of additional employment and foreign exchange in the country. 2. Importation of machinery and equipment that were not intended solely and exclusively for the project(s). 3. Finding that data and information provided by the beneficiary are false or inaccurate. 4. Transactions made through the use of electronic media that do not comply with the exemptions of the Sales Tax (ISV) according to the Law. 5. Acts, contracts or transactions originated or made outside the Free Trade Zone. 6. Destining all of its production to the domestic market. 7. Obligation to register in the Register of Exempted (PAMEH). 8. Compliance with deadline for exemption registration. 9. Non-simultaneity of tax benefits. 10. Single Window. Systematization. 11. Sworn statement of tax sacrifice. 12. The other legal obligations provided. d) The National Patronage for Children (PANI) and the National Port Authority (ENP) based on the programming established in the General Provisions of Budget 2025, shall transfer to the General Treasury of the Republic–CUT, L450.0 and L1,631.1 million respectively. e) The tax burden of the Central Administration for fiscal year 2025 reaches 17.6% (Tax Revenue/GDP). f) Continue programming own income from the provision of services generated by Institutions of the Central Administration (fines, repairs, notarial paper, authentications, translations, certificates). 6.2. Budget policy guidelines for Expenses: Expenses shall be subject to the following general policies. The present measures have the objective of containing and reallocating non-priority current spending and creating fiscal space for social spending, aligned with the priorities established by the Government of the Republic. a) Employment and Salaries: Institutions of the Public Sector must consider the following general guidelines in matters of human resources during budget formulation with impact on execution, without prejudice to the labor regime and in accordance with Articles 259 and 262 of the Constitution of the Republic: 1. In matters of employment and salaries, a wage bill target for the Central Administration shall be established, which is considered in the budget ceilings. 2. The Secretary of State in the Office of Finance (SEFIN) in coordination with the National Civil Service Administration (ANSEC) shall regulate the organization and administration of human resources and its budgetary effect. 3. Collective Labor Agreements: the institution must demonstrate that it has the financial capacity of own resources (Source 12) to meet the commitments of collective contracting. If it does not have the financial capacity, it shall not assume commitments in matters of salary nor collective benefits. 4. Equal work equal remuneration, consequently, wage equality must be respected among public servants, regardless of their sex, race, religious creed, political affiliation, social class, disabilities, underlying diseases, age, or persons with a letter of freedom who have recovered their civil status. The State of Honduras is guarantor of the labor rights of public servants, who must enjoy them in equal opportunities, without applying any discrimination of any kind. 5. In the formulation of the Detailed Annex of Basic Salaries and Wages of each institution of the Public Sector, the following must be considered: i. Correctly and currently describe all positions (occupied and vacant), with their respective codes, groups and levels. ii. For 2025, the budget of 75% of vacant positions in the institutions of the Executive Branch in the Central Administration is reduced, so these positions are frozen and institutions must refrain from appointing personnel in the same. If it becomes necessary to appoint public servants in such positions, resources must be identified internally from their budget to finance the budgetary deficit generated by the reduction. iii. For those positions that have been reallocated during the management of the period 2024 in the corresponding budget structure, according to technical opinion of position and salary classification, the following must be registered: seniority (five-year periods), vacations and verify the totals of positions per budget structure according to expense objects. 6. The salaries of employees and officials of Institutions of the Decentralized Administration and Deconcentrated Entities, whether of a permanent nature, by contract or any other modality that enter the civil service, must receive remunerations equal to those established for employees and officials of institutions of the Central Administration of equal category, according to group and level of position and salary classification of the Civil Service Regime. The institutions with special regimes or others qualified by the National Civil Service Administration (ANSEC) or the Secretary of State in the Office of Finance (SEFIN), as appropriate, are excepted from this Guideline. 7. In the subgroup 11000 of permanent personnel, expense object 11400 (additionals) the reserve must be provided to cover unavoidable legal commitments such as: benefits for mandatory increases for public employees for CPI, negotiation of general increase, adjustment of salary in relation to the Minimum Wage Law, effects of all collaterals and employer contributions that correspond. Likewise, those benefits that have their regulatory support in the bylaws or internal regulations of the corresponding public institutions, such as zoning, emoluments, shift rotation, among others, must be formulated in the expense object additionals 11400. Institutions of the Public Sector must consider that during the budget execution stage, SEFIN shall not process any type of request for budget modification for this purpose. Consequently, all institutions of the Public Sector must incorporate all benefits described in the previous paragraph in the expense object additionals 11400. 8. Institutions of the Public Sector must make correct use of the expense classifier to select the expense objects related to the hiring or appointment of personnel, both for permanent personnel (expense group 11000) and temporary personnel (expense group 12000). The use of expense object 11100 – Basic Salaries is exclusive for payment of personnel payroll who hold permanent positions in the different institutions of the Public Administration. For the allocation of temporary personnel (expense object 12100), it must be taken into account that contracting may be done when the assigned tasks cannot be performed by regular or career personnel (permanent). The use of expense object 12200 – Wages, is exclusive for paying personnel whose salary is established per day or per hour, and in no case should it serve to pay personnel who perform administrative or technical functions or work. 9. In budget formulation, vacant positions should not be considered for increases or leveling. 10. The registration of new positions or new contracting within the Public Administration must comply with the procedures provided for by the System of Registration of Public Employees (SIREP). Similarly, registrations must continue to be made in the Human Resources Management System (SIARH) of SIAFI, for administrative personnel of the Central Administration, and in the case of teaching personnel of the Secretary of State in the Office of Education, it must be done through the System of Administration of Teaching Human Resources (SIARHD). 11. To consider the creation of new positions in the Central Administration, these must be provided with the base salary established in the corresponding salary scales. Similarly, it shall serve as a reference for the creation of excluded positions described in Article 3 of the Civil Service Law and creation of positions for other public institutions that are not under the Civil Service Regime. 12. Institutions of the Public Sector must use expense object 12910 - Special Contracts for the provision of technical and professional services on a personal and individual basis. These services require monthly payments, compliance with in-person schedules and attendance control, and include contracting to cover personnel absence due to the enjoyment of acquired rights according to applicable regulations, and contracts should not exceed ninety (90) days in the fiscal period. At the time of formulation, the budget analyst shall request from the institution that it formulates in this expense object the evidence that it deems necessary to validate such provision, and if it is not appropriate, it shall be reallocated budgetarily to the corresponding objects. 13. Non-Personal Services: i. Contracts for professional and technical services (expense group 24000 – Consulting) must be justified, and shall only be executed with natural persons when the assigned tasks cannot be performed by regular or career employees, either due to the specialty of the tasks or for another properly qualified and justified reason. This modality may also be used to contract qualified personnel required for the execution of programs and projects. ii. Professional and technical service contracts are recognized as those that do not generate an employment or dependency relationship between the parties, examples of which are the following: expert assessments; technical specialists; artists and athletes; conducting studies, research, analysis, statistics and/or audits; development of computerized systems and information technology services; provision of legal services (legal fees); accounting and audit services; training services; services of interpretation of technical, economic and social matters; technical analysis services related to engineering or architecture; medical and sanitary services; technical-professional services to facilitate the operation of programs or projects; and professional services of similar nature provided by companies, foundations or NGOs. b) Materials, Supplies, Services or Works: Institutions of the Public Sector must consider the following general guidelines for the acquisition of materials, supplies, services or works during budget formulation with impact on execution: 1. The projection and budget estimation of the requirements of goods, works, consultancies and services shall be based on the demands originated in the programs, projects and activities established in the respective Annual Operating Plans (POA) and in the Annual Plans of Purchases and Contracting (PACC) duly aligned with the priorities established by the Government of the Republic. Institutions must conduct a historical analysis of consumption and a diagnosis of future needs for the acquisitions planned in the PACC. Such planning must ensure efficient and timely acquisition of materials, supplies, goods, services and works for the fulfillment of goals, objectives and expected results. Such plans shall be validated by ONCAE, and alignment shall be corroborated by SPE. 2. During the planning of its acquisitions, institutions shall consult the electronic catalogs available at ONCAE. If the demanded products are included in the catalogs, their purchase must comply with their provisions, except for legal exceptions. If no catalog exists, the procedure to follow must be that established in the State Contracting Law and the guidelines issued by ONCAE. 3. Public utilities: the budget must include the provision of the total values that are invoiced for the provision of services provided by public utility companies (ENEE, SANAA, UMAPS, HONDUTEL, among others). These companies must send by the end of July 2024 to the institutions and the Secretary of State in the Office of Finance through the General Budget Directorate, the value of monthly invoicing during 2023 and the estimate at the close of 2024, with the purpose that within the ceiling of the 2025 budget ceiling a complete and correct allocation be made for annual invoicing. c) Capitalizable Assets: each institution must justify the acquisitions of capitalizable assets, demonstrating their relevance for the fulfillment of strategic and operational objectives. In accordance with current legislation, the National Directorate of State Assets (DNBE) exercises the function of governing entity and supervisor of State assets, regarding acts of acquisition, disposition, preservation, registration and control of all assets in correspondence and cooperation with the supervisory bodies of the public sector, for the achievement of adequate and efficient administration. d) Transfers: institutions of the Public Sector must consider the following general guidelines in matters of transfers, during budget formulation with impact on execution: 1. Transfers by Law shall be calculated by SEFIN and shall be sent within the ceiling that is sent to each institution, notwithstanding the foregoing, if there is availability of balances in the institutional accounts in the public or private banking system, the Secretary of State in the Office of Finance (SEFIN) shall prioritize the allocation of transfers for those institutions that do not have balances available in the public or private banking system. 2. The Central Administration shall receive transfers from the National Patronage for Children (PANI) of L450.0 million and from the National Port Authority (ENP) of L1,631.1 million. 3. If a public institution formulates in its budget transfers to entities or non-governmental organizations (NGOs) with public funds, especially those from the National Treasury, the institution must ensure and guarantee that such entities meet the following requirements: i. Updated statement of being registered with the Directorate of Regulation, Registration and Monitoring of Civil Associations (DIRRSAC), as a non-governmental organization, foundation, development institute, community association, professional association, church or other civil society structure permitted by Law. ii. Updated statement issued by DIRRSAC, which accredits the registration of the board of directors of the organization before DIRRSAC, and the validity period of the appointment of the board of directors. iii. Copy of the articles of incorporation or legal personality of the organization (duly registered) with the names of the members of the board of directors and the validity period of their appointment. iv. Copy of the National Identification Document (DNI) and National Tax Registration (RTN) of all members of the board of directors, the legal representative, the treasurer and the secretary of the organization. v. Updated financial statements certified by a certified public accountant. vi. Statement of being registered as a beneficiary in the Integrated Financial Administration System (SIAFI). vii. Compliance with the provisions of the Public Information Access Law regarding Obligated Subjects. viii. In case of having received transfers from the State in previous years, the audited report is required for each year. For the programming of disbursements of transfers to NGOs, the following must be considered: i. 40% the first disbursement, as advance. ii. 40% subject to liquidation of the first disbursement. iii. 20% subject to liquidation of the previous disbursements. iv. The last disbursement must be liquidated no later than two (2) months after the project is completed, presenting a results report that contains evidence of the solution to the problem for which the resources were requested, through: testimonies, satisfaction and perception surveys, videos and other applicable means, Financial Statements certified by an authorized accountant as of the immediate date after the funds have been used and the Audit Report. e) Debt Service: institutions of the Public Sector must consider the following general guidelines in matters of debt service, during budget formulation with impact on execution: 1. For the 2025 budget, obligations (interest, amortization and commissions) are estimated for both internal and external debt, which must be met in a timely manner. 2. No entity of the Non-Financial Public Sector (SPNF) may initiate procedures to carry out external public credit operations without prior written authorization from SEFIN. 3. The prioritization of public credit operations to be executed for public investment by institutions of the Centralized and Decentralized Administration, before financial organizations and multilateral banks, shall be established by SEFIN based on the public investment goals, contracting ceilings and priorities of the Government of the Republic 2022-2026. 4. For programs and projects to be financed with external loan funds, a maximum amount of US$869.1 million is set. 5. Municipalities, public companies and other institutions of the Non-Financial Public Sector (SPNF) may not negotiate, refinance, or acquire any debt, without prior written approval from SEFIN. 6. Institutions of the Non-Financial Public Sector (SPNF) may carry out liability management operations under international standards, with the purpose of mitigating financial risks and/or improving the maturity profile of the debt portfolio, except when there is a different criterion ordered by SEFIN. f) Global Allocations: Global allocations shall be sent by the Secretary of State in the Office of Finance (SEFIN) within the ceiling sent to each institution, notwithstanding the foregoing, if there is availability of balances in the institutional accounts in the public or private banking system, SEFIN shall prioritize allocations for those institutions that do not have balances available in the public or private banking system. 6.3. Austerity and budget discipline: The priority of the Government of the Republic is the strengthening of public finances; in recent years it has been identified that current spending has grown significantly, which negatively affects public finances; for which reason, the decision is made to apply measures aimed at containing public spending in the General Budget of Income and Expenses of the Republic for fiscal year 2024, without affecting allocations for priority programs and projects of the Government. Such containment was applied to the following expense groups: personal services (vacant positions), non-personal services, materials and supplies, capitalizable assets, current and capital transfers without beneficiaries, and financial assets. This same exercise was considered at the moment of the allocation of the budget ceilings for the formulation of the General Budget of Income and Expenses of the Republic fiscal year 2025. 6.4. Budget policy guidelines for Public Investment Programs and Projects: every Public Investment initiative must be framed within the Government priorities. Below are general guidelines to consider in matters of public investment projects and programs: a) The General Directorate of Public Investments of SEFIN shall issue the guidelines that correspond to the formulation of programs and projects of public investment, using the applicable methodological guide, from the pre-investment stage to the closure stage. b) Priority must be given to the incorporation of social investment projects and job generation in line with the priorities of the Government of the Republic, especially in the sectors: social, education, health, agricultural, natural resources and environment, energy, training of young people through sport and culture, access to credit and infrastructure. c) Spaces must be created by prioritizing real investment, through budget reallocation. d) Social and infrastructure spending must be supported in the short and medium term. e) Projects must have their updated PACC, POA and Project Execution Plans (PEP), as well as the respective monthly budget execution projection; which must be sent to the General Directorate of Public Investments of SEFIN, after the publication of the General Budget of Income and Expenses of the Republic (Fiscal Year 2025), including the separation by source of financing. f) Institutions that fail to complete the registration and registration in the National System of Public Investment of Honduras (SNIPH), may complete the same during the execution of fiscal year 2025 and shall be incorporated upon meeting the requirements established by Law from the pre-investment phase. For the elaboration of the Public Investment Program, the National System of Public Investment of Honduras (SNIPH) implements a set of laws, norms, procedures, provisions, methodologies, training and information tools, oriented to order and follow-up the process to materialize investment initiatives in a more profitable, economical and socially manner. Below is the procedure to be followed by institutions: a) Pre-Investment: Pre-Investment has as its objective to evaluate the convenience of carrying out a particular Public Investment Project (PIP); that is, at this stage it is required to have the studies that support that it is socially profitable, sustainable and consistent with the guidelines and objectives of the PEG (Plan for the Construction of the Democratic Socialist State and the Integral Development of the Honduran People 2022-2026). 1. The institution shall request the fiscal space for financing with external credit and/or donation funds for a project. In the case of treasury resources and/or own resources, these must have availability within the budget of the executing institution, which must evidence the budget structure in the current fiscal year. For subsequent years, the fiscal space of national and/or own funds must be framed according to the Medium-Term Macro Fiscal Framework (MMFMP). 2. The requesting institutions of the Public Sector must submit to SEFIN the project document in accordance with the "General Methodological Guide for the Formulation and Evaluation of Projects" approved for such purpose, and must be registered in the SNIPH information tool, identifying the deliverable/final product of the project, as part of the primary information of the same, in order to obtain the Priority Note. 3. New projects from their formulation stage must identify the costs for their operation and maintenance, as well as an analysis of the future fiscal burden and what it would mean to have these resources available to ensure their sustainability from the governing institution, especially those directed to the social sector (schools, health centers, hospitals, highways among others). 4. The deadline for receiving requests for priority notes that will be considered in the process of formulating the draft budget for 2026 is March 31, 2025. All requests received after this date will not be included in such process. All institutions must send their requests within the established deadline to guarantee the opportunity for analysis and evaluation of prioritized projects. 5. The deadline for receiving requests for priority notes and amendments shall be until October 31, 2025. 6. Programs and/or projects to be financed with resources from the national treasury, loan resources, donations and any other source of financing must have the strategic alignment analysis issued by the Institutional Planning Directorate of SPE, who shall issue a certificate of alignment of the program or project with the Government's priorities within a maximum period of ten (10) business days, provided that the request is accompanied by the required documentation. 7. SEFIN may continue with the processes of fiscal space, priority note and financing management once the institution has requested the Strategic Alignment Certificate. The non-issuance of such Certificate within the established deadline shall authorize the requesting institutions to continue the procedure provided that it demonstrates that it complied with all the requirements requested in the established time. The non-issuance of such Certificate within the established deadline does not exempt the institution from completing the management with SPE until its delivery. 8. The modifications that public institutions request regarding the Strategic Alignment Certificates provided that it does not exceed 2 years from the issuance of the Priority Note for programs and/or projects to be financed with resources from the national treasury, loan resources, donations and any other source of financing must be duly justified, sent by letter and accompanied by supporting documentation to SPE who shall issue the modified Strategic Alignment Certificate. 9. Institutions of the Public Sector must request the amendment to the priority note issued in case of modification of the Project in the Pre-Investment or Investment Phase. The changes to be considered must relate to technical and methodological aspects of project formulation and be framed in the following cases: Inconsistencies in the project name (as long as this does not affect the objective and scope of the same), change of executing institution, geographical location, coverage, increase or decrease in the total cost of the project, component and source of financing. The General Directorate of Public Investments shall issue a technical opinion on amendment to the priority note. In the exclusive case of change of source and/or financing source, only the modification must be made in the SNIPH system, prior to the request of the Executing Unit, accompanied by the information that accredits the change. b) Financing for new Projects: 1. Negotiations and requests for financing from multilateral, bilateral, international and private financial organizations are the exclusive competence of the Secretary of State in the Office of Finance (SEFIN). 2. Financing shall be managed only for those projects prioritized by the Presidency of the Republic and that are consistent with the public spending and external debt targets defined by SEFIN through the Medium-term Macrofiscal Framework. 3. No financing management for programs and projects shall begin without having the Pre-Investment of the project and its respective priority note issued by SEFIN and other requirements contemplated in the applicable laws. 4. Counterpart Percentage: Projects financed with resources from donations or loans, in the case of the national counterpart of programs and projects when required by the financing body, must be established in the loan agreements up to 10% of national counterpart on the total amount of the agreement and in the case of donation counterpart, this shall be up to 20% and preferably shall be agreed in kind detailing its contribution. Every institution executing projects must consider within the budget ceiling the values corresponding to the counterpart when required. 5. For investments in social programs financed with external funds that by their nature or typology do not meet the technical characteristics defined for Public Investment Projects within the framework of the General Methodological Guide (GMG), the same shall be registered in the SNIPH according to the procedure established by SEFIN, generating a BIP Code for its identification, and/or in cases that require registration of UEPEX. Annex B of these Guidelines contains the detail of the SNIPH information tool modules, according to the lifecycle of the projects. 6.5. Budget policy guidelines for registration of Public-Private Partnerships (PPP): The Guidelines regarding registration of Public-Private Partnerships (PPP) are the following: a) The corresponding institutions must register PPPs accountably in the financial account of the Non-Financial Public Sector and not budgetarily, attending to the concept of economic ownership of the asset. b) An comprehensive audit must be ordered with respect to all PPPs that have been canceled or are in force. c) The firm commitments acquired and any other obligation on the State in the framework of concession contracts under PPP modality must be incorporated by each granting institution to the budget of income and expenses in accordance with the payment program for: 1. Remuneration of investments incurred by the private party. 2. Remuneration for operational exploitation, preservation, maintenance activities. 3. Investments requested by or at the expense of the State for each project. 6.6. Budget policy guidelines for Contingencies: The Guidelines regarding Contingencies are as follows:

• a)

  As provided in Article 40 of the Organic Budget Law, the allocation of contingencies shall be administered by SEFIN and shall consist of a maximum amount equivalent to 2% of budgeted current revenues for the corresponding fiscal period.

• b)

  All institutions of the public sector that have active lawsuits must budget the estimated amount for payment of such suits and send the respective information to the Fiscal Contingencies Unit (UCF) of SEFIN, including the analysis of the probability of unfavorable judgment against the State according to the matrix of registration of judicial demands provided by UCF.

• c)

  In case of embargoes to the Single Treasury Account (CUT) for pending judicial demands currently to be paid, the defendant institution must seek the funds within its own 2024 budget and make the necessary budget modifications for the return of funds to the CUT immediately, otherwise it must consider it in the draft budget 2025 presented.

Fiscal Rules.- For the estimation of revenues and expenses, institutions of the Public Administration shall use the following macroeconomic variables established in the Medium-Term Macro Fiscal Framework (MMFMP) 2025-2028:

• a)

  Real GDP growth is estimated at a range between 3.6% to 4.6% year-on-year variation, for both 2025 and the period 2026-2027.

• b)

  Inflation (year-on-year percentage variation of CPI) is estimated at a range of 4.0 ±1.0pp, for both 2025 and the period 2026-2027.

• c)

  Average projected exchange rate at current values per dollar: an annual depreciation of no more than 2.0% is projected for the period 2025-2027. The fiscal targets for the Central Administration (AC) and for the Non-Financial Public Sector (SPNF) are established in the Medium-Term Macro Fiscal Framework (MMFMP) 2025-2028 (available on the SEFIN website), approved on April 26, 2024 by Executive Decree PCM-12-2024 and published in the Official Gazette La Gaceta No. 36,540 dated April 27, 2024 and are as follows: Budget Policy Guidelines 2025-2027 Page 22 | 29 for both 2025 and the period 2026-2027. b) Inflation (year-on-year percentage variation of CPI) is estimated at a range of 4.0 ±1.0pp, for both 2025 and the period 2026-2027. c) Average projected exchange rate at current values per dollar: an annual depreciation of no more than 2.0% is projected for the period 2025-2027. The fiscal targets for the Central Administration (AC) and for the Non-Financial Public Sector (SPNF) are established in the Medium-Term Macro Fiscal Framework (MMFMP) 2025-2028 (available on the SEFIN website), approved on April 26, 2024 by Executive Decree PCM-12-2024 and published in the Official Gazette La Gaceta No. 36,540 dated April 27, 2024, and are as follows: Fiscal Targets for the Central Administration (AC) 2025 Description Millions of L. Percentage of GDP Tax Revenues 177,669.7 17.6% Salaries 73,249.7 7.3% Capital Expenses 51,009.0 5.1% AC Deficit -37,942.7 -3.8% The fiscal deficit corresponding to the Central Administration is 3.8% of GDP for 2025, which incorporates sustainable and growing public investment projects with a climate change approach towards the conservation of life, human rights and the environment, and social investment directed to address the most vulnerable population, especially in the sectors: social, education, health, agricultural, natural resources and environment, energy, training of young people, access to credit and infrastructure, in line with the Social Program of the Government of the Republic. This deficit of the Central Administration of 3.8% of GDP is consistent with the deficit of the Non-Financial Public Sector of 2.7% of GDP (detail in the following table), when consolidating the entire public sector due to the effect of the surplus of the Social Security and Pension Institutes, which reaches 1.5% of GDP. Fiscal Targets Non-Financial Public Sector (SPNF) 2025 Description Millions of L. Percentage of GDP Tax Revenues 184,216.7 18.3% Salaries 110,223.6 10.9% Capital Expenses 57,063.8 5.7% SPNF Deficit -27,198.1 -2.7%

Financing.- a) The balance of public debt of the Non-Financial Public Sector (SPNF) in relation to GDP (2025) shall not exceed 55.0% in present value, except in cases of emergency qualified by the Presidency of the Republic. b) SEFIN must manage resources of external and internal origin, through traditional and innovative instruments within the framework of applicable regulations (among these: Climate Financing), maintaining debt sustainability in the medium term and a prudent level of risk exposure. c) The Public Debt Policy (PEP) shall contain the contracting ceilings for new external financing for programs and public investment projects that have been classified with the highest priority criterion by the Presidency of the Republic. The external financing to be agreed through loan contracts must contain, to the extent possible, concessional terms and internal debt. d) Financing with external funds that is considered a priority and for which financial sources are not found that allow the required concessionality, may be contracted provided that the weighted concessionality of the entire external public debt portfolio is maintained above 20%. e) Internal debt shall seek the development of the domestic market, through the implementation of market practices that promote a climate of confidence; in such sense, government bonds shall be issued under the characteristics and limits established in the Financing Plan, mainly under characteristics of regional standardization (national currency, fixed coupon, medium and long-term) as well as variable coupons and others. f) Under the Public Investment Program (PIP) a maximum amount is established for execution for programs and projects with external credit financing of USD869.1 million for the year 2024, except in case of Declaration of Emergency made by the Presidency of the Republic.

Decentralized Administration.- Institutions of the Decentralized Administration (which include: Autonomous institutes, social security and pension institutes, universities, public companies and financial institutions) must follow the following guidelines for 2025:

• a)

  The provision of current revenues that is formulated must be as objective as possible and be a function of prices, rates, tariffs, donation agreements and levy plans authorized by Law (in the case that applies), as well as the review and/or updating of collections for consideration of the services provided, of which supporting documents must be sent to the Secretary of State in the Office of Finance (SEFIN) through the General Budget Directorate, which support the provision of such resources.

• b)

  The Pension Institutes (INPREMA, INJUPEMP, IPM and INPREUNAH), with regard to the total net granting of loans, must guarantee the stabilization of social funds and ensure the benefits of their members. The amounts of loans granted annually including refinancing, may in no case exceed the amounts of recoveries, which means that the granting of loans provided in the expense for the year must equal the recovery in the revenues, of which the technical team of the General Budget Directorate of SEFIN must ensure by coordinating with the corresponding institutions and making the pertinent adjustments.

• c)

  Pension Institutes must formulate all revenues they receive from their financial investments, this includes interest from deposits, certificates of deposit, interest from loans, interest from bonds and dividends or income from shares. Likewise, they must formulate financial investments separating the investment in securities held with the State and private banking, identifying them in the corresponding expense object.

• d)

  Institutions that depend on transfers from the Central Administration shall formulate their budget according to the assigned ceiling, that is with the allocation of source 11, and must adjust their programming and cut expenses until reaching the amount that was assigned to them based on the ceilings and thus be able to meet all expenses provided in their planning, prioritizing them based on the priorities established in the Government Plan.

• e)

  The National Patronage for Children (PANI) must make a separation of the revenues it receives as a result of the agreement executed with the Government of Canada, from the rest of the revenues generated by the activity of the institution.

• f)

  Institutions that generate own resources (Source 12) and that based on collective contracts or internal legal instruments formulate salary adjustments in their budget must formulate the same in the expense object additionals 11400 in compliance with what is established in Article 6.2. numeral 1) subsection g) of these guidelines.

Energy Sector.- The National Electricity Company (ENEE), within the framework of the "Special Law to guarantee the service of electrical energy as a Public Good of National Security and a Human Right of Economic and Social Nature" must continue to take actions in line with the following:

• a)

  Monitoring, continuity and accountability in the process of integrating the distribution system to improve ENEE's governance with the purpose of strengthening commercial management, network maintenance and loss reduction.

• b)

  Report on the completion of the process of negotiating energy supply contracts that have costs higher than those in the Central American region, as well as the comprehensive audit of the same.

• c)

  Maintain the subsidy to electricity for the most vulnerable families with consumption of less than 150kwh per month. 60% of the financing shall be covered by the Government of the Republic through the Secretary of State in the Office of Finance (SEFIN) and the remaining 40% shall be covered in a subsidiary manner by customers qualified as high non-residential consumers, targeted.

• d)

  ENEE must frame its emergency, medium and long-term investments in generation, transmission and distribution within the framework of the updated expansion plan and the country's energy policy.

• e)

  Correct the financial statements and establish a plan for monitoring and follow-up to financial and operational performance and reprofiling the debt by lengthening the average life of the total portfolio.

This Agreement is of immediate execution and must be published in the Official Gazette La Gaceta. Given in the city of Tegucigalpa, municipality of the Central District, on the twenty-second (22) day of the month of August of the year two thousand twenty-four (2024). COMMUNICATE AND PUBLISH: XIOMARA CASTRO SARMIENTO Constitutional President of the Republic MARLON DAVID OCHOA MARTINEZ Secretary of State in the Office of Finance

Conceptualization of Revenue and Expenses 1. Revenues: Correspond to the different categories of items that give rise to budget financing, these are classified into: Current, capital and financial sources. a. Current Revenues: Tax revenues (taxes); non-tax revenues (fees, rights, canons and royalties, fines); other non-tax revenues; social security contributions; sales of goods and services; operating revenues and non-operating revenues and current transfers. b. Capital Revenues: Property income (interest from loans, deposits and securities, other property rights); capital transfers. c. Financing Sources: Sales of securities, loan recovery and loan obtainment. 2. Expenses: Constitute the financial transactions carried out by public institutions to obtain the goods and services required for public administration, these are classified into: Current, capital and financial applications. a. Current Expenses: Personal services, goods and services, current transfers, debt service (interest), other expenses and global current allocations. b. Capital Expenses: Capitalizable assets, capital transfers, other capital expenses and global capital allocations are classified. c. Financial Applications: Correspond to financial assets (loan granting, investment in securities) and debt service (amortization).