General Budget of Income and Expenses 2018

It shall be approved as an estimate of Income of the Central Administration for the Fiscal Year 2018, the sum of ONE HUNDRED FORTY THOUSAND SEVEN HUNDRED FIFTY MILLION FIVE HUNDRED FORTY-NINE THOUSAND TWO HUNDRED FORTY-THREE LEMPIRAS EXACT (L140,750,549,243.00).

It shall be approved as an estimate of Income of the Decentralized Administration for the Fiscal Year 2018, the sum of ONE HUNDRED TWO THOUSAND THREE HUNDRED NINETY-NINE MILLION THREE HUNDRED FORTY-FOUR THOUSAND FIVE HUNDRED LEMPIRAS EXACT (L102,399,344,500.00).

The expenses of the Public Administration for the Fiscal Year 2018, by institution, sectorial cabinet and source of financing, are approved for the sum of TWO HUNDRED FORTY-THREE THOUSAND ONE HUNDRED FORTY-NINE MILLION EIGHT HUNDRED NINETY-THREE THOUSAND SEVEN HUNDRED FORTY-THREE LEMPIRAS EXACT (L243,149,893,743.00). With instructions from the Ordinary Budget Commission of the National Congress and through the use of the Budget Modifications Form (FMP-05) of the Integrated Financial Administration System (SIAFI), the State Secretary in the Office of Finance is authorized to make the necessary adjustments to the General Budget of Income and Expenses of the Republic for the Fiscal Year 2018 affecting the structures that are necessary.

For the Fiscal Year 2018, the articles of the General Provisions of the General Budget of Income and Expenses contained in Legislative Decree No. 171-2016 are ratified and whose wording is identical to those shown in the present Decree according to the following detail:

Violations of this Law, when not specifically sanctioned, shall be penalized with fines ranging from 3 minimum wages to 30 minimum wages, which shall be imposed by the Attorney General of the Republic on the offenders, based on the administrative procedure that the Superior Court of Accounts applies for this purpose, in accordance with its severity, without prejudice to other administrative, civil and criminal responsibilities that may apply. The amounts for fines established herein shall be deposited in the General Treasury of the Republic and from these revenues up to twenty percent (20%) shall be granted to the Superior Court of Accounts and to the Attorney General of the Republic for each institution, with the purpose of financing expenses related to review and compliance actions with this Law.

The Secretary of General Coordination of Government (SCGG), through the Presidential Directorate of Results-Based Management, shall carry out the monitoring of national planning, through reports containing the level of progress of medium and long-term results, defined in strategic planning instruments, as well as related public policies. To this end, it shall prepare a semi-annual report and an annual report on the progress of overall results and respective indicators established in the Strategic Plan of Government; likewise, it shall prepare a semi-annual report on the progress of selected indicators from the Plan of the Nation. Such reports shall be published on the SCGG's website and shall be presented to the President of the Republic, to the Superior Court of Accounts (TSC), to the Institute of Access to Public Information and to the National Congress through the Ordinary Budget Commission. In order to comply with what is established in the preceding paragraph, information must be registered periodically by the corresponding instances in the Presidential System of Results-Based Management.

The Secretary of General Coordination of Government (SCGG) shall carry out the monitoring of institutional planning, at the level of results and the production of goods and services delivered to the citizenry. To this end, the SCGG shall generate monthly reports from the Presidential System of Results-Based Management (SPGR) on the progress of physical execution of institutions, preparing the respective quarterly and annual reports. Such reports and documents shall be based on the programming that public sector institutions carry out in the SPGR. These must be related to financial records extracted from SIAFI and shall be sent to the heads of public institutions in order to improve their management. In order to comply with what is established, information must be registered by Public Sector institutions in the Presidential System of Results-Based Management no later than ten (10) calendar days after the end of the month.

All Government institutions: Central, Deconcentrated and Decentralized, must officially submit within the first fifteen (15) days of the month following the end of the quarter to the State Secretary in the Office of Finance, the quarterly report in digital format through the delivery of 3 CDs, containing their respective physical and financial execution of the Annual Operating Plan and Budget, as well as any other relevant information that facilitates the analysis of said report, this same information must be available on the WEB sites of each institution. These reports must be prepared quarterly and cumulatively by each institution complying with the principle of Self-evaluation. The monitoring and evaluation of the Annual Operating Plan and Budget shall be carried out by Government institutions: Central, Deconcentrated and Decentralized, without exception, in accordance with the Technical Standards and Procedure Manuals of the Budget, Treasury, Accounting, Public Credit and Public Investment Subsystems, approved by the State Secretary in the Office of Finance, based on information mandatorily registered in the Integrated Financial Administration System (SIAFI); financial information must be registered by each institution no later than the last day of each month. Likewise, consideration must be given to information available in the National Public Investment System of Honduras (SNIPH), the Human Resources Management System (SIARH), Teacher Management System (SAD), Debt Management and Administration System (SIGADE) and the Monitoring and Evaluation System (SME). When the results obtained are not in accordance with what was programmed, the State Secretary in the Office of Finance is authorized to reduce the amounts programmed in the Monthly Expenditure Program (PGM), as well as reduce the pending budget to be committed for accrual. Prior to the State Secretary making the decision to reduce said amounts, it shall communicate with the Secretary of General Coordination of Government and it shall be this Secretary who must ensure that such measure does not affect the achievement of Government priorities. The State Secretary in the Office of Finance shall submit no later than fifteen (15) days after receiving the information, the quarterly report on monitoring and evaluation of institutional budget execution in digital format through the delivery of one CD (for a total of 12 CDs) to each of the following instances: Secretary of the National Congress (1), Secretary of General Coordination of Government (1), to the Superior Court of Accounts (1), to the Institute of Access to Public Information (1), to the Ordinary Legislative Budget Commission (1) and to the Chiefs of each of the Caucuses of the National Congress (7). Likewise, the State Secretary in the Office of Finance shall make available to the general public said reports, publishing them on its internet portal and on the transparency page of said State Secretary. Once said reports are analyzed, the Ordinary Legislative Budget Commission of the National Congress shall issue the corresponding observations. Quarterly, the Ordinary Legislative Budget Commission together with the representations of the different accredited caucuses that make up the National Congress, shall analyze the reports and hold Public Hearings with the institutions of Government: Central, Deconcentrated and Decentralized, in order to exercise a controlling, financial and operational function, for which they shall require from the Office of the Presidency, the Secretary of General Coordination of Government, the State Secretary in the Office of Finance and from the Superior Court of Accounts the technical support deemed appropriate; after said Hearings are concluded, the Ordinary Legislative Budget Commission of the National Congress shall prepare a matrix containing the contributions from the hearings and shall publish it on its WEB site.

The Gender Budget is a democratic tool of affirmative action in the allocation of resources intended to implement actions to close the discrimination gap between men and women, ensuring that funds are used equitably from a gender perspective. The State, in order to achieve equal opportunities between men and women, shall promote, in a cross-cutting manner, the implementation of the Ciudad Mujer Program, as well as the application of the II Plan for Equality and Gender Equity in Honduras 2010-2022 (IIPIEGH), the national plan against violence towards women 2014-2022, through the incorporation of a gender perspective, in the design, implementation and evaluation of policies, plans and budgets of the Public Administration. To this end, the dependencies and entities must consider the following: 1. In its Strategic Plan at the level of objectives and results the commitment to reduce gaps of substantive inequality between men and women. 2. In its Operating Plan, contemplate products and activities/works with budget allocations, under the logic of the public value chain and production, that account for concrete actions to achieve gender equality in each public entity. 3. In the case of the Ciudad Mujer Program, each of the State institutions involved and participating must pay the expenses for the operation of both the National Directorate and the modules of their jurisdiction within each Ciudad Mujer Center, including payment of supplies and assigned personnel, in accordance with the details indicated in the Operating Manual and in the respective operating protocols, recording them in a differentiated manner in their Budget and Annual Operating Plan. 4. Funds allocated to the Ciudad Mujer Program must be used solely to cover expenses related to the operation thereof. Consequently, it is prohibited to make transfers to cover commitments of different purposes. 5. Generate information disaggregated by gender (sex, ethnicity, age, department, municipality, among others) through programs, projects, services and activities carried out by public entities. 6. Define and apply indicators that allow visualizing progress regarding the implementation of the Ciudad Mujer Program, II PIEGH and the National Plan against Violence towards Women 2014-2022.

Non-compliance with Articles 6, 7, 8 and 9 of this Law, by the official head of the State Secretaries, Deconcentrated Bodies and Decentralized Institutions, in addition to the sanctions established in Article 5 of this Law, shall give rise to censure by the National Congress, of which the President of the Republic shall be informed; likewise, disbursements shall be suspended by the State Secretary in the Office of Finance to the offending institutions until such situation is remedied.

All institutions of the Central Administration that generate or perceive income, whether from their own activities, contingent activities or those emanated from existing laws, shall deposit the total thereof in the General Income Account that the General Treasury of the Republic maintains in the Central Bank of Honduras no later than five (5) days after receipt, using for this purpose the procedures of the Income Execution Module of the Integrated Financial Administration System (SIAFI) or the deposit voucher authorized by the State Secretary in the Office of Finance; the same mechanism applies to Decentralized Institutions that based on their Creation Law are obligated to remit their own resources to the General Income Account of the General Treasury of the Republic. The State Secretary in the Office of Finance may authorize up to fifty percent (50%) of the net income generated by activities of their own nature and that refer to the sale of goods and services, so that they can be used by such departments, provided that the capture of the same is demonstrated, to these resources shall be made the deduction of the amounts charged by the Banking System for the collection service. The institutions described below are excepted from the foregoing paragraph; to which the following percentages shall be authorized: All institutions that have received the percentage of own income generated referred to in the above table and that do not use it in the Fiscal Year, must return the surplus amounts to the General Treasury of the Republic, no later than the first five (5) business days after the end of the Fiscal Year. In the present Fiscal Year and in duly justified cases, the State Secretary in the Office of Finance may authorize the incorporation of own resources, which have been received, incorporated and not executed in the previous period, the General Treasury of the Republic must immediately prioritize the F01s that are generated against these resources.

The Health Regulatory Agency (ARSA) is authorized to receive deposits in national banks by citizens and companies for payment of health regulation services provided within its competence, which may come through electronic payments, among others. All resources must be incorporated into the state's single account no later than 10 days after the end of each month.

The State Secretary in the Office of Finance is authorized to incorporate into the budget of the Customs Administration entity, one hundred percent (100%) of the amounts deposited by companies for operational fees for the customs surveillance and supervision service provided by this Institution to Companies under special regimes, deposit warehouses, temporary deposits and others and that are transferred to the receiving account of the General Treasury of the Republic. Such amounts shall be given the treatment of registration as own resources, to cover payments of salaries by contract and related benefits of human resources that work in the functions described above, as well as overtime and other benefits; also payment of travel allowances, transportation expenses and any other expense necessary to perform supervision work directly or through third parties. In the same manner, it may have the necessary resources to implement control mechanisms in the supervised companies. All amounts received by said entity must be obligatorily remitted to the General Treasury of the Republic and prior to their use shall be obligated to present the detail of expenses to be executed before the State Secretary in the Office of Finance for their respective Opinion.

Income from tariffs, surcharges, authorized licenses or services provided by the National Telecommunications Commission (CONATEL) shall be paid to the General Treasury of the Republic or to any Bank of the authorized National Financial System. Income that the National Telecommunications Commission (CONATEL) perceives abroad from the issuance of Radio Licenses that are paid by the owners and lessees of ships or vessels, as well as income from the registration in the Ship Registry and from the issuance of the Navigation Patent collected abroad by the General Directorate of the National Merchant Fleet must be registered in the Income Execution Module of the Integrated Financial Administration System (SIAFI) through direct internet access and deposited in Correspondent Banks abroad, who will transfer said amounts to the Account established by the General Treasury of the Republic, and these collection agents shall inform said Treasury no later than two (2) business days after their collection.

Income perceived from actions executed by the Office of the Attorney General of the Republic (PGR) before the Courts or Tribunals resulting from operations carried out by the Superior Court of Accounts (TSC), must be deposited in the General Treasury of the Republic in accordance with what is established in Article 11 of this Law. From such income may be distributed to the Superior Court of Accounts (TSC) and to the Office of the Attorney General of the Republic (PGR) the percentage established in Article 34 of the Law for the Organization of Public Finances, Control of Exemptions and Tax Evasion Prevention Measures, Decree No. 278-2013. Income perceived from the intervention of the Office of the Attorney General of the Republic (PGR), at the request of other Institutions, these shall be deposited in the single account of the General Treasury of the Republic and shall be granted up to ten percent (10%) of such income. In the case of sanctions imposed by the State Secretary in the Office of Labor and Social Security and in which the Office of the Attorney General of the Republic (PGR) intervenes, companies that commit infractions shall be assigned to said Office ninety percent (90%) of the percentage established in the previous paragraph.

All Institutions of the Public Administration to which a percentage is assigned for expansion of their budget based on the own resources mechanism, must present to the General Budget Directorate (DGP) within 30 calendar days of the month following the one in which said income was generated, the necessary documentation to prove that the amounts generated have been deposited in the General Treasury of the Republic (TGR), the State Secretary in the Office of Finance as the governing body may request the original supporting documentation.

When Current Income of the Central Administration is greater than the amounts estimated in the General Budget of Income and Expenses of the Republic, the Executive Power is authorized through the State Secretary in the Office of Finance to periodically incorporate the surpluses to the General Budget of Income and Expenses of the Republic through the budget expansion procedure. Such resources may not be allocated to increase: 1. The budget of institutions that receive a percentage established by Law, 2. Salary allocations of permanent or temporary personnel; and, 3. The hiring of consultants. These resources and those generated by the recovery of loans granted by forced liquidation operations of Financial System Institutions shall be allocated for:

• 1)

  Reducing the use of internal or external credit;

• 2)

  Canceling the debt balance that has less favorable conditions; and, 3. Paying the Debt Service. Equal treatment shall be given to recoveries and remainders of funds provided for payment to investors and/or depositors who were harmed by said forced liquidation and these shall be allocated to meet commitments derived from the same purpose. All the aforementioned amounts shall be incorporated into the Institution "449 Financial Services of the Central Administration".

For purposes of this Law, Net Income is understood to be the result of subtracting from Total Income, the following concepts: 1. The amount of loans received from both internal and external sources, 2. Internal and/or external transfers and donations, 3. The recovery of loans, 4. The amounts generated by the application of Decree No. 105-2011 dated June 23, 2011, reformed by Decree No. 166-2011 dated September 6, 2011 (Citizen Security Law), 5. The amounts collected as own resources, 6. The amounts paid to the national banking system for the collection service, 7. Tax refunds, 8. Refunds for overpayments made in previous Fiscal Years, 9. The applicability of Credit Notes, 10. The collection of 4.0% Tourist Rate allocated exclusively for IHT, 11. And those intended to fulfill specific social commitments such as Better Life Program, Security Rate, among others.

Transfers that must be granted to the different institutions of the Public Sector based on a percentage established by Law, shall be made in accordance with the programming of the General Treasury of the Republic and to the extent that the corresponding collection is made, respecting the Constitution of the Republic, special Laws, Agreements and Conventions.

The granting of Transfers in favor of institutions of the Public Sector that appear approved in the General Budget of Income and Expenses of the Republic, shall be subject to the value collected in the present fiscal year, regardless of the approved value, as established in the previous article; this condition is also applicable to transfers made to private sector institutions that are financed with resources from the National Treasury. In this sense, the State Secretary in the Office of Finance shall notify the values that will not be granted so that the institutions carry out the reprogramming of their POA and Budget, both in the Integrated Financial Administration System (SIAFI) and in the Presidential System of Management by Results.

Any additional requirement of resources from the National Treasury source (11) by the Institutions of the Central, Deconcentrated and Decentralized Administration, aimed at satisfying unavoidable needs not foreseen in the Objectives and Results of the Annual Operating Plan and the approved Budget, must be addressed with resources from its own budget through a physical and financial reprogramming of its objectives and results in accordance with the Technical Norms of the Budget Subsystem. IV. OF BUDGET MODIFICATIONS

In order to prevent overdrafts in approved budget allocations; all institutions of the Government: Central, Deconcentrated and Decentralized, when necessary, must make the necessary budget modifications prior to the execution of expenses, no institution will make payment commitments without having the respective budget allocation.

Without prejudice to the provisions established in Article 36 of the Organic Law of the Budget, for the purpose of expediting the incorporation of external resources from Donations previously approved by the Legislative Power, the Form (FMP-05) denominated "Budget Modification Document" generated by SIAFI, shall have the same effect as an Internal Resolution and shall be added to the General Budget of Income and Expenses of the Republic for the present Fiscal Year, provided that the national counterpart is available, when applicable. Donation resources, non-reimbursable Budget Support and other external sources other than Loans, shall be incorporated following the procedure established in this Article, provided that such resources are received in the present fiscal year, in case these resources have been received in previous years, the procedure for seeking Budget Space for its incorporation must be followed, subjecting itself to the analysis of the Budget Incorporation Committee referred to in Article 86 of this Law.

In order to avoid the incorporation of external funds from Loans, public institutions must review the execution level internally in their budget, and shall identify based on the corresponding prioritization the transfers of budget space required and must send to the Ministry of Finance the corresponding budget modification request for the issuance of the Opinion. Likewise, the State Secretariat in the Ministry of Finance shall conduct the corresponding analyses in accordance with the fiscal policy goals defined for the present Fiscal Year and shall identify the Budget Space in the institution that requires it and shall reduce it from another, through the Form (FMP-05) denominated "Budget Modification Document" generated by SIAFI based on the Technical Note issued by the Budget Incorporation Committee of the State Secretariat in the Ministry of Finance, based on Article 86 of this Law.

In order to have sound administration, when making a budget modification, the respective Annual Operating Plan must be readjusted in the cases that correspond, the corresponding information in the Presidential System of Results Management of the State Secretariat of General Government Coordination, the Monthly Spending Programming (PGM), the Quarterly Spending Quota (CGT) and the Annual Plan of Purchases and Contracting (PACC).

In addition to what is established in the current Technical Norms of the Budget Subsystem, Article 25, the institutions of the Central Administration and Decentralized Administration are authorized to carry out transfers or allocations of budget credits between items of the groups Non-Personal Services and Materials and Supplies between different programs of the same institution, including the Poverty Reduction Strategy.

In order to achieve sound administration of resources, a maximum of forty (40) budget modifications per year is restricted, derived from internal transfers carried out by institutions of the Public Sector. Excepted from the above are the transfers made by the State Secretariat in the Ministry of Finance, after analysis with a favorable Opinion or Resolution in response to requests submitted by Public Sector institutions.

Budget modifications that affect allocations designated for capital expenditures will not be permitted, both in the group of Capitalizable Assets (40000) and in Capital Transfers (50000), to finance current expenses from any source of financing, in case they are required, approval of the President of the Republic must be obtained and the same shall be formalized through Executive Agreement, prior to this approval, the opinion of the Inter-institutional Committee of the Fiscal Responsibility Law must be known, formed based on Article 7 of the Regulations of that Law Executive Agreement No. 288-2016.

In order to operationalize the transfers authorized by the President of the Republic in accordance with what is established in Article 37 numeral 2 of the Organic Law of the Budget, the State Secretariat in the Ministry of Finance is authorized to execute the necessary operations in order to make such transfers effective.

With the objective of guaranteeing and optimizing the resources allocated to the Ministry of Health for payment of transfers to Decentralized health service managers, budget modifications will be permitted from one beneficiary to another, solely and exclusively those that provide health service at the first level of care (departmental regions). V. OF TREASURY OPERATIONS

All payments by the Central Administration to or through the Central Bank of Honduras shall be made through the respective manual or electronic document issued by the State Department in the Ministry of Finance. The Central Bank of Honduras shall not make any debits to accounts in the name of the General Treasury of the Republic and the State Department in the Ministry of Finance that do not have the express authorization of this Department, except as agreed in agreements and/or contracts executed prior to this provision. For these exceptional cases, the Central Bank of Honduras must:

• 1)

  In Direct Internal Public Debt, deliver to the State Department in the Ministry of Finance, through the General Directorate of Public Credit, a copy of the documents that support the amounts paid for amortizations, interests and commissions, disaggregated according to the requirements of said General Directorate, each time the operation is generated, for purposes of registration and control of indebtedness;

• 2)

  In loans granted to Public Sector Institutions that have the guarantee, surety or security granted based on Article 78 of the Organic Budget Law, notify the State Department in the Ministry of Finance, through the General Directorate of Public Credit of the following situations: a) With twenty (20) business days in advance, the insufficiency or non-availability of funds in the accounts of the debtor institution, for purposes of programming the cash flow of the Single Account; and, b) With seven (7) business days in advance, the failure to present the payment order for the debt service by the debtor Institution, as well as the availability of funds in the bank accounts thereof. 3. If there is availability in the accounts and the debtor institution has not initiated the payment procedure, the Central Bank of Honduras must comply with the instruction of the State Department in the Ministry of Finance, debiting the bank accounts of the debtor institution to make the payment directly; and, 4. Immediately notify the General Treasury of the Republic and the General Directorate of Public Credit of each debit made in application of this Article, detailing the concept and basis thereof, to proceed with its corresponding verification.

In order to obtain timely information related to funds deposited by Public Sector Institutions in accounts of the Banking System (National and Foreign where applicable) including Trusts and fixed-term deposits, savings accounts and current accounts in accordance with what is ordered in numerals 7) and 8) of Article 94 of the Organic Budget Law, banking institutions shall send daily to the General Treasury of the Republic, bank statements in electronic format, related to the movement of such accounts, for the process of automatic bank reconciliation in the Integrated Financial Administration System (SIAFI), which must include the executing units and projects financed with external funds.

For disbursements made by the State in foreign currency, Payment Orders shall be generated with their equivalent in national currency using the exchange rate of the day established by the Central Bank of Honduras. The exchange rate differentials derived from these operations shall be generated and recorded automatically in the Integrated Financial Administration System (SIAFI) through form F-01 in the same previously affected allocations. Any differential in favor of the State must be credited to the expense structure originally affected and must generate form F-07 of reversal type.

All amounts that have been received by Central Administration Institutions in advance, as own resources and/or transfers and any other concept of income, that were not used at the end of the Fiscal Year, must be entered to the General Treasury of the Republic within five (5) business days after the end thereof. With the exception of the Municipalities. This provision is also applicable to public and private institutions that receive resources from the Central Administration. Likewise, the latter must present the liquidation of expenses incurred.

Suspend Article 7 of the Special Law for the Simplification of Public Infrastructure Investment Procedures, contained in Decree No. 58-2011 dated May 18, 2011.

Once the General Budget of Income and Expenditures of the Republic for the current Fiscal Year becomes effective, all institutions of the Central, Decentralized and Deconcentrated Government, through their Executing Units, must enter their original document of Monthly Expenditure Programming (PGM) in SIAFI, based on the planning of their expenses from January to December, this provision is applicable for source 11 National Treasury; for the execution of the Budget, institutions of the Central and Deconcentrated Government must relate the Quarterly Expenditure Quota (CGT) assigned by the General Treasury of the Republic with the Monthly Expenditure Programming (PGM).

The Executive Power, through the State Department in the Ministry of Finance, during the current Fiscal Year, if it does not have the necessary liquidity, may pay through bonds the quotas that the State as employer must contribute to the Social Welfare Institutes up to a maximum of fifty percent (50%). Likewise, the State Department in the Ministry of Finance is authorized to pay through the issuance of bonds, the pending employer contribution obligations from previous fiscal years.

The negotiation of securities shall be governed through the General Regulation of Negotiation of Government Securities that must be approved by Executive Agreement and shall establish the characteristics, terms and conditions of the issuances as well as their negotiation, placement, refinancing and other operations carried out with the securities issued by the State Department in the Ministry of Finance in the market and those authorized to be placed for the current Fiscal Year. The State Department in the Ministry of Finance shall issue a Ministerial Agreement to formalize the amount authorized to sell and/or purchase during each fiscal year, amount for liability management operations and Treasury Notes, for the current Fiscal Year. The State Department in the Ministry of Finance and the Central Bank of Honduras (BCH) shall make the corresponding adjustments in their norms and procedures to regulate what is described above.

In line with the Public Debt Policy document for the Period 2018-2021, in compliance with agreements negotiated with the International Cooperating Community, in accordance with the Monetary Policy and for the purpose of maintaining a level of public indebtedness of the Non-Financial Public Sector in conditions of financial stability and sustainable in the medium and long term, a maximum ceiling of public indebtedness of forty-eight percent (48.0%) in relation to the Gross Domestic Product (GDP) is established.

The State Department in the Ministry of Finance, the Secretariat of Foreign Relations and International Cooperation and the Secretariat of General Government Coordination shall work jointly to ensure that all resources of Non-Reimbursable External Cooperation received by Public Sector Institutions are incorporated into the General Budget of Income and Expenditures of the Republic, the Integrated Financial Administration System (SIAFI) and the Presidential System of Management by Results, for their respective monitoring. Likewise, these must be executed using the principle of Cash Unity which indicates that all public sector funds must be deposited into the Single Account of the General Treasury of the Republic, for their respective monitoring and control of the use of resources, with the exception of those cases in which the International Agreement expressly establishes how it should be handled.

The State Secretariat of the Finance Department may carry out swap or refinancing operations of current bonds or those at maturity for other bonds, with the purpose of minimizing risk and improving the portfolio profile of the debt. Swaps represent simultaneous purchase and sale operations of Government securities and as such, shall be registered in the Debt Management and Administration System (SIGADE) and in the Integrated Financial Administration System (SIAFI), as a principal payment and an issuance of a new bond, provided that the operation implies the purchase of securities with maturity within the current fiscal period. In case of swapping securities with maturity date in years after 2018, such placements shall not affect the budgetary ceiling for internal public debt authorized in the General Budget of the Republic for the present year, however the accrued interest that is capitalized and the nominal increase that exists in the debt as part of the swap process, shall count against the authorized ceiling.

The State Secretariat of the Finance Department is authorized to carry out the placements of available balances from the issuance of public debt securities and values, established in Article 1 of Decree No. 171-2016 and Decree No. 164-2016. The resources collected for this purpose shall be intended to finance the floating debt of the Central Administration at the close of the Fiscal Year 2017 and/or to reduce the internal financing need for 2018.

In order to guarantee the correct utilization of external funds, the persons authorized to request disbursements of these resources shall be only the Heads of Institutions of the Public Sector. The administrative procedures may be carried out by the Directors, Coordinators, Administrative and/or Financial Managers of the Program or Project. The Executing Units of programs and projects financed with external funds shall conduct periodic audits and closure audits in accordance with the financing agreements executed, and must present to the General Directorate of Public Credit of the Finance Secretariat the results of the audits carried out on their financial statements no later than 15 days after the date of receipt thereof, with the purpose of supervising the proper utilization of resources from external credit. The persons responsible for the administration and execution of the programs and projects that incur in the authorization of ineligible expenses shall be jointly liable for such authorizations, without prejudice to civil, criminal and administrative actions, with the Public Sector Institution from which the Executing Unit depends that presents findings in its audited financial statements being required to suspend disbursement requests before the Financing Organization and carry out the corresponding procedures to reimburse ineligible expenses to the project. Likewise, the Finance Secretariat through the General Directorate of Public Credit shall refrain from issuing confirmation of budgetary provision and/or inclusion in the disbursement schedule for new external credit disbursements, until the Executing Unit remedies its financial execution.

The bonds acquired by Public Sector Institutions including State Companies may be traded in the primary or secondary securities market without intermediaries when they are between institutions of the same Public Sector and the operation is carried out for purposes of investment of its own portfolio, without further purposes of speculation in the market; likewise it is explicitly recognized that securities in the securities market vary in price according to market conditions, so the selling or purchase price may be at par, below par or above par, fluctuating according to the specific conditions on the date of negotiation.

Debt Service includes resources intended to cover the payment of employer contributions, teacher contributions and other personal obligations owed from previous years, acquired by the State, for the benefit of teachers of the Honduran Community Education Program (PROHECO), which shall be paid to the National Teachers' Pension Institute (INPREMA). Said payment shall preferably be through the issuance of Government Securities, which may be carried out no later than September 30, 2018, corresponding to the seventh installment agreed in the Inter-institutional Agreement between the State Secretariat of the Finance Department and the National Teachers' Pension Institute, which shall be charged against the amount authorized for the issuance of securities in 2018.

Without prejudice to the provisions of Article 68 of Decree No. 17-2010 of March 28, 2010 containing the Law for the Strengthening of Income, Social Equity and Rationalization of Public Spending and for purposes of contracting financing that is deemed necessary and for which there is no financial source that allows the required weighted concessionality; non-concessional debt may be contracted, provided that the total current external debt portfolio maintains a minimum weighted concessionality of twenty-five percent (25%), preferably new borrowing should be contracted in currencies in which the country's international reserves are constituted, a provision that is consistent with the current Public Debt Borrowing Policy Guidelines.

Public debt authorized through the issuance of bonds and obtaining of loans is of a fungible nature and therefore may be redistributed when there are financial and market conditions that promote such fungibility from one source to another, with respect to the domestic or external market, type of currency, terms and other conditions that impact financing, provided that it does not exceed the amount authorized in Article 1 of this Law. The State Secretariat of the Finance Department through the General Directorate of Public Credit may redistribute, reassign, reorient or disregard funds from external credits, which shall ensure that such measure is consistent and feasible with Government priorities.

The net credit resulting from the placement of securities and values carried out by the State Secretariat of the Finance Department shall not exceed the amount authorized in Article 1 of this Law. Being understood by net internal financing credit the value authorized to raise or negotiate through the placement of government securities in public auction, refinancing or direct negotiations, excluding values for accrued interest and discounts granted. Natural fluctuations in exchange rate or inflation shall be considered once at each date of placement of securities in foreign currency (or denominated) and indexed to inflation.

The Municipal Corporations, Decentralized and Autonomous Institutions that request a ruling on borrowing capacity or debt readjustment from the State Secretariat of the Finance Department through the General Directorate of Public Credit (DGCP), for obtaining loans from nationally and/or internationally recognized entities in the financial sphere with the aim of addressing investment plans and projects must present the necessary documentation based on established requirements; municipal corporations registered in the Integrated Municipal Administration System (SAMI) must have their budgetary and financial information available mandatory in the system to request said ruling. Municipal Corporations that plan to acquire loans from National and/or International entities duly recognized in the financial sphere, must implement the SAMI tool as the main source of information and guarantee the proper execution of such funds. Municipal Corporations at the time of requesting financing from Private Banking must have an opinion certifying the viability of financing from an external Audit Firm, duly qualified and certified by the National Commission of Banks and Insurance (CNBS), provided that such financing exceeds Twenty Million Lempiras (L20,000,000.00). The ruling on the level of indebtedness and payment capacity issued by the DGCP must comply with the established indicators and it shall not constitute a guarantee on the part of the Central Government, this provision is complementary to what is provided in Article 82, Numeral 4 of the Organic Budget Law and Article 19, Numeral 3 of the Technical Standards of the Public Credit System. Municipal Corporations that contract loans with National and/or International entities are obligated to present to the State Secretariat of the Finance Department through the General Directorate of Public Credit on a monthly basis, information related to the detail of principal, interest and commissions paid for registration in the Debt Analysis and Management System (SIGADE); for the purpose of completing, updating and accounting for reliable information related to Contingent Obligations to which the State is exposed. Likewise, State Companies, Decentralized and Autonomous Institutions as well as Institutions of the National Financial System are instructed to provide and report information on a monthly basis no later than 10 days after the end of the month, regarding the obligations that State Companies, Decentralized Institutions, Autonomous Institutions and Local Governments maintain with any financial institution in the country, this in order to maintain an updated and reliable record of the total public debt that the State and its institutions maintain. Non-compliance with this provision shall result in the suspension of any action taken before the State Secretariat of the Finance Department related to the issuance of the Borrowing Capacity Ruling that the aforementioned entities require.

The Institutions that execute programs and projects financed with external funds prior to disbursement requests must have budgetary provision in the present Fiscal Year. The State Secretariat of the Finance Department through the General Directorate of Public Credit shall verify that disbursement requests of external credit whether in cash, direct payment or direct charge, have said budgetary provision and/or are contemplated in the disbursement schedule and shall confirm it in writing prior to its sending to the Financing Organization, in order to guarantee compliance with the disbursement ceilings established in the Current Public Debt Borrowing Policy. Once a direct payment or direct charge has been made, the Institution that executes programs and projects financed with external funds must record its budgetary execution in the Integrated Financial Administration System (SIAFI), no later than fifteen (15) days after the disbursement is made. The Institution that fails to comply with this Provision must suspend disbursement requests before the Financing Organization; likewise, the Finance Secretariat through the General Directorate of Public Credit shall refrain from issuing confirmation of budgetary provision and/or inclusion in the disbursement schedule for new external credit disbursements, until the Executing Unit records the disbursement.

The State Secretary in the Ministry of Finance is authorized to transfer to the Single Treasury Account the total value of bonds whose maturity is scheduled to occur during the present fiscal year issued in favor of "Ministry of Finance" for a nominal value of NINETY-ONE MILLION THREE HUNDRED SIXTY-TWO THOUSAND LEMPIRAS (L.91,362,000.00) plus accrued interest deposited in Account No. 1110102000034-6 "MHCP Remaining Funds from Inactive Accounts, Rdo. DGCP" and the bond issued in favor of "Ministry of Finance-SOGERIN" for a nominal value of TWENTY-FIVE MILLION THREE HUNDRED FIFTY-EIGHT THOUSAND LEMPIRAS (L.25,358,000.00) plus accrued interest deposited in Account No. 1110102000162-8 "SF Unclassified Securities Gov. of Honduras /CETEHDA RTDP DGCP (SOGERÍN)".

The National Company of Electric Energy (ENEE) is authorized to proceed with bond placements 2018 for an amount of up to USD $150.0 million to finance liabilities of thermal and solar electric energy suppliers, which may be issued in national currency, in dollars or denominated in dollars. The resources raised shall be incorporated into the Budget of Fiscal Year 2018 of ENEE and allocated exclusively to the payment of accumulated obligations at the close of fiscal year 2017 for accrued interest recorded accountably, reconciled and agreed between the contracting parties and the floating debt corresponding to incentives of USD $0.03 accrued and unpaid for photovoltaic energy supplied, provision established in Decree No. 70-2007 and its amendments including Decree No. 138-2013 "Law for the Promotion of Electric Energy Generation with Renewable Resources". Notwithstanding the foregoing, while the bond placement is not completed, ENEE is authorized to manage and obtain credit from national private banking to cover the obligations described in the preceding paragraphs; likewise, the credit obtained must be canceled by the company once the issuance and placement of bonds has been completed.

The State Secretary in the Ministry of Finance is authorized to, if deemed convenient, issue Sovereign Bonds of the Republic of Honduras in the international capital market against the borrowing amount authorized in this budget, under the modality of reopening or new issuance and under the financial conditions prevailing in the market at the time of negotiation. The State Secretary in the Ministry of Finance reserves the right to choose the moment to carry out the operation, in accordance with the resource needs and market conditions. Likewise, the State Secretary in the Ministry of Finance is empowered to directly contract the following: services of one or more investment bank(s) specialized in the structuring, marketing, pricing and placement of sovereign bonds, brokerage firms, advisors, financial and/or legal advisory firms, companies printing the offering circular, the bank or banks providing the services of fiscal agent, registrar and paying agent, legal registry entities, the securities markets that will list the operation and investment risk rating firms, for a term not to exceed the maturity of the bonds and according to market practices. Furthermore, authorization is granted to identify the necessary resources for the payment of such services. The principal and interest of the Sovereign Bond, payments for services provided by brokerage firms, advisors and financial and/or legal advisory firms, companies printing the offering circular, the bank or banks providing the services of fiscal agent, registrar and paying agent, legal registry entities, the securities markets that will list the operation and investment risk rating firms, shall be exempt from all kinds of taxes, rights, fees, surcharges, municipal levies, contributions, assessments, fees or public, governmental or municipal contribution applicable in the present and future. The foregoing applies only to those individuals or legal entities with residence abroad.

The Ministry of Finance is authorized to incorporate into Institution 220 Public Debt, the income of resources reimbursed by the National Company of Electric Energy (ENEE) as Interest, arising from the loan made to said company according to Article 3 of Decree No. 164-2016. Said incorporation shall be used to cancel the debt service of the Sovereign Bond placement and the costs associated with its issuance, which was carried out on January 19, 2017 for an amount of SEVEN HUNDRED MILLION DOLLARS OF THE UNITED STATES OF AMERICA (USD700,000,000.00).

In line with market practices and considering that the cost of securities administration services has decreased with the dematerialization of securities, and in view of the Recapitalization Agreement of the Central Bank of Honduras (BCH) being in effect since 2013, the State Secretary in the Ministry of Finance (SEFIN) and the Central Bank of Honduras (BCH) are instructed to subscribe a Framework Contract for Securities Administration that regulates all government issuances, current and future, of the State Secretary in the Ministry of Finance and that are under the administration of the Central Bank of Honduras (BCH). The Framework Contract for Securities Administration shall define a scheme of gradual reduction of the commission paid to the BCH for its services until reaching a total rate not exceeding 1/16 of ONE PERCENT 1% annually on the current daily balance placed of each issuance, with such rate to be achieved within a maximum period of four (4) years. The gradual reduction of the commission for the administration of government securities shall not affect the terms and conditions agreed upon in the dematerialization of the Bond Representative Certificate issued on March 16, 2009 under Decree No. 158-2008 and which is now identified with ISIN code HNSEFI00317-7.

Authorize the holders of the Undersecretary of Credit and Public Investment and the General Directorate of Public Credit of the State Secretary in the Ministry of Finance, who are part of the Republic of Honduras on the Binational Committee of the Honduras Debt Conversion Program against Spain approved by Decree No. 359-2005, to subscribe to the Resolution of that Binational Committee through which it is resolved to expand the percentage of administrative expenses of the Program to 5% of the total resources of the Program.

Authorize the State Secretary in the Ministry of Finance, so that through the General Comptroller of the Republic, it reclassifies the accounting accounts loans to public sector institutions short-term, loans to public sector institutions long-term and Accounts Receivable in which Temporary Loans, loans to local governments and accounts receivable for interest granted to the following Institutions are reflected:

• 1)

  Honduran Agricultural Marketing Institute (IHMA);

• 2)

  National Basic Products Supplier (BANASUPRO);

• 3)

  National Bank of Agricultural Development (BANADESA);

• 4)

  National Agrarian Institute (INA);

• 5)

  National Railroad of Honduras (FNH);

• 6)

  Honduran Postal Company (HONDUCOR);

• 7)

  National Registry of Persons (RNP);

• 8)

  State Secretary in the Ministry of Human Rights, Justice, Internal Affairs and Decentralization;

• 9)

  State Secretary in the Ministry of Energy, Natural Resources, Environment and Mines;

• 10)

  Institute for Community Development, Water and Sanitation – Honduran Social Investment Fund (IDECOAS - FHIS);

• 11)

  State Secretary in the Ministry of Foreign Affairs and International Cooperation;

• 12)

  State Secretary in the Ministry of Industry and Commerce (now Economic Development);

• 13)

  HONDUFARM/IBERMAR;

• 14)

  Industrial Corporation of Olancho (CORFINO); and,

• 15)

  Autonomous Municipal Bank (BANMA), because the amounts disbursed as Temporary Loans to the aforementioned institutions must be accounted for as current transfers granted in previous years, affecting the Accounting Account Accumulated Results from previous years. The State Secretary in the Ministry of Finance shall define the procedure and time in which the balances of the Loans of each of the institutions shall be reclassified, in accordance with the Fiscal Space that exists annually in the General Budget of Income and Expenses of the Republic. The aforementioned Institutions shall reclassify the accounting account according to the instructions issued by the State Secretary in the Ministry of Finance.

Authorize the Honduran Agricultural Marketing Institute (IHMA) and the National Basic Products Supplier (BANASUPRO), so that the debts that both Institutions maintain in reciprocal form, resulting from the Temporary Loans granted by the State Secretary in the Ministry of Finance, contained in the Tripartite Agreements before and up to the year 2010, are cleared from their Financial Statements and the debts between both Institutions are eliminated.

In all investment contracts in which Public-Private Partnerships are constituted or in possible modifications of those contracts, in which they imply for the State of Honduras the granting of endorsements or a contingency, prior authorization from the State Secretary in the Ministry of Finance shall be required before their execution, who shall grant it after an Opinion issued by the Fiscal Contingencies Unit.

The State Secretary in the Ministry of Finance, through the Directorate of Public Investments and the Fiscal Contingencies Unit, shall participate in all stages of the project cycle under the public-private financing modality (APP), as well as in the review of the cost-benefit and payment capacity of the public entity participating under this modality.

All concessionaires are obliged to present, no later than ten (10) business days after the end of the month, to the Fiscal Contingencies Unit of the State Secretariat of the Finance Office (SEFIN) and the Superintendency of Public-Private Partnerships (SAPP), all financial information regarding operations.

For the purpose of promoting processes of transparency, accountability, monitoring and verification by the State Secretariat of the Finance Office (SEFIN) and the Public-Private Partnership Superintendency (SAPP); all operators and/or concessionaires of projects under the Public-Private Partnership (PPP) modality that carry out collection activities through toll collection are instructed to provide unrestricted access to the information contained in their control systems to the aforementioned instances. SEFIN and SAPP may carry out information requests through the design of a standard format or any other process or technological means defined by said institutions, which in an enumerative but not limiting manner may include: Direct access to the operator's systems, creation of linking interfaces with the operator's systems - SEFIN and SAPP, online platforms, applications, among others. The information presented shall contain at minimum data related to collection by vehicle category, details of collection broken down by gross income, taxes and net income, including details of values for surplus concepts, daily vehicle throughput report by sub-section, date and time, payment method, tariff applied to each vehicle category including differentiated tariffs, classification or category of vehicles, incident report for toll evasion, observations regarding seasonality and fortuitous events in each period. SEFIN and SAPP may request explanations and clarifications that they deem pertinent, as well as request additional information requirements if necessary. All information presented shall be subject to audit processes that SAPP may arrange for its verification. The frequency of information presentation shall be defined by SEFIN and/or SAPP according to the methodology applied described in the second paragraph of this provision. The denial, malicious withholding or delay in delivery or access deadlines of information shall be subject to sanctions of up to fifteen (15) minimum salaries per non-compliance event; sanction that shall be applied by SAPP. VIII. PUBLIC ADMINISTRATION CONTRACTS

For the purposes of applying Articles 38 and 63 number 3) of the State Contracting Law and other applicable laws, the required amounts are established for applying bidding processes, competitions or quotations:

The quotations referenced in this article must be from unrelated suppliers, in accordance with what is specified in Decree No. 232-2011 of December 8, 2011, contained in the Transfer Pricing Regulation Law and in the quotation document the general data of the supplier as well as the RTN number must appear.

The amount of contracts that the State executes includes the payment of corresponding taxes, except for exemptions expressly determined by a National Law or International Agreement.

When at the beginning of the present Fiscal Year the bidding process required for a new contract has not been completed, exceptionally and without prejudice to the responsibility that corresponds in those cases where there is a serious risk of damage to the public interest, authorization may be granted through a reasoned resolution issued by the competent superior authority, for the continuation of the effects of the contract for the time that is strictly necessary up to a maximum of two (2) months, within which term said procedure must be completed, except in cases where said process has been declared void or failed in accordance with the Law, the aforementioned contract may be extended under the same conditions and up to a final period of two (2) additional months. The extension shall be made through agreement between parties, following an administration opinion containing legal, technical and financial opinions of the respective Institution and shall be formalized through an Agreement or Resolution of the institution, as appropriate. The foregoing shall apply provided that it does not contravene what is established in Articles 122 and 123 of the State Contracting Law.

For the purpose of complying with the provisions of Article 84 of the Organic Budget Law, which establishes the operation of the Single Account of the General Treasury of the Republic, the State Secretariat of

the Finance Office is authorized to, through the direct contracting procedure, execute Financial Services Provision Agreements with the National Banking System by virtue of the fact that said institutions participate in these Agreements upon simple compliance with technical requirements of communication between the systems of each financial institution and the Integrated Financial Administration System (SIAFI). This process must be supervised by the Supreme Court of Accounts (TSC). Likewise, the State Secretariat of the Finance Office is authorized to, in coordination with the Tax Revenue Administration System (SAR), proceed to renegotiate the Tax Collection and Recovery Contract, executed with the Central Bank of Honduras, which must reflect the actual costs of collection and recovery services of said Bank.

In observance of the provisions of Article 72, second and third paragraphs, of the State Contracting Law, the applicable daily fine is fixed at zero point thirty-six percent (0.36%), in relation to the total amount of the contract for failure to meet the deadline and the same must be specified both in the conditions document and in the Construction and Supervision of Public Works contract. This same provision must be applied to all goods and services contracts executed by Public Sector Institutions.

Only payments shall be authorized that imply advance of funds for public works contracts in accordance with the provisions of the State Contracting Law, which must not exceed fifteen percent (15%) of the total contract amount. In the case of construction works contracts and insurance derived from international agreements, the advance shall be authorized in the manner and amount established by the norms of the Financial Organization. Foreign contractors may be granted advance only when the respective projects are financed at a minimum of eighty percent (80%) with external funds. The Executive Power dependencies are authorized to pay as advance, in the lease contracts they execute, up to the equivalent of one (1) month of rent as a deposit, which shall remain as payment of the rent for the last month in case of resolution of the lease contract of the property. To avoid budget imbalances, it is prohibited for the dependencies of the Central, Deconcentrated and Decentralized Government to execute lease contracts within the country in a currency other than the Lempira; those established in International Agreements are excepted from the foregoing.

In every contract financed with external funds, the suspension or cancellation of the loan or donation may give rise to the rescission or resolution of the contract, with no further obligation on the part of the State other than payment corresponding to the works or services already executed as of the effective date of the rescission or resolution of the contract. The same shall occur in case of budget cuts of national funds made due to the economic and financial situation of the country, the estimation of lower income perception than projected expenses, and in case of unforeseen needs or emergencies. The provisions of this Article must be obligatorily stipulated in the conditions documents, bidding bases, terms of reference or other documents prior to contract execution and in the contract itself of the Public Sector.

In accordance with applicable laws, according to its budget allocations and for the purpose of promoting decentralization in the State Secretariat of the Health Office, acquisitions of one hundred percent (100%) of resources allocated in expense items for: food and beverages for persons

(31100) and minor surgical medical and laboratory instruments (39500), must be carried out by the administrations of the departmental regions and hospitals of the country. Such acquisitions shall be made using the electronic catalog administered by ONCAE, except for exceptions qualified by ONCAE in accordance with the Law of Efficient and Transparent Purchases through Electronic Media. However, the purchase of medicines must be carried out by the Administrative Management of the State Secretariat of the Health Office at the central level in ninety percent (90%) to supply the Central Pharmacy through the Trust Fund constituted for such purpose, hospitals that have completed their decentralization process are excluded. The remaining ten percent (10%) shall be acquired by each Hospital and Departmental Region of the State Secretariat of the Health Office, according to budget allocation. In any case, the acquisition processes of the administrations of the departmental regions, the hospitals of the country and the Administrative Management of the Health Office must be carried out in accordance with the State Contracting Law or the Law of Efficient Purchases through Electronic Media and other related laws, using the instruments provided by ONCAE.

Hiring charged to the Subgroup of Expenditure, 24000 Technical and Professional Services (Consultants), shall be carried out under the responsibility of the head of each institution, provided that there is availability in the budgetary allocation of the current Fiscal Year. This type of obligation shall be formalized through a Contract. The person hired under this modality shall not be considered for any purpose as a Permanent or Temporary employee of the institution. In order to regulate hiring charged to Expenditure Subgroup 24000, increases through budgetary modifications for expenditure items belonging to this subgroup are prohibited, this rule applies exclusively to resources from source 11 National Treasury. Exceptions to this provision are contracts for medical, health and social services (expenditure item 24100) and hiring charged to expenditure subgroup 24000 that the Superior Court of Accounts deems necessary to carry out with the Municipal Transparency Funds approved in Article 163 numeral 5) of this Law. The hiring of legal professionals as external consultants is also prohibited for the attention of lawsuits filed in the Courts of the Republic, when the institution has legal departments for such purpose. Excepted from the above are those cases in which the Attorney General of the Republic deems it convenient to hire them to safeguard national interests, and must issue a favorable Opinion that will contain the amount of their fees for their hiring and charged to the budget of the corresponding institution. The regulation of this law shall specify the cases referred to in the preceding paragraph. The prohibitions and disabilities for contracting established in Articles 15 and 16 of the State Contracting Law shall apply to all contracts entered into by the Public Administration, regardless of their modality.

Those obligated to pay Income Tax are any natural or legal person hired under the modality of Personal Services expenditure group 10000 and Professional Technical Consulting Services in Expenditure Subgroup 24000, financed with resources from National Funds (National Treasury and Own Resources), Loans and/or Donations.

Public Sector Institutions may enter into contracts for the provision of professional services or consulting with national consultants under the following conditions: 1. In their hiring, more weight shall be given to the result or activity executed than to time; due to the nature of the contract the consultant has no right to vacations, thirteenth month as a bonus concept, fourteenth month as social compensation and other rights of employees financed through Group 10000 Personal Services; and, 2. All consultants must be registered and paid through SIAFI. The head of each institution that enters into this type of contract and grants any of the benefits mentioned in the preceding paragraph shall be financially and jointly liable, without prejudice to civil, administrative and criminal actions before the oversight bodies. National Consultant shall be understood as the professional who performs their activity with permanent residence in the national territory.

The hiring of international consultants for programs or projects shall be done based on professional market conditions and according to the availability of budgetary and financial resources. Contracts with international consultants for programs and projects with external financing shall be governed by what is established in credit agreements, letters, accords, memoranda of understanding or donation agreements. The setting or estimation of fees shall be recorded in budgets agreed between the executing entity and the financing or cooperating agency. International Consultant shall be understood as one who has performed consulting work in a country other than their nationality and whose permanent residence is different from the national territory. Consultants of foreign nationality may not perform administrative activities.

The registration of pre-commitment is an act of internal administration useful for keeping a record, certifying or verifying the availability of budgetary credits and making a reservation of the same at the beginning of a procedure (request) for expenses, a purchase or a hiring. Said reservation must be finalized in a commitment and registered in the name of the Contractor or Supplier of the good or service within a maximum period of 3 months. The Secretary of State in the Office of Finance is authorized to automatically revert in the SIAFI system all F01s whose status has not been formalized in a commitment in its approved status within the established maximum period. The Secretary of State in the Office of Finance through the Transparency Department shall verify what is stated in the preceding paragraph and shall proceed to the reversion of the F-01 documents in the system, in accordance with the procedure established by it. Without prejudice to administrative, civil and/or criminal liability incurred, the administrative managers of each institution shall be liable for damages and losses they cause to the State due to any approved commitment that does not have supporting legal documentation.

Every supplier and/or contractor of the State at the time of receipt of the purchase order or start of work must demand a copy of the Expense Execution Form F-01, registered in the Integrated Financial Administration System (SIAFI), in the stage of approved commitment, in order to ensure that the contracting institution has budgetary availability to honor the commitments acquired; otherwise the Government of the Republic, through the Secretary of State in the Office of Finance, will not accept payment claims for debts that do not have the respective budgetary support. Officials who violate the provisions of this Article shall be jointly and financially responsible for honoring all debts generated by not having the corresponding credit reserves.

The amount of a real estate lease contract shall be calculated by the total of its annual rent. Exceptions to the obligation to submit to public bidding are contracts for the leasing of real estate of the public sector, when they represent higher costs to the institution due to mobilization, price, location and quality of service. In these cases, the extension of contracts entered into by annuities is authorized. Said extension shall be authorized after an Opinion containing legal, technical and financial opinion issued by the Institution and shall be formalized by Ministerial Agreement in the case of the Secretaries of State or Resolution for Decentralized or Deconcentrated Institutions.

It is prohibited to enter into lease contracts for luxury real estate and air, sea and land transport equipment; air transport expenses in first class and medical insurance; with resources from external and internal sources (national treasury and own resources), as well as to make payments for cellular telephone services with external sources; contracts for medical insurance carried out by the Security Secretariat are excluded; as well as the rental of work vehicles contracted by INE, which shall be used for the collection of information from the National Survey of Demography and Health, ENDESA and the National Agricultural Census CAN. For purposes of what is established in the preceding paragraph, those buildings whose conditions, characteristics and location in areas whose rental cost exceeds ten Dollars (US$10.00) or its equivalent in Lempiras per square meter shall be understood as luxury. The official who carries out this type of hiring and payments shall be responsible for it with the amount of his salary, which shall be deducted automatically and shall be Financially and jointly liable, without prejudice to civil, administrative and criminal actions in which he may incur.

Regardless of their amount, acquisitions made through electronic catalogs shall be made through the issuance of a direct purchase order, which shall be generated in the Electronic Catalog module found in the National Procurement and Contracting System "HonduCompras". Purchases of goods or services that are available in the electronic catalog shall be null, when these are carried out outside the system, unless there is authorization from ONCAE. The head of each institution that fails to comply with the above shall be financially and jointly liable, without prejudice to civil, administrative and criminal actions before the oversight bodies.

All public sector institutions must publish in the HONDUCOMPRAS system administered by ONCAE and the respective transparency portal of the institution the selection process for contractors, consultants and suppliers in all its stages, and this must issue a report that it will publish in HonduCompras and communicate to the Institute of Access to Public Information (IAIP) and the Superior Court of Accounts (TSC). In private biddings, prior to the date of receipt and opening of bids, and once the invitation has been published, the participation of possible bidders who request it in writing must be allowed, and they must be provided with an invitation, the conditions documents and any other document related to it, and a record of said request must remain in the contracting file.

The Annual Plan of Purchases and Contracting (PACC) is mandatory compliance for all institutions of the Public Sector, in accordance with what is established in the State Contracting Law and its regulations. For this purpose, ONCAE will provide the guidelines for the development of said plans. The PACCs shall be submitted to ONCAE no later than January 30, 2018, for the purposes of their review and publication on HONDUCOMPRAS. They shall also publish them on their respective transparency portal. Prior to publication, ONCAE will review the plans submitted and issue its suggestions to improve them. Once the suggestions are received, the institution shall submit to ONCAE, within a period not exceeding five business days, the plan with the observations incorporated, so that it can be published. Only those plans that contain ONCAE's recommendations will be published. ONCAE will conduct an evaluation of the execution of the PACC, taking information from the purchases that are published on HonduCompras, to verify its compliance by granting each institution a rating that will indicate the efficiency level of the plan. Non-compliance with the formulation of the PACC or its publication will give rise to the corresponding administrative or civil responsibilities. For this purpose, ONCAE will notify the TSC and IAIP, no later than February 28, the list of institutions that did not comply with said obligation.

ONCAE shall consolidate the PACCs of public institutions into a single document that will be called the Government PACC, which shall be classified by source of financing, Class of expenditure/object and institution; in order to facilitate cash flow programming and the same shall be sent by ONCAE to SEFIN for the pertinent purposes according to the agreed format.

ONCAE, in accordance with the best interests of the State, shall define and notify which are the joint purchases that will be mandatory in nature, for all institutions that acquire the goods or services included in the catalog. For this purpose, it must notify this information to the institutions through the HonduCompras portal.

All direct contracting covered by an emergency decree shall be carried out in accordance with what the State Contracting Law establishes and its process shall be published on HonduCompras. It is prohibited to carry out direct contracting covered by emergency decrees whose objective is different from what motivates the emergency, as well as contracts whose effects extend beyond the emergency itself. Purchases covered by emergency decrees issued and approved before December 31, 2016 are prohibited.

Public Sector Institutions whether at the central, decentralized level or local governments, prior to the acquisition of computer applications and development of computerized systems, regardless of their cost, will require a favorable opinion from the State Department in the Finance Ministry, through the Modernization Unit, for the purpose of ensuring the feasibility of the functions being sought; complying with the regulations already established in the State and that are not found in the Integrated Financial Administration System (SIAFI) and other national systems, in case the acquisition is favorable, the prior guidelines for interoperability or information exchange between the systems shall be provided as applicable; said opinion shall be issued within a maximum period of 30 days from the request.

The State Department in the Finance Ministry, through the Budget Incorporation Committee, made up of the General Directorate of Public Investment, General Directorate of Macro-Fiscal Policy, General Directorate of Budget and General Directorate of Public Credit, will issue a Technical Note jointly, in order to determine whether there is budgetary space for the financing of a program or project.

The Priority Note does not constitute an obligation for the State Department in the Finance Ministry to allocate additional resources to those already budgeted and it has a validity of two (2) years from the date of its issuance when the Project Financing Management and Negotiation process is not completed, this priority note shall be issued within a maximum period of 15 days once the information is received at SEFIN.

The State Department in the Finance Ministry is authorized to, through the General Directorate of Public Investments, consider as part of the process of prioritizing new investments, comprehensive disaster risk management indicators, climate change, gender equality, specific programs aimed at women and human rights, as well as the priorities established in the Regional Development Plans, to promote more balanced development between the regions of the Country Vision and in accordance with the natural, cultural and social potential of the territory and its focus on the four (4) purposes of the plan for all for a better life.

Following the issuance of the Priority Note issued by the Finance Department, through the General Directorate of Public Investments, when it is necessary to modify technical aspects in the project formulation, such as; inconsistencies in the project name, Executing Unit, location, coverage, increase or decrease in the total project amount, Public Sector institutions shall request from the Finance Department a "Technical Opinion for Amendment of Issued Priority Note". For this purpose, it will be required that Public Sector institutions, through the UPEGs, attach the proper supporting documentation that allows technical analysis, for the issuance of the corresponding Opinion that includes the accumulated physical and financial progress. In the event that a change in objective is required, it shall be considered as a new Project.

Without prejudice to what is established in Article 12, numeral 5), subsection b) of the Technical Standards of the Public Credit Subsystem, the National counterpart of programs and projects when required by the financing agency shall be established in loan agreements up to ten percent (10%) of the total amount of the agreement. In the case of donation counterparts, this will be up to twenty percent (20%) and preferably will be agreed in kind. Every institution executing programs or projects must consider within its budget the amounts corresponding to counterparts when required. In exceptional cases, the State Department in the Finance Ministry is authorized to raise the percentage limit of national counterpart funds of the Project that it considers a special treatment in accordance with the budgetary and financial capacity of the Institution.

The administrative expenses assigned annually must not exceed ten percent (10%) in relation to the budget assigned for each project, which must be clearly reflected in the budgetary structure corresponding to administrative expenses of the Executing Unit. In the case of Project Management Units, the administrative expenses assigned annually must not exceed ten percent (10%) in relation to the total cost of the set of projects under their administration. Non-compliance with this Article will result in temporary disabling of the BIP Code until excess Current Expenditure resources are transferred to investment.

The Secretary of State in the Office of Finance through the General Directorate of Public Investments; the Secretary of General Coordination of Government through the Presidential Directorate of Strategic Planning, Budget and Public Investment, Presidential Directorate of Results-Based Management and the Presidency of the Republic through the Presidential Office for Project Monitoring, shall meet periodically to review Public Investment Programs and Projects in alert status, in order to issue a consensus opinion for timely decision-making in relation to the programs and projects, said opinion must be sent to the corresponding authorities.

Extensions of project closing dates regardless of the source of financing must have the Technical Opinion of the General Directorate of Public Investments of the Secretary of State in the Office of Finance. That Directorate shall issue a technical opinion prior to the management before International Organizations by the General Directorate of Public Credit for the extension of deadlines, disbursement period, project closure and grace period, which must be established in International Agreements. For extensions of execution closing deadlines, disbursement period, and grace period, it is a mandatory requirement to present to the General Directorate of Public Investments, prior to the issuance of said Opinion, the following: Accumulated physical and financial execution report of the project; Reprogramming of activities that include the costs per activity, and in the project closing stage must contemplate only administrative and accounting personnel; Demonstrate that administrative expenses do not exceed 10.0% with respect to the total investment. Have seventy-five (75%) of the committed resources (reimbursable and non-reimbursable funds) according to the signed contract of the total project amount and corresponding justifications. In the case of Programs and Projects financed with External Funds, the DGIP shall issue a technical opinion prior to the management before International Organizations by the General Directorate of Public Credit.

For programs and projects in closure, only the administrative and accounting personnel necessary to carry out the closure activities must be maintained in the executing unit, and six months before the closing date the payroll of the essential personnel for the Project closure must be sent to the DGIP. To comply with the above, the General Directorate of Public Investments of the Secretary of State in the Office of Finance shall issue a Technical Opinion at the request of the institution in which it will evaluate the necessity of human resources and the estimated time to complete this activity, and must attach a comparative analysis of personnel reduction.

Prior to the approval of requests for modifications to budget allocations of public investment projects, their registration in the National System of Public Investments of Honduras (SNIPH) will be required with the justification and supporting documentation that allows technical and financial analysis, so the amount to be modified must not exceed the total cost of the project, which will be reviewed by the General Directorate of Public Investments of the Secretary of State in the Office of Finance.

Government Institutions: Central, Decentralized, and Deconcentrated that execute public investment programs and projects regardless of their source of financing must adjust their programming of commitments and payments strictly to the Current Budget.

In follow-up to the implementation of the computer tool of the National System of Public Investments of Honduras (SNIPH), all public sector institutions that execute public investment programs and projects, whether with national and/or external sources, Public-Private Partnership modality, shall have the obligation to formulate and register based on the General Methodological Guide and keep updated the physical and financial information thereof in the System according to the project life cycle. Amendments, deadline extensions and changes between investment categories or components must be registered in the SNIPH. Non-compliance with this provision will result in the Secretary of State in the Office of Finance, through the General Directorate of Public Investments, proceeding to temporarily disable the code assigned in the SNIPH until compliance with what is established in this Article.

All public sector institutions that execute programs and projects must identify and mark in the programmatic structure at the level of activity or work in the Multi-Year Budget (2018-2021), in accordance with the budget classifier for Climate Change, which was developed based on technical criteria aimed at mitigation, adaptation and disaster management related to Climate Change; this activity will be developed by the General Directorate of Public Investments (DGIP) of the Secretary of State in the Office of Finance.

Within the framework of improving the governance of risk management and climate change, the Secretary of Finance is instructed to allocate to institution 449 "Financial Services of the Central Administration," national funds resources up to an amount of 30.0 million Lempiras from the allocations of public sector institutions linked to climate change mitigation and adaptation, for the creation of a fund for climate financing, administered by the Secretary of State in the Office of Finance, constituting this an agile and permanent mechanism for financing affected sectors; said fund may capture other resources from external sources, whether these are loans or donations.

All Public Sector Institutions that execute public investment programs and projects whether with national funds, external funds or under the APP modality must register the original contract and its respective modifications, if any, in the National System of Public Investments of Honduras (SNIPH) for the respective monitoring. When the project is financed with national funds, the analysis will be based on the State Contracting Law, in case it is financed with external resources, the regulations of the corresponding financing organization will be applied, in follow-up to Article 1 of the State Contracting Law and the APPs under the applicable legal framework. Non-compliance with this provision will result in the Secretary of State in the Office of Finance through the General Directorate of Public Investments proceeding to temporarily disable the code assigned in the SNIPH until compliance with what is established in this Article. Once the corresponding instrument is signed, the institution will be obligated to make the respective publication in the HonduCompras portal in accordance with what is established in Article 77 of the Regulations of the State Contracting Law.

The Executing Units of Programs and Projects, prior to entering into contracts for works, goods, services or supplies whose closing date extends beyond the project completion date, must previously request from the State Department of Finance the respective extension of term. Likewise, contracts regardless of their source of financing that extend beyond the Government Period must be approved by the National Congress.

Modifications between investment categories and components, regardless of the source of financing, must have a Technical Opinion from the General Directorate of Public Investments (DGIP). It is a mandatory requirement that the Executing Unit present to the General Directorate of Public Investments the following information: approved budget and modification proposed by investment category/component; committed resources and project availabilities by investment category/component; accumulated physical and financial execution report of the project; and corresponding justifications. In the case of Programs and Projects financed with External Funds, the DGIP shall issue a technical opinion prior to the management before International Organizations by the General Directorate of Public Credit.

The State Department of Finance is authorized to transfer to Institution 449 "Financial Services of Central Administration," prior to the opinion of the General Directorate of Public Investment, the available balances of national counterpart of Public Investment projects that have complied with the validity period of the agreement and whose liquidation has been completed, for the purpose of optimizing State resources, in order to meet requirements of other projects.

All public investment contracts, subject to the State Procurement Law or Efficient Procurement Law through Electronic Means, entered into by the Public Administration, as well as their modifications, must be registered in the HonduCompras System, no later than 30 days after being executed and certified copies of each contract must be sent to the General Directorate of Public Investments of the State Department of Finance. X. ADMINISTRATION OF HUMAN RESOURCES

Modifications to the structure of positions, opined by the General Directorate of Civil Service, or others governed by Special Laws, must be authorized through Internal Resolution of the State Department of Finance. These modifications must be financed with the budget approved for each Executing Unit of Central Administration. In the case of modifications to the position structure of decentralized institutions that do not imply salary increases, these must be authorized by the superior decision-making body of each institution and must have their financing within their budget. Violation of this Article shall be subject to the provisions of Article 5 of this Law.

When positions are created or any personnel action is intended to be carried out, the procedure must be followed through the Human Resources Administration System (SIARH) of the Integrated Financial Administration System (SIAFI) for administrative personnel of Central Administration and in the case of Teaching Personnel of the Education Department, it must be done through the Teaching Human Resources Administration System (SIARHD). Prior to initiating these processes, the position structure and assigned budget must be in place, which must be confirmed by the State Department of Finance. Prior to the creation of new positions in the Itemized Annex of Basic Salaries and Wages, the General Directorate of Civil Service must proceed with their classification. The Department of Finance through the General Directorate of Budget will not process such creations if the corresponding opinion is not available. The position structure must be generated in the General Directorate of Civil Service or in the Teaching Human Resources Sub-management as appropriate. State Universities are excepted, which may directly hire teaching personnel at the highest level when necessary for their optimal development, provided they have budget resource availability.

The preparation of payroll for personnel incorporated into the Civil Service System, Excluded Service, Wages and Contracts and other special statutes, with the exception of those governed by the Honduran Teacher Statute, shall be subject to the new Human Resources Administration System (SIARH), which is directed by the General Directorate of Civil Service, as a module of the Integrated Financial Administration System (SIAFI). The Teaching Human Resources Administration System (SIARHD) must have or develop interfaces with the Integrated Financial Administration System (SIAFI), for purposes of registration and electronic payment.

The hiring of temporary personnel (expense subgroup 12000) shall be limited to the allocations and amounts approved in the General Budget of Income and Expenses of the Republic. In order to regulate these allocations, increases through budget modifications for this expense subgroup are prohibited, with the exception of adjustments for minimum wage provided the institution has budget availability, reimbursements by court order and unpaid salaries; as well as exceptional cases for the Health sector, when due to the nature of their functions the hiring of interim medical personnel is required for normal functioning while the competition process is concluded (object 12910 Special Contracts). This rule applies to all sources of financing, except resources from Donations. The heads, Chiefs of Executing Units and contracting Administrative Managements are directly and exclusively responsible for personnel selection, which must be carried out based on competencies, skills, dexterity, academic merits, integrity and other suitability requirements deemed necessary for the efficient performance of the position. These contracts have validity only within the current Fiscal Year, and personnel hired under this modality should not be considered permanent for any purpose, and their effectiveness shall be counted from the date this personnel takes possession of the position. This type of hiring shall be formalized through Internal Agreement of each Public Sector institution and in that Agreement there shall be no provision for vacation bonus payments. It is prohibited to appoint non-permanent personnel (12000) when in the Itemized Annex of Basic Salaries and Wages of State Departments or their equivalent in the rest of the Public Sector Institutions there are approved positions for the performance of the functions that are the object of the contract. Officials who fail to comply with this Article shall be jointly and severally responsible financially for all obligations generated.

Specific Object 12200 wages shall be exclusive for paying personnel whose salary is established by day or by hour, and in no case should it be used to pay personnel who perform administrative or technical functions. The hiring of personnel whose functions are different from those that correspond to the nature of the work as wages is prohibited, in such cases direct responsibility shall fall on the official or officials who violate the provisions of this Article. This personnel is not classified as permanent for any purpose, likewise, vacation bonus should not be considered in the corresponding resolution.

To civil service employees under contract modality, under object 12100 who voluntarily request contract termination by mutual agreement, the State may grant indemnification according to the benefit granted to employees governed by the Civil Service Law. To access this benefit, the public server under this modality must meet the following requirements: that the contract has been terminated by mutual agreement; that the beneficiary is not a participant in any of the State's social security systems; to have contracts executed for at least 10 consecutive budget periods; and in case of terminal illness or permanent disability this benefit shall proceed without any requirement. The granting and application of this benefit shall be governed by the provisions of the regulations of these provisions. This benefit shall also apply to those public servers who hold excluded service positions provided they have worked consecutively for a period of no less than three (3) years.

For the payment of salaries of diplomatic and consular personnel or those holding representation positions abroad, after corresponding deductions have been made, it shall be applied in accordance with the Diplomatic and Consular Service Law. Any additional charge generated by exchange rate differential shall be covered with their own budget.

Retirees from any State institution may be hired, with national or external funds to provide their professional services, provided they present the corresponding act of suspension of the retirement benefit extended by the respective social security institute, with the exception of retirees who have provided their services in teaching and health.

The institutions of the Central Government, Decentralized and Deconcentrated entities, shall not be able to allocate funds from any class of loan or donation, for the purpose of making salary supplements or increases or granting extra pay to public servants.

All officials of the Central Government and Deconcentrated Institutions included in Article 3 of the Civil Service Law shall have the right to enjoy annual unpaid vacations granted in accordance with the periods established by said Law, provided that the following circumstances occur: That it is outside the Regime established by the Civil Service Law and its Implementing Regulations; and, This right is acquired after completing the first uninterrupted year of service. In the event that due to work requirements the officials of the Central Government and Deconcentrated Institutions have not enjoyed vacation time based on Law, they shall have the right to payment for the same. For these purposes, they must comply with the requirements established in Article 128 of the Regulations of the Civil Service Law.

The appointment of personnel by Agreement in the capacity of excluded is prohibited, in positions that are not included in Article 3 of the Civil Service Law.

Public Servants who having been terminated have sued the institution in which they worked, during the time it is in process and pending sentence may work under the form of (Temporary) contracting in any institution of the Public Sector. In the case of a final judgment in which the State is condemned to indemnification and/or reinstatement with payment of damages and losses of unpaid salaries, the salaries received by the contracted person during the course of the trial shall form part of the quantification of the indemnification of unpaid salaries fixed in the condemning judgment, consequently they shall form part of the final payment settlement that is made effective to the contracted person. The official who violates what is established in the first paragraph of this Article, and makes an appointment under the agreement modality, shall be subject to the application of a fine equivalent to ten (10) minimum salaries.

Appointments of personnel in vacant positions shall be permitted only when the base salary is assigned to them. The merger of positions for the creation of a new one shall be permitted provided that a savings of thirty percent (30.0%) of the total amount of the merged positions is generated; and, the creation of positions originating from the division of the same position is prohibited.

For the purpose of bringing greater efficiency and effectiveness in the performance of the institutions of the Central Administration, Deconcentrated Bodies and Decentralized Institutions, at least sixty percent (60%) of the vacant positions existing on December 31, 2017 shall be filled, except those positions of teaching service, health care and security. The General Directorate of Civil Service and equivalent bodies in the rest of the institutions of the Public Sector shall submit to the State Secretariat of the Finance Office and to the Superior Court of Accounts (TSC) no later than January 30, 2018 the corresponding reports demonstrating the actions taken in compliance with this provision. The Administrative Management offices of each institution through the Human Resources Sub-management offices must comply with what is established in this provision.

The institutions of the Decentralized Administration and the Deconcentrated Entities shall present to the State Secretariat of the Finance Office, specifically to the General Directorate of Budget, no later than January 31, 2018, the Detailed Annex of Salaries and Wages corresponding to Fiscal Year 2018 in accordance with the format provided by the State Secretariat of the Finance Office. This must contain the positions of permanent, trust, temporary and daily wage personnel, collateral and other benefits granted to them. Likewise, said annex must be updated in accordance with the changes that occur during this Fiscal Year. The Administrative Management offices of each institution through the Human Resources Sub-management offices must comply with what is established in this provision.

In order to guarantee compliance with Executive Decree PCM-021-2016, containing the Guidelines related to the registration and control of public servants. The salaries of all employees and officials of the institutions of the Central Government, Decentralized and Deconcentrated Entities shall be registered month by month in the Registration and Control System of Servers (SIREP) in accordance with its payment mechanism (biweekly, monthly, fortnightly, among others), the above for Employees registered in the Personal Services Group, financed with National Treasury Funds, Own Resources or External Funds. Likewise, all Consultants who receive professional fees and who are registered under the Non-Personal Services expense Group (subgroup 24000) financed from any source must be registered in this System, this for the sole purpose of having better control of resources allocated to consulting services and without these being considered under any circumstance as permanent or temporary employees of State institutions, in accordance with what is established in Article 73 of this Law. In the case of the Central Administration, the sole payment mechanism for institutions shall be through the Integrated Financial Administration System (SIAFI); in the case of Decentralized Administration Institutions their payment process shall continue to be carried out through their respective mechanisms. Non-compliance with this provision shall result in affecting the timely delivery of disbursements made by the General Treasury of the Republic for each of the Institutions. Likewise, Administrative Managers and Managers or Sub-managers of Human Resources who contravene these provisions shall be jointly liable for an amount of 10 minimum salaries.

Institutions such as: the Public Ministry, the Supreme Electoral Tribunal (TSE), the Superior Court of Accounts (TSC), the Attorney General of the Republic (PGR), the National Commissioner of Human Rights (CONADEH) and the National Registry of Persons (RNP), shall be responsible for registering their employees' records and uploading their payrolls that are earned according to their payment mechanism in the System for Registration and Control of Public Servants (SIREP), with the objective of organizing the process of human talent registration, which must be reliable, uniform, orderly and pertinent. Likewise, they must register the execution of spending in SIAFI identifying the natural or legal person that provides services and/or goods to the institutions, thereby promoting transparency and the consolidation of public finances. The Treasuries or their equivalent for each Institution shall carry out the prioritization of payments through SIAFI according to their needs for the fulfillment of institutional goals.

The Decentralized Institutions shall be limited to the number of positions and amounts that have been approved in their budget and that appear in their Opinion approved by the State Secretariat of the Finance Office. The reassignment of functions, renaming of positions and any other action related to the workforce, is an administrative action of each Decentralized institution, so it is the exclusive responsibility of the institutional authority to carry out these actions, which must previously have the authorization of the highest decision-making body. However, the Decentralized Institution that carries out these actions must make the corresponding adjustments in SIREP; likewise, it must take into consideration the current legal regulations regarding Human Resources.

The obligations arising from the payment of benefits, severance pay and indemnities established in the Law shall be canceled and assumed by the State, with the budget allocated to the institution where the public servant was providing services. Likewise, each institution must assume payment for final judgments regardless of their nature. The official in charge of the payroll unit shall not be personally or jointly responsible, nor shall any other public official or employee who intervenes in the administrative acts that give rise to the payment of such benefits and indemnities. If for any reason the payment of these does not become effective and the State is sued and defeated judicially, this fact will not make public officials or employees responsible either.

Authorization is granted to the Institutions of Government: Central, Deconcentrated and Decentralized so that, when a State servant resigns, is dismissed or separated and has not caused the payment of the Thirteenth Month of Salary as a Bonus (Aguinaldo), Fourteenth Month of Salary as social compensation, vacation or any other benefit that according to Law or Collective Bargaining corresponds; the proportional payment of these shall become effective at the moment of dismissal or resignation; without waiting for the months established to make the settlement.

The payment of the Thirteenth Month of Salary as a Bonus (Aguinaldo) and Fourteenth Month of Salary as social compensation shall also be granted to officials, daily wage and contract personnel of the Public Sector that are included in Group 10000 of Personal Services. With the exception of expense object 12910.

For the calculation of overtime hours, compliance must be made with what is provided in the Regulation of these General Provisions. Without prejudice to what is provided in Article 31 numeral 1), subsection c) of the Tax Equity Law, contained in Decree No. 51-2003 dated April 3, 2003, the personnel of the Air Traffic Service (Air Controllers) and Aeronautical Information Services (Flight Plan) dependent on the Honduran Civil Aeronautics Agency and Personnel of Security, Transport and Issuance, and Treasury of the Central Bank of Honduras and National Agricultural Development Bank, linked to the work of custody, transfer and handling of valuables, are incorporated within the exceptions referred to in said legal provision, related to the authorization and payment of overtime. The following officials are excluded from overtime pay: State Secretaries and Subsecretaries, General Secretary, Presidential Directors, General Directors and Subdirectors, Directors and Subdirectors, Internal Audit Chief, Administrative Manager, Managers, Sub-managers, Legal Advisor, Executive Presidents, Executive Secretaries and Rectors and similar positions regardless of the position title.

The salaries of employees and officials of the Institutions of the Decentralized Administration and Deconcentrated Entities, whether permanent, by contract or any other modality that enter the public service during the validity of this Decree, must be in relation to the compensation earned by those of equal category in the Central Administration. To carry out the monitoring and tracking of salaries and wages of the Institutions of the Decentralized Administration and the Deconcentrated Entities without any exception, they must send to the State Secretariat of the Finance Office, the complete payroll containing permanent, trust, temporary and daily wage personnel, within fifteen (15) days following the end of each quarter. Likewise for statistical and control purposes, Decentralized Institutions must send monthly the list of personnel in the formats provided to the General Budget Office and the General Office of Decentralized Institutions broken down by their different categories and classified by gender, said list must be consistent with the data entered by the institution in the System for Registration and Control of Public Servants (SIREP).

The savings in the allocations of basic salaries for Permanent Personnel, derived from the cancellation of positions, due to the creation of positions by merger, positions that are temporarily vacant, positions that earn a lower salary than budgeted or due to the cancellation of supernumerary personnel in the Public Sector, must not be used for salary increases, adjustments, leveling, and/or appointment of emergency personnel nor be transferred for another purpose; except: For the creation of positions with prior favorable opinion 1. of the State Secretariat of the Finance Office, when it comes to personnel that due to the nature of their functions, are required for the normal functioning of any State body; and, To satisfy urgent and unforeseen needs, 2. such as: Emergency Expenses, decreed by the President a) of the Republic; Internal b) upheaval or public calamity; Payment of labor benefits and/or severance pay; and, c) Payment of Labor Claims by court order, d) in cases where no other source of financing is available. With the savings generated by positions that e) remain vacant from teaching personnel of the Education Office due to retirement, pension, death or any other reason, one hundred percent (100%) shall be reinvested in the programs and projects of the Education Office to improve coverage and quality of Education in coordination with the State Secretariat of the Finance Office, likewise positions for first-time teaching staff may be created assigning them the basic salary established by Law.

Based on what is established in Decree No. 18-2010 of March 28, 2010, containing the Fiscal and Financial Emergency Law, for the present fiscal year salary increases are frozen in the State Secretariats and Deconcentrated Institutions. Excepted from the above are those institutions that have the respective financial and budgetary availability that supports the benefit to be granted, for which the public institution must accompany the request for opinion with the Economic and Financial Study that certifies the sustainability of said benefit and it cannot exceed the year-over-year variation of the consumer price index (CPI) established by the BCH at the close of 2017. The State Secretariat of the Finance Office through the General Budget Office shall proceed to conduct the corresponding review and analysis and shall issue the respective Opinion.

Any salary increase that is intended to be granted in Decentralized Institutions in the present fiscal year, these must demonstrate that they have the respective financial and budgetary availability that supports the benefit to be granted, for which the public institution must accompany the request for opinion with the Economic and Financial Study that certifies the sustainability of said benefit. If any increase is granted in these institutions, it must not exceed the year-over-year variation of the consumer price index (CPI) established by the Central Bank of Honduras (BCH) at the close of 2017, except for those institutions with collective contracts already negotiated in which the percentage already negotiated in collective bargaining must be considered as long as they can be covered both budgetarily and financially without implying an expenditure for the National Treasury; if new negotiation is required, it must be adjusted to what is established in this provision and request the opinion of the State Secretariat of the Finance Office through the General Office of Decentralized Institutions.

The salaries earned by State Secretaries and Under-Secretaries shall be those approved in the Itemized Annex of Basic Salaries and Wages of the Central Administration, which is an integral part of the General Budget of Income and Expenses of the Republic.

The Honduran Community Education Program (PROHECO), as of the year two thousand seventeen (2017), must pay the salaries corresponding to teachers hired by said program through deposits to their respective bank accounts. For this purpose, it must have the technological platform that enables the execution of payments and connectivity with the State's financial administration and human resource control systems; such as SIAFI and SIREP. Compliance with the above shall be the responsibility of the State Secretariat in the Office of Education through the administration of said program, and coordinated with the General Directorate of Human Talent of the same Secretariat.

In the Teaching Sector (teaching staff) the division of teaching positions shall not be permitted, arising from retirement, vacant positions or canceled positions for the purpose of supplementing teaching hours of teachers; authorization is only granted when they are allocated to the hiring of teachers strictly in front of students to whom the base salary would be assigned to meet the needs in one-teacher schools in the pre-basic and basic modality.

For personnel without a Teaching Degree or who do not meet the requirements to opt for a teaching position and who for this reason are hired as interim teachers, as of the month of February of the year 2016, the contract period shall be effective as of the month of February concluding in the month of November of each year.

For teachers under the modality of the Distance Secondary Education System (SEMED), hiring must be carried out for the periods from February to June and from July to November of each year as applicable.

Any action of transfer of position or teaching personnel, prior to its approval must have the position or the person who will replace it, having to previously notify the State Secretariat in the Office of Finance so that it issues the Internal Resolution, the budgetary modification and the Itemized Annex of Basic Salaries and Wages. For this purpose the justification of the movement must be attached. In relation to the State Secretariat in the Office of Health, any person who for any reason has been transferred to a zone, region or different from the area where the position is budgeted, must return to the place where they were appointed. Exceptions are made for positions for which the entity that accepted the transfer assumes budgetary responsibility without prejudice to the one that originally made the appointment.

The appointment of teachers and/or the assignment of functions in educational centers of all levels under the Ad honorem modality may be carried out provided that the service provider declares in said appointment that it is Ad honorem and that it does not generate nor will generate any economic responsibility to the State. Violation of this regulation shall make the officials or employees who authorize such actions personally responsible for the payment of these services.

Officials or employees of the Central Government, Deconcentrated and Decentralized, who have to participate in official events outside the country, invited by international institutions or organizations, may participate provided that travel allowances and other travel expenses are covered in their entirety by the sponsors; only the payment of airport departure taxes from the country shall be recognized, provided that the cost of the airline ticket does not include it. When officials or employees of the Central Government, Deconcentrated and Decentralized participate in official events outside the country duly justified, with State resources, it shall be limited to two (2) participants per Institution, and in any case at a general level no type of supplement shall be authorized when travel allowances are provided by the sponsoring organization of the event. When it comes to special missions carried out in representation of the country there shall be no limits in its representation, provided that they are authorized by the Presidency of the Republic, through Executive Agreement. Exempt from what is established in this provision is the National Commission of Banks and Insurance (CNBS), for the consolidated financial supervision work it carries out jointly with entities both at the national and international level, maintaining links with regional and world institutions necessary to comply with its main function of exercising oversight and control of banking, insurance and financial institutions and other regulated public and private institutions, including what is related to the prevention and combat of money laundering and terrorist financing, with the Intergovernmental Agreement FACTA with the Government of the United States of America; which for all its foreign trips, must be governed by the provisions contained in the Regulations on Travel Allowances and Other Travel Expenses for Officials and Employees of the Executive Power.

Budgetary allocations for scholarships may be used provided that the following is taken into consideration: The execution of a commitment with executive force and immediate execution (Promissory Note or Bill of Exchange) as well as the contract between the scholarship recipient and institutions of the public sector, aimed at obliging the latter, in reciprocity for the financial aid received, to work for the agency that nominated him for a time no less than double that of the duration of the financial aid for the completion of studies, and to proof of having obtained the respective degree or degrees. In case of non-compliance with these conditions the scholarship recipient is obliged to return the amounts granted, in the currency in which they were received or its equivalent at the exchange rate in effect at the time of obligating the return. Only for reasons of force majeure sufficiently proven at the discretion of the Administration through the institution that nominated him, shall the scholarship recipient be exempt from said responsibility; That the State guarantee permanent scholarship recipient personnel the work in the position they occupy on the date they are authorized to study inside or outside the country and that upon their return be assigned functions in accordance with their level of study and if possible the corresponding salary according to the level of studies achieved; and, That scholarships granted inside and outside the country be for permanent personnel (object 11100). Notwithstanding what is provided here, the agency that has sponsored a scholarship may authorize the scholarship recipient to comply with this obligation by providing his services in a government agency different from the one that granted him the scholarship. Preference is given to scholarship applications where the applicants are women who have the sponsorship of partial or total financing from national, international institutions or cooperative Governments, being able to grant full or partial scholarships to private individuals, provided that there is an agreement with such organizations that expressly establishes it. The State reserves the right to hire these persons, after the scholarship ends and the respective degree is obtained. In case the duration of this benefit does not exceed one (1) month or when it comes to scholarships, studies or seminars to be conducted in the country or abroad, its granting shall be formalized by means of an official document from the head of the agency in the Central Administration, in Decentralized Institutions, it shall be done by means of an official document from the head of these and in the Judicial and Legislative Power it shall be done through their internal regulations. If the duration of the scholarship exceeds one (1) month the authorization or extension shall be made by Ministerial Agreement, when it comes to State Offices, in the case of Deconcentrated Bodies and Decentralized Institutions the authorization shall be made by resolution of the Governing Body, in the Judicial and Legislative Power it shall be done through their internal regulations. In all cases the financing of the studies must be attended with the resources allocated for this purpose in the budget of each institution of the Central Administration, Deconcentrated Organisms and Decentralized Institutions.

The obligation that the State has to make the payment in the concept of one-half of one percent (1/2 of 1%) of the total amount of permanent salaries and wages of the Central Administration, as employer contribution to the National Institute of Professional Training (INFOP), shall be limited to the allocation approved in the Budget of the State Secretariat in the Office of Labor and Social Security for this Fiscal Year.

The employer contribution that the State pays to Social Welfare Institutes cannot exceed the percentage established in their respective Laws. The allocations intended for the payment of the employer contribution to the aforementioned Institutes cannot be transferred for another purpose. Likewise, both the employer and labor contributions of public servants must be deposited in full to the social welfare institutes in the corresponding month, being strictly prohibited from allocating them for other purposes. Non-compliance with this Provision shall be subject to the sanctions stipulated in Article 5 of this Law. The Heads and Administrative Managers or whoever acts in their place who breach this Article shall be jointly and severally liable financially for all obligations generated without prejudice to civil, administrative, and criminal liability.

The deductions of Income Tax from officials, employees, and contractors of the public sector and any other type of deduction or withholding made from payments in favor of goods and/or services providers or employees, must be deposited in full by the respective institutions in the corresponding month, being strictly prohibited from allocating them for other purposes. The Heads and Administrative Managers or whoever acts in their place who breach this Article shall be jointly and severally liable financially for all obligations generated without prejudice to civil, administrative, and criminal liability.

Public servants working in the General Directorate for the Protection of Human Rights Defenders shall receive salaries in accordance with their responsibilities, special capacities, and professional risk; for this purpose, the Secretary of State in the Ministry of Finance shall issue the corresponding internal Resolution based on the Opinion of the General Directorate of Civil Service, in compliance with the provisions of current legal regulations. XI. OF DECENTRALIZED INSTITUTIONS

Without prejudice to the limit established in Article 51 of the Budget Organic Law and for the purpose of expediting the financial investments of Social Welfare Institutes and State Financial Institutions, these institutions are authorized to incorporate the surpluses of their income into the budget of income and expenses of the present fiscal year, prior authorization of their Corporate Governance, and to invest these resources in securities and financial instruments with high safety, profitability, and liquidity. Likewise, additional income generated in accordance with the provisions of the previous paragraph may also be allocated to the payment of operating expenses related to the service provided by said Social Welfare Institutes and Financial Institutions based on their own laws, observing compliance with budget regulations contained in this Law and prior Opinion of the Secretary of State in the Ministry of Finance. The National Commission of Banks and Insurance (CNBS) through its specialized technical body must supervise that financial investments made by these institutions comply with the established technical norms and/or criteria.

For the execution of the budget of the present fiscal year, the social welfare institutes, INPREMA, INJUPEMP, INPREUNAH, and IPM, must obtain a Net Loan Concession equal to or less than zero, that is, the granting of loans must be equal to or less than the amount of their recovery, this provision shall apply to the IHSS in the event that this institute is authorized for the granting of loans to its affiliates.

The Surplus reflected by the Public Social Welfare and Security Institutes may be used for financial investments in the purchase of securities, Treasury Bills of the General Treasury of the Republic and Central Bank of Honduras, time deposits, purchase of shares, and any other instrument classified as a Security in Article 40 of the Regulations for Investments of Public Pension Funds, as well as the limits established by instrument in the same Regulation (Minutes No. 1148 of the CNBS, published in the Official Gazette No. 34418 of August 16, 2017).

The Public Social Welfare and Security Institutes, prior to any modification in the structure of benefits to active affiliates, pensioners, and retirees of their systems, including changes in the periodicity of payment and increases in pension amounts, must obtain authorization from the National Commission of Banks and Insurance (CNBS), for which they must submit the corresponding request to the CNBS, attaching the actuarial technical study that supports the financial capacity of the Institute. Likewise, the revaluation of pensions may not exceed the annual inflation index, and for its granting, the institution must have budgetary and financial capacity, backed by the corresponding actuarial technical study.

The Public Social Welfare and Security Institutes must submit to the General Directorate of Decentralized Institutions of the Secretary of State in the Ministry of Finance on a monthly basis no later than ten (10) days after the end of the month, the detail of the financial investments they maintain in the National Financial System.

The National Port Authority (ENP) must transfer to the Central Administration the amount of EIGHTY-FIVE MILLION LEMPIRAS EXACTLY (L85,000,000.00). The ENP is prohibited from transferring said Transfer for a purpose other than that for which it was approved according to Law or executed in favor of a different beneficiary. The amount described in this Article must be deposited to the General Treasury of the Republic, in accordance with the payment schedule prepared jointly between it and the aforementioned Institution, which must be agreed upon no later than January 31, 2018; the maximum payment date must not exceed the last day of each month and the last installment must be deposited no later than November 30. In case of non-compliance with this obligation, the Secretary of State in the Ministry of Finance is authorized to request the Central Bank of Honduras to automatically debit from the bank accounts that this institution maintains in said Bank and/or in the rest of the National Financial System the amounts of the pending payment installments. Notwithstanding the provisions of the previous paragraph, the Executive Power through the Secretary of State in the Ministry of Finance may authorize and provide, if the financial situation of this Institution permits, additional or complementary funds to address programs and projects that the Government deems necessary, subject to prior approval of the National Congress.

From the transfer referred to in the previous Article for the Central Administration coming from the National Port Authority (ENP), an amount of EIGHTEEN MILLION LEMPIRAS EXACTLY (L18,000,000.00) shall be allocated to finance the operations of the National Port Security Commission (CNPP), in accordance with the provisions of Article 2 of Executive Decree PCM-050-2013, which amends the Law Creating the CNPP PCM-002-2004. The CNPP must adjust its POA and 2018 Budget to the figure approved in this Law; likewise, it must submit to the Secretary of State in the Ministry of Finance, through the Administrative Management, the corresponding monthly reports on both physical and financial progress; the foregoing shall be a condition for the corresponding disbursements.

Budget modifications of Decentralized Institutions are governed by the provisions of Article 51 of the Organic Budget Law, as well as by the Technical Standards of the Budget Subsystem. Those operations related to debt service and exchange rate variations, carried out by the Central Bank of Honduras, are excepted, which must be approved by its Board of Directors and inform the State Secretary of the Treasury for purposes of monitoring and control. Notwithstanding the foregoing, Decentralized Institutions that generate their own resources are authorized to proceed with their incorporation, exempting them from the application of Article 51 of the Organic Budget Law, provided that the availability of resources to be incorporated is demonstrated and that the total projection of approved income has been collected at one hundred percent (100.0%).

The Budget of the National Electric Energy Company (ENEE) includes resources intended to finance the Social Development Fund for Electrical Energy (FOSODE) for rural electrification; such resources cannot be used by the National Electric Energy Company (ENEE) for purposes other than those for which they were authorized. Only the National Congress shall indicate the use of the funds through its Presidency.

The National Electric Energy Company (ENEE) is authorized to proceed to readjust the medium-term debt under the best financial conditions for an amount of TWO BILLION FIVE HUNDRED MILLION LEMPIRAS (L 2,500,000,000.00) granted for fiscal year closure 2017 by the National Banking System for payment to thermal and renewable energy providers. ENEE must proceed with the accounting record of the assumed debt and its incorporation into the General Budget of Income and Expenses for 2018 of the Company; however, such accounting operations shall have no implication of cash outflow from the cash flow during the fiscal year 2018. The Debt Readjustment is part of the design and process of gradual restructuring of debt re-profiling from short to medium and long-term currently being executed by ENEE to improve the company's financial flow and cover its operational deficit while advancing in its financial sanitation and reform process.

Authorize the State Secretary of the Treasury Department to incorporate into the Budget of Income and Expenses of the Fiscal Year 2018 of the National Commission for Sports Facilities and Sports Improvement (CONAPID), the amount of EIGHT MILLION EXACT LEMPIRAS (L.8,000,000.00), remaining funds from the project "FUTURE SEEDS" incorporated into the 2017 budget according to Decree No. 42-2017 published in the Official Gazette "La Gaceta" on September 4, 2017, but not executed in that period, affecting the following structures: In the Income Budget: GA 01-Expense Item 18101 Current Transfers and Donations from Central Administration and the Expense Budget: GA 01- UE 01 -Fte 11- Org 01 -Prg 11- Spg 00- Pry 00 -Aob 002 - expense object 41120 Construction of Public Domain Assets for a total amount of EIGHT MILLION LEMPIRAS (L8,000,000.00).

All Institutions of the Decentralized Administration and Deconcentrated Entities are obligated to present no later than ten (10) days after the end of the month, the Financial Statements and other information necessary for the continuous monitoring of their financial situation, complying with the requirements established in International Accounting Standards for their presentation; such information must be sent in digital format to the State Secretary of the Treasury Department specifically to the General Accounting Office of the Republic, to the General Budget Department, to the Macro Fiscal Policy Department, and to the General Department of Decentralized Institutions.

Decentralized and Deconcentrated Institutions operating outside the Integrated Financial Administration System (SIAFI) shall send to the National State Property Department (DNBE) no later than January 30, 2018, the inventory of use and consumption assets existing on December 31 of Fiscal Year 2017, as well as a detail of losses of these inventories. Likewise, in order to guarantee compliance with the provisions of Article 6 of Legislative Decree 274-2010, regarding the creation and function of the National Property Department: "The responsibility for the administration of movable and immovable property corresponds to the heads of administrative management of the corresponding institution in coordination with the National State Property Department"; and Article 7 of Executive Decree PCM-047-2015, "The responsibility for movable and immovable property that are part of the inventory or have been assigned to each institution or agency of the public sector corresponds to the heads of administrative management departments or administration departments of the same institutions or public sector agencies. All Institutions of the Central Government, Deconcentrated and Decentralized, must register movable and immovable property in the national property subsystem of the integrated financial administration system (SIAFI) in accordance with the programming established in coordination with the National State Property Department, failure to comply with the activities and dates established will affect the timely disbursements made by the General Treasury for each of the institutions.

In order to generate savings, meetings of Boards of Directors or Governing Bodies of Decentralized Institutions must be held with the members and representatives provided for in their respective Laws; likewise, additional expenses derived from the holding of sessions carried out outside their headquarters must be avoided.

All Institutions of the Decentralized Administration that have assigned in their budget transfers to the Honduran Institute for the Prevention of Alcoholism, Drug Addiction and Pharmacodependence (IHADFA), must make such transfer effective before the end of October 2018, as well as any other transfer assigned in their budgets. To carry out the payment management of said transfer, IHADFA must send to each institution the corresponding receipt with the total amount of the transfer or with the value that has been agreed between the parties (IHADFA and Institution) as programming. In the particular case of social security and welfare institutes (IHSS, INPREMA, INJUPEMP, IPM and INPREUNAH), such transfer must be financed with the additional resources received by such institutions, resources other than the contributions received from affiliates to the system. Likewise, all Public Sector institutions that currently have pending transfers from prior years to IHADFA must proceed to make effective payment of the same with the budget of the Present Fiscal Year, making a reprogramming within it. Non-compliance with these payments results in the sanction established in Article 5 of this Law.

Public Service Companies are ordered to proceed within the term of one effective year from the effective date of this Law to carry out the clearing of outstanding accounts receivable in the concept of service provision, having the option of performing subrogation for debt recovery in arrears or making a payment arrangement. The results of these actions must be reported quarterly to the Superior Court of Accounts, to the Institute for Access to Public Information, and to the State Secretary of the Treasury Department. The Administrative Managers of said companies shall be responsible for ensuring that the actions referred to herein are carried out; otherwise, the sanctions established in this Law shall be applied to them.

The values and resources to execute programs and projects of the Strategy for Poverty Reduction (ERP) must be incorporated in each executing unit of the different institutions of the Public Sector, in accordance with the provisions of the Technical Standards of the Budget and Public Investment Subsystems, insofar as applicable.

Resources from debt relief under the Highly Indebted Poor Countries Initiative (HIPC), the Multilateral Debt Relief Initiative (MDRI) and as corresponding to the Paris Club must be allocated exclusively for the flagship projects listed in the Annex "Poverty Reduction Strategy," which forms part of this Budget of Income and Expenses of the Republic, Fiscal Year 2018.

Public Debt Service corresponding to the borrowing agreements that make up the group of loans subject to reorganization and that improve the public debt profile shall be executed budgetarily through the Integrated Financial Administration System (SIAFI) and its interface with the Debt Management and Administration System (SIGADE), on the dates and terms established in the respective loan agreements or contracts. Simultaneously, the income that this debt relief concession could generate must be recorded in the Integrated Financial Administration System (SIAFI), and the funds thus obtained shall constitute the resources of the Highly Indebted Poor Countries Initiative (HIPC), Multilateral Debt Relief Initiative (MDRI) and Paris Club that shall serve as the basis for financing poverty eradication programs and projects. XIII. OF THE MUNICIPALITIES

The State, through the State Secretariat in the Offices of Human Rights, Justice, Governance and Decentralization, shall transfer the allocated and authorized amount through monthly allocations to the Municipal Corporations according to the following distribution: One forty-five percent (45%) of the 1. transfers shall be distributed equally among the municipalities. Five percent (5%) of the total amount of 2. transfers for the year 2018 shall be distributed based on the criteria of fiscal efficiency and collection effort; and, Twenty percent (20%) by projected population 3. according to the latest Population and Housing Census conducted or projected by the National Institute of Statistics (INE); and, Thirty percent (30%) by poverty, according to the 4. proportion of poor population in each municipality based on the Unmet Basic Needs (NBI) method and in accordance with the latest Population and Housing Census conducted or projected by the National Institute of Statistics (INE). From the total amount of the Central Government transfer, the Corporations shall allocate the resources from said transfers in accordance with the provisions of the Law of Municipalities or those contained in the Municipal Pact for a Better Life, signed between the Association of Municipalities of Honduras AMHON and the Executive Power. They must notify their decision to the General Directorate of Municipal Strengthening (DFGM) of the State Secretariat in the Offices of Human Rights, Justice, Governance and Decentralization through a certification of a Point of Minutes, attaching it to the current Municipal Budget. The destination of funds under the Municipal Pact for a Better Life shall be applied as follows: Thirty-five percent (35%) for investments 1. that improve the living conditions of the population through programs and projects for assistance to children, with special attention to returned migrants, adolescents and youth, persons with special disabilities, pre-basic, basic, and third cycle education, primary family and community health care, water and sanitation, electrification and housing improvements for families in extreme poverty, all in accordance with the BETTER LIFE PROGRAM; Five percent (5%) for Women's 2. programs; which shall be monitored by the National Institute of Women in Coordination with Municipal Women's Offices (OMM), the Superior Court of Accounts and the Directorate of Planning and Local Governance of the Secretariat of Human Rights, Justice, Governance and Decentralization, responsible for promoting and strengthening the OMM in the municipality. Twenty percent (20%) to strengthen the social fabric 3. under a prevention approach, promoting a culture of peace, justice and coexistence in municipal territories, in accordance with the EVERYONE FOR PEACE PROGRAM, through the revitalization of public spaces to promote sports, cultural activities, training in values and human rights for citizens, community surveillance and other actions that address the particular conditions for preventing violence, so that in the short and medium term, results of impact and measurable outcomes are achieved in the municipalities; and, Ten percent (10%) to improve the municipal investment climate by 4. promoting territorial competitiveness through productive infrastructure works, promoting the Micro, Small and Medium-sized Enterprise (MIPYME) sector in rural and urban areas, for job creation, administrative simplification processes, standardization of tax plans, municipal cadastres, strengthening of administrative, budgetary and treasury capacities, project execution, formulation of local economic development agendas, which are integrated with Central Government initiatives through the PRO HONDURAS Program, seeking public-private cooperation, supporting infrastructure for agricultural, tourism corridors and business development centers, among others. The Central Government shall promptly make transfers to the Municipal Corporations on a monthly basis that ensure payment for the execution of programs and projects of municipal investment in social, economic and security matters, including the programs and projects of the better life platform, everyone for peace and Pro-Honduras. The Municipal Corporations shall support the President of the Republic's initiatives for better connectivity by implementing community technology centers that promote human development; One percent (1%) for the Municipal 5. Transparency Fund (FTM) allocated to the Superior Court of Accounts (TSC) as a municipal counterpart. Decision-making regarding the use and destination of said funds shall be made through meetings of the Committee that has been created for this purpose, composed of the State Secretariat in the Offices of Human Rights, Justice, Governance and Decentralization, which shall preside, the Association of Municipalities of Honduras (AMHON) in the capacity of Secretary, and the Superior Court of Accounts (TSC) which administers it; with these financial resources, training shall be conducted on Municipal Management and Municipal Financial Administration Systems implemented by SEFIN, on-site Technical Assistance, monitoring, compliance with recommendations and greater coverage of municipal audits. It is understood that while resources from other sources are identified to fulfill these obligations, the Superior Court of Accounts (TSC) shall formalize an agreement and regulations with the Committee members, for the purpose of jointly planning the activities to be developed in the Annual Operating Plan (POA) of the Municipal Transparency Fund Committee (CFTM). Municipalities that fail to transfer the 5% of 6. funds for women's programs shall be sanctioned by Ten (10) minimum wages until such failure is remedied. Likewise, the Secretariat of Governance, Human Rights, Justice, Governance and Decentralization must open a non-compliance file. Fifteen percent (15%) for Own 7. Administration Expenses; Municipal Corporations whose annual own income, not exceeding FIVE HUNDRED THOUSAND LEMPIRAS (L.500,000.00), excluding transfers, may allocate for such purposes up to twenty-nine percent (29.0%); and, The remainder of the resources shall be allocated to 8. investment, to cover the counterpart required by the organisms that finance the projects; to the payment of contributions to the Association of Municipalities of Honduras (AMHON), to the payment of contributions that municipalities make to Associations or Mancomunidades upon prior decision of the Municipal Corporations through the affirmative vote of two-thirds of their members and for transfers in goods or services to organized communities for Investment, in all cases respecting the provisions of Article 98 of the Law of Municipalities. It should be understood that the expenditures described in numerals 1), 2), 3) and 4) above should be considered as an investment. Municipal Corporations that enjoy the economic benefit established in Decree No. 72-86 (Port Municipalities), dated May 20, 1986, may avail themselves of the regime established in this Article, provided they renounce before the State Secretariat in the Office of Finance the benefit established in the aforementioned Decree.

The State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization shall transfer through monthly and advance allocations to the Municipal Corporations, through the Central Bank of Honduras (BCH), the values for Capital Contribution in accordance with the values listed in the General Budget of Income and Expenses for Fiscal Year 2018, based on the budget approved by the National Congress; as well as what corresponds to Port Municipalities, provided that the municipalities prove to have delivered to the State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization through the General Directorate of Local Strengthening (DGFL), the administrative documents and account rendering in physical and electronic form, through the account rendering subsystem Local Governments (RENDICIONGL) in approved status. Municipal corporations must present to the State Secretariat in the Offices of Human Rights, Justice, Governance and Decentralization, for the issuance of the prior opinion to the transfer, the following original administrative documents: Certification of the current Municipal Strategic 1. Plan (PEM), issued by the General Coordination Secretariat of Government (SCGG) and within the framework of the technical methodological guidelines provided by the SCGG; The Municipal Investment Plan, by April 30 2. of the current year, which responds to the Municipal Strategic Plan and duly certified by the SCGG; Municipalities that are registered with SEFIN for 3. SAMI implementation must present the Annual Budget of Income and Expenses for the new fiscal year with the sole methodology of the public sector no later than January 15 of the current year, including the requirements mentioned in the preceding numerals; Report of physical and financial progress of projects 4. and executed expenses corresponding to: I, II and III quarter, no later than thirty (30) days after completion and, the IV quarter by January 15, 2019 at the latest; Cumulative Quarterly Account Rendering defined 5. through the account rendering manual, electronically and physically through the RENDICIONGL tool, no later than thirty (30) days after completion; for the I, II and III quarter; the IV quarter by January 15, 2019 at the latest; Cumulative Annual Account Rendering defined through 6. the account rendering manual, in physical and electronic form, by January 15 of the current year at the latest. Municipalities that do not present their cumulative annual account rendering by April 30 shall not qualify for the fiscal efficiency criterion, nor for the retention of the statutory fee of the Association of Municipalities of Honduras AMHON. In the framework of the transition process and transfer of command, the outgoing Municipal Corporations are obligated to prepare and approve the Account Rendering for the 25 days corresponding to their management of the month of January of the current year, and must keep the records in books approved by the Municipal Corporation, approved in RENDICIONGL no later than January 25 of the current year; failure to comply with this provision shall subject the municipality to the corresponding sanctions according to law. All Municipalities, Mancomunidades and Municipal Companies must present to the Superior Court of Accounts (TSC): The annual cumulative account rendering report, containing the 14 forms defined through the account rendering manual, in physical and electronic form, no later than April 30 of the following year, attaching the Certification of the Point of Minutes approved by the Municipal Corporation. SAMI Municipalities must carry out the process of exporting SAMI to RENDICIONGL, maintaining the sole methodology of the Public Sector, and subsequently confirm the corresponding quarter to activate the APPROVED status to present the required information to the competent institutions. This Information must be reviewed and audited in accordance with this methodology, in order to issue opinions and official letters regarding their account rendering reports. To the General Accounting Office of the Republic, they must present: Local Governments their financial statements and annexes with a deadline for submission for consolidation of national accounts in accordance with Accounting Closing Standards issued by the General Accounting Office of the Republic applicable for the current year.

All the administrative financial documents mentioned above must be presented to the General Directorate of Local Strengthening (DGFL) of the State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization, in electronic and physical version in original document, attaching the certification of the point of minutes of approval of the Municipal Corporation. The delivery date shall be that shown in the receipt stamp of the DGFL. The administrative financial documents indicated in numerals 3), 4), 5) and 6) of the previous article, shall be reviewed by the DGFL of the State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization, which within a period of thirty (30) business days shall issue an opinion thereon and notify the corresponding recommendations to the municipal corporation so that it may make the corrections (updates, implementations, modifications or extensions as appropriate) and shall return them to the same directorate within a maximum period of thirty (30) days from receipt of the notification. Failure to do so shall prevent the DGFL from issuing the final opinion and therefore the municipality shall be causing the retention of the disbursement of the respective transfer. In order to support the opinions and strengthen the culture of efficiency, effectiveness and optimization of public resources, the National Commission of Banks and Insurance (CNBS) must send to the DGFL of the State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization, the detailed records of loans that municipalities have with the different banking and credit entities in the country, for the purpose of verifying the thirty percent (30%) authorized by Article 168 of this Law, to commit transfer funds to payments of bank loans. Likewise, all public and private institutions that transfer funds to Local Governments in the concept of subsidies, bequests and donations, must provide this information to the DGFL of the State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization, for the purpose of identifying the source of financing, use and destination thereof, which shall facilitate that Office's compliance with the powers established in Article 29 of the General Law of Public Administration in relation to: Fiscalizing, on behalf of the population, the compliance with the Country Vision and National Plan by the different implementers, and coordination, liaison, supervision and evaluation of departmental and municipal regimes and Civil Society Organizations.

The State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization is ordered to retain and transfer from the respective transfers granted to Municipal Corporations or to port municipalities, among others, the fees in favor of: Fire Department, one hundred percent (100%) 1. of the amounts owed by the municipalities collecting the Fire Service fee; in Municipalities where this service exists, provided that the fire department has exhausted the path of reconciliation to subscribe payment plans between both institutions. After the agreement is signed, non-compliance with one of the payment installments shall result in the application of retention of the total amount owed from the following transfer, provided that the balances are reconciled by both institutions; The statutory fee to the Association of 2. Municipalities of Honduras (AMHON), calculated on one percent (1%) of real municipal current income contained in the Cumulative Annual Account Rendering of the year prior to the approval of the municipal budget. Associations of Municipalities, 3. the values corresponding to statutory fees or contributions of the Municipalities; prior to the application of retention, said organisms must present the document or other requirements established in the DGFL that supports the collection and budgetary execution in the Mancomunidades Account Rendering Module. All Mancomunidades that receive funds 4. from municipalities and are not rendering accounts to the Superior Court of Accounts (TSC), this body must identify them, communicate to the member municipalities about the non-compliance and at the same time require the receipt of delivery of the Account Rendering to the TSC duly registered and approved in the Mancomunidades Account Rendering module. Continue with the transfer of one percent (1%) 5. that is deducted from the transfer to the Municipalities; in accordance with Article 91 of the Law of Municipalities; the Municipal Corporations benefited by Decree No. 72-86 of May 20, 1986 (4% or 8% of the port municipalities), must equally contribute with one percent (1%) of their annual transfers, for the same purpose established in said Article. Said percentage must be credited to the Superior Court of Accounts (TSC) through Internal Resolution of the State Secretariat in the Office of Finance and using the automatic expansion procedure in the Integrated Financial Administration System (SIAFI), as disbursements are made to the municipalities; and, Upon prior request of the Honduran 6. Social Investment Fund (FHIS), National Program for Rural, Urban and Sustainable Development (PRONADERS) or the Institute for Community Development of Water and Sanitation (IDECOAS), the percentage corresponding to the local contribution of the municipalities benefiting from projects financed with resources from loans and donations signed with international organizations, as well as the amounts owed for non-compliance with Agreements and Contracts signed with the State financed with national funds. Such retention shall be made after notification to the municipalities that fail to comply with the payment of the municipal counterpart and Agreements and Contracts signed with the State.

Any debit made by the Central Bank of Honduras (BCH) to the accounts of the General Treasury of the Republic for payments corresponding to those indicated in Article 166 of this Law, shall be applied to the transfers listed in the General Budget of Income and Expenses of the Republic.

Municipal Corporations may commit up to thirty percent (30%) of the transfer funds for the payment of loan installments, when it comes to financing works whose investment is recoverable and the indebtedness is not greater than the Government period; otherwise, it must be approved by the National Congress.

In the case of the distribution and destination of the transfer established by the third paragraph of Article 91 of the Law of Municipalities and specifically with fifteen percent (15%) for annual administration expenses, and in the case of Municipal Corporations whose annual own income, excluding transfers, does not exceed Five Hundred Thousand Lempiras (L.500,000.00), they may allocate for such purposes double this percentage. That is, twenty-nine percent (29%), shall be allocated for own administration expenses, understood as administrative and operational expenses in equal parts, fourteen point five percent (14.5%) each, within the percentage of operational expenses, consider thirty percent (30%) for salaries and wages, provided it is proven that the annual current income received by the Municipality was increased by the same percentage.

In order to maintain a reliable and timely database on contingent debt, Municipal Corporations are obliged to provide to the State Secretariat in the Office of Finance, through the General Directorate of Public Credit, all information related to their public credit operations, such as: loan agreements, issuance of securities, disbursements and debt service payments, which must be submitted via fax, email or other means no later than thirty (30) days after the operation occurs. For the development of the implementation of Phase II of SAMI, the administration of the system and financial policy shall be carried out by the State Secretariat in the Office of Finance (SEFIN) and the implementation by the State Secretariat in the Offices of Human Rights, Justice, Governance and Decentralization (SDHJGD).

The transfers of port municipalities and municipal transfers are exempt from any deductions except those municipal obligations arising from Income Tax, Social Security and the National Institute of Retirement and Pensions of Employees of the Executive Branch, deductions to its workers and payments for public services in the concept of drinking water, electrical energy, telephone services or any other public service of the municipal corporations. SEFIN shall issue and send to each municipality within fifteen (15) days following the transfer, the corresponding settlement and the municipalities that do not agree shall present their objections to the corresponding institutions and these shall resolve within thirty (30) calendar days. The withholdings made by SEFIN must be paid to the corresponding institutions within a maximum period of five (5) business days, otherwise it will assume the responsibility that corresponds in law, provided that there are no outstanding accounts on the part of the service provider. Additionally, the Secretariat of State in the Offices of Human Rights, Justice, Governance and Decentralization (SDHJGD) in coordination with SEFIN shall issue an annual settlement of the amounts transferred to the municipalities and the amounts owed, during the first fifteen (15) days of January of each year.

The Subsystems of Budget, Treasury, Accounting, Collection Public Credit and Investment, in Local Governments and Associations of Municipalities, shall be managed through the Integrated Municipal Administration System (SAMI), which shall be the tool of official and mandatory use in the 298 municipalities of the country, which have a deadline to incorporate gradually until the year 2019 until completing one hundred percent (100%) as follows: In the year 2018 the Municipalities category A and B, and for the year 2019 municipalities category C and D. To achieve this objective the Secretariat of Finance in coordination with the Secretariat of State Human Rights, Justice, Governance and Decentralization, the Association of Municipalities of Honduras and cooperating organizations that contribute to the Local Governments Sector, shall promote the implementation of SAMI in compliance with what is prescribed in this Law and according to the previously established agreements. The Municipal Corporations that have signed an agreement and/or officially implemented the SAMI System shall account in said system. In case of non-compliance with what is indicated in this Article, the Secretariat of State in the Office of Finance is authorized to withhold any type of payment or transfer in favor of the corresponding Municipality.

Based on the fiscal emergency established in Decree No. 18-2010 of March 28, 2010, containing the Law of Fiscal and Financial Emergency, for the present Fiscal Year the suspension of Decree No. 368-2005 is ordered, concerning special monetary transfers authorized to the Municipal Corporations of the Central District and San Pedro Sula.

The Secretariat of State in the Office of Finance in coordination with the Secretariat of State in the Office of Human Rights, Justice, Governance and Decentralization and the Superior Court of Accounts, shall make available the uniform budgetary methodology of the Public Sector for Local Governments through the mandatory implementation of the Integrated Municipal Administration System (SAMI), which will strengthen the mechanisms of transparency, improvement in the provision of local public services, the strengthening of their capacities in matters of financial management and additionally the system will allow periodic accountability in electronic and timely form on the budget settlements for the calculation of the transfer, as well as the settlement thereof. XIV. IMPROVEMENT OF INCOME

State purchases of goods and/or services in which the payment of Sales Tax is applicable, the value of this shall be withheld in each payment document, this value shall be paid to the General Treasury of the Republic within ten (10) calendar days following the transaction. For purposes of the previous deadline, no withholding Institution may make use of these resources to finance expenses of any nature. What is established in the previous paragraph is applicable both to Decentralized Institutions and Deconcentrated ones and all Project Execution Units without exception, who as Withholding Agents must deliver to the provider of goods and/or services, the withholding receipt, so that they can verify before the Tax Administration Service (SAR) the amounts paid for this concept. In the case of the Central Administration, the foregoing results in an automatic operation at the moment of making the payment of the corresponding F-01 document.

When a State Institution must make any payment in favor of third parties, these must present proof of solvency in the payment of taxes and tax obligations, such proof must be issued by the Tax Administration Service (SAR). In case of not being solvent, the Public Institution shall apply the corresponding withholding.

Municipal Corporations shall require natural or legal persons with whom they have relationships as providers of goods and services, the presentation of the National Tax Register (RTN), prior to making any payment procedure.

Public Enterprises referred to in Article 53 of the General Law of Public Administration to determine the Income Tax for the present Fiscal Year, shall not be subject to the provisions of Article 22 A and its amendments contained in the Income Tax Law, but rather to those provided by Article 22 of said Law. Likewise, Public Enterprises for the present Fiscal Year shall not be subject to Advance Payments determined by Article 34 of the Income Tax Law. XV. VARIOUS PROVISIONS

All branches of Government: Central, Deconcentrated and Decentralized, shall assign and execute monthly based on collection notices and charged to their respective Budget, the services provided to them by the Honduran Telecommunications Company (HONDUTEL), the National Autonomous Service of Aqueducts and Sewers (SANAA), the National Electric Power Company (ENEE) or any other public or private institution that provides these services. Budget allocations intended for the payment of public services must be used solely to cover expenses incurred for these concepts, consequently, it is prohibited to make transfers of these expenditure items to cover commitments of different purpose. No Public Institution can shirk these obligations; in case of non-compliance the Administrative Managers or whoever acts in their place, shall be financially liable for the debts, charges and interest incurred, without prejudice to civil, administrative and criminal actions. All public institutions must conduct a review of electricity meters, water and telephone numbers in order to determine that the amounts charged effectively correspond to their institution, any payment made improperly shall be the personal responsibility of the Administrative Manager or whoever performs this function in the institution; the public service companies shall provide all necessary cooperation to carry out this review. The public service institutions mentioned in the first paragraph of this article are obligated to provide to the user departments of Government: Central, Deconcentrated and Decentralized, the detail of the collection of services provided during the period covered by the respective payment notices, they must also make the corresponding credits in the collection notices, when the State has used the compensation mechanism to settle debts between public service providers and public institutions. Quarterly the Administrative Managements or their equivalent in the Institutions of the Central, Deconcentrated and Decentralized Sector, shall simultaneously remit to the National Electric Power Company (ENEE), Honduran Telecommunications Company (HONDUTEL), National Autonomous Service of Aqueducts and Sewers (SANAA) and to the General Directorate of Decentralized Institutions of the Secretariat of Finance evidence of the budget execution of these allocations. The Internal Audit of each of the institutions in reference shall ensure compliance with this provision, in accordance with what is established in Article 119 of the Organic Law of the Budget.

All public institutions are ordered, including Project and Program Execution Units, to apply the Regulation of Per Diem and Other Travel Expenses previously homologated to the current Regulation of Per Diem and Other Travel Expenses for Officials and Employees of the Executive Branch, approved through Executive Agreement Number 0696 dated October 27, 2008. The values established in the Regulation of Per Diem and Other Travel Expenses of the Executive Branch correspond to the maximum allocations, therefore the institutions must adjust to the same and to those assigned in their Budgets. The Superior Court of Accounts shall verify compliance with this Article during the first quarter, sending a report to the Ordinary Budget Commission of the National Congress.

The President of the Republic or his/her designee shall authorize the Titular Officials of the Secretariats of State and Decentralized Entities for Travel Allowances and Other Travel Expenses outside the country; for other employees, authorization shall be granted by the Head of the respective institution. Every public official or employee must settle the travel allowances received in accordance with the determination of categories, zones, periods of missions, and limits for travel allowances established in the Travel Allowances and Other Travel Expenses Regulations for Officials and Employees of the Executive Branch. The supporting documentation shall be submitted for review by the Administrative Management Office or its equivalent in each institution, and in the event that falsifications or alterations are found, the total refund of the amount specified in the altered document or documents shall be made within no more than five (5) business days after notification, without prejudice to the administrative and criminal liability incurred.

Cash refunds of surplus travel allowances and other travel expenses shall be deposited to the General Treasury of the Republic or Institutional Treasury, accompanied by the respective deposit receipt and the travel settlement. If a trip is not taken, the value of the travel allowances and other expenses granted shall be refunded within no more than five (5) business days after receipt. Under no circumstance may these resources be used for other purposes.

Representation Expenses within and outside the country are the amounts determined for non-liquidatable expenses, inherent to the exercise of their functions, and are granted to officials in accordance with their position and responsibilities. These expenses are distinct from those referred to in the Travel Allowances and Other Travel Expenses Regulations for Officials and Employees of the Executive Branch. Such representation expenses shall be granted in the following amounts: to the President of the Republic and Secretaries of State, Twenty Thousand Lempiras (L.20,000.00); to the Under-Secretaries of State, Fifteen Thousand Lempiras (L.15,000.00); and to the heads of Decentralized Institutions and Deconcentrated Bodies, Fifteen Thousand Lempiras (L.15,000.00), provided that these officials earn a monthly salary equal to or less than that of the Secretaries of State; in the event that the head's salary is greater than that of the Secretaries of State, they shall not be entitled to representation expenses, and likewise, in cases where the institutions represented by the officials who seek to enjoy this right are in precarious financial situations and where deficiencies are evident in covering their operating expenses, in these cases such representation expenses shall not be granted. For other officials of the Executive Branch provided that they earn a salary less than that of an Under-Secretary of State, the authorization of representation expenses shall be made by the President of the Republic with a maximum amount of up to L10,000.00 and its validity shall only be for the present Fiscal Year.

The budgetary allocations of the Object Representation Expenses Abroad that appear in the Activities Diplomatic Representations and Consular Representations of the External Promotion and International Management Program of the Ministry of Foreign Affairs shall serve exclusively to cover expenses directly linked to the functioning of Embassies and Consulates Abroad and these must be liquidated. Article 185.- The spending allocations contained in the structures described below and which, by the nature of their functions, require an expedited administrative procedure, shall be transferred to bank accounts in the Central Bank of Honduras that shall be opened for each institution in the programmatic categories indicated here based on the disbursement plan and execution budgets that they present and whose management shall be the responsibility of the Administrative Manager of the respective Office, who must present reports of their execution to the President of the Republic, to the President of the National Congress, and to the National Defense and Security Commissions of the National Congress. In the Secretariat of State in the Office of Security: Program: 11 Community Prevention Police Services, Subprogram: 00, Project 00, Activity 01 Direction and Coordination of the Program, the allocations financed with funds from the Paris Club Debt Relief, source 27, Activity 02 Community Police Prevention Services, Activity 03 Services for the Prevention of Violence Against Women, Activity 04 Police Dissuasion and Control Services, Activity 05 Protection and Special Services, Activity 06 Police Control Services to Guarantee State Security, Program 12 Criminal Investigation Services, Subprogram 00, Project 00, Activity 02 Investigation Services, Activity 03 Investigation Services for Crimes Against Children, Family and Organized Crime, Activity 04 Anti-Narcotics Police Services. With respect to expenses incurred in favor of State Security, based on what is established in Article 17 of Legislative Decree No. 170-2006, expenses derived from budgetary allocations corresponding to Institutions 1, 20 and with respect to Institution 30, Program 99, Subprogram 00, Project 00, Activity 01 and Spending Object 99100 are classified as reserved information; In the case of Activity 03 Services for the Prevention of Violence Against Women of Program 11 Community Prevention Police Services, Subprogram: 00, Project 00 of the Secretariat of State in the Office of Security, the transfers of funds shall be disbursed in anticipated quarters in accordance with the annual plan presented before the Secretariat of Finance. In the Secretariat of State in the Office of National Defense: Program: 03 Strategic System of National Defense; Subprogram 00; Project 00; Activity 01 Superior Direction of the Armed Forces; Activity 002 Strategic Coordination and Planning. Program: 11 Defense of National Sovereignty and Territorial Integrity; Subprogram 01 Defense of Sovereignty and National Security in the Terrestrial Space Domain; Project 00; Activity 002 Protection of Sovereignty in the Terrestrial Domain; Activity 003 Maintenance of Operational Organization and Terrestrial Military Equipment; Subprogram 02 Defense of Sovereignty and National Security in the Airspace Domain; Project 000; Activity 002 Protection of Sovereignty in the Airspace Domain; Activity 003 Maintenance of Operational Organization and Aerial Military Equipment; Subprogram 03 Defense of Sovereignty and National Security in the Maritime Space Domain; Project 00; Activity 002 Protection of Sovereignty in the Maritime Domain; Activity 003 Maintenance of Operational Organization and Naval Military Equipment; Program 12 Operational Systems for National Security Matters and Preservation of Public Order; Subprogram 00; Project 00; Activity 002 Support Actions for Terrestrial, Aerial and Maritime Shields; Activity 003 Maintenance of Operational Organization and Logistical Equipment; Activity 006 Actions to Protect the Internal Sovereignty of the Republic and Activity 007 Maintenance and Preservation of Public Order to Strengthen Internal Security and the Defense and Security Cabinet. In the National Penitentiary Institute, Program 11. Penitentiary Treatment and Management, Subprogram 00; Project 00; Work Activity 02 Custody and Security of Persons Deprived of Liberty; Program 12 Comprehensive Service to Persons Deprived of Liberty; National Migration Institute, Program 11, Migration and Foreign Affairs Services, Activity 01, Superior Direction and Coordination, Activity 02, Migratory Matters, Activity 03, Passports, and Activity 04 Migrant Assistance Center. In the Secretariat of Human Rights, Justice, Governance and Decentralization, Program 14 Administration of the Protection System, Subprogram 00; Project 00; Activity 02 Risk Analysis, Prevention and Case Follow-up. It is understood that the resources managed through this mechanism must be annually liquidated and any surplus deposited in the General Treasury of the Republic within five (5) business days of the end of the Fiscal Year. The following are excepted from the foregoing: spending allocations contained in the Programs and Activities mentioned that refer to Transfers, Rentals, Insurance, Employer Contributions to Social Security and Welfare Institutions, Payment of the Thirteenth and Fourteenth Month of Salary and Contracting of Public Works, Public Services and Consulting Services which shall be executed following the moments of spending denominated: Pre-commitment, commitment and Accrual.

All institutions of the Central, Deconcentrated, and Decentralized Administration must register in the Integrated Financial Administration System (SIAFI) the readjustments to their Annual Operating Plan within the following thirty (30) calendar days after the publication of the General Budget of Income and Expenses of the Republic, accompanied by their corresponding Annual Plan of Purchases and Contracting as a prerequisite for the allocation of the respective quota, both for external resources and for their national counterpart, said readjustments must have prior authorization from the General Government Coordination Secretariat. Likewise, in order to ensure proper transparency in the use of public resources allocated for this purpose, the executing units must send to the Institute of Access to Public Information (IAIP) and to the Normative Office of State Contracting and Acquisitions (ONCAE) such plans so that the latter may incorporate them into the HONDUCOMPRAS portal. Similarly, State institutions that manage public funds and do not execute their budgets through SIAFI must send their Annual Plans of Purchases and Contracting. Municipalities are excepted from what is established in this Article. In the case of programs and projects financed with external funds, they shall be registered in the UEPEX module of SIAFI for the respective financial monitoring.

The use of official vehicles is prohibited during non-business hours and days; however, in exceptional cases and with proper justification, the heads of the departments may authorize the use of vehicles. The Administrative Management Office or its equivalent in each institution shall be responsible when a public official violates this regulation due to lack of the corresponding authorization or permit that authorizes its use during non-business hours and days.

All vehicles owned by the State and by municipalities that are assigned to the various institutions of the Central, Deconcentrated, and Decentralized Government must be properly identified with the National Flag and the emblem or logo of the institution to which they belong; the Superior Court of Accounts shall ensure strict compliance with this provision. The Superior Court of Accounts shall present quarterly reports to the Budget Commission of the National Congress and to the Presidential Office on compliance with this Provision.

Officials who use personal security and whose cost is covered by the State shall limit themselves to a maximum of two (2) persons. This provision does not apply to what is contemplated in Decree No. 323-2013 of January 15, 2014, which contains the Law of Special Protection for Officials and Former Officials at Extraordinary Risk.

In consonance with Articles 321 and 324 of the Constitution of the Republic, any titular official, governing body, or employee of State institutions (central, deconcentrated, and decentralized) who through negligence or carelessness gives rise to judicial sentences that condemn the State and cause financial resource expenditures is personally and jointly liable.

Works are prohibited on buildings that are not State property; however, conditioning may be carried out in physical spaces that do not exceed ONE HUNDRED THOUSAND LEMPIRAS (L100,000.00) annually in total; it being understood that conditioning refers to those improvements that are not permanent in nature and that allow adapting the physical spaces to the needs of the institutions.

The institutions of the Central Government, Decentralized and Deconcentrated Government, as well as national projects approved through trust contracts, which require services such as those provided by: the Honduras Postal Company (HONDUCOR), National Graphic Arts Company (ENAG), Honduran Telecommunications Company (HONDUTEL), National Basic Products Supplier (BANASUPRO) and the Military Industry of the Armed Forces (IMFFAA), shall mandatorily request quotes for such services in those places where these companies have coverage, giving them preference to obtain them, if the prices were equal to or lower than those offered by other companies operating in the market. In the interest of the principles of publicity, transparency and free competition, this requirement must be included in the invitation or call notice issued by the institutions. Prior to the process related to the acquisition of the services mentioned in the previous paragraph, the Administrative Managers must verify that the departments requesting them provide the aforementioned quotes.

All institutions of the Central Government, Decentralized and Deconcentrated Government that currently have outstanding debts with the National Graphic Arts Company (ENAG), for publications in the Official Gazette "La Gaceta" and for printing work must make payment from their respective budget of the Present Fiscal Year. Non-compliance with these payments will result in late payment interest and legal costs.

When the Central Administration pays public services on behalf of municipalities or any other institution, which according to the Constitution of the Republic or other special laws corresponds to a percentage or amount in concept of transfer, such amount must be charged to the corresponding budget credit, being considered as partial or total payment of the transfer as applicable. Likewise, the amounts that municipalities or any other institution owe in concept of taxes to the treasury shall be applied using this same mechanism.

The institutions of the Central Government, Decentralized and Deconcentrated Government are authorized to contract, charged to their respective budgets, individual fidelity bonds in favor of each of the natural persons who administer public goods and resources, to protect the funds and property of the State, determining the amounts of such bonds based on the Law of the Superior Court of Accounts and its regulations Article 126. In the insurance contract, it shall be stipulated that the insurer will collect from the insured public officials and employees, the payments made in favor of the State as a consequence of misuse and infidelity in the management of public property. The collection actions carried out by both the State and the insurance company must be carried out in accordance with the reports issued by the Internal Audit units of each institution and/or the Superior Court of Accounts. The payment made by the insurance company in compensation for the infidelity of the public official or employee in the management of public goods or resources does not exempt him from the civil, administrative or criminal liability that corresponds according to law.

Without prejudice to what is established in Article 31, numeral 2), letter c) of the Tax Equity Law, the Regulations of these Provisions must determine which other officials are recognized for the payment of cellular telephone service, as well as the maximum authorized monthly limits. When the official responsible for the use of the Cellular Service exceeds the authorized consumption, the administration of each institution must make the deduction from their respective assigned monthly salary.

In order to comply with the annual settlement of the General Budget of Income and Expenditures of the Republic, the State Department in the Finance Office is authorized to use, through the "Budget Modification Form," the available balances of allocations of various kinds that remain at the end of the Fiscal Year in the different State Departments and Deconcentrated Organizations, in order to make the budget increases or creations that may be necessary. The available balances of budget allocations must be used at the end of December, so as not to hinder the achievement of the objectives and goals established in the respective program and Annual Operating Plan.

In accordance with Article 118, numeral 1) of the Organic Budget Law, for the purposes of prior control of budget execution, the State Department in the Finance Office is instructed to continue with the function of control and monitoring of spending, for which it may conduct operations in the State Departments of Health, Education, Infrastructure and Public Services, National Electric Energy Company (ENEE), Supreme Electoral Court, National Registry of Persons or in any other institution of the Central Government, Decentralized and Deconcentrated Government that circumstances warrant. Budget Delegates shall be assigned by the State Department in the Finance Office in the different Administrative Departments and have the authority to review, prior to the acquisition of any commitment of goods and services, all procedural actions in order to verify if there is budget support and other necessary requirements for the realization of spending, with emphasis on aspects related to personnel contracting and initial public works contracts and their respective expansions.

Resources allocated to cultural or social institutions without profit motive must not be transferred to a purpose different from that for which they were assigned or executed for the benefit of a recipient different from the transfer. For the first payment, the presentation of the annual disbursement plan and liquidation report of the funds executed in the previous Fiscal Year will be required.

Institutions, programs and projects related by their performance to services of assistance, protection and social development, must incorporate the guidelines of the Policies of Social Protection and Integral Development of Early Childhood, in their Institutional Strategic Plans, as well as in their Annual Operating Plans and Budgets corresponding. The State Department in the Offices of Development and Social Inclusion shall be responsible for evaluating quarterly the compliance of commitments in matters of assistance and social protection provided for the population subject to attention, for which it shall generate the corresponding evaluation instruments. Therefore, institutions, programs and projects must submit within five (5) calendar days after the end of the quarter, a report on compliance with the Policies of Social Protection and Integral Development of Early Childhood.

When Contracts, Agreements, Decree Bills or any other legislative initiative are sent to the National Congress for approval, they must be sent in both physical and digital form to facilitate projection at the time of discussion and subsequent publication on the portal of this State Power.

Without prejudice to what is established in Article 78 of this Law, the acquisition processes for Insurance of the Central Government, Decentralized and Non-Centralized entities must be framed within the procedures established in the State Contracting Law and the regulations issued by the National Banking and Insurance Commission (CNBS). In compliance with what is established in Article 99 of the Law of Insurance and Reinsurance Institutions, it is prohibited for Public Social Security Institutes to directly contract Insurance and Bonds on their own property and those related to their credit portfolio through agents, brokers or brokerage firms.

Based on Article 9, fourth paragraph and Article 23, numeral 2 of the Organic Budget Law, it is established as a guiding instrument for medium-term fiscal policy for the period 2018-2020, which will be updated annually in accordance with policy guidelines, the behavior of macroeconomic variables, projected financial flows, as well as projections of income and expenditures of the Central Administration and the Non-Financial Public Sector. The Medium-Term Spending Framework 2018-2020 is framed within the Law for the establishment of a Country Vision and the adoption of a Plan of Nation for Honduras and is part of the General Budget of Income and Expenditures of the Republic for the current Fiscal Year.

In order to guarantee compliance with what is established in Articles 4 and 5 of the Organic Budget Law (Decree No. 83-2004), all institutions of the Central Government, Decentralized and Non-Centralized entities, must be operating in the Integrated Financial Administration System (SIAFI). Decentralized institutions that have an administrative, financial and accounting system must technically design and develop an interface with SIAFI; likewise, those that do not have an administrative, financial and accounting system must implement the Integrated Financial Administration System (SIAFI) to join the single account system. With each of the Institutions of the Decentralized Public Sector that are not operating in SIAFI, the State Modernization Unit and the General Directorate of Decentralized Institutions will establish a schedule of activities for system implementation; non-compliance with the activities and dates thereof will result in the measure of not transferring the national source by the General Treasury of the Republic; the implementation of SIAFI must be completed no later than the first semester of 2018.

Authorize the Secretary of State in the Office of Finance to, after reconciliation of amounts owed between institutions of the Powers—Legislative, Executive and Judicial—carry out account compensations and, if necessary, affect through the "Budget Modification Form" the budget items approved in this Law. For the current Fiscal Year, all telecommunications services provided by HONDUTEL to Central Administration institutions will be compensated with the amount it owes to the State for radio-electric fees, rate per external call (0.03 cents of Dollar), supervision fee, as well as the debt owed to SAR for taxes, among others.

The funds collected for four percent (4%) for tourist services, established in Article 43 of Decree No. 131-98 of April 30, 1998, must be incorporated by the Secretary of State in the Office of Finance to the Honduran Tourism Institute (IHT) and will be used expressly for promotion and encouragement of Tourism in the Country and to promote and encourage self-sustainability of said Institute; likewise, said values will not be subject to freezing or budget cuts and are excluded from any other restriction that may be applied to expenses financed with these resources; additionally, the F01s generated from these incorporations must be prioritized by the General Treasury of the Republic within a maximum period of (15) calendar days.

For the purpose of compliance with Budget Transparency and Accountability Indicators, the Secretary of State in the Office of Finance will make available to the population in digital and printed form the following documents during Formulation: Budget Policy Document, Sectoral and Institutional Ceilings, Medium-Term Macro Fiscal Framework, General Budget Proposal for Income and Expenditures of the Republic; during Approval and Execution: Supporting Budget Documents of the Proposal established in Article 23 of the Organic Budget Law, Approved Budget, Citizen Budget, Quarterly Reports, Mid-year Review and Year-end Report.

The budget allocation approved in the budget of the Secretary of State in the Office of Defense, specifically in Program 13 Naval Force for the lease with purchase option of six (6) interceptor boats and two (2) patrol boats, may not be transferred nor used for any purpose other than payment of the obligation derived from the signed Contract.

The distribution of values or seized assets administered by the Office of Seized Assets Administration (OABI) will be distributed in accordance with the percentages established by Law to guarantee the activities of Prevention and Protection of Women. The OABI must report quarterly to the Secretary of State in the Office of Finance and to the Superior Court of Accounts (TSC) and publish on its WEB site regarding the distribution of seized resources, and the institutions receiving seized assets must perform the corresponding budget and accounting records in the Integrated Financial Administration System (SIAFI); therefore, the Secretary of State in the Office of Finance is authorized to perform the necessary operations.

In accordance with what is established in Article 22, literal 1) of the Fiscal Responsibility Law, any commitment acquired by institutions of the Central Government, Decentralized and Non-Centralized entities, outside the allocations approved in the General Budget of Income and Expenditures of the Republic will not be registered in the Integrated Financial Administration System nor will it be recognized as public debt. The Secretary of State in the Office of Finance will not process any request for budget modification for this concept and is authorized to establish the pertinent regulations for the rejection thereof. Officials who authorize these commitments will be jointly and severally liable to honor the debts of these expenses.

The National Directorate of State Assets (DNBE) is authorized to carry out the sale of movable and immovable national assets that do not provide any utility to the State, in public auction, in accordance with the Opinion issued by said Directorate. From sales generated through public auction, the National Directorate of State Assets (DNBE) will obtain a Canon of TWENTY PERCENT 20.0% on the amounts collected for such purposes, as the managing body of said processes, funds that will be incorporated into its budget. The National Directorate of State Assets (DNBE) will act based on its Organization and Operating Regulations (Executive Agreement No. 226-2017) and will report to the Superior Court of Accounts (TSC) of the respective sales (30) thirty days after the sale is made. The DNBE must publish these sales on its WEB page.

The National Transit Directorate (DNT), Public Ministry (MP) and Supreme Court of Justice (CSJ) are instructed to comply with Decree No. 114-2007 as reformed, concerning abandoned vehicles. From the proceeds, FIFTY PERCENT 50% shall be allocated to the institution that owns the auctioned assets, TWENTY PERCENT 20% to the National Directorate of State Assets and the difference of THIRTY PERCENT 30% to the General Treasury of the Republic (TGR).

The National Directorate of State Assets is authorized to proceed with the direct sale of surplus merchandise from auctions that have fallen into abandonment in the various customs offices of the country, as well as in customs warehouses in the following cases: Merchandise 1. not awarded in public auction conducted by the former Executive Directorate of Income (DEI), which due to their physical conditions cannot be donated to state institutions or public charities; and, Vehicles that entered national territory whose 2. importation is prohibited by Law, in accordance with Article 21 of Decree 17-2010; those covered by the Special Law on Abandonment of Motor Vehicles contained in Decree 245-2002 dated July 17, 2002, concerning vehicles that are in deposit in the courts of the Republic and other administrative bodies are excluded. Prior to the sale, the Customs Valuation unit must issue the corresponding opinion on the value of the merchandise. When the sale concerns vehicles, these must be sold as scrap, and the buyer is obliged to dismantle them, which shall be carried out under the supervision of the Customs Authority. The Administrative Authority of the State Customs Service in coordination with the DNBE, within twenty (20) days after the entry into force of this Decree, must issue the Regulation of this Article. Financial resources generated from the sales established in this Article and in the preceding one shall be deposited in the Single Account of the General Treasury of the Republic (TGR).

No vehicle that has been sold in parts or as scrap may circulate in the National territory; therefore, the Property Institute (IP) shall not authorize the registration of the complete vehicle, but may register the engine, chassis or cabin.

The Cabinet Ministers coordinating Sectoral Cabinets shall execute the resources allocated to each Cabinet in accordance with the organizational structure and operating rules that shall be established by the General Government Coordination Secretariat through the Presidential Directorate of Strategic Planning, Budget and Public Investment, with the objective of ensuring compliance with the functions defined for each Sectoral Cabinet in the Executive Decrees PCM-001-2014 and PCM-024-2014.

The Secretary of State in the Finance Ministry is authorized to continue the Solidarity and Social Protection Fund for the Reduction of Poverty in the General Budget of Income and Expenses of the Republic with the proceeds from the application of the Public Finance Ordering Law, Control of Tax Exemptions and Anti-Evasion Measures. The proceeds from the aforementioned law shall be reviewed quarterly and as they are collected, they shall automatically be incorporated into the budget and allocated to said Fund until reaching four thousand five hundred million Lempiras (L.4,500,000,000.00); the amounts collected after completing this amount shall serve to finance programs and projects aimed at health, education, security and infrastructure and others related to Article 45 of Decree No. 278-2013, Law on the Ordering of Public Finances, Control of Tax Exemptions and Anti-Evasion Measures. From the aforementioned fund, the Trusts financed by this Solidarity and Social Protection Fund for the Reduction of Extreme Poverty shall be increased to be executed by the Government of the Republic, as well as to finance the obligations arising from the application of said law.

Exempt the BCH from the payment of all types of taxes related to the importation in the purchase of bank bills and coins, as well as the exportation of bills in foreign currency.

For the purpose of optimizing the use of State resources during the current fiscal year, the various institutions of the Central Administration are prohibited from contracting advertising and propaganda services. Resources for these purposes shall be centralized in the Budget of the Presidency of the Republic, which is the only authority authorized to execute and expand this budget item. In case these services are required by the institutions, they must submit the corresponding request to the President of the Republic.

The use and administration of the funds from the Public Security Rate shall be applied in accordance with Decree No. 105-2011 containing the Law on Public Security and its reforms; favoring actions in favor of women's security.

Policy initiatives or plans for modernization or digital government, promoted by the Sectoral Cabinets or by certain public sector institutions, must be brought to the attention of the General Government Coordination Secretariat, through the Presidential Directorate of Transparency, Modernization and State Reform, in order to achieve efficient coordination in their execution.

The General Government Coordination Secretariat, through the Presidential Directorate of Transparency and State Modernization, through the National Office for Comprehensive Internal Control Development (ONADICI), shall instruct the Highest Authorities of all institutions, programs and projects of the Executive Branch, so that in budget execution, internal control processes are established in accordance with the policies established in the general rules issued by the Superior Court of Accounts and the regulations developed by ONADICI. These internal control processes shall be subject to permanent and systematic monitoring with the participation of the Institutional Internal Control Committee (COCOIN), the Internal Audit Units and the support of ONADICI. Failure to comply with this obligation gives rise to the administrative sanctions established in the Organic Law of the Superior Court of Accounts.

In compliance with the Fiscal Responsibility Law (LRF), all institutions of the Decentralized Sector must submit within the first ten (10) days after the end of the month, to the Macro Fiscal Policy Directorate (DPMF) of the State Department of Finance, the monthly report on their respective budget execution and the balance sheet of sums and balances in the format of the Single Chart of Accounts of the General Accounting Office of the Republic.

In compliance with the Fiscal Responsibility Law (LRF), the Municipal Governments shall report budget execution figures at least in the Local Government Reporting module (RENDICIONGL), within the framework of the Integrated Municipal Administration System (SAMI) described in Article 165 of this Law.

The provisions established in the second paragraph of Article 39 of Decree 56-2015, containing the Social Protection Framework Law, are hereby suspended.

Reform Article 3, numeral 1), subsection c) of the Fiscal Responsibility Law contained in Decree No. 25-2016 of April 7, 2016, which shall read as follows: "c) Payment arrears that arise during the Fiscal Year from accrued expenses financed with national funds generated by the Central Administration at the close of the fiscal year from the approval of this Law, may not in any case exceed zero point five percent (0.5%) of the Gross Domestic Product (GDP) in nominal terms".

BANHPROVI is authorized to grant loans to those affected by the events generated in the Country following the General Elections of November 2017; merchants who avail themselves of this benefit may receive up to a maximum of TWO MILLION LEMPIRAS (L 2,000,000.00) at a subsidized rate of FIVE PERCENT 5.0%, and they must verify that they reported the situation and that they do not enjoy insurance that could be executed against this type of situation. The financing of these loans shall be obtained from the existing trusts that BANHPROVI currently holds, so the Bank shall identify them and prepare the detail of the requirements to be benefited from said loans, as well as all the necessary documentation to formalize the granting of these.

State institutions shall publish on their WEB page, through the Administrative Management offices, the settlements presented by the beneficiary institutions of all transfers allocated in the budgets prior to making a new disbursement.

Considering the reengineering process that will be carried out during 2018 in the Deputy Directorate of Customs Revenues (DARA), the State Department of Finance is authorized to proceed, from the available balances of DARA's budget when the aforementioned process takes place, to finance the new institution that results from said process and create the structures deemed necessary for both current expenditure and capital expenditure, which shall be subject to the review conducted by the General Budget Directorate of the State Department of Finance.

To continue the Departmental Development Fund, which shall be composed of an annual contribution of at least FOUR HUNDRED MILLION EXACT LEMPIRAS (L. 400,000,000.00) that the State shall make through the State Department of Finance. Said funds shall be allocated for execution by the Deputies of the National Congress to community projects, investment in works and equipment, or assistance in social areas in the different departments of the country. The resources for these programs and projects shall be disbursed by the State Department of Finance to a specially enabled account in any of the banks, for each of the 128 principal deputies of the National Congress and the incorporated substitutes. For the implementation of the Fund, the Board of Directors of the National Congress and the State Department of Finance must execute within 60 days following the publication of this Decree an agreement, which shall establish the procedure for management and settlement of the Fund. The Deputy must present a settlement report to the State Department of Finance and this shall timely report to the President of the National Congress. The account enabled by each deputy for the management of the funds must be audited annually by the Superior Court of Accounts (TSC); for this purpose, FORTY-FIVE MILLION LEMPIRAS (L45,000,000.00) shall be added to its budget. As long as TSC does not have solvency, the Deputy may not access the resources allocated to the Departmental Development Fund for the following Fiscal Year. The Superior Court of Accounts (TSC) must approve within 30 calendar days following the publication of this Decree a Regulation which shall regulate the oversight of the administration and execution of resources. The disbursement and use of funds are subject to the approval of the aforementioned Regulation.

For the purpose of making transparent the use of resources corresponding to the Departmental Development Fund approved to Parliamentarians for the execution of programs and projects in the different communities either directly or through any natural or legal entity, a period of up to three (3) years is established for the execution of said funds to be audited from the Government periods 2006-2010, 2010-2014, 2014-2018. The auditing entity shall be the TSC; for these purposes, the State Department of Finance shall annually allocate the corresponding budget for this activity.

Authorize the Fund Management Company for Reciprocal Guarantees CONFIANZA, S.A. FGR, to issue guarantees for credits in national currency up to the amount of FIFTY THOUSAND DOLLARS OF THE UNITED STATES OF AMERICA (US$50,000.00), from the following Funds: Agricultural Reciprocal Guarantee Fund, Guarantee Fund for Micro, Small and Medium Enterprises, Guarantee Fund for Social Housing and the Guarantee Fund for Technical and Higher Education. The Fund Management Company for Reciprocal Guarantees CONFIANZA, S.A. FGR, is authorized to make internal transfers of the different Reciprocal Guarantee funds, in order to expedite the issuance of guarantees in the areas with greatest demand.

Authorize the Secretary of State in the Department of Finance, so that in the year 2018, it shall transfer to the Fund Management Company for Reciprocal Guarantees CONFIANZA, S.A. FGR the amount equivalent in national currency of ONE HUNDRED THOUSAND DOLLARS OF THE UNITED STATES OF AMERICA (US$100,000.00), coming from the Trust Fund for the Reactivation of the Agricultural Sector (FIRSA) with the objective of capitalizing the Fund Management Company, based on reimbursable financing and capital investment (HO-Q0003), subscribed between the Inter-American Development Bank (IDB) and the Fund Management Company for Reciprocal Guarantee CONFIANZA S.A. FGR.

The Secretary of State in the Departments of Infrastructure and Public Services (INSEP) is authorized to make payment from its assigned budget for Fiscal Year 2018 and through the General Treasury of the Republic (TGR), in favor of the current concessionaire and for the concept of tariff adjustment corresponding to the year 2017, within the Concession Contract "Logistics Corridor-Goascorán – Villa de San Antonio and Tegucigalpa-San Pedro Sula – Puerto Cortés".

Exempt the Association International Christian Love "Orphanage Emmanuel" from the payment of consumption of Electrical Energy, with the objective that said association allocate it to health and education areas, among others. Said association is forgiven the overdue balances, fines and accrued interest that as of the date of approval of this Decree it owes to the National Company of Electrical Energy (ENEE).

Exempt the ASSOCIATION OF EVANGELICAL INSTITUTIONS OF HONDURAS (AIEH) with Legal Status granted in accordance with Agreement No. 18 of July 20, 1970, from the payment of ordinary and default interest, fines, charges or surcharges caused by the delay in administrative and judicial proceedings accumulated by the amount of FIVE MILLION FOUR HUNDRED TWELVE THOUSAND SEVEN HUNDRED NINETY-FIVE LEMPIRAS WITH NINETY-SEVEN CENTS (L. 5,412,795.97), derived from the obligations contracted with the Social Fund for Housing (FOSOVI) and those that are generated upon the effective date of this Decree.

The Executive Power through the Secretary of State in the Department of Finance shall regulate these General Provisions within a term of thirty (30) days, counted from the effective date of this Law. XVI. REFORM OF THE ORGANIC LAW OF THE BUDGET

Reform Article 16 of the ORGANIC LAW OF THE BUDGET, through the addition of a paragraph and add Article 131-A, to the aforementioned Law, which is contained in Decree No. 83-2004, dated May 28, 2004, which from now on should be read in the following manner: "ARTICLE 16. BODIES AUTHORIZED TO CONDUCT THE ADMINISTRATION OF PUBLIC RESOURCES. The administration of public resources corresponds, according to its ownership, to the Executive Power, through the Secretary of State in the Department of Finance, to the respective decentralized institutions or to other public bodies that by law have been assigned this authority. The National Congress and its Deputies have equal authority to request, manage, receive, administer and execute public funds from any source, including outsourced or decentralized funds, intended for community development projects, social assistance and the Strengthening of Governance and Democracy.

A.- LIQUIDATION OF PUBLIC FUNDS INTENDED FOR THE EXECUTION OF PROJECTS OR SOCIAL ASSISTANCE. In application of Article 123 of this Law and related laws, the Superior Court of Accounts (TSC) is ordered to conduct a Special Audit and Investigation of all public funds managed, received, administered and executed by Public Servants, Deputies to the National Congress, Non-Governmental Development Organizations (ONGD), Private Development Organizations (OPD's), Foundations and in general all those natural or legal persons who receive or administer public funds of any kind, whatever their origin, included in the government periods 2006-2010, 2010-2014, 2014-2018. The aforementioned funds include both the Departmental Planning Social Fund, the Departmental Development Fund, subsidies or any other name given to the funds intended for the execution of community projects or social assistance in the different departments, including those outsourced or decentralized. Also included are Social Investment Expenses and those related to the Strengthening of Governance and Democracy that are executed through public and private law institutions created to achieve the effective political participation of citizens. Said audit and Special Investigation by the Superior Court of Accounts (TSC) must be conducted within a period of three (3) years after the publication of this reform, for which the TSC shall approve a special regulation. All documents related to said funds must be sent and delivered to the TSC to perform the corresponding audit, by whoever possesses them or at the simple request of the latter. Once the audit and special investigation are completed in accordance with the Law and the Regulation of the Superior Court of Accounts and it finds findings, it shall determine the civil, criminal or administrative responsibility that corresponds in Law, notifying the corresponding entities in each of the cases; or otherwise granting its clearance; while the audit and special investigation is in process and until the administrative proceeding has been exhausted and it has the character of final and enforceable, no judicial action shall proceed to claim any type of responsibility, whether administrative, civil or criminal."

This Decree shall enter into force as of the day of its publication in the Official Newspaper "La Gaceta". Given in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the eighteenth day of the month of January of two thousand eighteen. ANTONIO CÉSAR RIVERA CALLEJAS PRESIDENT ROMÁN VILLEDA AGUILAR SECRETARY SARA ISMELA MEDINA GALO SECRETARY Therefore: Let it be Published