Decree 171-2019

Be it approved as an estimate of revenues of the Central Administration for Fiscal Year 2020, the sum of ONE HUNDRED FIFTY-FIVE THOUSAND FOUR HUNDRED EIGHTY-THREE MILLION ONE HUNDRED EIGHTY-ONE THOUSAND FIVE HUNDRED THIRTEEN LEMPIRAS EXACT (L155,483,181,513.00) according to the details described below:

Be it approved as an estimate of revenues of the Decentralized Administration for Fiscal Year 2020, the sum of ONE HUNDRED TWENTY-SIX THOUSAND EIGHT HUNDRED FIFTY-TWO MILLION THREE HUNDRED SEVENTY-TWO THOUSAND THREE HUNDRED FORTY-TWO LEMPIRAS EXACT (L126,852,372,342.00), according to the details described below: CHAPTER II OF THE EXPENSES OF PUBLIC ADMINISTRATION

The expenses of the Public Administration for Fiscal Year 2020, by Institution, Sectorial Cabinet and Financing Source, are approved by the sum of TWO HUNDRED EIGHTY-TWO THOUSAND THREE HUNDRED THIRTY-FIVE MILLION FIVE HUNDRED FIFTY-THREE THOUSAND EIGHT HUNDRED FIFTY-FIVE LEMPIRAS EXACT (L.282,335,553,855), according to the details described below: With instructions from the Ordinary Budget Commission of the National Congress and through the use of budget modification forms (FMP-05) of the Integrated Financial Administration System (SIAFI), it authorizes the State Secretariat in the Office of Finance, to make the necessary adjustments to the General Budget of Income and Expenses of the Republic for Fiscal Year 2020, affecting the structures that are necessary. The budgetary allocations or reallocations approved by the National Congress may not be modified internally by the Institutions or the State Secretariat in the Office of Finance. When a modification is required, the corresponding initiative of Law must be presented to the National Congress.

For Fiscal Year 2020, the articles of the General Provisions of the General Budget of Income and Expenses 2019, contained in Decree No. 180-2018 and its reforms, Decree 4-2019 and its reforms, are ratified, even if they change their wording, present or add small changes, which do not modify the spirit of these: CHAPTER III I. STANDARDS OF BUDGETARY EXECUTION

Non-compliance and violations of the Standards established in this Law, when not specifically sanctioned, shall be penalized with fines ranging from three (3) minimum wages to thirty (30) minimum wages, which shall be imposed by the General Office of the Public Prosecutor (PGR) to the violators, based on the administrative procedure applicable for this purpose by the Superior Court of Accounts (TSC), according to its severity, without prejudice to the other administrative, civil and criminal liabilities that may apply. The amounts from the fines established here shall be entered into the General Treasury of the Republic and these revenues shall be granted to the Superior Court of Accounts (TSC) and to the General Office of the Public Prosecutor (PGR) up to twenty percent (20%) for each institution, with the purpose of financing expenses related to the actions of review and compliance with this Law. Therefore, the State Secretariat in the Office of Finance is authorized to refer all cases of non-compliance and/or violations of this Law to the Superior Court of Accounts (TSC) for it to carry out the actions that correspond to it in coordination with the General Office of the Public Prosecutor (PGR).

The General Government Coordination Secretariat (SCGG), through the Presidential Directorate of Monitoring and Evaluation, shall conduct 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. For this purpose, it shall prepare an annual report on the progress of overall results and respective indicators established in the Government's Strategic Plan. Said report shall be published on the SCGG 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 (AIP) and to the National Congress through the Ordinary Budget Commission. In order to comply with what is established in the previous paragraph, information related to progress in indicators must be recorded periodically by the corresponding bodies in the Presidential Results Management System (SGPR) and presented through reports containing the progress in policy measures, at the request of the General Government Coordination Secretariat (SCGG).

The General Government Coordination Secretariat (SCGG) shall conduct monitoring of institutional planning at the level of results and production of goods and services delivered to the citizenry. For this purpose, the SCGG shall generate monthly reports from the Presidential Results Management System (SPGR) on the progress of physical execution of institutions and shall prepare the respective quarterly reports and an Annual Report. Said reports and reports shall be based on the programming that public sector institutions carry out in the SPGR. These must present information related to budget execution generated by SIAFI and what is allocated in the trusts. Monthly reports shall be sent to the Heads of public institutions in order to improve their management. The Quarterly Reports shall be sent to the Heads of the Sectorial Cabinets, as well as to the Secretariat of Finance. In order to comply with what is established, information must be registered by Public Sector institutions mandatorily in the Presidential Results Management System no later than ten (10) calendar days after the end of the month.

All institutions of the Government: Central, Decentralized and Deconcentrated, must officially send within the first fifteen (15) days of the month following the end of the quarter to the State Secretariat in the Office of Finance, the quarterly report in digital format by delivering 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 in accumulated form 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 the institutions of the Government: Central, Decentralized and Deconcentrated, without exception, in accordance with the Technical Standards and Procedure Manuals of the Subsystems of Budget, Treasury, Accounting, Public Credit and Public Investment approved by the State Secretariat in the Office of Finance, based on the information recorded mandatorily in the Integrated Financial Administration System (SIAFI); the financial information must be recorded by each institution no later than the last day of each month and the physical information the first 5 working days after the end of the month. Likewise, consideration must be given to the information available in the National System of Public Investment of Honduras (SNIPH), in the System of Administration of Human Resources (SIARH), System of Registry of Public Employees (SIREP), Teaching Administration System (SAD), System of Management and Administration of Debt (SIGADE) and the System of Monitoring and Evaluation (SME). When the results obtained are not in accordance with what was programmed, the State Secretariat in the Office of Finance is authorized to reduce the amounts programmed in the Monthalized Program of Expenses (PGM), as well as reduce the budget pending commitment for its accrual. Prior to the State Secretariat making the decision to reduce said amounts, it shall communicate with the General Government Coordination Secretariat and it shall be this Secretariat that must ensure that such measure does not affect the achievement of Government priorities. The State Secretariat in the Office of Finance shall send no later than fifteen (15) days after receiving the information, the quarterly report of monitoring and evaluation of institutional budget execution in digital format by delivering one CD (in total 12 CDs) to each of the following bodies: Secretary of the National Congress (1), General Government Coordination Secretariat (1), Superior Court of Accounts (1), Institute of Access to Public Information (1), Ordinary Legislative Budget Commission (1) and to the heads of each of the Congressional Benches (7). Likewise, the State Secretariat 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 Secretariat. Once said reports are analyzed, the Ordinary Legislative Budget Commission based on the powers of the National Congress, shall carry out the actions that based on law it considers appropriate. The Ordinary Legislative Budget Commission together with the representations of the different accredited benches that make up the National Congress, shall analyze the reports and when it so requires shall hold Public Hearings with the institutions of the Government: Central, Decentralized and Deconcentrated, in order to exercise a control, financial and operational function, for which they shall require from the Office of the Presidency, the General Government Coordination Secretariat, the State Secretariat in the Office of Finance and the Superior Court of Accounts the technical support that is deemed appropriate; after said Hearings are concluded, the Ordinary Legislative Budget Commission of the National Congress shall prepare a matrix containing the contributions of the hearings and shall publish it on its WEB site. II. OF THE GENDER APPROACH IN THE GENERAL BUDGET OF INCOME AND EXPENSES OF THE REPUBLIC.

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 transversal manner, the application of the II Plan for Equality and Gender Equity in Honduras 2010-2022 (II PIEGH) and 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 Public Administration. For this purpose, the departments and entities must consider the following:

• 1)

  In their institutional Strategic Plan at the level of objectives and results the commitment to reduce substantive inequality gaps between men and women; In their Operating Plan, contemplate products and activities/work with budgetary allocations, under the logic of the public value chain and production, that account for concrete actions to achieve gender equality in each public entity;

• 2)

  Generate information disaggregated by gender (sex, ethnicity, age, department, municipality, among others) through programs, projects, services and activities carried out by public entities; and,

• 3)

  Define and apply indicators that allow visualizing progress regarding the implementation of the Women's City Program, II PIEGH and the National Plan Against Violence Towards Women 2014-2022;

• 4)

  In order to promote and monitor the application of the II Plan for Equality and Gender Equity in public management and the directives of this article, in accordance with Article 8 of the Regulation of the Law of Equal Opportunities for Women, each Institution shall create the Gender Unit financing its creation with resources from its own budget, without demanding additional resources for its operation, following the guidelines issued by the National Institute of Women in the Manual of Organization and Functions of Gender Mechanisms. The National Institute of Women (INAM) as the Governing Body of Policies in favor of women's rights and gender equity, must issue the technical and operational guidelines for the formulation of planning and budgets with a gender approach, in coordination with the entities that govern the Planning and Budgeting processes (General Government Coordination Secretariat through the Presidential Directorate of Strategic Planning, Results-Based Budgeting and Investment and the State Secretariat in the Office of Finance). The State Secretariat in the Office of Finance shall issue the Budgetary Policy Guidelines for the Formulation of Public Sector Budgets, gathering the consensual contributions of the Governing Body of Gender Policy. The National Institute of Women (INAM) shall apply annually the gender equity investment index, as an internal mechanism for monitoring and evaluation of public management in terms of gender equity. For this purpose, State institutions must submit a report on their allocation and budget execution with a gender perspective. The application of this Index shall also constitute a mechanism of incentive for public entities that comply with gender equity goals and plans, either through the expansion of budget ceiling or avoiding budget cuts in the following period to those institutions that report greater investment in gender. The Legislative Budget Commission in coordination with the Legislative Commission for Gender Equity of the National Congress and the National Institute of Women (INAM), shall conduct a semi-annual monitoring of the execution of expenses of public management in terms of gender equity, through public hearings. For this purpose, the state departments and entities shall be convened to said public hearings and shall have the responsibility of preparing reports on their investment in favor of women's rights and gender equity. The Gender Equity Commission of the National Congress shall coordinate this process with the National Institute of Women (INAM) and representatives of Women's Organizations of Civil Society.

The National Directorate of the Women's City Program (Institution No. 244), constitutes one of the relevant operational programs to advance the implementation of public Gender policies, created by Executive Decree No. PCM-031-2016 of March 15, 2016, and elevated to the rank of National State Policy through Legislative Decree No. 159-016 of November 29, 2016 with the purpose that it be mandatory for all governments that assume the leadership of the State. To comply with the above, each of the State institutions involved and participating in the Program is instructed to pay the expenses for the functioning of the modules under their jurisdiction within each Women's City Center, including the payment of supplies and assigned personnel, in accordance with what is established in the Operating Manual of the Program, Framework Agreement for Interinstitutional Cooperation for the Enabling, Operation, Regulation and Sustainability of the Women's City Program, and in the operating protocols. Said budget must be itemized differently at the level of Activity/Work and identified in the Annual Operating Plan of each of the participating institutions, the funds allocated to the different modules of Women's City must be used solely to cover expenses related to the operation of said modules, consequently, it is prohibited for participating institutions to make transfers to cover commitments of a different purpose.

The non-compliance with Articles 6, 7, 8 and 9 of this Law, by the official head of the State Secretariats, Decentralized 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 Secretariat in the Office of Finance to the offending institutions until said situation is remedied. III. OF INCOME

All institutions of the Public Administration that generate or receive income, whether from their own activities, contingent or arising from existing laws, shall deposit in the General Income Account that the General Treasury of the Republic maintains in the Central Bank of Honduras (BCH) the total thereof 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) and the official online receipt TGR-1 defined by the General Treasury of the Republic. In the case of Decentralized Institutions that based on their Special Creation Law are obligated to remit their own resources to the General Income Account of the General Treasury of the Republic, they must proceed based on the aforementioned mechanism. The State Secretariat 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 agencies, provided that the capture thereof is demonstrated, to these resources the deduction of the amounts charged by the Banking System for collection services shall be made. The institutions described below are excepted from the foregoing; to which the following percentages shall be authorized: The following 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 Secretariat in the Office of Finance may authorize the incorporation of fifty percent (50.0%) of own resources that have been received, incorporated and not executed in the previous period, the General Treasury of the Republic must immediately prioritize the F01s generated against these resources.

It is authorized for all State institutions that receive deposits in the national banking system by citizens and companies for the concept of payments for services rendered within their competence, which may come through electronic payments, among others. All resources must be incorporated into the State's single account no later than ten (10) days after the end of each month.

It is authorized for the State Secretariat in the Office of Finance to incorporate in the budget of the Customs Administration entity, one hundred percent (100%) of the amounts that companies deposit as operational fees for the customs surveillance and supervision service that this Institution provides to Companies under special regimes, deposit warehouses, temporary deposits and other resources that are received and 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 contract salaries and collateral items of human resources working 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 carry out supervision work directly or through third parties. In the same manner, it may have available what is necessary to implement control mechanisms in supervised companies and any other expense required for the proper functioning of the institution.

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 National Financial System certified for the use of the Official Receipt (TGR-1) of payment defined by the TGR. Income that the National Telecommunications Commission (CONATEL) receives abroad from the issuance of Radio Licenses paid by shipowners and ship or vessel lessors, as well as income from registration in the Ship Registry and from the issuance of the Navigation Patent collected abroad by the General Directorate of the National Merchant Marine must be recorded 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 such amounts to the Account established by the General Treasury of the Republic, and these collecting agents shall inform said Treasury no later than two (2) business days after collection.

The non-tax income payment receipt TGR-1 online must be used mandatorily as proof of all payments that must be made in favor of the National Treasury and the payments of Own Resources of Secretariats and Institutions included within the scope of the Unique Treasury Account.

Income received from actions executed by the General Attorney of the Republic (PGR) before Courts or Tribunals resulting from operations carried out by the Court of Accounts (TSC) must be deposited in the General Treasury of the Republic in accordance with the provisions of Article 12 of this Law. From such income, the percentage established in Article 34 of the Public Finance Ordering Law, Control of Exemptions and Anti-Evasion Measures, Decree No. 278-2013 dated December 21, 2013 may be distributed for the Court of Accounts (TSC), municipal governments and the General Attorney of the Republic (PGR). Income received from the intervention of the General Attorney of the Republic (PGR), at the request of other Institutions, must be deposited in the unique 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 Secretariat in the Offices of Labor and Social Security and in which the General Attorney of the Republic (PGR) intervenes, to companies that commit infractions, said Office shall be assigned ninety percent (90%) of the percentage established in the previous paragraph. When the income is due to a finding that caused detriment to the patrimony of a Municipality or institution created by it, ninety percent (90%) of the recovered funds must be returned to the Municipality.

All Public Administration Institutions to which a percentage is allocated for budget expansion based on the own resources mechanism established in Article 12 of this Law must present to the General Budget Office (DGP) within thirty (30) calendar days of the month following the generation of such income, the necessary documentation to prove that the amounts generated have been deposited in the General Treasury of the Republic (TGR), if they fail to comply with the deadline established in this rule, the right to claim such resources is lost; the State Secretariat 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 Expenditures of the Republic, the Executive Branch is authorized to, through the State Secretariat in the Office of Finance, periodically incorporate the surpluses into the General Budget of Income and Expenditures of the Republic through the budget expansion procedure, and must notify the National Congress through the Ordinary Budget Commission of the execution of the aforementioned increase. Such resources may not be allocated to increase: 1) The budget of institutions that receive a percentage established by Law; 2) The allocations for Salaries and Wages of permanent or temporary personnel; and, 3) The hiring of consultants. These resources and those generated by the recovery of loans granted by the forced liquidation operations of Financial System Institutions shall be allocated solely for:

• 1)

  Reducing the use of internal or external credit;

• 2)

  Paying off the debt balance that has less favorable conditions;

• 3)

  Paying the Debt Service; and,

• 4)

  To address matters of national interest/priority. Equal treatment shall be given to recoveries and remainders of funds granted for payment to investors and/or depositors who were harmed by said forced liquidation and these shall be allocated to address 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 as the result of subtracting the following concepts from Total Income:

• 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, amended by Decree No. 166-2011 dated September 6, 2011 (Population Security Law);

• 5)

  The amounts collected as own resources;

• 6)

  The amounts paid to the national banking system for the collection service;

• 7)

  The Return of taxes;

• 8)

  Returns for overpayments made in Previous Fiscal Years;

• 9)

  The applicability of Credit Notes;

• 10)

  The collection of 4.0% of Tourist Fee allocated exclusively for the IHT;

• 11)

  Amounts allocated to cover the Government Civic Center; and,

• 12)

  Those intended to fulfill specific social commitments such as the 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 (TGR) 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 Public Sector institutions that appear approved in the General Budget of Income and Expenses of the Republic, shall be subject to the amount collected in the present fiscal year, regardless of the approved amount, as established in the previous article; in this sense, the State Secretariat of the Finance Office shall notify of the amounts that will not be granted so that institutions carry out the reprogramming of their POA and Budget, both in the Integrated Financial Administration System (SIAFI) and in the Presidential Results Management System. The provisions of this rule are also applicable to transfers made to private sector institutions that are financed with National Treasury resources.

Any additional requirement for resources from the National Treasury source (11) by the Institutions of the Central, Decentralized and Deconcentrated 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 their own budget through a physical and financial reprogramming of their objectives and results in accordance with the Technical Standards of the Budget Subsystem. To make such reprogramming, counterparts of projects that are being financed with External Funds should not be considered.

The State Secretariat of the Finance Office is authorized to finance, from the available amount of the Trust Fund called Fund for Investments in Telecommunications and Information Technologies (ICTs), considered as Seed Capital contained in Legislative Decree No. 136-2015 which gives it origin and which is deposited in the General Treasury of the Republic, the Transformation of the Normal Schools of the Country, Permanent Teacher Training Center for In-Service Teachers, Higher Level Educational Centers, University Regional Centers or other Higher Education Centers, as well as the Program for the training of Human Resources to support the business process outsourcing industry and the operation of priority programs of the Education Secretariat such as: National Literacy Plan, Expansion of Third Cycle of Secondary Education Coverage and Higher Education for all Municipalities and Presidential Program "English for a Better Life".

When a State institution must make a payment in favor of third parties, they must present proof of solvency in the payment of taxes and tax obligations, said proof must be issued by the Tax Administration Service (SAR), in case the taxpayer is not solvent, the public institution shall apply the corresponding withholding.

Notwithstanding what is established in Agreement No. 1341 containing the Standards of the Budget Subsystem, Article 24 and for the purpose of expediting Budget Modifications, the Budget Modification Form FMP-05 called "Budget Modification Document" generated by the Integrated Financial Administration System (SIAFI) shall be used in all cases, which shall have the same effect as an Internal Resolution or an Opinion issued by the State Secretariat of the Finance Office.

For the purpose of avoiding overdrafts in the approved budget allocations; all Government institutions: Central, Deconcentrated and Decentralized, when so required, must make the necessary budget modifications prior to the execution of expenses, no institution shall make payment commitments without having the respective budget allocation. The State Secretariat of the Finance Office through the General Directorate of Budget shall not process any budget modification request after the respective institution has made expenditures to be charged to the objects of expense subject to approval, for which reason the State Secretariat of the Finance Office shall refrain from issuing an opinion in this regard and shall refer the case to the Superior Court of Accounts (TSC) in accordance with what is established in Article 5 of this Law.

Notwithstanding what is established in Article 36 of the Organic Law of the Budget, for the purpose of expediting the incorporation of external resources from Donations, the Form (FMP-05) called "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 there is a national counterpart, 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 and/or are required to regularize the income and expense made in the present year. In case these resources were received in previous years, the procedure for searching for Budget Space for their incorporation must be followed, being submitted to the analysis of the Budget Incorporations Committee of the State Secretariat of the Finance Office, which shall be composed of the General Directorate of Public Investment, General Directorate of Macrofiscal Policy, General Directorate of Budget and General Directorate of Public Credit, which shall issue the Technical Note of budget incorporation for external funds.

In order to avoid the incorporation of external funds from Loans, public institutions shall review the execution level within their own budget, and shall identify based on the corresponding prioritization the budget space transfers required and shall submit to the Finance Secretariat the corresponding budget modification request for the issuance of the Opinion. Likewise, the State Secretariat of the Finance Office 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) called "Budget Modification Document" generated by SIAFI based on the Technical Note issued by the Budget Incorporations Committee of the State Secretariat of the Finance Office, based on Articles 28 and 100 of this Law.

For the purpose of maintaining sound administration, at the moment of making a budget modification, the respective Annual Operating Plan must be readapted in the cases that correspond, the corresponding information in the Integrated Financial Administration System (SIAFI); in the Presidential Results Management System of the State Secretariat of General Government Coordination, the monthly expense programming (PGM), the Quarterly Expense Quota (CGT) and the Annual Plan of Purchases and Contracting (PACC).

In addition to what is established in Article 25 of the Technical Standards of the current Budget Subsystem, the institutions of the Central Administration and Decentralized Administration are authorized to make transfers or transpositions of budgetary credits between items of the Non-Personal Services and Materials and Supplies groups among different programs of the same institution, including the Poverty Reduction Strategy. However, to effect transfers affecting project structure, the Executing Units must submit the corresponding request to the General Directorate of Public Investment, attaching the justification that allows prior analysis to the approval of the Opinion in SIAFI.

In order to achieve sound administration of resources, a maximum of forty (40) budgetary modifications per year is restricted, resulting from internal transfers made by Public Sector institutions. The transfers made by the State Secretariat in the Finance Office are excepted from the above, following prior analysis with a favorable Opinion or Resolution in response to requests submitted by Public Sector institutions.

Budgetary modifications that affect allocations designated for capital expenditures to finance current expenditures from any source of financing will not be permitted. In case they are required, approval from the President of the Republic must be obtained and it shall be formalized through an Executive Agreement. Prior to its approval, the opinion of the Intra-institutional Commission of the State Secretariat in the Finance Office must be known. In the particular case of budgetary modifications of Group 40000 (Capitalizable Assets) of the institutions that make up the Sectoral Cabinet for Prevention, Security and Defense (GSPSD), which for legal purposes is called the Sectoral Cabinet for Security and Defense (GSSD), they must have prior approval from the Deputy General Coordinator of said Cabinet before being sent to the President of the Republic and then continue with the procedure provided in the previous paragraph.

For the purpose of operationalizing the transfers authorized by the President of the Republic in accordance with what is established in Article 37, numeral 2 of the Organic Budget Law, the State Secretariat in the Finance Office is authorized to execute the necessary operations in order to make said transfers effective.

With the objective of guaranteeing and optimizing resources allocated to the Health Secretariat for payment of transfers to decentralized health service managers, budgetary modification shall be permitted from one transfer beneficiary to another, solely and exclusively those that provide health services at the first level of care (departmental regions).

All payments by the Central Administration in favor of or through the Central Bank of Honduras shall be made through the respective manual or electronic document issued by the State Secretariat in the Finance Office. The Central Bank of Honduras shall not make any debit to the accounts in the name of the General Treasury of the Republic and of the State Secretariat in the Finance Office without the express authorization of this Office, 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 Secretariat in the Finance Office, through the General Directorate of Public Credit, a copy of the documents that support the values paid for amortizations, interest 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, bond, or surety granted based on Article 78 of the Organic Budget Law, notify the State Secretariat in the Finance Office, 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 cash flow programming of the Single Account; and, b) With seven (7) business days in advance, the failure to present the debt service payment letter by the debtor Institution, as well as the availability of funds in its bank accounts.

• 3)

  If funds are available in the accounts and the payment process has not been initiated by the debtor institution, the Central Bank of Honduras must comply with the instruction of the State Secretariat in the Finance Office, 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, in order 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 in applicable cases) 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 automatic bank reconciliation process in the Integrated Financial Administration System (SIAFI), which must include the executing units and projects financed with external funds.

For expenditures 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 originally affected expenditure structure and must generate form F-07 of reversal type.

All values that have been received by Public Administration Institutions (Central, Deconcentrated, Decentralized, and Constitutional Bodies) in advance, as own resources, transfers, and any other concept of income, that were not used at the end of the Fiscal Year, these must be deposited with the General Treasury of the Republic within five (5) business days after the end of the Fiscal Year. This provision is also applicable to private institutions that receive resources from the Central Administration, which must present a statement of expenses incurred. From the above mechanism, Transfers granted based on percentages established in the Law of Municipalities, the Constitution of the Republic, and the Cooperative System Law are excepted.

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 Fiscal Year 2020 comes into effect, all institutions of the Central Government, Decentralized and Deconcentrated, through their Executing Units, must submit 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 to 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 to the Monthly Expenditure Programming (PGM). The Quarterly Expenditure Quota (CGT) corresponding to external sources assigned by the General Treasury of the Republic (TGR), shall be indicative and not limiting in nature.

When there are Liens attached to the Single Account of the General Treasury of the Republic (TGR) at the Central Bank of Honduras (BCH), due to actions brought against the various State Institutions, the State Secretary in the Office of Finance is empowered through the General Treasury of the Republic (TGR) to be able to suspend payments with impact on the budget of such Institutions as long as they do not carry out the regularization and/or registration thereof. VI. OF PUBLIC CREDIT OPERATIONS

The Executive Branch, through the State Secretary in the Office of Finance, during the present Fiscal Year, may pay through bonds up to a maximum of fifty percent (50%) of the fees that the State as employer must contribute to the Social Welfare Institutes; if necessary, authorization is granted to negotiate percentages other than this. Likewise, the State Secretary in the Office of Finance is authorized to pay through bond issuance the obligations of employer contributions pending payment from previous fiscal years, prior negotiation with the Welfare Institute.

The negotiation of securities shall be governed through the General Regulation of Negotiation of Government Securities of the Government of Honduras approved by Executive Accord No. 301-2018 of March 5, 2018, published in the Official Gazette "La Gaceta" on March 12, 2018.

In line with the Public Debt Policy document for the Period 2020-2023, in compliance with the agreements negotiated with the International Cooperating Community, in accordance with Monetary Policy and for the purpose of maintaining a level of public debt of the Non-Financial Public Sector under conditions of financial stability and sustainable in the medium and long term, a maximum ceiling of public debt of forty-nine point three percent (49.3%) in relation to Gross Domestic Product (GDP) is established.

Institutions in the public sector that receive Non-Reimbursable External Cooperation resources must incorporate them into the General Budget of Income and Expenditures of the Republic through the Integrated Financial Administration System (SIAFI) and in the Presidential System of Management by Results, for their respective monitoring. Likewise, these must be executed through SIAFI, using the principle of Cash Unity which indicates that all public sector funds must be deposited in the Single Account of the General Treasury of the Republic, with the exception of those cases in which the International Agreement expressly establishes how it should be handled.

The State Secretary in the Office of Finance (SEFIN) is authorized to conduct liability management operations, with the purpose of mitigating financial risks and/or improving the maturity profile of the public debt portfolio. Within liability management operations, forgiveness, conversion, consolidation, renegotiation, refinancing, exchange or swap, early redemption or purchase and subscription of financial derivative contracts are contemplated. In the event of carrying out swap or refinancing operations of bonds with maturity within the year 2020, they must be recorded as a charge against the present General Budget of the Republic. For bonds with maturity date after the year 2020, such operations shall not affect the General Budget of the Republic for the present Fiscal Year. If there is a nominal increase in the debt balance resulting from liability management operations, it shall count against the public debt ceiling authorized in the present General Budget of the Republic.

The State Secretary in the Office of Finance is authorized to conduct the placements of available balances from the issuance of public debt securities and bonds, established in Article 1 of Decree No. 180-2018, as well as the sovereign bonds authorized in Decree No. 128-2019. The resources obtained for this purpose shall be allocated to finance the floating debt of the Central Administration at the close of Fiscal Year 2019 and/or the purposes established in Decree No. 128-2019, including the payment of costs associated with the issuance and premiums for liability management.

In order to guarantee the correct use of funds from external credit and external donations subscribed by the State Secretary in the Office of Finance, the persons authorized to request disbursements of these resources shall be only the Heads of Public Sector Institutions that are designated in the respective agreements as Executing Units. 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 must conduct periodic and closing audits according to the financing agreements subscribed, and must present to the General Directorate of Public Credit of the Finance Secretariat the results of the audits conducted on their financial statements no later than 15 days after the date of receipt thereof, for the purpose of overseeing the proper use of resources from external credit. The persons responsible for the administration and execution of programs and projects that incur in the authorization of non-eligible expenses shall be jointly and severally liable for such authorizations, without prejudice to civil, criminal and administrative actions, and the Public Sector Institution to which the Executing Unit that presents findings in its audited financial statements belongs must suspend disbursement requests before the Financing Organization and carry out the corresponding actions to reimburse the non-eligible expenses of the project to the organization, identifying them within the budget of such institution. 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 programming for new external credit disbursements, until the Executing Unit corrects its financial execution.

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

Without prejudice to the provisions of Article 68 of Decree No. 17-2010 of March 28, 2010 containing the Law for Strengthening Income, Social Equity and Rationalization of Public Spending, and for purposes of contracting external financing that is deemed necessary and where no financial source is found that allows the required weighted concessionality; non-concessional debt may be contracted, provided that the total outstanding 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 Policy Guidelines.

Public debt authorized through bond issuance and loan procurement is fungible in nature and may therefore be redistributed when financial and market conditions exist that facilitate such fungibility from one source to another, with respect to the domestic or external market, currency type, terms and other financing-related conditions, provided that the amount authorized in Article 1 of this Law is not exceeded. The Secretariat of State in the Office of Finance through the General Directorate of Public Credit may redistribute, reallocate, redirect or reject funds from external credits, which must ensure that such measure is consistent and feasible with Government priorities.

Natural fluctuations in exchange rates or inflation that occur on securities placed by the Secretariat of State in the Office of Finance charged against the amount authorized in Article 1 of this Law shall be considered once on the date of placement of the security in foreign currency (or denominated) and indexed to inflation.

Municipal Corporations, Decentralized and Autonomous Institutions that request an opinion on debt capacity or debt readjustment from the Secretariat of State in the Office of Finance through the General Directorate of Public Credit (DGCP), for obtaining loans with duly recognized national and/or international entities in the financial sphere in order to address investment plans and projects shall present the necessary documentation based on established requirements; municipal corporations registered in the Integrated Municipal Administration System (SAMI) must have budgetary and financial information obligatorily available in the system to request such opinion. The opinion on the level of indebtedness and payment capacity issued by the DGCP must comply with the established indicators and shall not constitute a guarantee by the Central Government, this provision is supplementary to the provisions of Article 82, Section 4 of the Organic Budget Law and Article 19, Section 3 of the Technical Standards of the Public Credit System. The Secretariat of State in the Office of Finance has a maximum of sixty (60) business days to issue opinions once the complete request is received from the municipalities and a maximum period of ninety (90) days to resolve pending opinions, the General Prosecutor's Office (PGR) shall oversee compliance. In order to maintain an updated and reliable record of all public debt that the State maintains, its institutions must submit to the Secretariat of State in the Office of Finance through the General Directorate of Public Credit on a monthly basis, information related to the details of principal, interest and commissions paid as follows: 1) Municipal Corporations that contract loans with National and/or International entities are obligated to submit reliable information related to Obligations Incurred. Providing all information related to their public credit operations, such as: loan agreements, bond issuance, disbursements and debt service payments, which must be sent via fax, electronic mail or other means no later than thirty (30) days after the operation occurs. 2) Likewise, State Enterprises, Decentralized and Autonomous Institutions, as well as Institutions of the National Financial System, are ordered to provide and report information on a monthly basis and no later than 10 days after the month concludes, regarding obligations that State Enterprises, Decentralized and Autonomous Institutions, and Local Governments maintain with any financial institution in the country. Non-compliance with such provision shall result in the suspension of any action taken before the Secretariat of State in the Office of Finance related to the issuance of the Debt Capacity Opinion required by the entities mentioned above. Likewise, for Local Governments, temporary withholding of the transfer granted by the Central Government until the requirements are met.

Institutions that execute programs and projects financed with external funds must have budget provision prior to disbursement requests in the present Fiscal Year. The Secretariat of State in the Office of Finance through the General Directorate of Public Credit shall verify that requests for external credit disbursements whether in cash, direct payment or direct charge, have such budget provision and/or are contemplated in the disbursement programming and shall confirm it in writing prior to its submission to the Financing Organization, in order to guarantee compliance with the disbursement ceilings established in the Current Public Debt Policy. Institutions must attach to their disbursement request the schedule of payments to be made in the 6 months following the disbursement. Cash disbursement requests (different from direct payment or direct charge) scheduled for the last quarter of the fiscal year must consider the budget availability contained in the budget draft for the following fiscal year. Once a direct payment or direct charge has been made, the Institution executing programs and projects financed with external funds must record its budget 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 budget provision and/or inclusion in disbursement programming for new external credit disbursements, until the Executing Unit registers the direct payment/charge made.

The Secretariat of State in the Office of Finance (SEFIN) is authorized to, if deemed appropriate, issue Sovereign Bonds of the Republic of Honduras in the international capital market charged against the amount of indebtedness authorized in Article 1 of this budget, under the modality of reopening or new issuance and under the financial conditions prevailing in the market at the time of negotiation, and may be placed at a premium, discount or at par. The Secretariat of State in the Office of Finance (SEFIN) reserves the right to choose the timing of the operation, in accordance with resource needs and market conditions.

When it comes to external sovereign bond operations, referred to in Articles 47 and 56 of this Law, the Secretariat of State in the Office of Finance (SEFIN) is authorized to directly contract the following services: one or more investment banks specialized in the structuring, marketing, pricing and placement of sovereign bonds, brokerage advisory firms, financial and/or legal advisory firms, companies for printing the offering circular, one or more banks that provide the services of fiscal agent, exchange agent, information agent, closing agent, registrar and paying agent, legal registration entities, securities markets that will list the operation and risk rating firms, for a maximum term equal to the maturity of the bonds and according to market practices. Likewise, the Secretariat of State in the Office of Finance (SEFIN) is authorized to identify and allocate the necessary budgetary space for the payment of such services. The debt service of sovereign bonds, as well as payments for services rendered listed in the first paragraph of this Article, shall be exempt from all types of taxes, rights, fees, surcharges, local taxes, contributions, fees, honorariums or public, governmental or municipal contribution, the foregoing applies only to natural or legal persons with residence abroad. The issuance and placement shall be carried out in accordance with international practices and the legislation of the place where the bond placements are registered.

In accordance with the provisions of Articles 83 and 84 of the Organic Budget Law and Article 27 of its Regulation, the Secretariat of State in the Office of Finance is authorized, through the General Directorate of Public Credit, to transfer available resources at the end of Fiscal Year 2019 in accounts opened at the Central Bank of Honduras (BCH), of remaining funds from reimbursable and non-reimbursable external cooperation whose return has not been requested by the corresponding Financing Organizations.

The Secretariat of State in the Office of Finance (SEFIN) and the Central Bank of Honduras (BCH) are authorized to refinance or exchange government securities up to a maximum nominal value of SIX THOUSAND NINE HUNDRED SIX MILLION FIVE HUNDRED FIFTY THOUSAND LEMPIRAS EXACTLY (L.6,906,550,000.00) maturing in 2020, through the issuance of a new government security under the same financial conditions of the Recapitalization Agreement of the Central Bank of Honduras (BCH) approved by Decree No. 38-2014. Likewise, the Secretariat of State in the Office of Finance (SEFIN) and the Central Bank of Honduras (BCH) are authorized to renegotiate any obligation, negotiable instrument or agreement that is in force and subscribed between both institutions.

In all investment contracts in which Public-Private Partnerships are established or in any possible modifications of such contracts, in which the State of Honduras grants guarantees or a contingent, prior authorization from the Secretariat of State in the Office of Finance shall be required before its execution, which shall grant it following an Opinion issued by the Fiscal Contingencies Unit.

The State Secretary's Office of Finance, through the Directorate of Public Investments, shall participate during the pre-investment phase of projects under the public-private financing modality (APP) through the issuance of the Priority Note and registration of the Project in the National System of Public Investments (SNIPH) 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. Likewise, from the funds allocated through a Trust to finance investment projects, up to a maximum of 10% may be used for operational or administrative expenses of the allocated budget.

All concessionaires are obligated to present, no later than ten (10) business days after the end of the month to the Fiscal Contingencies Unit of the State Secretary's Office of Finance (SEFIN) and the Superintendency of Public-Private Partnerships (SAPP), all financial information of the operations of the Projects together with monthly supervision reports.

For the purpose of promoting transparency processes, accountability, monitoring and verification by the State Secretary's Office of Finance (SEFIN) and the Public-Private Partnership Superintendency (SAPP), all operators and/or concessionaires of projects under the Public-Private Partnership modality (APP) that carry out collection activities through toll collection are instructed to provide unrestricted access to information contained in their control systems to the aforementioned entities. SEFIN and SAPP shall request no later than the first five days of the month following the corresponding month, information requirements 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 shall include: Direct access to the operator's systems, creation of link 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, the detail of collection broken down by gross income, taxes and net income, including details of values for overage, daily vehicle count report by sub-section, date and time, method of payment, tariff applied to each vehicle category including differentiated tariffs, classification or category of vehicles, report of incidents by evasion, observations for seasonality and fortuitous cases in each period. SEFIN and SAPP may request explanations and clarifications they deem pertinent, as well as request additional information requirements if necessary. All information presented shall be subject to audit processes that SAPP and the TSC may arrange for 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. Denial, malicious withholding or delays in delivery deadlines or access to information shall be subject to sanctions of up to fifteen (15) minimum salaries per non-compliance event; sanction that shall be applied by SAPP.

All public administration institutions are ordered to register in the Integrated Financial Administration System (SIAFI) the operations derived from Trust contracts entered into. All Public Sector institutions that have established Trusts in prior Fiscal Years shall perform the corresponding liquidation of the trust funds to the General Accounting Office of the Republic, divisions of the State Secretary's Office of Finance. The Technical Committees are responsible for ensuring compliance with this regulation. The State Secretary's Office of Finance, through the General Accounting Office of the Republic, shall send quarterly reports of the State Trusts operations to the Ordinary Budget Commission of the National Congress.

Trusts established by Public Sector Institutions must be reflected in the General Budget of Income and Expenses of the Republic and the operations derived from these Contracts must be registered in the Integrated Financial Administration System (SIAFI) for each Executing Institution, complying with the Trust Registration procedure approved by the State Secretary's Office of Finance (SEFIN), including those expenses that by their economic classification are defined as capital and are required for their registration as current expense, without prejudice to what is established in Article 33 of this Law. Likewise, the State Secretary's Office of Finance (SEFIN) is authorized to incorporate the resources from the different Trusts into the General Budget of Income and Expenses of the Republic for the current Fiscal Year. The foregoing does not limit the financial flow in the operations of the trusts already defined in the contracts and approved by the technical committees. The administration of these trusts shall be based on what is established in the Commercial Code.

The State Secretary's Office of Finance (SEFIN) is authorized in coordination with the State Secretary's Office for General Coordination of Government (SCGG) and the Deputy General Coordinators to review the Solidarity and Social Protection Fund for Poverty Reduction in the General Budget of Income and Expenses of the Republic with the returns from the application of the Law for the Organization of Public Finances, Control of Exemptions and Anti-Evasion Measures. The returns from the aforementioned Law shall be reviewed quarterly and as they are collected they shall be automatically 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 this value is reached shall be used to finance programs and projects oriented toward health, education, security and infrastructure and others in accordance with Article 45 of Decree No. 278-2013 Law for the Organization of Public Finances, Control of Exemptions and Anti-Evasion Measures; Article 10 of the Framework Law of the Social Protection System and PCM-033-2018. Likewise, the State Secretary's Office of Finance (SEFIN) in coordination with the State Secretary's Office for General Coordination of Government (SCGG) and the Deputy Coordinators may make budget transfers considering the relevance, sustainability, efficiency, effectiveness and impact on programs financed through this mechanism.

The use and administration of the funds from the Population Security Tax shall be applied in accordance with Decree No. 105-2011 containing the Population Security Law and its reforms; favoring actions for the security of women, therefore an amount of Five Million Lempiras (L.5,000,000.00) must be allocated from the Population Security Tax for the construction of a Shelter House for women victims of domestic violence in Tegucigalpa.

The State Secretary's Office of Finance is authorized to, after the audit conducted by the legal grantor, seek the necessary financing to make effective the payment of the contingent liability generated by the early termination of the Public-Private Partnership Contract of the project called "El Progreso-Tela Corridor and San Pedro Sula-El Progreso and La Barca-El Progreso sections". The National Congress must approve at the appropriate time the financing that is necessary.

Authorize the National Agricultural Development Bank (BANADESA), as fiduciary bank to proceed with the liquidation of Administration Agreements and/or Trust Contracts that have ended their validity at this date or where it is indisputably evident that they had no operation whatsoever. After the respective liquidation is completed, all assets and resources, as well as the trust patrimony, or funds under administration, shall become part of the patrimony of the National Agricultural Development Bank (BANADESA), being the responsibility of said bank the recovery, control and monitoring of these assets. The State Secretary's Office of Finance (SEFIN) is authorized to celebrate with the National Agricultural Development Bank (BANADESA), a liquidation agreement for a term of up to ten (10) years for the purposes mentioned above.

For the purposes of application of articles 38 and 63 section 3) of the State Contracting Law and other applicable laws, the required amounts are established for applying tenders, contests or quotations: The quotations referred to in this Article must be from unrelated suppliers, in accordance with what is typified in Decree No. 232-2011 of December 8, 2011, containing the Law for Regulation of Transfer Prices and in the quotation document must include the general data of the supplier, as well as the number of the National Tax Registry (RTN). In Private Contests and Tenders once the invitation is 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 of which a record shall be kept in the contracting file. In those cases where there are prequalification requirements, the participation of possible bidders who have been prequalified by the contracting authority must be allowed. In compliance with Article 4 of the Law of Transparency and Access to Public Information, all contractor selection processes must be disseminated in the "Honducompras" System and must comply with the principles of open contracting promoted by the Open Contracting Partnership.

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

When at the beginning of this Fiscal Year the bidding process required for a new contract has not been completed, exceptionally and without prejudice to the liability that corresponds in those cases where there is a serious risk of harm to public and institutional interest, it may be authorized by means of a reasoned resolution issued by the competent superior authority, the continuation of the effects of the contract for the time that is strictly necessary up to a maximum of three (3) months, within which period said procedure must be completed, except in cases where said process has been declared void or failed in accordance with Law, the aforementioned contract may be extended under the same conditions and up to a final period of three (3) additional months. The extension shall be made by agreement between the parties, with prior opinion of the administration containing legal, technical and financial opinion of the respective Institution and shall be formalized by Agreement or Resolution of the institution, as appropriate. The foregoing shall apply provided it does not contravene what is established in Articles 122 and 123 of the State Contracting Law; or the special law applicable according to the nature of the contract.

With the objective of guaranteeing and optimizing the resources allocated to the State Secretariat in the Office of Health (SESAL) linked with the contracting of Decentralized Managers of Health Services of the first and second level of care through Expense Object 24130 Medical Services, as long as the required bidding processes for the contracting of said services have not been completed, exceptionally and without prejudice to the corresponding liability, for cases where there is a serious risk or harm to public interest, it may be authorized by means of a resolution issued by the highest institutional authority, prior to an opinion from the administration of SESAL that contains legal, technical and budgetary opinion, the continuation of the effects of the agreement for this Fiscal Year, and must conduct the contracting process for the following fiscal year. The Health Commission of the National Congress, the Health Secretariat and the Association of Municipalities of Honduras (AMHON) may present proposals for new models of decentralization in health so that SEFIN identifies funds to pay the debts that exist to date to the decentralized health managers in the different municipalities. The foregoing shall also apply to other Public Institutions that need to contract third-party services for the compliance and efficiency of their management, charging the corresponding expense object.

For the purpose of complying with the provisions of Article 84 of the Organic Budget Law, which establishes the operability of the Single Account of the General Treasury of the Republic, the State Secretariat in the Office of Finance is authorized to, through the direct contracting procedure, execute Agreements for the Provision of Financial Services 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). Said process must be supervised by the Superior Court of Accounts (TSC). Likewise, the State Secretariat in the Office of Finance is empowered to, in coordination with the Tax Revenue Administration System (SAR), proceed to renegotiate the Tax Collection and Collection Contract, signed with the Central Bank of Honduras, which must reflect the actual costs of the collection and collection services of said Bank.

In compliance with the provisions of Article 72, second and third paragraphs, of the State Contracting Law, the applicable daily fine is set at zero point thirty-six percent (0.36%), in relation to the total amount of the contract balance for non-compliance of the balance and the same must be specified both in the conditions sheet and in the Construction and Supervision Contract for Public Works. This same provision must be applied to all contracts for goods and services entered into by Public Sector Institutions.

Only payments that imply advance of funds for public works contracts shall be authorized in accordance with what is established in the State Contracting Law, which must not exceed fifteen percent (15%) of the total amount of the contract. In the cases of construction contracts for works and insurance derived from international agreements, the advance shall be authorized in the manner and amount established by the regulations of the Financial Organization. Foreign contractors may be granted advance only when the respective projects are financed at least eighty percent (80%) with external funds. The departments of the Executive Power are authorized to pay as advance, in the lease contracts they enter into, up to the equivalent of one (1) month of rent as a deposit, which shall remain as payment of the rent of the last month in case of termination of the lease contract of the property, without the need to require a guarantee for advance. In the case of microenterprises, advance payment is authorized in purchase orders generated by electronic catalogs, without the need to require a guarantee. The authorized percentage and the form of amortization shall be regulated through the enabling circulars of the respective catalogs. To prevent budget imbalances, it is prohibited for the departments of the Central, Deconcentrated and Decentralized Government to enter into 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 termination of the contract, without further obligation on the part of the State, than payment corresponding to the works or services already executed as of the date of validity of the rescission or termination of the contract. The same shall occur in case of budget cuts of national funds that are made due to the economic and financial situation of the country, the estimation of the perception of income lower than projected expenses and in case of unforeseen needs or emergency. The provisions of this Article must be mandatorily stipulated in the conditions sheets, terms of reference and in the contract itself.

In accordance with applicable laws, based on their budgetary allocations and for the purpose of promoting decentralization in the State Secretariat in the Office of Health, the acquisitions of one hundred percent (100%) of the resources allocated in the expense objects for: Food and Beverages for People (3110) and its auxiliary (31110) Food Products and Beverages and Instrumental, Medical Materials and Supplies, Minor and Laboratory (3950) and its auxiliaries (39510 Minor Medical Surgical Instruments and 39520 Instruments and Laboratory Materials), must be carried out by the administrations of the departmental regions and the hospitals of the country. It shall not be necessary to authorize purchases outside the electronic catalog when the product is not found in the Electronic Catalog Enabling Circular. However, purchases of medicines must be made by the Administrative Management of the State Secretariat in the Office of Health at the central level in ninety percent (90%), through the Trust established for that purpose; hospitals that have concluded their decentralization process are excluded. The remaining ten percent (10%) shall be acquired by each Hospital and Departmental Region of the State Secretariat in the Office of Health, according to budgetary allocation. The subdivision of contracting processes is prohibited in the acquisitions carried out by the administrations of the departmental regions, the hospitals of the country and the Administrative Management of the Health Office. Those cases are excepted in which it is evident that the subdivision is not carried out for the purpose of evading the contracting ceilings established in this Law, for which a favorable opinion from the corresponding internal audit must be issued. Also, the contracting processes established in the Law are excepted for expense objects 35610 and 35620 for the Health Secretariat, which only need quotations to meet the needs of the National Health System and when hemodialysis and peritoneal dialysis services are declared void or failed in accordance with Articles 59, 60, 61, 62, 63, 65 and 68 of the Constitution of the Republic that guarantees health as a fundamental right. In this case, payment for the service shall be recognized through administrative claim. The State Secretariat in the Office of National Defense, to comply with national defense plans and in application of the laws and regulations that govern the Armed Forces of Honduras, executes its budgetary allocations under operational decentralization of some budgetary items intended for its operation as a mechanism of public management, typical of a modern state maximizing the achievement of positive results and optimal use of state resources, for which reason the acquisitions of one hundred percent (100%) of the resources allocated in the expense objects for: Food and Beverages for People, Fuels and Lubricants, Fats and Oils, Goods, Materials and Services for the Military Health System, Spare Parts Accessories and Services for Military Equipment, must be carried out by the different programs and subprograms at the national level. The purchases of food and beverages for people, fuels and lubricants, oils and fats must be acquired giving preference to local suppliers, the geographic location must be fully accredited in the administrative file and in their monthly expense liquidations. All material goods and services of the military health system and the spare parts accessories and services of military equipment must show evidence that the subdivision is not carried out for the purpose of evading contracting ceilings and must be justified by means of the corresponding opinion from the competent body with a favorable opinion from the corresponding internal audit.

For the purpose of making purchases through electronic catalog of the microentrepreneur, in application of Article 2 section 5 of the Law on Efficient and Transparent Purchases through Electronic Means, centralized, decentralized, deconcentrated institutions and local governments may make direct purchases from microenterprises and small businesses through quotations, up to the amounts required contained in this same budget execution standard, in such a way that the sum of these does not exceed the threshold of direct contracting by quotations.

The contracting charged to the Subgroup of Expense 24000 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 by Contract. The contractor under this modality should not be considered for any purpose as a Permanent or Temporary employee of the institution. In order to regulate contracting charged to Expense Subgroup 24000, increases by budgetary modifications for expense objects belonging to this subgroup are prohibited, this rule is of exclusive application for resources from source 11 National Treasury. The contracts for medical health and social services (expense object 24100) and the contracting charged to expense subgroup 24000 that are necessary to be carried out by the Superior Court of Accounts with the Municipal Transparency Funds approved in Article 194 numeral 4) of this Law are excepted from this provision. It is also prohibited to hire legal professionals as external consultants for the care of lawsuits filed in the Courts of the Republic, when the institution has legal departments for such purpose. Those cases are excepted from the foregoing in which the Attorney General of the Republic considers it convenient to contract them, to safeguard national interests, and must issue a favorable Opinion that will contain the amount of its fees for contracting and charged to the budget of the corresponding institution. The regulation of this law shall typify the cases referred to in this paragraph. Likewise, the Honduran Bank for Production and Housing (BANHPROVI) is excepted, which due to its banking nature of recovery of its portfolio and the lawsuits for cases of default may hire legal professionals as external consultants whose fees shall be paid in accordance with the current fee schedule for legal professionals. The prohibitions and disabilities to contract established in Articles 15 and 16 of the State Contracting Law shall apply to all contracts entered into by the Public Administration, regardless of its modality.

Those obligated to pay the Income Tax are any natural or legal person contracted under the modality of Personal Services from expense group 10000 and Technical Professional Consulting Services, in Expense 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 contracting, greater emphasis shall be placed on the result or activity executed than on time; due to the nature of the contract, the consultant has no right to vacations, thirteenth month as a bonus, fourteenth month as social compensation and other rights inherent to employees financed through Group 10000 Personal Services in none of the contracts; and, 2) The head of each institution that subscribes to this type of contract and grants any of the benefits mentioned in the previous paragraph shall be financially and jointly liable, without prejudice to civil, administrative and criminal actions before the supervisory entities. A National Consultant shall be understood as the professional who performs his activity with permanent residence in the national territory. It is prohibited to enter into contracts of this nature to perform administrative functions inherent to permanent employees.

The hiring of international consultants for programs or projects shall be done based on the conditions of the professional market and in accordance with the availability of budgetary and financial resources. Contracts for international consultants for programs and projects with external financing shall be governed by what is established in credit agreements, letters, agreements, memoranda of understanding or donation agreements. The setting or estimation of fees shall be recorded in the budgets agreed upon between the executing entity and the financing or cooperating agency. An 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 that of the national territory. Consultants of foreign nationality may not perform activities of an administrative nature.

The registration of the precommitment is an act of internal administration useful for recording, certifying or verifying the availability of budgetary credits and making a reservation thereof at the beginning of a process (request) for expenses, a purchase or a contract. Said reservation must be formalized in a commitment and registered in the name of the Contractor or Service Provider within a maximum period of 3 months. The Secretary of State in the Ministry of Finance is authorized to automatically reverse in the SIAFI system all F01s whose status has not been formalized in a commitment in its approved status within the maximum established period. The Secretary of State in the Ministry of Finance through the Transparency Department shall verify what is stated in the previous paragraph and shall proceed with the reversal of the F-01 documents in the system, in accordance with the procedure established by it. Without prejudice to the administrative, civil and/or criminal liability incurred, the Administrative Managers of each institution shall be responsible for the damages caused to the State by any approved commitment that does not have the legal supporting documentation. All of the foregoing does not apply in the event that the document has been generated through the HONDUCOMPRAS interface with the budgetary execution of SIAFI.

Every supplier and/or contractor of the State at the time of the purchase order or beginning 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 Ministry of Finance, will not accept claims for payment of debts that do not have the respective budgetary support. Officials who violate what is provided in this Article shall be jointly and financially liable to honor 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. Contracts for real estate leasing by the public sector are exempt from the obligation to submit to public bidding, when they represent higher costs to the institution due to mobilization, price, location and quality of service. In these cases, the extension of contracts subscribed by annual periods is authorized, such extensions may not exceed a period of four (4) years, and after this extension must be subject to a new bidding process. Public institutions that have accumulated extensions of four (4) or more years upon the entry into force of this Law must proceed to carry out the new bidding process. Said extension shall be authorized upon a prior Legal Opinion that contains legal, technical and financial opinion issued by the Institution and shall be formalized through Ministerial Agreement in the case of the Secretaries of State or Resolution for Decentralized or Deconcentrated Institutions. All public institutions that will move to the Government Civic Center are exempt from what is established in the third paragraph of this Regulation.

It is prohibited to enter into contracts for the leasing of luxury properties, first-class air transportation expenses 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. Medical insurance contracts, life insurance and military equipment and security insurance carried out by the Secretaries of State in the Ministry of National Defense and Security are excluded. And the Municipalities, as long as there is availability in the budgetary allocation of the current fiscal year for the contracting of medical insurance. For the purposes of what is established in the previous paragraph, luxury is understood as those buildings that by their conditions, characteristics and location in areas whose monthly rental cost exceeds Fifteen Dollars (US$15.00) or its equivalent in Lempiras per square meter; the official who carries out this type of contracting 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. The Honduran Bank for Production and Housing (BANHPROVI) and the National Bank of Agricultural Development (BANADESA) are exempt from what is established in this provision, which by their banking business and business strategy must be governed by the provisions established in Article 15 of the Financial System Law, which establishes that financial institutions may establish branches/agencies or other means of providing financial services anywhere in the Republic, as long as the premises where they provide such services offer sufficient security and confidence for the public user.

Regardless of the 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 System of Purchases and Contracting "HonduCompras". The ONCAE is authorized to issue guidelines that allow generating greater opportunity for competition within the catalog, for those acquisitions that due to their amount may provide greater savings benefits for the State. Purchases of goods or services that are available in the electronic catalog shall be null when they are made outside the system regardless of their amount, unless there is authorization from the ONCAE, as established by this regulatory office and complying with article 44-C of the reform of the State Contracting Law Regulation in accordance with Executive Agreement 028-2018, which must have the approval of a Certified Public Buyer (CPC) in the documents issued by the ONCAE, as evidence that they substantially comply with the current regulatory framework. Municipalities are exempt from this provision. The Administrative Manager or equivalent who fails to comply with the above shall be financially and jointly liable, without prejudice to civil, administrative and criminal actions before the supervisory entities.

Regardless of the source of financing and the amount, all public sector institutions must publish in the HONDUCOMPRAS system administered by the ONCAE and the respective transparency portal of the institution the selection process for contractors, consultants and suppliers, in all its stages. In accordance with Article 79 of the State Contracting Law Regulation, it is the responsibility of the Administrative Manager or equivalent to ensure compliance with what is established in the previous paragraph. The violation of this provision, in addition to the sanctions established in the Transparency and Access to Public Information Law, shall incur the sanctions for non-compliance with this Law ranging from three (3) minimum salaries to thirty (30) minimum salaries. The Institute of Access to Public Information (IAIP) shall verify that such processes were published in the Honducompras System when contracts are uploaded to their transparency portals and if they are not found published it shall apply the corresponding sanction.

The coordination of the elaboration, publication, execution and modification of the PACC is the responsibility of the Administrative Manager, or whoever acts in his stead, and of the highest authority of the institution, in accordance with what is established in Article 5 of the State Contracting Law. For this purpose, the ONCAE shall provide guidelines for the development of such plans. The updated PACCs must be published by institutions in the "HonduCompras" system within the following thirty (30) calendar days after the publication of the General Budget of Income and Expenses of the Republic in the Official Newspaper "La Gaceta". They must also publish the PACC in their respective transparency portal. The ONCAE shall notify the Superior Court of Accounts (TSC), Secretary of State in the Ministry of Finance (SEFIN) and the Institute of Access to Public Information (IAIP), no later than twenty (20) calendar days after the deadline mentioned above, the list of institutions that complied with said obligation. In addition to what is established in Article 27 of this same Law, the PACC may also be modified or updated for the purpose of timely satisfying procurement needs for goods, works, consulting and services and in order to comply with the POA. All modifications or updates of the PACC must be published by the bodies responsible for contracting in the "HonduCompras" system and in their institutional portals in accordance with the guidelines of the ONCAE. Such modifications may only be made in accordance with the closure rules issued by the Secretary of State in the Ministry of Finance (SEFIN). Institutions shall monitor and control the execution of the PACCs published in "HonduCompras" in accordance with the indicators published by the ONCAE on its portal, in order to efficiently manage its budget and the provision of goods and services in a timely manner for compliance with the POA. Municipalities are exempt from this provision.

The ONCAE shall send to the General Coordination Secretariat of Government, to the State Secretariat of the Office of Finance and to the Budget Commission of the National Congress the consolidated information of all PACC of the present Fiscal Year that have been published by the institutions in the "Honducompras" System until February 28. The information sent by ONCAE must be taken into account by the institutions that receive it for cash flow programming, evaluation of goal compliance and budget allocations in order to be efficient with payment to contractors.

The ONCAE, in accordance with the best interests of the State, shall define and notify which are the joint purchases that shall be mandatory for all institutions that acquire goods or services included in the catalog complying with article 44-C of the Reform of the Regulations of the State Contracting Law in accordance with Executive Agreement 028-2018, the Request for Incorporation in Joint Purchases must have the Approval of the Certified Public Buyer (CPC) in the documents issued by ONCAE, as proof that they substantially comply with the current regulatory framework. For this purpose, it must notify such information to the institutions through the "HonduCompras" portal, municipalities that do not have registered suppliers are excepted from the above, and municipal corporations must require their suppliers to be properly registered with ONCAE. Companies registered with ONCAE must have branches in the cities to which they will invoice; otherwise, purchases can be made from registered suppliers of each municipality regardless of whether or not they are registered with ONCAE. The Central Bank of Honduras is excepted from being part of the joint purchase when it comes to the acquisition of armored vehicles for the transport and custody of valuables.

All direct contracting covered by an emergency decree shall be carried out in accordance with the State Contracting Law and its process must be published in "HonduCompras". It is prohibited to carry out direct contracting covered by emergency decrees whose objective is different from that which 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, 2019 are prohibited.

ONCAE shall be responsible for certifying the status of Certified Public Buyer (CPC). ONCAE may revoke the certification at any time if it is reliably established that the person has performed an act that does not substantially comply with the current public contracting regulatory framework, if their morality is compromised by investigations or public questions relating to acts contrary to ethics and the code of conduct of the public servant, or if the CPC has criminal history for any reason.

The Dispute Resolution Board (MRD) referred to in Article 3-A of the State Contracting Law is an instance of conflict resolution formed by one or three (3) persons so designated in the Contract. For contracts with an initial contracting amount equal to or greater than FIFTY MILLION LEMPIRAS (L50,000,000.00), the contracting parties shall jointly appoint a Dispute Resolution Board (MRD) on the date established in the contract. The remuneration conditions of the sole member, or of each of the three (3) members, including the remuneration of any expert to whom the Dispute Resolution Board (MRD) consults, shall be determined by mutual agreement between the contracting parties when agreeing on the conditions of appointment. Each contracting party shall be responsible for paying half of this remuneration; therefore, each State institution that in its Annual Plan of Purchases and Contracting PACC plans to execute contracts with initial contracting amounts equal to or greater than FIFTY MILLION LEMPIRAS (L50,000,000) must make provision of funds in the Budget of Expenditures to make the corresponding payments.

The submission of offers and envelopes referred to in Article 111 of the Regulations of the State Contracting Law may be electronic on the "HonduCompras 2.0" platform. ONCAE shall issue the corresponding Circulars, which shall establish the guidelines and graduality for the use of the new National Contracting System "Honducompras 2.0". In order to guarantee the sustainability of the National Contracting System "Honducompras" in its different versions, for the present fiscal year 2020, each user institution of the system is instructed to transfer to the Road Infrastructure Trust Fund, administered by "Invest-h", the amount corresponding to 1.5% of the total amount of contracts managed through this system during 2019. According to the foregoing paragraph, SCGG through ONCAE shall officially communicate to the user institutions, to Invest-h and to the State Secretariat of the Office of Finance, the total amount that must be transferred to the trust fund. If by no later than February 17, 2020, the participating institutions have not made the aforementioned transfer effective, the State Secretariat of the Office of Finance (SEFIN) is authorized to make the necessary provisions to comply with what is ordered here. The amounts incorporated into the trust fund shall be used to cover the payments that result from the contract for support services and updating of the "Honducompras 2.0" platform, consulting services necessary for training, deployment, interoperability with other systems, infrastructure, user accreditation, digital signature certification and any other necessary for the correct operation of the system.

Institutions of the Public Sector of the Central Government, Decentralized, Constitutional Entities and Local Governments prior to the acquisition of information systems and/or development of computer systems in administrative, financial and accounting matters, regardless of cost, shall require an Opinion from the State Secretariat of the Office of Finance, through the Modernization Unit, to guarantee that such functions do not compete with the SIAFI, SAMI, SNIPH, SIARH or other national systems; in case the opinion is favorable for acquisition, the Finance Secretariat shall subsequently provide guidelines to guarantee interoperability or exchange of information between systems in case applicable; such opinion must be issued within a maximum period of 30 business days from the date of receipt of the request. The acquisition of Hardware, Licenses and Software not related to the functionalities described in this article do not require an opinion. The Secretary of Health and the Secretary of Education are instructed to, in coordination with the Finance Secretariat, begin a pilot to evaluate the feasibility of implementing the SAP System or similar in order to improve institutional management, and also to ensure that it is compatible at the interface level with the Integrated Financial Administration System (SIAFI).

For State purchases of goods and/or services in which the payment of Sales Tax applies, the value thereof shall be withheld in each payment document, this amount shall be paid to the General Treasury of the Republic within ten (10) calendar days following the transaction. For purposes of the foregoing period, no withholding institution may make use of these resources to finance expenses of any nature. The provisions in the foregoing paragraph are applicable to both Decentralized and Deconcentrated Institutions and all Project Executing Units without exception, who as Withholding Agents must deliver to the provider of goods and/or services, the withholding receipt, so that they can accredit to the Tax Administration Service (SAR) the amounts paid for this purpose. In the case of the Central Administration, the foregoing results in an automatic operation at the time of payment of the corresponding F-01 document.

All institutions of the Public Sector in budget execution must provide information that allows identifying the goals and indicators provided for in the planning and their relationship with what was budgeted, including procurement and contracting data properly reflected in the Plan of Purchases and Contracting (PACC). IX. PUBLIC INVESTMENT

Every initiative for a program and/or project to be financed with resources from the national treasury; loan resources; donations and any other source; must have the Strategic Alignment analysis, issued by the Presidential Directorate of Planning, Results-Based Budget and Public Investment, of the General Coordination Secretariat of Government, which shall issue an Opinion that will certify the Alignment of the program or project to Government priorities within a maximum period of ten (10) business days, the non-issuance thereof within the established period shall authorize proceeding with subsequent steps. This certification shall be a requirement to continue with the different regulatory requirements by the State Secretariat of the Office of Finance. The State Secretariat of the Office of Finance, through a Committee of Budget Incorporations made up of the General Directorate of Public Investment, General Directorate of Macrofiscal Policy, General Directorate of Budget and General Directorate of Public Credit, shall issue a Technical Note jointly, in order to determine if there is fiscal space for financing with external credit and donation funds for a new project. In the case of Treasury and/or own Resources, they must have availability within the budget of the executing institution which must demonstrate the budget structure. Every requesting institution of fiscal space must submit the executive summary of the Project and the respective Alignment certification issued by SCGG to the State Secretariat of the Office of Finance through the General Directorate of Public Investments.

The General Directorate of Public Investments shall issue the respective Priority Note for new Investment Projects, for which the requesting Public Sector institutions must present the Project document within the framework of the General Methodological Guide for Formulation and Evaluation and register in the National System of Public Investment of Honduras (SNIPH). The Priority Note does not constitute an obligation for the State of Honduras; it is issued for financing management purposes and has a validity of two (2) years from the date of its issuance, when the Process of Financing Management and Negotiation of the project is not completed. The Priority Note shall be issued within a maximum period of fifteen (15) business days provided that it has all the required documentation. Once the Priority Note is issued by SEFIN, the executing unit must conclude the Priority Note cycle in SNIPH.

The State Secretary of the Finance Ministry is authorized so that, through the General Directorate of Public Investments, it may consider as part of the prioritization process of new investments, indicators of comprehensive disaster risk management, climate change, gender equity, specific programs aimed at women and human rights, as well as the priorities established in the Regional Development Plans, to promote more balanced development among the regions of the Country Vision and in accordance with the natural, cultural and social potentialities of the territory and its focus on the purposes of the Strategic Government Program 2018-2021.

Following the issuance of the Priority Note issued by the Finance Ministry, through the General Directorate of Public Investments, when it is necessary to modify technical aspects in the project formulation, Public Sector institutions must request from the Finance Ministry a "Technical Opinion on Amendment to the Priority Note," in the following cases: inconsistencies in the project name (provided that it does not affect its objective and scope), Change of Executing Unit, coverage, geographic location, increase or decrease in project cost and Source of Financing. For this purpose, Public Sector institutions shall be required, through the UPEGs, to attach the proper supporting documentation that justifies and allows for technical analysis, for the issuance of the corresponding Opinion that includes accumulated physical and financial progress. In the case that a change in objective and/or scope is required, it shall be considered as a new Project. To ensure efficient use and proper administration of investment resources, a maximum of three (3) Amendments to Priority Notes is established and their amount must not exceed in any case a cumulative maximum of 25% of the initial cost of the Program or Project.

For requests for new phases of projects in execution, the requesting institution must submit the Mid-Term Report and the Closing Report of the previous phase that indicates the results achieved and the fulfillment of the proposed objectives of the project.

Notwithstanding 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 body must be established in the loan agreements up to ten percent (10%) of the total amount of the agreement. In the case of donation counterparts, this shall be up to twenty percent (20%) and preferably shall be provided in kind. Every executing institution of programs or projects must consider within its budget the amounts corresponding to counterparts when required. In exceptional cases, the State Secretary of the Finance Ministry is authorized to raise the percentage limit of national counterpart funds of the Project that deems it warrants special treatment in accordance with the budgetary and financial capacity of the Institution.

Administrative expenses shall not exceed ten percent (10%), regardless of the source of financing of the total project cost, which must be clearly reflected in the budgetary structure corresponding to administrative expenses of the Executing Unit and in the case of Project Management Units (UAP) the combined sum of projects under their administration. Non-compliance with this Article shall result in temporary disablement of the BIP Code until excess Current Expenditure resources are transferred to investment. The cost of supervision of projects submitted by public sector institutions to the State Secretary of the Finance Ministry for issuance of priority note, based on Article 62 of the Budget Organic Law that exceed ten percent (10%) of the total cost of Project construction, must present in the project document the proper technical justifications associated with the particularities of each project such as: geographic location, installation logistics, indirect expenses, professional fees and social benefits among others, that support the increase of the established percentage. Prior to the approval of supervision contracts by the National Congress, every public institution must comply with what is established in this paragraph.

The State Secretary of the Finance Ministry through the General Directorate of Public Investments; the General Coordination Secretariat of Government through the Presidential Directorate of Strategic Planning, Results-Based Budgeting and Public Investment, Presidential Directorate of Monitoring and Evaluation 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 consensual opinion for the timely decision-making in relation to programs and projects, said opinion must be sent to the corresponding authorities.

Expansions, execution closure periods, disbursement period and grace period of projects regardless of the source of financing must have the Technical Opinion of the General Directorate of Public Investments of the State Secretary of the Finance Ministry. This Directorate shall issue a technical opinion prior to management before International Bodies by the General Directorate of Public Credit which must be established in International Agreements. For this purpose, it is a mandatory requirement to present to the General Directorate of Public Investments, prior to the issuance of said Opinion, the following:

• 1)

  Report of accumulated physical and financial execution of the project;

• 2)

  Rescheduling of activities that include costs per activity, and at the project closing stage must contemplate only administrative and accounting personnel; and,

• 3)

  Demonstrate that administrative expenses do not exceed 10.0% with respect to the total investment. Have seventy-five percent (75%) of committed resources (reimbursable and non-reimbursable funds) according to the contract executed of the total amount of the project and corresponding Justifications.

For programs and projects in closing, only the necessary administrative and accounting personnel must be maintained in the executing unit to comply with the closing activities thereof, and must submit to the DGIP six (6) months before the project closing date the payroll of the essential personnel for the closing thereof. To comply with the above, the General Directorate of Public Investments of the State Secretary of the Finance Ministry shall issue a Technical Opinion at the request of the institution, in which it shall evaluate the need for human resources and the time necessary to complete pending activities, and must attach a comparative analysis of the personnel reduction.

Once the extensions of periods, disbursement period, project closings, grace period have been authorized by the financing bodies or amendments to the Priority Notes have been authorized by the Finance Ministry, the executing units of projects shall have ten (10) days to register them with the corresponding changes in the informatics tool of the National System of Public Investments of Honduras (SNIPH), with the supporting documentation.

Public Sector Institutions that execute public investment programs and projects regardless of their source of financing must adjust their commitment and payment programming strictly to their Current Budget. The supervision of any project carried out by Public Sector institutions must be conducted by the public authority related to the work being developed.

All Public Sector institutions that execute Public Investment projects, whether with national and/or external sources, shall be obligated to formulate and register based on the General Methodological Guide for Project Formulation and Evaluation (GMG) and maintain updated physical and financial information thereof in the information technology tool of the National System of Public Investments of Honduras (SNIPH). Non-compliance with this provision shall result in the Ministry of State in the Office of Finance, through the General Directorate of Public Investments, proceeding to temporarily disable the BIP code assigned in the SNIPH until compliance with what is established in this Article. In the case of Public-Private Partnership (PPP) Modality, these must register in the SNIPH the formulation based on the GMG.

All Public Sector institutions that execute Institutional Programs and Investment Projects must identify and mark in the programmatic structure at the level of activity or work in the Medium-Term Budget Framework (MPMP), in accordance with the budget classifier for Climate Change, which was developed based on technical criteria oriented toward mitigation, adaptation, and disaster management related to Climate Change; an activity that must be developed by the Budget Sub-managements jointly with the UPEGs of said institutions.

All Public Sector Institutions that execute public investment programs and projects whether with national or external funds must register the main Milestones of the contract in the National System of Public Investments of Honduras (SNIPH), once the Monitoring Sub-module is implemented. When the project is financed with national funds, the analysis shall be based on the State Contracting Law; in case it is financed with external resources, the regulations of the corresponding financing organization shall apply, in compliance with Article 1 of the State Contracting Law. Non-compliance with this provision shall be the direct responsibility of the Project Executing Unit and shall result in the Ministry 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.

The Executing Units of Programs and Projects must not enter into contracts for works, goods, services, or supplies whose closing date extends beyond the project completion date. 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:

• 1)

  Approved budget and proposed modification by investment category/component;

• 2)

  Committed resources and project availabilities by investment category/component;

• 3)

  Report of accumulated physical and financial execution of the project; and,

• 4)

  Corresponding justifications.

The Ministry of State in the Office of Finance is authorized to transfer to Institution 449 "Financial Services of the 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 completed the term of validity of the agreement and have been liquidated, with the purpose of optimizing State resources, in order to meet the requirements of other projects.

All public investment contracts, subject to the State Contracting Law or Efficient Purchasing Law through Electronic Means, that the Public Administration enters into, as well as their modifications, must be registered in the HonduCompras System, no later than 30 days after being executed and remit a certified copy of each works contract to the General Directorate of Public Investments of the Ministry of State in the Office of Finance.

To guarantee the sustainability of investment projects that conclude, institutions must include information about the recurring cost or maintenance cost that said projects will require during the implementation or production stage. This information shall be included in the formats that the General Directorate of Public Investment defines to present the investment plan and shall form part of the documentation that will accompany the Budget of Income and Expenses of the Republic for the following Fiscal Year.

Modifications to the structure of positions in the institutions of the Central Administration, ruled upon by the General Directorate of Civil Service or others governed by Special Laws must be authorized by Internal Resolution of the Ministry of State in the Office of Finance; these modifications must be financed with the approved budget of each Executing Unit. In the case of modifications to the position structure of Decentralized Institutions, these must be authorized by their Superior Bodies based on their Special Laws; these must not imply wage increases, and if they have a budgetary effect, they must have the same within their budget and remit the request for Opinion to the Ministry of State in the Office of Finance through the General Directorate of Budget prior to its execution, in accordance with what is established in Article 142 of this Law. Violation of this Article shall be subject to the provisions of Article 5 of this Law.

When new positions are created or any personnel action is intended to be carried out, the procedure must be followed through the Human Resources Management System (SIARH) of the Integrated Financial Administration System (SIAFI) for administrative personnel of the Central Administration and in the case of Teaching Personnel of the Ministry of Education it must be done through the Teaching Human Resources Management System (SIARHD). Prior to initiating these processes, there must be a position structure and assigned budget, which must be confirmed by the State Secretariat in the Ministry of Finance through the General Directorate of Budget. The position structure will be generated in the General Directorate of Civil Service or in the Sub-management of Teaching Human Resources as appropriate and prior to the creation of new positions in the Detailed Annex of Basic Salaries and Wages, the General Directorate of Civil Service or the Sub-management of Teaching Human Resources must proceed with their classification. State Universities are excepted, which may directly hire teaching personnel at the highest level when necessary for their optimal development, provided they have the availability of budgetary resources.

The preparation of payroll for personnel incorporated into the Civil Service Regime, 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 Management System (SIARH), which is governed by the General Directorate of Civil Service, as a module of the Integrated Financial Administration System (SIAFI). The Teaching Human Resources Management 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 Expenditures of the Republic. In order to regulate these allocations, expansions through budgetary modifications for this expenditure subgroup are prohibited, with the exception of adjustments for minimum salary provided the institution has budgetary availability, reimbursements by court order and back pay; as well as exceptional cases for the Health sector, when due to the nature of its functions the hiring of medical personnel is required for normal operation while the competition process is concluded (object 12910 Special Contracts). This norm applies to all sources of financing, excepting resources from Donations. The holders, the Heads of Executing Units, and the Contracting Administrative Managements are directly and exclusively responsible for personnel selection, which must be conducted based on competencies, skills, expertise, academic merits, probity and other suitability requirements considered necessary for the efficient performance of the position. These contracts are valid only within the current Fiscal Year, and personnel hired under this modality should not be considered, for any purpose, as permanent and their effectiveness shall be counted from the date this personnel takes possession of the position. This type of hiring shall be formalized through an Internal Agreement of each Public Sector institution and in that Agreement no payment of vacation bonification shall be agreed upon. It is prohibited to appoint non-permanent personnel (12000) when in the Detailed Annex of Basic Salaries and Wages of the State Secretariats or their equivalent in the rest of the Public Sector Institutions there are approved positions for the performance of the functions subject to the contract. Officials who fail to comply with this Article shall be jointly and severally liable financially for all obligations generated.

The 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 serve to pay personnel who perform administrative or technical functions. The hiring of personnel whose functions are different from those corresponding to the nature of work as wages is prohibited, in such cases direct responsibility shall fall upon the official or officials who violate the provisions of this Article. This personnel is not classified as permanent for any purpose, likewise, vacation bonification should not be considered in the corresponding resolution.

To servers of the Central Government under contract modality, under object 12100 who voluntarily request contract resolution by mutual consent, the State may grant them indemnification in accordance with 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:

• 1)

  That the contract has been resolved by mutual consent;

• 2)

  That the beneficiary is not a participant in any of the State's social security systems;

• 3)

  Have contracts subscribed for at least 10 consecutive budget periods; and,

• 4)

  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 in the regulations of these dispositions. This benefit shall also apply to those public servers who hold positions of excluded service provided they have worked consecutively for a period not less than two (2) years.

The Specific Object 12910 special contracts, allocation for personnel contracts for a period not exceeding ninety (90) days in the fiscal period, are personnel contracts that complement the activity proper to each institution and require monthly payments. It includes hiring to cover absence of personnel due to the enjoyment of acquired rights in accordance with current regulations such as: sick leave, maternity, scholarships, paid leave. Such hiring must have the legal support that justifies it. Due to the nature of the contract it has no right to vacations, thirteenth month as bonus, fourteenth month as social compensation and other rights of employees that are financed through other objects of Subgroup 12000.

For the payment of salaries of diplomatic, consular personnel or those holding representation positions abroad, after the 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 must be covered with its own budget.

Retirees and Pensioners of any State institution may be hired, with national or external funds to provide their personal and/or professional services, as well as hold positions of popular election, without detriment to their retirement or pension benefits.

The institutions of the Central Government, Decentralized and Deconcentrated, may not use funds from loans or donations, in order to make salary supplements or increases or grant additional salaries to public servers.

All officials of the Central Government and Deconcentrated Institutions covered by Article 3 of the Civil Service Law shall enjoy the right to enjoy unpaid annual vacations granted in accordance with the periods established by said Law, provided that the following circumstances occur: 1) That they are outside the Regime established by the Civil Service Law and its Application Regulation; and, 2) This right is acquired after completing the first year of service without interruption. In the event that due to work demands the officials of the Central Government and Deconcentrated Institutions have not enjoyed the time of vacations based on Law, they shall have the right to payment thereof. For these purposes, they must comply with the requirements established in Article 128 of the Regulation of the Civil Service Law.

The appointment of personnel by Agreement as excluded shall be prohibited in positions not included in Article 3 of the Civil Service Law.

Public Servants who, having been dismissed, have sued the institution in which they worked, during the time the case is in process and pending judgment may work under temporary contract form in any institution of the Public Sector. In the case of a final judgment in which the State is ordered to pay indemnification and/or reinstatement with payment of damages and lost wages, the salaries received by the contractor during the course of the lawsuit shall form part of the quantification of the indemnification for lost wages set forth in the condemnatory judgment, consequently, they shall form part of the final liquidation payment made effective to the contractor. 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.

The appointment of personnel in vacant positions shall be permitted only when the lowest average salary of positions of similar or equal category to which the person will be appointed is assigned. 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 enhancing 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 as of December 31, 2019 shall be eliminated, except those positions of Direction, teaching services, health care and security, as well as cases duly justified before the Finance Secretariat. The General Directorate of Civil Service and equivalent Bodies in the rest of the Public Sector institutions shall submit to the State Secretariat in the Finance Department and to the Superior Court of Accounts (TSC) no later than January 30, 2020 the corresponding reports demonstrating the actions taken in compliance with this provision. The Administrative Managements of each institution through the Human Resources Sub-managements 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 in the Finance Department, specifically to the General Budget Directorate, no later than January 31, 2020, the Detailed Schedule of Salaries corresponding to Fiscal Year 2020 in accordance with the format provided by the State Secretariat in the Finance Department. This shall contain the positions of permanent, trust, temporary and daily wage personnel, collateral benefits and other benefits granted to them. Likewise, said schedule shall be updated in accordance with changes that occur during the present Fiscal Year. The Directors of each Institution shall be responsible for compliance with what is established in this provision.

In order to guarantee compliance with Executive Decree PCM-021-2016, containing Guidelines related to the registration and control of public servants, the salaries of all employees and officials of Public Sector institutions, except Local Governments, shall be registered month by month in the System for Registration and Control of Servers (SIREP) according to their payment method (biweekly, monthly, fortnightly, among others), mode of contracting and object of expense to be charged, likewise, they must keep the files updated in the Server Registration Module; the foregoing for employees and officials registered in the Personal Services Group, financed with National Treasury Funds, Own Resources or External Funds; in the case of contracts under spending Subgroup 12000, prior to the signing of the contract and beginning the provision of services, the file must be registered for approval in SIREP. Likewise, all Consultants who receive professional fees and who are registered under the Non-Personal Services spending 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 circumstances as permanent or temporary employees of State institutions, in accordance with what is established in Article 82 of this Law. Non-compliance with this provision shall result in affecting the timely delivery of disbursements made by the General Treasury of the Republic to each of the Institutions or the disabling of the payment delegation. Likewise, Administrative Managers and Human Resources Managers or Sub-managers who violate these provisions shall be jointly and severally liable for an amount of 10 minimum salaries.

Decentralized and Deconcentrated Institutions shall be limited to the number of positions and amounts that have been approved in their budget and that appear in the Opinion approved by the State Secretariat in the Finance Department; notwithstanding the foregoing, the General Budget Directorate shall review said positions based on the corresponding report on vacant positions established in Article 134 and the update of the Detailed Schedule established in Article 135 of this Law, for the purpose of validating the number of positions the institution will have for the present Fiscal Year. The reassignment of functions and renaming of positions is an administrative action of each Decentralized and Deconcentrated institution, therefore 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; this type of action must not imply changes in the position amount, if so it must request the corresponding authorization from the State Secretariat in the Finance Department, in accordance with what is established in Article 120 of this Law. Decentralized and Deconcentrated Institutions that carry out the administrative actions described above shall make the corresponding adjustments in SIREP; likewise, it must take into consideration the current legal regulations regarding Human Resources.

The obligations arising from the employment relationship, such as benefits, severance and indemnifications established in the Law, shall be assumed and paid by the State, with the budget allocated to the institution where the public servant was providing services. Each institution shall assume payment for final judgments regardless of their nature. In the event that the State is defeated in court regarding payment for the concepts referred to in this Article; the head of the nominating unit, the officials and/or employees who intervene in the administrative acts that give rise to the payment shall not be personally or jointly responsible.

Authorization is granted to the Government Institutions: Central, Deconcentrated and Decentralized so that, when a State server resigns, is dismissed or laid off and has not received payment of the Thirteenth Month of Salary as Bonus, Fourteenth Month of Salary as social compensation, vacations or any other benefit that corresponds according to Law or Collective Bargaining; the proportional payment of these shall be made 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 Bonus and Fourteenth Month of Salary as social compensation shall also be granted to officials, daily wage personnel and contract personnel of the Public Sector who are included in Group 10000 of Personal Services. With the exception of expense item 12910.

For the calculation of overtime hours, compliance must be made with the provisions set forth in the Regulations of these General Provisions. Without prejudice to the provisions of Article 31 numeral 1), subsection c) of the Tax Equity Law, contained in Decree No. 51-2003 dated April 3, 2003, the personnel of Air Traffic Service (Air Controllers) and Aeronautical Information Services (Flight Plan) dependent on the Honduran Civil Aeronautics Agency and Security, Transport and Issuance and Treasury Personnel of the Central Bank of Honduras, as well as BCH personnel related to the National Survey of Income and Expenses of Households (ENIGH) and the National Agricultural Development Bank, linked to custody, transfer and handling of valuables, are incorporated within the exceptions referenced by said legal provision, related to the authorization and payment of overtime. The following officials are excluded from overtime pay: State Secretaries and Undersecretaries, General Secretary, Presidential Directors and Subdirectors, General Directors and Subdirectors, Directors and Subdirectors, Internal Audit Chief and Subchief, 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 Decentralized Administration Institutions and Deconcentrated Entities, whether permanent, by contract or any other modality who enter public service during the validity of this Decree, must be consistent with the remuneration earned by those of equal category in the Central Administration. To carry out monitoring and oversight of salaries and wages of Decentralized Administration Institutions and Deconcentrated Entities without exception, they must send to the State Secretariat in the Finance Office the complete payroll containing permanent, confidential, 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 Directorate and the General Directorate 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 Public Servants Registry and Control System (SIREP). This provision is also applicable when new positions are created in any public institution.

Savings in the allocations of basic salaries of Permanent Personnel, derived from: cancellation of positions, creation of positions by merger, temporarily vacant positions, positions that earn a lower salary than budgeted or by the cancellation of supernumerary personnel in the Public Sector, should not be used for: salary increases, adjustments, equalizations, and/or hiring of personnel nor be transferred for another purpose; except for:

• 1)

  The creation of positions upon favorable opinion of the State Secretariat in the Finance Office, through the General Budget Directorate, when it is personnel that, by the nature of their functions, is required for the normal functioning of any State body;

• 2)

  To satisfy urgent and unforeseen needs, such as:

  • a)

    Emergency Expenses, decreed by the President of the Republic;

  • b)

    Internal commotion or public calamity;

  • c)

    Payment of labor benefits and/or severance;

  • d)

    Payment of Labor Claims by court order, in cases where no other source of financing is available;

  • e)

    Cover Minimum Wage; and,

  • f)

    In the case of the State Secretariat in the National Defense Office, indemnifications to personnel established within the legal framework of the Armed Forces and recognition for services rendered to the nation equivalent to the amount resulting from applying severance assistance may be covered. 3) Likewise, with the savings generated by positions that become vacant due to retirement, pension, death or any other cause of teaching staff of the State Secretariat in the Education Office, these will be reinvested one hundred percent (100%) in the programs and projects of the same Secretariat to improve coverage and quality of Education in coordination with the State Secretariat in the Finance Office, in the same way, positions of first-entry teachers may be created assigning them the base salary established by Law; and, 4) With the savings generated by positions that become vacant due to voluntary retirement and restructuring of the National Police, these will be reinvested one hundred percent (100.0%) in the programs of the Security Secretariat to create positions of first-entry police officers assigning them the base 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. The foregoing is excepted for those State Secretariats and Deconcentrated Institutions that have the respective financial and budgetary availability that supports the benefit to be granted, for which the public institution must accompany the opinion request with the Economic and Financial Study that certifies the sustainability of said benefit and the same cannot exceed the average consumer price index (CPI) established by the BCH at the close of 2019, except in those cases that result from a restructuring and/or reengineering process. The State Secretariat in the Finance Office through the General Budget Directorate shall proceed to conduct the corresponding review and analysis and shall issue the respective Opinion, after analysis and Opinion issued by the General Civil Service Directorate.

Any salary increase intended to be granted in Decentralized Institutions in the present fiscal year shall not exceed the average consumer price index (CPI) established by the Central Bank of Honduras (BCH) at the close of 2019, likewise, Decentralized Institutions must demonstrate that they have the respective financial and budgetary availability that supports the benefit to be granted, for which these institutions must accompany the Economic and Financial Study that certifies the sustainability of said benefit, to the Opinion request that will be issued by the State Secretariat in the Finance Office, through the General Budget Directorate, likewise, this Directorate shall issue opinions on adjustments to the minimum wage intended to be granted. The application of the CPI is excepted for those institutions with Collective Contracts already negotiated and in force in which a different percentage is established, provided that these can be covered both budgetary and financially without implying an expenditure by the National Treasury, the institution that intends to grant said benefit must request the corresponding Opinion as established in the first paragraph of this Article regardless of the Contract's validity.

Every Decentralized Institution that conducts a new collective negotiation or review of its economic clauses must request prior to the Denunciation of the Collective Contract in the State Secretariat in the Offices of Labor and Social Security (SSTS) the corresponding Opinion before the State Secretariat in the Finance Office (SEFIN) through the General Directorate of Decentralized Institutions, said Opinion shall be exclusive to the content of the articles referred to in the negotiation. The State Secretariat in the Offices of Labor and Social Security (SSTS), must request as part of the documents accompanying the Minutes of the new negotiations of Collective Contracts the Opinion issued by the State Secretariat in the Finance Office (SEFIN) referred to in the previous paragraph prior to giving authorization or denunciation of any new collective negotiation. New collective negotiations cannot consider salary increases greater than the average consumer price index (CPI) established by the Central Bank of Honduras (BCH) at the close of the previous year, of which the General Directorate of Decentralized Institutions must ensure.

The salaries earned by State Secretaries and Undersecretaries shall be those that appear approved in the Detailed 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 the teachers contracted by said program through deposits to their respective bank accounts. For this purpose, it must have the technological platform that enables the making 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 Education Office through the administration of said program and coordinated with the General Human Talent Directorate of the same Secretariat.

In the Teaching Sector (teaching staff) the division of teaching positions originating from retirement, vacant positions or canceled positions for the purpose of supplementing teaching hours of teachers will not be permitted, it is only authorized when they are allocated to the hiring of teachers strictly in front of students to which the base salary would be assigned to meet the needs in single-teacher schools in the pre-basic and basic modalities.

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 contracted as interim teachers, as of the month of February of the year 2016, the period of the contract must 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 of February to June and July to November of each year in its case.

Any action involving the transfer of position or teaching personnel, prior to its approval, must have the position or the person who will replace it, and must previously notify the State Secretary in the Finance Ministry so that it may issue the Internal Resolution, the budget modification and the Itemized Annex of Basic Salaries and Wages. For this purpose, the justification for the movement must be attached. In relation to the State Secretary in the Health Ministry, any person who for any reason has been transferred to a zone, region or area different from 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 that originally performed by the appointment.

The appointment of teachers and/or the assignment of functions in educational centers at 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 and will not generate any economic responsibility to the State. Violation of this norm will make personally responsible for the payment of these services the officials or employees who authorize such actions.

Officials or employees of the Central Government, Deconcentrated and Decentralized Government, who must participate in official events outside the country, invited by international institutions or organizations, may participate provided that per diem and other travel expenses are covered in their entirety by the sponsors; only the payment of airport exit taxes will be recognized, provided that it is not included in the cost of the airline ticket. When officials or employees of the Central Government, Deconcentrated and Decentralized Government participate in official events outside the country duly justified, with State resources, it will be limited to two (2) participants per Institution, and in any case at the general level no type of supplement will be authorized when per diem is provided by the event's sponsoring organization. When it comes to special missions carried out on behalf of the country, there will be no limits to its representation, provided they are authorized by the Presidency of the Republic, by Executive Agreement. Municipalities are excluded from this provision, which must have the necessary resources in their current budgets to cover participation in official events outside the country. And be approved by the respective Municipal Corporations. Excepted from what is established in this provision are the National Commission of Banks and Insurance (CNBS), Central Bank of Honduras (BCH), Public Ministry (MP), Supreme Court of Justice (CSJ) and Justice Operators for the work of financial supervision, formulation, development and execution of the country's monetary, credit and exchange policy and national security that they carry out jointly with entities both at the national and international level, maintaining links with regional and world institutions necessary to comply with their main purposes, these institutions for all their trips abroad must be governed by the provisions contained in the Regulations on Per Diem and Other Travel Expenses for Officials and Employees of the Executive Power.

Budget allocations for scholarships may be used provided that the following is taken into consideration:

• 1)

  The subscription 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 the institutions of the public sector, aimed at obliging them to, in reciprocity for the financial aid received, work for the agency that nominated them for a period not less than double that of the financial aid for the completion of studies, upon proof of having obtained the respective title 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 the obligation to return. Only for reasons of force majeure sufficiently proven at the discretion of the Administration through the institution that nominated them, shall the scholarship recipient be exempt from said responsibility;

• 2)

  That the State guarantee the permanent scholarship-holding personnel their work in the position they hold on the date they are authorized to study within or outside the country and that upon their return they be assigned functions in accordance with their level of study and if possible the corresponding salary according to the level of studies achieved; and,

• 3)

  That the scholarships granted within 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 fulfill this obligation by providing their services in a government agency different from the one that granted the scholarship. Applications for scholarships have preference where the applicants are women who have sponsorship of partial or total financing from national, international institutions or organizations or cooperating Governments, and total or partial scholarships may be granted 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 has ended and the respective title has been 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 will be formalized through an official letter from the head of the agency in the Central Administration, in Decentralized Institutions, it will be done through an official letter from the head thereof and in the Judicial Branch and Legislative Branch it will be done through their internal regulations. If the duration of the scholarship exceeds one (1) month, the authorization or extension will be made through a Ministerial Agreement, when it comes to State Departments, in the case of Deconcentrated Bodies and Decentralized Institutions the authorization will be made through a resolution of the Governing Body, in the Judicial Branch and Legislative Branch it will be done through their internal regulations. In all cases, the financing of studies must be attended with the resources allocated for this purpose in the budget of each institution of the Central Administration, Deconcentrated Bodies and Decentralized Institutions. In the case of the State Secretary in the National Defense Ministry, the concept of scholarship will also include travel expenses and travel costs, in accordance with the scholarship recipient's study allocation.

The obligation that the State has to make payment for 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), will be limited to the allocation approved in the Budget of the State Secretary in the Labor and Social Security Ministry for the present Fiscal Year.

The employer contribution paid by the State to the Social Security Institutes cannot exceed the percentage established in their respective Laws. The allocations intended for the payment of employer contribution to the Institutes mentioned above cannot be transferred for another purpose, unless savings are identified in these allocations, which may be directed to finance what is established in numeral 2 of Article 141 of this Law. Likewise, both employer and labor contributions of public servants must be paid in full to the social security institutes in the month that corresponds, and it is strictly prohibited to use them for other purposes, the same applies to deductions for loans made to public servants. 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 fail to comply with this Article will be jointly and severally responsible financially for all obligations generated without prejudice to civil, administrative and criminal liability.

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 suppliers of goods and/or services or employees, must be paid in full by the respective institutions in the month that corresponds, and it is strictly prohibited to use them for other purposes. The Heads and Administrative Managers or whoever acts in their place who fail to comply with this Article will be jointly and severally responsible financially for all obligations generated without prejudice to civil, administrative and criminal liability.

Public servants working in the General Directorate of Protection for Human Rights Defenders will earn salaries in accordance with their responsibilities, special capacities and professional risk; for this purpose the State Secretary in the Finance Ministry will issue the corresponding internal Resolution in accordance with the Opinion of the General Directorate of Civil Service, complying with what is established in the current legal regulations. XI. OF DECENTRALIZED INSTITUTIONS

Without prejudice to the limit established in Article 51 of the Organic Budget Law and for the purpose of expediting the financial investments of the Social Security Institutions 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 invest these resources in securities and bonds with high security, profitability and liquidity. Likewise, the additional income generated in accordance with what is established in the preceding paragraph may also be used for the payment of operating expenses related to the service provided by said Social Security Institutes and Financial Institutions based on their own laws, observing compliance with the budgetary norms contained in this Law and prior Opinion of the State Secretary in the Finance Ministry. The National Commission of Banks and Insurance (CNBS) through its specialized technical body must supervise that the financial investments made by these institutions comply with the established norms and/or technical criteria.

For the execution of the budget of the present fiscal year, the pension institutes, INPREMA, INJUPEMP, INPREUNAH and IPM, must obtain a Net Loan Concession equal to or less than zero, that is, that the granting of loans must be equal to or less than the amount of their recovery, provided that these exceed the limits established in the Regulations for Investments of Public Funds (Minutes No. 1148 of the CNBS, published in La Gaceta No. 34,418 of August 16, 2017), this provision shall apply to the IHSS in case this institute is authorized to grant loans to its affiliates. In exceptional cases and with the prior opinion of the National Commission of Banking and Insurance, the aforementioned institutes may have a net concession different from zero.

The Surplus reflected by the Public Pension and Social Security Institutes may be used for financial investments in the purchase of securities, Treasury bills from the General Treasury of the Republic and the Central Bank of Honduras, time deposits, purchase of shares and any other instrument typified in the Regulations for Investments of Public Pension Funds, as well as the limits established by instrument in the same Regulations (Minutes No. 1148 of the CNBS, published in La Gaceta No. 34,418 of August 16, 2017).

The Public Pension and Social Security Institutes, prior to any modification in the structure of benefits to active members, pensioners and retirees of their systems, including changes in payment frequency and increases in pension amounts, must obtain authorization from the National Commission of Banks and Insurance (CNBS), for which they must submit the corresponding application to the CNBS, attaching to it the technical actuarial 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, supported by the corresponding technical actuarial study.

The Public Pension and Social Security Institutes must submit to the General Directorate of Decentralized Institutions of the State Department of Finance on a monthly basis no later than ten (10) days after the end of the month, the details 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 ONE HUNDRED FIFTY MILLION LEMPIRAS EXACTLY (L150,000,000.00). The National Port Authority (ENP) is prohibited from transferring said Transfer toward a purpose other than the one for which it was approved in accordance with Law or executed in favor of a different beneficiary. The value described in this Article must be paid to the General Treasury of the Republic, in accordance with the payment schedule that is prepared jointly between it and the aforementioned Institution, which must be agreed upon no later than January 31, 2020; 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 State Department of Finance is authorized to request the Central Bank of Honduras (BCH) 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 outstanding installments. Notwithstanding the foregoing and based on what is established in Article 269 of the Constitution of the Republic, the Executive Power through the State Department of Finance may authorize and dispose, in case the financial situation of this Institution permits, additional or complementary funds to address programs and projects that the Government considers necessary.

From the transfer consigned in the previous Article for the Central Administration from the National Port Authority (ENP), an amount of EIGHTEEN MILLION LEMPIRAS EXACTLY (L18,000,000.00) shall be allocated to finance the operation of the National Maritime Security Commission (CNPP), attending to what is established in Article 2 of Executive Decree PCM-050-2013, which amends the Law for the Creation of the CNPP PCM-002-2004. The CNPP must adjust its Annual Operating Plan and Budget for 2020 to the figure approved in this decree, and must also submit to the State Department of Finance, through the Administrative Management, the corresponding reports monthly of both physical and financial progress; the foregoing will be a condition for the corresponding disbursements.

From the transfer consigned in the

of this Law, from the National Port Authority (ENP), an amount of TEN MILLION LEMPIRAS EXACTLY (L10,000,000.00) shall be transferred to the Presidency of the Republic for the fulfillment of the functions of the Technical Unit for Logistics Execution (UTEL) of the National Logistics Council (CNL), created by Executive Decree No. PCM-053-2018, Articles 1, 7 and 9 of said Law. Likewise, allocate from the transfer consigned in Article 165 of this Law an amount of FIFTY MILLION LEMPIRAS EXACTLY (L50,000,000.00) to the Ministry of Agriculture and Livestock for the Agricultural Research program through the Honduran Foundation for Agricultural Research (FHIA). From the transfer consigned in Article 165 of this Law an amount of SEVEN MILLION LEMPIRAS EXACTLY (L7,000,000.00) is allocated to the Ministry of Investment created by Decree PCM-009-2019, with the purpose of contributing to the generation and development of projects in favor of the Honduran population.

The budgetary modifications of the Decentralized Institutions are governed by the provisions of Article 51 of the Organic Law of the Budget, 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 (BCH), are excepted, which must be approved by its Board of Directors and report to the State Department of Finance 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 Law of the Budget, provided that the availability of the resources to be incorporated is demonstrated and that the total of the projection of approved income has been collected at one hundred percent (100.0%). In case it is necessary to incorporate income generated in previous years, these must be imputed to the allocation approved in the present Fiscal Year, provided that their existence is demonstrated; once the collection goal is reached, additional income may be incorporated.

The National Electricity Company (ENEE) is authorized to carry out liability management operations for outstanding bonds, with the purpose of minimizing risk and improving the profile of the debt portfolio. The liability management operations carried out by the National Electricity Company (ENEE) shall not count against the budgetary ceiling for authorized borrowing for the present year and may be carried out through swap operations, refinancing, early redemption of securities, loan contracting or another legally viable financial mechanism, being able to access the domestic and international market.

The National Electric Company (ENEE) is prohibited from reducing the amounts allocated in the following expense items: 21120 referred to Electric Energy for Resale, Bunker (35660) and Diesel (35670) the portion corresponding to energy generation; movements to these expense items shall only be authorized when they are to increase said allocations.

All Institutions of the Decentralized Administration 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 in their presentation with the requirements established in the International Accounting Standards; said information must be sent in digital format to the State Secretary in the Office of Finance specifically to the General Accounting Office of the Republic, to the General Directorate of Budget, to the Macrofiscal Policy Directorate and to the General Directorate of Decentralized Institutions.

In order to generate savings, meetings of Board of Directors or Governing Bodies of Decentralized Institutions shall 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 shall be avoided.

All Institutions of the Decentralized Administration that have allocated in their budget transfers for the Honduran Institute for the Prevention of Alcoholism, Drug Addiction and Pharmacodependence (IHADFA), must make said transfer effective before the end of October 2020, as well as any other transfer allocated 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 amount that has been agreed between the parties (IHADFA and Institution) as programming. In the particular case of social security and pension institutes (IHSS, INPREMA, INJUPEMP, IPM and INPREUNAH), said transfer must be financed with the additional resources received by said institutions, resources different from the contributions and/or fees they receive from affiliates to the system. Likewise, all public sector institutions that currently have pending transfers from previous years to IHADFA, must proceed to make effective the payment of the same with the budget of the Present Fiscal Year, making a reprogramming within it. The non-compliance with these payments causes the sanction established in Article 5 of this Law.

Public Service Companies are ordered to, within the period of one effective year from the effective date of this Law, proceed to clean up pending accounts receivable for the provision of services, having the option of performing subrogation for debt recovery in default or arranging a payment plan. The results of these actions must be reported quarterly to the Supreme Court of Accounts, to the Institute of Access to Public Information and to the State Secretary in the Office of Finance, through the General Directorate of Decentralized Institutions. The Administrative Managers of said companies shall be responsible for carrying out the actions referred to here, otherwise the sanctions established in this Law shall be applied to them.

All institutions of the Central, Deconcentrated and Decentralized Government that currently have pending debts with the Honduran Telecommunications Company (HONDUTEL), in concept of the different services offered by the company, must make effective the payment of the same with their respective budget in the present Fiscal Year. Non-compliance with these payments shall result in late payment interest and legal expenses attributable to the institutions and officials who violate this provision. In the case of Municipalities, compliance must be equal for both institutions (Hondutel, Municipalities) also incorporating the debts that ENEE and SANAA have with the Municipalities.

For the purpose of financing a voluntary retirement plan, the Honduran Telecommunications Company (HONDUTEL) is authorized to negotiate, contract and obtain a line of credit in the National Banking System under the best financial conditions of the market for an amount up to One Hundred Fifty Million Lempiras (L.150,000,000.00), resources that will be destined for the payment of labor benefits of the voluntary retirement plan, which will allow to reduce HONDUTEL's cash deficit. The Honduran Telecommunications Company shall record the debt assumed in accounting and incorporate it under revenue item 32201 Obtaining Internal Loans from the private sector for long-term contained in the General Budget of the Company for Fiscal Year 2020, without the need for the issuance of the Opinion established in Article 36 of Decree No 83-2004 dated May 28, 2004, published in the official newspaper "La Gaceta" dated June 21, 2004, as well as the opinion established in Article 52 of this same Law.

The Central Bank of Honduras (BCH) is authorized to, using resources approved within its budget, during the pilot period and implementation of the new National Survey of Household Income and Expenditures 2019-2020 (ENIGH 2019-2020), establish a monetary recognition mechanism for households that have been selected in the statistical sample of that survey and properly complete the questionnaires thereof, for the purpose of encouraging effective and complete participation of selected households, for the benefits and relevance that this information has for the updating of the National Accounts System, the basket of products and weightings of the Consumer Price Index and all derived socioeconomic indicators. Likewise, the Central Bank of Honduras (BCH) is authorized to contract goods and services through the direct contracting mechanism in case of contingencies, as well as the leasing of vehicles for activities related to said survey.

Exempt the Central Bank of Honduras (BCH) from the payment of all types of taxes related to the importation in the purchase of banknotes and Bank coins, as well as with the exportation of banknotes in foreign currency.

The funds collected as the four percent (4%) for tourist services, established in Article 43 of Decree No. 131-98 of April 30, 1998, must be incorporated to the State Secretary in the Office of Tourism by the State Secretary in the Office of Finance to be transferred to the Honduran Tourism Institute (IHT) which will be used expressly for promotion and development of Country Tourism and promote and encourage the self-sufficiency of said Institute; likewise, said values will not be subject to freezing, nor budget cuts and are excluded from any other restriction that is applied to expenses that are 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. From the previous four percent (4%) for tourist services, one percent (1%) shall be allocated to the creation of a fund for the promotion of municipal tourism projects. Likewise, the incorporated and unexecuted values at the end of the fiscal year may be incorporated for execution in the present fiscal year, otherwise the values shall remain in the common fund of the General Treasury of the Republic.

The National Agrarian Institute (INA) is authorized to incorporate into its Budget of Income and Expenses for the present Fiscal Year the amount of ELEVEN MILLION NINE HUNDRED FIFTY-FIVE THOUSAND ONE HUNDRED TWO LEMPIRAS EXACT (L.11,955,102.00), value remaining from own resources of previous fiscal years; said resources shall be allocated to cover the payment of benefits and compensation for its employees; likewise, the State Department in the Office of Finance (SEFIN) is authorized to make the corresponding budgetary modification.

The Honduran Institute of Tourism (IHT) is authorized to incorporate into its Budget of Income and Expenses for the present Fiscal Year the amount of up to NINE MILLION LEMPIRAS EXACT (L.9,000,000.00), value remaining from own resources of previous Fiscal Years; said resources shall be allocated to cover the tourist promotion carried out by the Institute; likewise, the State Department in the Office of Finance (SEFIN) is authorized to make the corresponding budgetary modification. Likewise, the Honduran Institute of Tourism (IHT) is authorized to transfer Five Hundred Thousand Lempiras (L.500,000.00) to the municipalities that are part of the Charming Towns Program. XII. STATE PROPERTY

The National Directorate of State Property (DNBE) is ordered to proceed with public auction to carry out the sale of national movable and immovable property that does not provide any utility to the State, in accordance with the Opinion issued by said Directorate. Likewise, the DNBE is ordered to assist municipalities in the process of property discharge, a procedure that must be executed in the present fiscal year to reflect financial statements as real information. From the sales generated through public auction, the National Directorate of State Property (DNBE) shall obtain a Fee of TWENTY PERCENT 20.0% on the amounts collected for such concepts, as the managing body of said processes. From the funds generated as a product of the Fee related in the preceding paragraph, the DNBE is empowered to incorporate them into its Approved Budget for both income and expenses in the month following collection, said amounts may be allocated to the hiring of certified appraisers by the CNBS, as well as temporary personnel and the acquisition of equipment required by the DNBE with the purpose of complying with the objectives established in its Law. The National Directorate of State Property (DNBE) shall act based on its Regulations of Organization and Operation (Executive Agreement No. 226-2017) and shall report to the Superior Court of Accounts (TSC) of the respective sales (30) thirty days after said sales are 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 ordered to comply with Decree No.114-2007 as amended, regarding abandoned vehicles. From the collections obtained, FIFTY PERCENT (50%) shall be granted to the institution owning the auctioned property, TWENTY PERCENT (20%) to the National Directorate of State Property and the difference of THIRTY PERCENT (30%) to the General Treasury of the Republic (TGR). For the purposes of this article, when these institutions intend to carry out auction processes on the aforementioned property, they are obligated to inform and invite the DNBE to participate in said processes, which may provide advice on such matters.

The National Directorate of State Property is ordered to proceed with the direct sale of merchandise that has fallen into abandonment in the various customs of the country remaining from auction, as well as in customs warehouses in the following cases: 1) Merchandise not awarded in public auction conducted by the Customs Administering Entity that due to its physical conditions cannot be donated to state institutions or public charity institutions; and, 2) Vehicles that entered national territory whose import 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, regarding 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 corresponds to vehicles, these must be sold as scrap, with the buyer obligated to dismantle them, which shall be done under the supervision of the Customs Authority. The Customs Administering Entity in coordination with the DNBE, within a period of twenty (20) days after the entry into force of this Decree, must issue the Regulations for this Article. Merchandise that has fallen into abandonment remaining from auctions conducted in application of this article and those donated to state institutions shall be exempt from collection or storage or demurrage fees that may have been incurred during their stay in the country's customs warehouses. The 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).

Decentralized and Deconcentrated Institutions operating outside the Integrated Financial Administration System (SIAFI) shall send to the National Directorate of State Property (DNBE) no later than January 30, 2020, the inventory of goods in use and consumption existing as of December 31 of Fiscal Year 2019, as well as a detail of the losses of these inventories. Likewise, in order to guarantee compliance with what is established in Article 6 of Legislative Decree 274-2010, on the creation and function of the National Directorate of Property: "The responsibility for the administration of movable and immovable property corresponds to the heads of the administrative departments of the corresponding institution in coordination with the National Directorate of State Property"; and Article 7 of Executive Decree PCM-047-2015, "The responsibility for movable and immovable property that form part of the inventory or have been assigned to each institution or dependency of the public sector corresponds to the heads of administrative departments or administration departments of the same institutions or dependencies of the public sector. 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 Directorate of State Property, failure to comply with the activities and dates established will affect the timely disbursements made by the General Treasury for each of the institutions.

Institutions of the Centralized and Decentralized Public Sector may develop business models and cooperation agreements between institutions in order to take advantage of and make more efficient government resources and in this way generate greater public value in line with the country's objectives. Likewise, Institutions of the Decentralized Public Sector may, subject to the regulations, provisions and supervision of the National Directorate of State Property (DNBE), lease, sell and/or auction their infrastructure (Productive and non-productive property) as well as materials and supplies that are not required for operations and are in disuse and/or obsolescence, generating direct income to the institution for sustenance and growth of operations, said income is considered as Own Resources and must comply with the norms and guidelines established in this Law and other applicable regulations that apply to them.

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

The value obtained from property that has been lost, damaged or destroyed may be incorporated into the Budget of the institution possessing the same, provided that the value is allocated to the repair of the damages caused or the acquisition of property of the same nature. XIII. STRATEGY FOR POVERTY REDUCTION

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 after approval by the SCGG and the General Coordinators of Attached Government, in accordance with what is provided in the Technical Standards of the Budget and Public Investment Subsystems.

Resources from debt relief under the Heavily Indebted Poor Countries Initiative (HIPC), the Multilateral Debt Relief Initiative (MDRI), and as applicable to the Paris Club must be allocated exclusively for the carryover projects listed in the Annex "Poverty Reduction Strategy," which is part of this Budget of Income and Expenses of the Republic. This allocation must be made in coordination with the SCGG and the Deputy General Coordinators as appropriate.

Public Debt Service corresponding to the lending agreements that make up the group of loans subject to reorganization and that improve the profile of public debt 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 registered in the Integrated Financial Administration System (SIAFI), and the funds thus obtained shall constitute the resources of the Heavily Indebted Poor Countries Initiative (HIPC), Multilateral Debt Relief Initiative (MDRI), and Paris Club that shall serve as the basis for financing programs and projects for poverty eradication. XIV. REGARDING MUNICIPALITIES

The State, through the Secretary of State in the Offices of Governance, Justice and Decentralization, shall transfer the allocated and authorized amount by monthly installments to the Municipal Corporations according to the following distribution:

• a)

  Fifty percent (50%) of transfers shall be distributed equally among municipalities;

• b)

  Twenty percent (20%) by projected population according to the most recent Census of Population and Housing conducted or projected by the National Statistics Institute (INE); and, c) Thirty percent (30%) by poverty, according to the proportion of poor population in each municipality based on the Unmet Basic Needs (NBI) method and in accordance with the most recent Census of Population and Housing conducted or projected by the National Statistics Institute (INE). From the total amount of the Central Government transfer, the Corporations shall allocate the resources from such transfers in accordance with what is established in the Municipalities Law or the contents of 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 Secretary of State in the Offices of Governance, Justice and Decentralization through a certification of a Meeting Point attached to the current Municipal Budget. The destination of funds under the Municipal Pact for a Better Life shall be applied as follows:

  • 1)

    Thirty-five percent (35%) for investments that improve the living conditions of the population through programs and projects providing social assistance to children, with special attention to returned migrants, adolescents and youth, persons with special disabilities sector, municipal investment guidelines in pre-basic, basic, and third cycle education, primary family and community healthcare, water and sanitation, electrification and housing improvements for families in situations of extreme poverty, all in accordance with the BETTER LIFE PROGRAM;

  • 2)

    Five percent (5%) for women's programs, shall be distributed considering 30% for training actions on women's rights, 20% for women's health actions, 30% for women's economic initiatives, 10% for women's scholarships, and 10% for improving women's living conditions.

  • 3)

    Twenty percent (20%) to strengthen the social fabric 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 promoting sports, cultural activities, training in values and human rights for citizens, community surveillance, and other actions that allow addressing the particular conditions for violence prevention, so that in the short and medium term there are results of impact and measurable outcomes in the municipalities;

  • 4)

    Ten percent (10%) to improve the municipal investment climate by promoting territorial competitiveness through productive infrastructure works, fostering the Micro, Small and Medium Enterprise (MIPYME) sector in rural and urban areas, for job creation, administrative simplification processes, standardization of fee plans, municipal property registries, strengthening of administrative, budgetary and treasury capacities, project execution, and formulation of local economic development agendas, which integrate with central government initiatives through the PROHONDURAS Program seeking public-private coordination, supporting agricultural corridors, tourism, and business development centers, among others. The Central Government shall make timely transfers to the Municipal Corporations monthly that ensure payment for the execution of programs and projects of municipal investment in social, economic, and security matters, including programs and projects from the better life platform, everyone for peace, and Pro-Honduras. The Municipal Corporations shall support the President of the Republic's initiatives for connectivity of a better life by implementing community technology centers that promote human development;

  • 5)

    One percent (1%) for the Municipal Transparency Fund (FTM) allocated to the Superior Court of Accounts (TSC) as the municipal counterpart. Decision-making regarding the use and destination of such funds shall be done through meetings of the Committee that has been created for this purpose, made up of the Secretary of State in the Offices of Governance, Justice and Decentralization who presides over it, the Association of Municipalities of Honduras (AMHON) serving as Secretary, and the Superior Court of Accounts (TSC) who administers it; with these financial resources, training in Municipal Management and Municipal Financial Administration Systems implemented by SEFIN shall be conducted, on-site technical assistance, monitoring, compliance with recommendations, and greater coverage of municipal audits shall be provided. 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 regulation with the Committee members, for the purpose of jointly planning the activities to be developed in the Annual Operational Plan (POA) of the Municipal Transparency Fund Committee (CFTM);

  • 6)

    Municipalities that fail to transfer 5% of funds for women's programs shall be sanctioned by ten (10) minimum wages until such non-compliance is remedied. Likewise, the Secretary of Governance, Justice and Decentralization shall open a file for non-compliance;

  • 7)

    Twenty percent (20%) for Own Administration Expenses; Municipal Corporations whose annual own income, not exceeding FIVE HUNDRED THOUSAND LEMPIRAS (L.500,000.00), excluding transfers, may allocate up to twenty-nine percent (29.0%) for such purposes;

  • 8)

    The remainder of resources shall be allocated to investment, to cover the counterpart required by agencies financing the projects; for payment of contributions to the Association of Municipalities of Honduras (AMHON); for payment of contributions that municipalities make to Inter-Municipal Associations or Associations 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, and in all cases must respect what is provided in Article 98 of the Municipalities Law. It is understood that the expenditures described in items 1), 2), and 3) above must be considered as investment. Likewise, salaries and wages included in health and education areas shall be considered as investment;

  • 9)

    Municipal Corporations that benefit from the economic benefit established in Decree No. 72-86 (Port Municipalities), dated May 20, 1986, may adopt the regime established in this Article, provided they renounce before the Secretary of State in the Office of Finance the benefit established in the aforementioned Decree; and,

  • 10)

    From the Municipal Budget.- From INAM coordination shall be made with the Secretary of Governance, Justice and Decentralization, so that in the quarterly reports of transfers presented by Municipalities to the Secretary of Governance, Justice and Decentralization, an execution report is included in accordance with the guidelines of the Municipal Gender Investment Index; From this transfer, no municipality may be garnished by more than 40% of the approved budget.

The Secretary of State in the Office of Governance, Justice and Decentralization shall transfer by monthly and advance installments to the Municipal Corporations, through the Central Bank of Honduras (BCH), the amounts for Capital contributions in accordance with the values recorded in the General Budget of Income and Expenses for Fiscal Year 2020, based on the budget approved by the National Congress; as well as what corresponds to port municipalities, provided that the municipalities prove having delivered to the Secretary of State in the Office of Governance, Justice and Decentralization through the Municipal Strengthening Directorate (DFM), the administrative documents and account rendering in physical and electronic form in Approved status, as follows: Municipalities registered in the Integrated Municipal Administration System (SAMI) through this system and the remaining municipalities through the Local Governments Account Rendering Subsystem (RENDICIONGL). The municipal corporations must present to the Secretary of State in the Offices of Governance, Justice and Decentralization, as a maximum date of January 31 of the current year, for the issuance of the Final Opinion prior to transfer management, the following original administrative documents: DOCUMENTS:

• 1)

  Presentation of proof of progress in the process of preparing the Municipal Development Plan (PDM), by the General Directorate of Planning and Local Governance (DGPGL) of the Secretary of State in the Offices of Governance, Justice and Decentralization (SGJD), for municipalities in the process of preparing the plan, which shall be extended semi-annually and shall be reviewed in accordance with the activity schedule that each municipality shall present for its development. Presentation of proof of certification of the Municipal Development Plan (PDM), for those municipalities that already have a Certified or Draft PDM by the General Directorate of Planning and Local Governance (DGPGL) of the Secretary of State in the Offices of Governance, Justice and Decentralization (SGJD), which shall be extended semi-annually in accordance with the presentation of progress in PDM execution. The Secretary of State in the Offices of Governance, Justice and Decentralization (SGJD) and the Association of Municipalities of Honduras (AMHON) shall prepare a joint work plan to promote the formulation of Municipal Development Plans, as well as their execution. The Secretary of State in the Offices of Governance, Justice and Decentralization (SGJD) shall exempt from compliance with item 1 those Municipalities that on their own account and in a technical, professional and complete manner have prepared their Municipal Development Plans and have been duly approved by their Municipal Corporations and the respective Open Town Hall, are being implemented within their municipalities and are known to the municipal population and are available to the population through the municipal transparency portal.

• 2)

  Quarterly Report of physical and financial progress of projects and executed expenses corresponding to the I, II, and III quarters, no later than thirty (30) days after the end of the same, and the IV quarter as a maximum date of January 31 of the following year;

• 3)

  Annual budget of income and expenses for the current fiscal year, in physical form, generated from the Budget Subsystem, approved in the Integrated Municipal Administration System (SAMI), including the Municipal Investment Plan and Payroll Book. Municipalities not registered in SAMI, from the Local Governments Account Rendering Subsystem, in approved status.

• 4)

  Cumulative Quarterly Account Rendering, in electronic and physical form, no later than thirty (30) days after the end of the same; for the I, II, and III quarters; and the IV quarter as a maximum date of January 31, 2021.

• 5)

  Final Financial Statements and their annexes in accordance with the date established in the closing standards issued by the General Comptroller of the Republic for the IV quarter. All Municipalities that already have a Municipal Development Master Plan duly approved by their respective Municipal Corporations in Open Town Hall and that the amount of the transfer received from the Central Government is less than 7% of their annual current income shall only present the annual Account Rendering to the Superior Court of Accounts and shall be exempt from the presentation of quarterly account rendering before the General Directorate of Local Strengthening of the Secretary of State in the Offices of Governance, Justice and Decentralization. Municipal transfers shall not be conditioned to other requirements than those expressly stated in this decree.

All administrative financial documents mentioned above must be presented to the Municipal Strengthening Directorate (DFM) of the Secretary of State in the Office of Governance, Justice and Decentralization, in electronic and physical form in original document, attaching the certification of the meeting point of Municipal Corporation approval. The delivery date shall be the one that appears on the receipt stamp of the DFM. The administrative financial documents indicated in items 2), 3), and 4) of the previous article shall be reviewed by the DFM of the Secretary of State in the Office of Governance, Justice and Decentralization, which within a period of thirty (30) business days shall issue an opinion on them and shall notify the corresponding recommendations to the municipal corporation so that it makes the necessary corrections (updates, implementations, modifications, or extensions) and shall return them to the same directorate within a maximum period of thirty (30) days counted from receipt of the notification. If it does not do so, the DFM shall not be able to issue 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 Banking and Insurance Commission (CNBS) must send to the DFM of the Secretary of State in the Office of Governance, Justice and Decentralization and to the General Public Credit Directorate of the Finance Secretariat detailed records of the loans that municipalities have with the different banking and credit entities of the country, for the purpose of verifying the thirty percent (30%) that Article 197 of this Law authorizes to commit transfer funds to payment of bank loans.

The Secretary of State in the Office of Governance, Justice and Decentralization is ordered to withhold and transfer from the respective transfers granted to the Municipal Corporations or port municipalities, among others, the fees in favor of:

• 1)

  Fire Department, one hundred percent (100%) of the amounts owed by the municipalities that collect the fee for Fire Department Service; in those Municipalities where this service exists provided that the fire department has exhausted the reconciliation process to subscribe payment plans between both institutions. After the agreement is signed, the non-compliance with one of the payment installments shall result in the application of the retention of the total amount owed from the following transfer, provided that the balances are reconciled by both institutions;

• 2)

  The statutory fee to the Association of Municipalities of Honduras (AMHON), calculated on one percent (1%) of the actual municipal current income contained in the Cumulative Annual Account Rendering of the year prior to the approval of the municipal budget.

• 3)

  Associations of Municipalities, the amounts corresponding to statutory fees or contributions from the Municipalities; prior to the application of the retention, these agencies must present the document or other requirements established in the DFM that supports collection and budget execution in the Account Rendering Subsystem for Associations.

• 4)

  Continue with the transfer of one percent (1%) that is deducted from the transfer to the Municipalities; in accordance with Article 91 of the Municipalities Law; the Municipal Corporations benefiting from Decree No. 72-86 dated May 20, 1986 (4% or 8% of port municipalities), must also contribute with one percent (1%) of their annual transfers, for the same purpose established in such Article. Such percentage must be credited to the Superior Court of Accounts (TSC) through Internal Resolution of the Secretary of State in the Office of Finance and using the automatic expansion procedure in the Integrated Financial Administration System (SIAFI), as disbursements to municipalities are made; and,

• 5)

  Upon request of the Honduran 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 from municipalities benefiting from projects financed with resources from loans and donations entered into with international organizations, likewise, the amounts owed for non-compliance with Agreements and Contracts entered into with the State financed with national funds. Such retention shall be made upon prior notification to the municipalities that fail to comply with the payment of the municipal counterpart and Agreements and Contracts entered into with the State. Regarding liquid, firm, and demandable debts that different State Institutions such as ENEE, SANAA, HONDUTEL have with the Municipalities, the Secretary of State in the Office of Finance is ordered to deduct the owed amounts from the budget transferred to these Secretariats, being able to establish a payment agreement that shall not exceed the current fiscal year.

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 195 of this Law shall be applied to the transfers recorded 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 payment of loan installments, when it involves financing works whose investment is recoverable and the debt does not exceed the government period; otherwise it must be approved by the National Congress.

The Superior Court of Accounts (TSC) is instructed to proceed with audits of all those municipalities that do not receive municipal transfers due to not having supporting documentation to carry out budget settlements; however, in the audit process the Secretary of State in the Office of Governance, Justice and Decentralization must generate the F01 so that the Secretary of State in the Office of Finance transfers the corresponding resources in accordance with the Law.

In the case of the distribution and destination of the transfer established in the third paragraph of Article 91 of the Municipalities Law and specifically with the fifteen percent (15%) for annual administration expenses and that in the case of Municipal Corporations whose annual own income, excluding transfers, does not exceed Five Hundred Thousand Lempiras (L.500,000.00), may allocate for such purposes double this percentage. That is, twenty-nine percent (29%), shall be allocated for own administration expenses, understanding these 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 in the same percentage.

In order to maintain a reliable and timely database on contingent debt, Municipal Corporations are obligated to provide the State Secretariat of the Finance Ministry, 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; and its respective budgetary and accounting record.

The transfers of port municipalities and municipal transfers are exempt from any deduction except those obligations of the municipality originated 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 of public services for drinking water, electrical energy, telephone services or any other public service of municipal corporations.

SEFIN shall issue and send to each municipality within fifteen (15) days following the transfer, the corresponding settlement and 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 shall assume the responsibility that corresponds in law, provided that there are no outstanding accounts by the service provider. Additionally, the State Secretariat of the Offices of Governance, Justice and Decentralization (SDJGD) 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 the month of January of each year.

The Subsystems of Budget, Treasury, Accounting, Public Credit and Investment, in Local Governments and Municipal Associations, shall be managed through the Integrated Municipal Administration System (SAMI), which is the official and mandatory tool in the two hundred ninety-eight (298) municipalities of the country, which will gradually be incorporated in its implementation. To achieve this objective, the State Secretariat of the Finance Ministry in coordination with the State Secretariat of the Offices of Governance, Justice and Decentralization, the Association of Municipalities of Honduras (AMHON) and cooperating organizations that contribute to the Local Government Sector, must formulate a consensual plan to promote the implementation of the Integrated Municipal Administration System (SAMI) in compliance with what is prescribed in this Law and, according to the previously established agreements. The Municipalities of the Country that have previously made investments in technology and programs and that currently have robust, technological, operational, efficient and effective information systems and software shall be exempt from the previous provision and shall continue operating their information systems normally. Coordination with SEFIN will be conducted to integrate into the SAMI system. The State Secretariat of the Finance Ministry in coordination with the State Secretariat of the Offices of Governance, Justice and Decentralization 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), with which the mechanisms of transparency will be strengthened, improvement in the provision of local public services, the strengthening of their capacities in financial management matters and, additionally the system will allow for periodic accountability in electronic and timely form on budget liquidations for the calculation of the transfer, as well as the liquidation thereof. Prior to the implementation of the Integrated Municipal Administration System (SAMI), municipalities and municipal associations must comply with the following requirements:

• 1)

  Have a functional organizational structure;

• 2)

  Have Budget Execution up to date;

• 3)

  Have bank account reconciliation;

• 4)

  Have delivered accountability reports to the competent entities, according to the requirements established in this law; and,

• 5)

  Have an internal regulation of Petty Cash duly authorized by the Municipal Corporation.

  They must send the documentation to the Finance Secretariat with the Point of the Minutes of the Municipal Corporation by which they confirm that they have complied with the requirements to begin the SAMI implementation process. Municipalities and municipal associations must consider for Budget Execution in the Integrated Municipal Administration System (SAMI), for each Subsystem the following: Budget Subsystem 1) Comply with what is established in article 95 of the Law of Municipalities, regarding the budgetary formulation of income and expenses; 2) Respect the origin and destination of funds established by the sources of financing to maintain budgetary balance. Accounting Subsystem 1) Keep budget execution up to date; and 2) Those that incorporate into the system must perform the registration and approval of the Initial Accounting Item (APEC) and those that have completed the accounting closing process must perform the approval of the Automatic Accounting Opening (APCA), no later than March 31, in order to generate financial information for the presentation of Financial Statements as established by the General Accounting Office of the Republic. Treasury Subsystem 1) Respect the origin of bank accounts approved in the system, considering that the Single Municipal Treasury Account CUT (with Treasury origin) will be the only one with which all payments corresponding to obligations contracted by the municipality and its companies can be made, except for bank charges and commissions generated by each of the accounts it maintains; 2) For the execution of expenses, they must perform the printing of Online Check Voucher, which is an indispensable requirement to guarantee compliance with the moments of expenditure (Committed, Accrued and Paid), the proper management of sources of financing and financial availability; 3) Apply the process of return and adjustment of account books of movements of transfers between account books generated by the application of funds between different sources of financing within the same fiscal year, to fulfill the obligations contracted. In the case of account books generated by the sources of financing of loans and donations, the use of these resources must be based on what was agreed in the agreements. For the development of implementation, the administration of the system and financial policy shall be carried out by the State Secretariat of the Finance Ministry (SEFIN) and the implementation by the State Secretariat of the Offices of Governance, Justice and Decentralization (SGJD).

Order the State Secretariat of the Finance Ministry (SEFIN) to identify funds in the amount of Three Million Lempiras (L.3,000,000.00), which must be transferred to the Technical Secretariat of the Municipal Administrative Career, these funds must be used in the strengthening of the human resources of the Municipalities thus guaranteeing the processes of training and capacity building at the level.

The State Secretariat of the Finance Ministry in coordination with the State Secretariat of 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), with which the mechanisms of transparency will be strengthened, improvement in the provision of local public services, the strengthening of their capacities in financial management matters and additionally the system will allow for periodic accountability in electronic and timely form on budget liquidations for the calculation of the transfer, as well as the liquidation thereof.

Municipalities are authorized to make adjustments and reclassifications in their accounting to subsequently generate purified financial statements which may be audited, as well as to purify and clean up accounts receivable from the different taxpayers, all in accordance with what is established in articles 106 and 107 of the Law of Municipalities and in accordance with International Accounting Standards for the Public Sector. The State Secretariat of the Offices of Governance, Justice and Decentralization, the Superior Court of Accounts (TSC), the State Secretariat of the Finance Ministry, the Association of Municipalities of Honduras (AMHON) must jointly develop a Regulation, which shall regulate the procedure to follow for the purification of arrears from the publication of this Law.

In compliance with the Fiscal Responsibility Law (LRF), the Municipalities that have implemented the Integrated Municipal Administration System (SAMI) with the support of the Finance Secretariat must report figures of budget execution.

Every taxpayer, whether natural or legal person, is obliged to present the municipal solvency at the place of their domicile, likewise the institutions must request from the taxpayers, whether natural or legal person, the presentation of the municipal solvency of the municipality where they pay taxes. Excluding the financial system. Municipal solvency must be presented for the registration of production and real property. Consequently, the registration of inscription of real property and other interested parties shall not proceed unless the due municipal solvency is presented by the seller and the buyer. When a property is sold or a mortgage is made or any instrument transferring ownership, whether it is a donation or other, that real property must be solvent with respect to its municipal obligations.

Without prejudice to what is established in Article 205, Attribution 19) of the Constitution of the Republic, Municipalities are authorized to readjust their debts according to their financial capacity and ability to pay, with national or international financial institutions or organizations, with the best market interest rates, as of the effective date of this Law in order to develop infrastructure projects and other social development purposes. Any Municipal Corporation that transfers a loan contract beyond its term of government must go to the National Congress for approval.

Authorize Municipalities and/or Municipal Associations to carry out the purchase for exclusive use of the municipality of heavy machinery of any kind that does not exceed a depreciation by use of 12 years, such purchases may not be transferred under any title.

Municipal Governments, within the powers granted to them by the Law of Municipalities, shall prepare municipal emergency plans that contribute to preventing and addressing situations arising from climatic factors. The Permanent Commission for Contingencies (COPECO) shall provide technical assistance to Municipal Governments and shall certify said plans. Additionally, it shall coordinate with the Association of Municipalities of Honduras (AMHON) and the State Secretariat in the Offices of Governance, Justice and Decentralization in defining a methodology for plan formulation, in accordance with local realities. The formulation of the plans shall be gradual depending on COPECO's capacity to provide technical assistance and support to Municipal Governments and the availability of resources of the municipalities. For these purposes, COPECO, AMHON and the SGJD shall define an annual implementation plan, which shall include the updating of existing plans and the formulation of new ones.

All Municipalities, Inter-municipal Associations and Municipal Companies must submit to the Superior Court of Accounts (TSC) no later than April 30 the following: 1. The Municipalities 1.1 Those registered in the Integrated Municipal Administration System (SAMI): a. Annual accounting report in physical and electronic form, generated from SAMI. 1.2 Those not registered in the Integrated Municipal Administration System (SAMI) must submit the following: a. ANNUAL Accounting Report in physical and electronic form. Generated from the RENDICIONGL Subsystem. All of the above must be presented attached with the certification of the Minutes Point of the Municipal Corporation and a complete copy of the minutes book showing approval by the Municipal Corporation of the Accounting Report. In order to verify information on the financial obligations of local governments and strengthen the culture of Accountability, the National Commission of Banks and Insurance (CNBS) must provide to the Superior Court of Accounts (TSC), the General Directorate of Public Credit and the Directorate of Municipal Strengthening, detailed records of loans and any other type of transaction that municipalities have with different banking and credit entities in the country. Similarly, all public and private institutions and international organizations that transfer funds to Local Governments in the form of subsidies, bequests and donations, are obligated to provide this information to the Superior Court of Accounts (TSC) for the purpose of identifying the source of financing, use and destination of the funds. 2. The Inter-municipal Associations The annual cumulative accounting report in physical and electronic form generated from the INTER-MUNICIPAL ACCOUNTING Subsystem, attached with the Certification of the Minutes Point approved by the Board of Directors and a complete copy of the minutes book. It is prohibited for municipalities to transfer funds to inter-municipal associations that do not present their accounting reports in the INTER-MUNICIPAL Subsystem. The Directorate of Regulation, Registry and Monitoring of Civil Associations (DIRRSAC) of the State Secretariat in the Offices of Governance, Justice and Decentralization (SGJD), is obligated to request from inter-municipal associations the submission in the INTER-MUNICIPAL Subsystem. 3. Municipal Companies Financial Statements attached with the Certification of the Minutes Point approved by the Board of Directors and a complete copy of the minutes book.

To the General Accounting Office of the Republic, Local Governments must submit: Local Governments must present their Financial Statements, Annexes to the Financial Statements and Budget Liquidation with a submission deadline for consolidation of the national account in accordance with the Accounting Closing Standards issued by the General Accounting Office of the Republic applicable for the current year. XV. MISCELLANEOUS PROVISIONS

All departments of the Government: Central, Deconcentrated and Decentralized, shall allocate and execute monthly based on billing notices and at the expense of 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 Electrical Energy 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 purposes. Consequently, it is prohibited to transfer these spending objects to cover commitments of a different purpose. No Public institution may evade these obligations; in case of non-compliance, the Administrative Managers or whoever performs that function shall be jointly and severally liable for the debts, charges and interest incurred, without prejudice to civil, administrative and criminal actions. All public institutions must conduct a review of electrical meters, water meters and telephone numbers in order to determine that the amounts charged correspond effectively to their institution. Any payment made improperly shall be the personal responsibility of the Administrative Manager or whoever performs this function in the institution. 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 the Government: Central, Deconcentrated and Decentralized, the detail of service charges for services provided during the period covered by the respective billing notices. They must also make corresponding credits in the billing notices when the State has used the compensation mechanism to settle debts between public service providers and public institutions. Quarterly, the Administrative Managers or their equivalent in the Institutions of the Central, Deconcentrated and Decentralized Sector shall simultaneously submit to the National Electrical Energy Company (ENEE), Honduran Telecommunications Company (HONDUTEL), National Autonomous Service of Aqueducts and Sewers (SANAA) and to the General Directorate of Decentralized Institutions of the State Secretariat in the Office of Finance evidence of budget and financial 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.

It is ordered to all centralized public institutions, decentralized institutions, municipalities, including Project and Program Executing Units to apply the Regulation of Per Diems and Other Travel Expenses of the institution itself, which may be standardized with the current Regulation of Per Diems and Other Travel Expenses for Officials and Employees of the Executive Branch, approved by Executive Agreement Number 0696 dated October 27, 2008. The values established in the Regulation of Per Diems and Other Travel Expenses of the Executive Branch correspond to the maximum allocations, therefore institutions must comply with them and with those allocated 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. All Decentralized Institutions shall submit to the General Directorate of Decentralized Institutions the Per Diem Regulations that have been standardized with the current Regulation of Per Diems and Other Travel Expenses for Officials and Employees of the Executive Branch no later than February 15, 2020.

The President of the Republic or whomever he delegates shall authorize the Titular Officials of the State Secretariats and Deconcentrated Offices to receive Per Diems 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 with the respective vouchers the per diems received in accordance with the determination of categories, zones, periods of missions and per diem limits set forth in the Regulation of Per Diems and Other Travel Expenses for Officials and Employees of the Executive Branch. The supporting documentation shall be submitted for review by the Administrative Management or equivalent in each institution and in case falsifications or alterations are verified, the total return of the amount specified in the altered document or documents must be made, within a period not exceeding five (5) business days after notification, without prejudice to administrative and criminal responsibility incurred.

Cash refunds of excess per diems and other travel expenses shall be deposited with the General Treasury of the Republic or Institutional Treasury, accompanied by the respective deposit receipt and the Trip Settlement. If a trip is not completed, the value of the per diems and other expenses that were provided shall be returned within a period not exceeding five (5) business days after receipt. Under no circumstances may these resources be used for other purposes.

Representation Expenses within and outside the country are the amounts determined for non-liquidable expenses, inherent to the exercise of their functions, and are granted to officials according to their position and responsibilities. These expenses are different from those referred to in the Regulation of Per Diems and Other Travel Expenses for Officials and Employees of the Executive Branch. Such representation expenses shall be granted only to the officials mentioned in the following numerals and in the amounts here established:

• 1)

  To the President of the Republic and State Secretaries, Twenty Thousand Lempiras (L20,000.00);

• 2)

  To the State Undersecretaries, Fifteen Thousand Lempiras (L15,000.00);

• 3)

  To the Commissioner holding the Presidency in any institution of the Public Sector, Fifteen Thousand Lempiras (L15,000.00) provided that this official receives a monthly salary equal to or less than that of State Secretaries. In case the salary of the Presiding Commissioner is greater than that of State Secretaries, this official shall not be entitled to representation expenses;

• 4)

  To the Head of Decentralized Institutions and Deconcentrated Bodies, Fifteen Thousand Lempiras (L15,000.00), provided that this official receives a monthly salary equal to or less than that of State Secretaries. In case the salary is greater than that of State Secretaries, this official shall not be entitled to such Representation Expenses. Likewise, in cases where officials who intend to make these expenses and who represent institutions that are in precarious financial situations in which deficiencies are evident to cover their operating expenses, such representation expenses shall not be granted;

• 5)

  To the Subdirector or Sub-manager of Decentralized Institutions and Deconcentrated Bodies, Ten Thousand Lempiras (L10,000.00), provided that this official receives a monthly salary equal to or less than that of State Undersecretaries. In case the salary is greater than that of State Undersecretaries, these officials shall not be entitled to such Representation Expenses. Likewise, in cases where officials who intend to make these expenses and who represent institutions that are in precarious financial situations in which deficiencies are evident to cover their operating expenses, such representation expenses shall not be granted. In the case of Superior Level Bodies different from those of the Executive Branch that generate Own Income, they may grant such Expenses from their own income, without ever exceeding the maximum level of the amounts previously described for Officials of the Executive Branch and provided that the officials have equal or less salary than that of State Secretaries in the Executive Branch. If the salary is greater than that of State Secretaries, this official shall not be entitled to representation expenses.

The budget allocations for the Representation Expenses Abroad object that appear in the Diplomatic Representations and Consular Representations Activities, of the External Promotion and International Management Program of the Office of Foreign Relations, shall serve exclusively to cover expenses directly related to the operation of Embassies and Consulates Abroad and they must be settled.

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 at the Central Bank of Honduras that shall be opened for each institution in the program categories indicated here based on the disbursement plan that must be presented quarterly in accordance with the annual plan that is presented to the State Secretariat in the Office of Finance, and whose management shall be the responsibility of the Administrative Manager of the respective Office or Institution, who must present reports of its 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 State Secretariat in the Office of Security: Program: 03 Activities of the Direction of the National Police; Program: 11 Police Services for Prevention, Protection and Control; Program 12 Criminal Investigation Services; Subprogram 00, Project 00; Activity 02 Investigation Services; Activity 03 Services for Investigation of Crimes Against Minors; Activity 04 Anti-Drug Police Services; Activity 05 Services for Attention to Violence Against Women; Program: 13 Road and Traffic Services; Program: 14 Police Educational Services. The State Secretariat in the Office of National Defense in compliance with Article 31 of the Constitutional Law of the Armed Forces. In the budget of Institution 02 Superior Court of Accounts: Program 11 Control of the Management of Resources to Guarantee Integrity of Public Management. In the budget of Institution 03 National Commissioner for Human Rights in its programs: 01 Central Activities, 11 Municipalities of Solidarity Welfare, 12 Protection of Human Rights and 13 Promotion of Human Rights. In the budget of Institution 190 Public Ministry in its Program 11 Defense and Protection of the General Interests of Society. In the budget of Institution 210 Supreme Electoral Tribunal in its program 11 Electoral Process. In the budget of Institution 200 General Prosecution Office of the Republic in its Legal Advisory and Representation Program of the State. Regarding expenses incurred for the Security of the State, based on what is established in Article 17 of Legislative Decree No. 170-2006, the information derived from the budget allocations corresponding to Institutions 1, 20, 350 is classified as reserved, and with respect to Institution 30, Program 01, Subprogram 00, Project 00, Activity 01 and Spending Object 99100. In the National Penitentiary Institute: Program 11 Penitentiary Security; Subprogram 00; Project 00; Activity Work 02 Custody and Security of Persons Deprived of Liberty, Program 12 Progressive Treatment of Persons Deprived of Liberty. In the National Migration Institute: Program 11 Migration and Foreign Affairs Services, Activity 01 Direction and Higher Coordination, Activity 02 Migratory Affairs, Activity 03 Passports and Activity 04 Migrant Care Center only for spending groups: 20000 Non-Personal Services, 30000 Materials and Supplies and 40000 Capital Assets. In the Human Rights Secretariat: Program 12 Protection of Human Rights, Activity 02 Prevention of Risk of Human Rights Violations and Social Conflict; Activity 03 Inter-institutional Coordination for Protection of Persons Internally Displaced by Violence and Activity 04 Protection System, only for spending groups: 20000 Non-Personal Services, 30000 Materials and Supplies and 40000 Capital Assets. The above exceptions shall not apply to spending allocations contained in the Programs and Activities mentioned, regarding: Transfers, Leases, Insurance, Employer Contributions to Social Security and Benefit Institutions, contracting of Public Works, Public Services and Consultancies, which shall be carried out following the moments of spending called: Pre-commitment, commitment and Accrued which must be made to the beneficiaries of these services. It is understood that resources managed by this mechanism must be annually settled and excess amounts deposited in the General Treasury of the Republic within five (5) business days after the end of the Fiscal Year. Additionally, the Honduran Agricultural Marketing Institute (IHMA) may make use of this mechanism: Program 11 Marketing of Basic Grains, Subprogram 00, Project 00, Activity 002 Operations and Marketing of the Strategic Reserve, only for Spending Group 30000 Materials and Supplies, specifically for Spending Object 31120 Basic Grains for their Marketing, without the obligation to return balances at the end of the fiscal year, since these are own resources.

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 thirty (30) calendar days following the publication of the General Budget of Income and Expenses of the Republic; likewise, they must adapt the Annual Plan of Purchases and Contracts as a prerequisite for the allocation of the respective quota, both external resources and their national counterpart, said readjustments must have prior authorization from the General Coordination Secretariat of Government. In the case of programs and projects financed with external funds, they must make budget transfers between projects within the institution according to the execution schedule, as well as readjustments to the Annual Operating Plan and make the corresponding entries in the UEPEX module of SIAFI, for the respective financial monitoring, during the same established time period.

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

All vehicles owned by the State and municipalities that are assigned to the different 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 (TSC) shall ensure strict compliance with this provision. The Superior Court of Accounts (TSC) shall submit quarterly reports to the Budget Commission of the National Congress and to the Presidential Office on compliance with this Provision. The following institutions are excepted from this provision: Supreme Court of Justice (CSJ), Public Ministry (MP), National Police (PN), State Secretariat of the Office of National Defense, and the National Investigation and Intelligence Directorate (DNII) and officials protected under the Law of Special Protection of Officials and Former Officials at Extraordinary Risk contained in Decree No. 323-2013 of January 15, 2014.

Officials who use personal security whose cost is covered by the State shall limit themselves to a maximum of two (2) persons. This provision is excepted by what is provided in Decree No. 323-2013 of January 15, 2014, containing the Law of Special Protection of Officials and Former Officials at Extraordinary Risk.

In accordance with Articles 321 and 324 of the Constitution of the Republic, any principal official, governing body, or employee of State institutions (central, deconcentrated, and decentralized) is personally and jointly liable for negligence or carelessness that results in judicial sentences condemning the State and causing expenditures of financial resources.

Public Sector institutions may make improvements to the physical spaces in which offices, agencies, or service windows operate through which they provide their services, provided that these do not exceed TWO HUNDRED FIFTY THOUSAND LEMPIRAS (L250,000.00) annually per building; improvements being understood as those enhancements that are not of a permanent nature and that allow physical spaces to be adapted to the needs of the different institutions. Administrative officials must verify that the departments requesting them provide the respective quotations.

The institutions of the Central, Deconcentrated, and Decentralized Government, as well as national Projects approved through trust contracts, that require services such as those provided by: Correos de Honduras Company (HONDUCOR), National Graphic Arts Company (ENAG), Honduran Telecommunications Company (HONDUTEL), National Supplier of Basic Products (BANASUPRO), and the Military Industry of the Armed Forces (IMFFAA), must mandatorily request quotations for such services in those places where these companies have coverage, giving them preference to obtain them if the prices are 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 obligation must be included in the notice of invitation or call that the institutions issue. Prior to the procedure related to the acquisition of the services mentioned in the previous paragraph, Administrative Managers must verify that the departments requesting them provide the respective quotations.

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

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 is entitled to a percentage or amount in the concept of a transfer, such amount must be charged to the corresponding budgetary credit, being considered as partial or total payment of the transfer as appropriate. Likewise, amounts that municipalities or any other institution owe in the concept of taxes to the treasury shall be applied with this same mechanism.

The institutions of the Central, Deconcentrated, and Decentralized Government are authorized to contract, at the expense of their respective budget, individual fidelity bonds in favor of each natural person who administers public assets and resources, to protect State funds and assets, 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 bonded public officials and employees the payments made in favor of the State as a consequence of misuse and infidelity in the management of public assets. Collection actions carried out by both the State and the insurance company must be carried out in accordance with the reports submitted 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 official or public employee in the management of public assets or resources does not exempt them from civil, administrative, or criminal liability that corresponds under Law.

Without prejudice to what is established in Article 31, numeral 2), letter c) of the Tax Equity Law, the Regulation of these Provisions must determine to which other officials the payment of cellular telephone service is recognized, as well as the authorized maximum 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 Expenses of the Republic, the State Secretary's Office in the Office of Finance 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 Secretaries and Decentralized Organisms, in order to make the budget increases or creations that may be necessary. The available balances of budget allocations must be used by 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 purposes of prior control of budget execution, the State Secretary's Office in the Office of Finance is instructed to continue with the function of control and monitoring of spending, for which it may conduct operations in the State Secretaries of Health, Education, Infrastructure and Public Services, National Electric Energy Company (ENEE), Supreme Electoral Tribunal, National Registry of Persons or in any other institution of the Central, Decentralized and Decentralized Government that circumstances warrant. Budget Delegates shall be assigned by the State Secretary's Office in the Office of Finance in the different Administrative Management 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 requirements necessary for the realization of spending, with emphasis on aspects related to personnel contracting and initial public works contracts and their respective extensions. The State Secretary's Office in the Office of Finance is instructed to review budget expenses that in support of other institutions are charged to the State Secretary's Office in the Office of National Defense.

Resources allocated to non-profit cultural or social institutions must not be transferred or diminished for a purpose different from that for which they were allocated or executed in favor of a beneficiary different from the transfer. For the first payment, the presentation of the annual disbursement plan and settlement report of the funds executed in the previous Fiscal Year will be required.

Institutions, programs and projects related by their performance with assistance, protection and social development services must incorporate the guidelines of the Social Protection Policies and Comprehensive Development of Early Childhood and the Social Protection Framework Law in their Institutional Strategic Plans, as well as in their Operating Plans and corresponding Annual Budgets. The SCGG through the Social Cabinet shall be responsible for evaluating compliance with this provision as well as the Impact of the measures implemented. The State Secretary's Office in the Departments of Development and Social Inclusion shall be responsible for quarterly evaluating the fulfillment of commitments in matters of assistance and social protection provided for the subject population, for which it shall generate the corresponding evaluation instruments. Therefore, institutions, programs and projects must present within five (5) calendar days after the end of the quarter, a report on compliance with the Social Protection Policies and Comprehensive Development of Early Childhood.

When Contracts, Agreements, Draft Decrees 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 87 of this Law, the insurance acquisition processes of the Central, Decentralized and Decentralized Government must be framed within the procedures established in the State Contracting Law and the regulations issued by the National Banking and Insurance Commission (CNBS), except for municipalities. In compliance with what is established in Article 99 of the Insurance and Reinsurance Institutions Law, it is prohibited for Public Social Welfare Institutes to directly contract Insurance and Bonds on property of their ownership 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 of medium-term fiscal policy for the period 2020-2022, which will be updated annually in accordance with policy guidelines, the behavior of macroeconomic variables, projected financial flows, as well as the relative projections of income and expenses of the Central Administration and the Non-Financial Public Sector. The Medium-Term Budget Framework 2020-2022 is framed in the Law for the establishment of a Vision of Country and the adoption of a National Plan for Honduras and is part of the General Budget of Income and Expenses of the Republic for the present Fiscal Year.

In order to ensure compliance with what is established in Articles 4 and 5 of the Organic Budget Law (Decree No. 83-2004), all institutions of the Central, Decentralized and Decentralized Government must be operating in the Integrated Financial Administration System (SIAFI). Decentralized institutions that have an administrative, financial and accounting system must design and technically develop an interface with SIAFI, if such system responds to the needs of integration, consistency and reliability, having to register the execution of spending identifying the natural or legal person that provides services and/or goods to the Institutions. In case of not meeting these criteria, it must implement the Integrated Financial Administration System (SIAFI) to join the single account system. With each of the Decentralized Public Sector Institutions that are not operating in SIAFI, the State Modernization Unit and the General Directorate of Decentralized Institutions will establish a schedule of activities for the implementation of the system, 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 and/or the restriction of budget modifications by the General Budget Directorate, the implementation of SIAFI must be completed no later than the first semester of 2020.

Authorize the State Secretary's Office in the Office of Finance to, after reconciliation of the amounts owed between institutions of the Legislative, Executive and Judicial Powers, make account compensations and, if necessary, affect through the "Budget Modification Form" the budget items approved in this Law. For the present Fiscal Year, all telecommunications services provided by HONDUTEL to the institutions of the Central Administration will be compensated up to 50.0% with the amount that it owes to the State in concept of radio-electric fee, rate for calls abroad (0.03 cents of Dollar), supervision fee, likewise the debt that is owed to the SAR for the concept of taxes, among others.

For the purposes of compliance with the Budget Transparency Indicators and Accountability Reporting, the Secretary of State in the Office of Finance shall make available to the population in digital and printed form the following documents during the Formulation phase: Budget Policy Guidelines, Sectoral and Institutional Ceilings, Medium-Term Macro Fiscal Framework, Proposal of the General Budget of Income and Expenses of the Republic; during the Approval and Execution phases: Budget Supporting Documents of the Proposal established in Article 23 of the Organic Budget Law, Approved Budget, the Citizens' Budget, Quarterly Reports, Mid-Year Review and Year-End Report. Likewise, during the execution of the budget and through the aforementioned documents, social audit shall be conducted through the disclosure of information that promotes population oversight through monitoring, tracking and evaluation of spending.

The budgetary allocation approved in the budget of the Secretary of State in the Office of Defense specifically in Program 11 Defense of National Sovereignty and Territorial Integrity Subprogram 03 Defense of Sovereignty and National Security in the Maritime Space Domain for the leasing with option to purchase of six (6) interceptor boats and two (2) patrol boats, may not be transferred or used for any purpose other than payment of the obligation derived from the signed Contract and its derivatives for maintenance and upkeep in compliance with contractual guarantees.

The distribution of values or goods seized that are administered by the Seized Assets Management Office (OABI) shall be distributed in accordance with the percentages established by Law to guarantee activities for the Prevention and Protection of Women. The OABI shall inform quarterly the Secretary of State in the Office of Finance and the Superior Court of Accounts (TSC) and publish on its website regarding the distribution of seized resources, and the institutions receiving seized goods shall perform the corresponding budgetary and accounting records in the Integrated Financial Administration System (SIAFI), for which reason 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, subsection 1) of the Fiscal Responsibility Law, any commitment acquired by institutions of the Central Government, Deconcentrated and Decentralized Government, outside the allocations approved in the General Budget of Income and Expenses of the Republic shall not be registered in the Integrated Financial Administration System nor shall it be recognized as public debt. The Secretary of State in the Office of Finance shall not process any request for budgetary modification for this purpose and is authorized to establish the relevant regulations for the rejection thereof. Officials who authorize these commitments shall be jointly responsible for honoring the debts of these expenses.

With the purpose of minimizing the acquisition costs of air tickets in economy class, all institutions of the Public Administration must quote them on the official pages of institutions that are legally authorized to provide this service; likewise, a price no higher than 15.0% above the value offered in the market may not be paid.

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

The Secretary of General Government Coordination, through the Presidential Directorate of Transparency and Modernization of the State, through the National Office for Comprehensive Development of Internal Control (ONADICI), shall instruct the Highest Authorities of all institutions, programs and projects of the Executive Branch, so that in the execution of the budget, internal control processes are established in accordance with the policies set forth 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. Non-compliance 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 month ends, to the Macro Fiscal Policy Directorate (DPMF) of the Secretary of State in the Office of Finance, the monthly report on their respective budgetary execution and the trial balance in the format of the Single Chart of Accounts of the General Accounting Office of the Republic.

With the exception of institution 604, what is established in the second paragraph of Article 39 of Decree 56-2015, containing the Social Protection Framework Law, is hereby suspended.

To 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) The payment arrears that arise during the Fiscal Year for 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".

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

The Public Companies 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 the provisions of Article 22 of said Law. Likewise, Public Companies for the present Fiscal Year shall not be subject to the Advance Payments determined by Article 34 of the Income Tax Law.

Considering the reengineering process carried out during 2019 in the Deputy Directorate of Customs Revenue (DARA), authorization is granted in the present fiscal year to the Secretary of State in the Office of Finance so that from the balances of own resources collected, incorporated and not executed in the 2019 budget by the defunct DARA, it may proceed to incorporate in its budget said balances, which shall serve to finance the payment of labor benefits to employees of the former institution in accordance with what was authorized by the Liquidating Technical Commission.

The Secretary of State in the Office of Finance is instructed to conduct, with the support of the Tax Administration, Customs Administration and the Central Bank of Honduras (BCH), within a maximum period of six (6) months from the effective date of this Law, a cost/benefit analysis and evaluation of the fulfillment of the objectives for which tax or customs benefits, privileges, prerogatives, tax or customs incentives, exemptions, exonerations and customs franchises were granted to benefit or promote certain activities, sectors, regions or groups of taxpayers in Honduras. Natural or legal persons that have not fulfilled the objectives for which they were granted benefits, privileges, prerogatives, tax or customs incentives, exemptions, exonerations and customs franchises shall be sanctioned in accordance with what is established in Article 158, numeral 2) of the Tax Code, contained in Decree No. 170-2016 dated December 15, 2016; the Secretary of State in the Office of Finance shall coordinate the process of applying the sanction described above.

For the purpose that all Centralized, Decentralized and Deconcentrated institutions may honor legal obligations, the expenditure item 27500 referred to Judicial Expenses may be increased without any restriction; however, if it is necessary to decrease the same, the institution shall submit the request to the Secretary of State in the Office of Finance, who shall rule through the General Budget Directorate whether or not its reduction is appropriate.

It is prohibited for any institution of the Centralized, Decentralized and Deconcentrated Public Sector to reduce the amount allocated in the expenditure subgroup 16000 referred to Benefits and Compensation; movements to this subgroup shall only be authorized when they are to increase said allocation.

For the purpose of complying with what is provided in Decree No. 115-2014, containing the Reform to the Law on Promotion of Public-Private Partnerships; Decree No. 25-2016 containing the Fiscal Responsibility Law and Agreement 288 containing the Regulations of the Fiscal Responsibility Law, through which the Secretary of State in the Office of Finance is authorized to progressively develop the identification and assessment of fiscal risks generated in the administration of the State, including sources of risk from Judicial Lawsuits Against the State. Likewise, it is established that the Fiscal Contingencies Unit assigned to the Secretary of State in the Office of Finance shall establish the necessary communication levels with the involved institutions to define and develop a historical and standardized database, which the fiscal risk assessment methodology requires for the estimation and quantification of contingent liability from judicial lawsuits. For such purpose, all State institutions without exception shall officially submit quarterly, within the first fifteen (15) days of the month following the end of the quarter, the Judicial Process Identification Matrix in Excel format through the delivery of 1 CD, containing 100% of the Judicial claims in process, as well as those with final judgment. Institutions that do not comply with these provisions shall be subject to what is established in Article 5 of this Law.

The Certificates or other documents necessary for the issuance of the Visit Card for Persons Deprived of Liberty issued by the different State institutions, including those issued by the Judicial Power and that form part of the requirements established by the National Penitentiary Institute (INP), shall be issued exclusively for that purpose at no cost.

The income received from the sale of electrical energy to the National Electrical Energy Company (ENEE), through the operation of the José Cecilio del Valle Hydroelectric Plant, Nacaome, shall be entered into the General Treasury of the Republic and shall be incorporated at 100.0% into the budget of the Secretary of State in the Office of Energy (SEN); said resources shall be allocated to cover the maintenance and operation expenses of the Dam, as well as the cost incurred for pumping and supplying water to the Water Boards in the Area, and from the remainders it may pay operational expenses of said Secretariat.

The Secretary of State in the Office of Finance is authorized to finance, from the available value of the Trust Fund called the Investment Fund in Telecommunications and Information Technologies (ICTs), considered as Seed Capital contained in Legislative Decree No. 136-2015 which gives it origin and which is deposited in the General Treasury of the Republic, the Transformation of the Normal Schools of the Country, Permanent Teacher Training Centers in Service, Higher Level Educational Centers, University Regional Centers or other Higher Education Centers, as well as the Program for the training of Human Resources to support the business process outsourcing industry and the operation of priority programs of the Secretariat of Education such as: National Literacy Plan, Expansion of Third Cycle Coverage of Secondary Education and Higher Education for all Municipalities and Presidential Program "English for a Better Life".

Based on the provisions established in Article 222 of the Constitution of the Republic, the entire content of Article 238 of Decree No. 141-2017 is established as a budgetary provision and the Secretary of State in the Office of Finance is ordered to transfer the amount of Forty Million Lempiras (L.40,000,000.00) additional in the budget of the Superior Court of Accounts (TSC), to continue in its third year the process of audit and special investigation that was ordered.

The validity of Decree No. 51-2018 and its reforms is extended until March 31, 2020.

The Public Ministry is instructed to allocate in a labeled and progressive manner in the General Budget of Income and Expenses of the Republic assigned to its institution, resources for the strengthening of the unit of investigation of deaths of women and femicides, as well as the expansion of coverage for new units; therefore the Secretary of State in the Office of Finance shall provide the necessary technical support.

The Judicial Power is instructed to allocate in a labeled and progressive manner in the General Budget of Income and Expenses of the Republic assigned to its institution, resources for the strengthening and expansion of specialized courts in domestic violence in cities where there is high incidence of domestic violence, therefore the Secretary of State in the Office of Finance shall provide the necessary technical support to achieve this identification.

The Secretary of State in the Office of Finance is authorized to incorporate in the Budget of the Judicial Power of the present Fiscal Year up to an amount of FOUR HUNDRED MILLION LEMPIRAS EXACTLY (L.400,000,000.00), value coming from remainders of previous fiscal years; such resources shall be allocated to meet the operating and investment expenses of the Judicial Power. Likewise, the Secretary of State in the Office of Finance is authorized to carry out the incorporation of outstanding payment values from previous years in the General Treasury of the Republic in favor of the following institutions: CONAPID, Migration Institute, DINAF and any other institution of the public sector in similar conditions; such resources shall be allocated to meet the payment of benefits and other obligations acquired in the respective institutions.

Centralized, decentralized or deconcentrated institutions, including the Legislative Power, Judicial Power or those institutions created by constitutional provision, must require as a documentary requirement to satisfy economic obligations derived from their contractual obligations with providers of goods and services, public works, consulting or professional services, the fiscal document according to what is established in the billing system regulation, the Fiscal Document according to what is established in the billing system regulation, other fiscal documents and printing tax registration. The administrative management offices or units that perform this function according to the organizational structure of each institution must verify that the fiscal document referred to in the previous paragraph is valid and duly authorized by the Tax Administration.

The Millennium Account-Honduras/Invest-H is ordered to transfer Forty Million Lempiras (L.40,000,000.00) to the Secretary of Community Development of Water and Sanitation (SEDECOAS), for the execution of artisanal market projects.

The Executive Power through the Secretary of State in the Office of Finance shall regulate the present Budgetary Execution Standards within a period of thirty (30) working days, counted from the publication of the present Law.

Authorize the National University of Forest Sciences to proceed to use in Fiscal Year 2020 a remainder in Item 42310 "Land transport equipment for persons", in the amount of Two Million Twenty-Four Thousand One Hundred Lempiras Exactly (L.2,024,100.00), in order to be able to carry out the purchase of buses that will be used for the transportation of students in different academic activities. For the foregoing, the Secretary of State in the Office of Finance is ordered to make the corresponding modification.

Authorize the Secretary of State in the Office of Finance to incorporate in the General Budget of Income and Expenses of Fiscal Year 2020 of the National Commission for Sports Facilities and Sports Improvement (CONAPID), the remaining funds from the "Future Seedbeds" Project, allocating it as a priority to address investment projects in the group of capitalizable assets and likewise, cover the operating expenses of the institution.

All values that have been received by Public Administration Institutions (Central, Decentralized, Deconcentrated, and Constitutional Bodies) in advance, as own resources, transfers and any other concept of income, that were not used at the end of the Fiscal Year, these must be deposited with the General Treasury of the Republic within five (5) business days after the Fiscal Year ends. This provision is also applicable to private institutions that receive resources from the Central Administration, which must present a statement of expenses incurred. From the aforementioned mechanism, Transfers that are granted based on percentages established in the Law of Municipalities, the Constitution of the Republic and the Cooperative System Law are exempted. This provision is also applicable to private institutions that receive resources from the Central Administration, which must present a statement of expenses incurred. From the aforementioned mechanism, Transfers that are granted based on percentages established in the Law of Municipalities, the Constitution of the Republic and the Cooperative System Law are exempted. The Secretariat of Natural Resources (MiAmbiente+) is authorized to incorporate own resources generated in 2019 and 2020 in the fiscal year 2020 as these are deposited with the General Treasury of the Republic, to cover the operational needs of personnel in the different Regional or Central Offices, as well as institutional strengthening and to incorporate resources to any expenditure group, including 40000 and 50000.

Authorize the State Secretariat in the Office of Finance (SEFIN), so that through the General Accounting Office of the Republic, it reclassifies the accounting accounts for short-term loans to public sector institutions, long-term loans to public sector institutions 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 Supplier of Basic Products (BANASUPRO);

• 3)

  National Bank for Agricultural Development (BANADESA);

• 4)

  National Agrarian Institute (INA);

• 5)

  National Railway of Honduras (FNH);

• 6)

  Honduras Postal Service Company (HONDUCOR);

• 7)

  National Registry of Persons (RNP);

• 8)

  State Secretariat in the Office of Human Rights, Justice, Governance and Decentralization;

• 9)

  State Secretariat in the Office of Energy, Natural Resources, Environment and Mines;

• 10)

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

• 11)

  State Secretariat in the Offices of Foreign Relations and International Cooperation;

• 12)

  State Secretariat in the Office 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.

Order the State Secretariat in the Office of Finance (SEFIN) to transfer the Social Fund for Electrical Development (FOSODE) for rural electrification from the Budget of the National Electrical Energy Company (ENEE) to the Secretariat for Community Development of Water and Sanitation (SEDECOAS), for the execution of turnkey projects. Likewise, the ENEE shall liquidate the current personnel of FOSODE and the new personnel of the Fund in SEDECOAS shall not exceed twenty percent (20%) of the fund. This social development fund shall also be financed by one percent (1%) on total billing as established by the Electrical Industry Law, from the generation of electrical energy, from the collection of electrical energy.

Order the State Secretariat in the Office of Finance (SEFIN) so that in the month of January of fiscal period 2020, it proceeds to issue the certification of fiscal space in the structure of the Secretariat of Agriculture and Livestock (SAG) to sign the credit agreement in the month of May of the new project of Economic and Social Inclusion of Small Rural Producers in the Northeast Region of Honduras (PROINORTE), which aims to increase the income of small producers by improving their productivity, diversification, transformation and marketing and develop the competitiveness of their value chains sensitive to nutritional aspects while increasing overall resilience to climate change, in the departments of Atlántida, Yoro, Colón and Olancho; which will be financed by the International Fund for Agricultural Development (IFAD), OPEC Fund for International Development (OFID).

Based on what is established in articles 56-A, 76-A, 76-B and 76-C of Decree No. 109-2019 containing Amendments by Addition to the General Mining Law and Executive Decree No. PCM-008-2013 for support in the implementation of the National Organization of EITI-Honduras in the mining sector, the Honduran Institute of Geology and Mines (INHGEOMIN) is authorized so that during the current Fiscal Year 2020, it proceeds with the organizational restructuring that entails the creation, suppression or merger, adjustment and salary leveling of permanent positions or internal dependencies, for which the State Secretariat in the Office of Finance (SEFIN) is ordered to increase and redistribute the budget ceilings of groups 100 and 120, according to the request of INHGEOMIN, and these amounts must be appropriated so that they are adapted progressively in the General Budget of Income and Expenses of the Republic.

The State Secretariat in the Office of Finance (SEFIN) is authorized to conduct a review of accrued documents, recorded in previous fiscal years that are pending payment in the different State institutions, with the purpose that these can be redirected in the same institutions that generated them to cover documented commitments from previous years with the same economic nature of the original expense. For which these institutions must document the documented documents not recorded and replace them with the pending payment documents recorded from previous years that justified their accrual, through the procedure established by the State Secretariat in the Office of Finance (SEFIN).

An amount is appropriated in the budget of the State Secretariat in the Office of Health, under the following structure: Program: 01 Central Activities, Subprogram: 00, Project: 00; Activity/Work: 05 Administrative and Accounting Services, Expense Object 24200 Studies, Research and Feasibility Analysis, the amount of Twenty Million Exact Lempiras (L.20,000,000.00) intended exclusively for conducting Pre-investment Studies of the Oncology Hospital, the Health Secretariat cannot transfer such resources for purposes other than those indicated here.

In compliance with what is established in articles 256 to 259 of the Constitution of the Republic, Civil Service Law, Executive Decree PCM No. 28-2014 containing the creation of the commission for the reform of Centralized and Decentralized Public Administration; Executive Decree PCM No. 21-2016, containing the guidelines of SIREP and Executive Decree PCM No. 08-97, containing the regulation of the competencies of the Executive Power, the State Secretariat in the Office of Finance (SEFIN) is instructed, in coordination with the State Secretariat in the Office of the Presidency through the General Directorate of Civil Service, to regulate the organization and administration of human resources and its budgetary effect for which guidelines will be defined and detailed in salary matters for both appointment, contracting, as well as any modification to the structure of positions or personnel action for the Non-Financial Public Sector (SPNF) for both institutions governed by the Civil Service Directorate or special laws. The application of what is established in this Article shall be governed by what is provided in the regulation of this Law, in the meantime the aforementioned regulation enters into force, the State Secretariat in the Office of Finance (SEFIN) is authorized to issue the corresponding guidelines in a preventive manner through a circular for compliance with what is established in this Article.

Reform Article 1 contained in Decree No. 37-2019 of April 10, 2019 which shall read as follows:

Exempt the Municipality of the Municipality of Santa Bárbara, department of Santa Bárbara from the payment of fees, tariff taxes, customs duties, sales taxes and others, for the purchase of a dump truck vehicle with the following characteristics: Dump truck Brand MACK Model, granite elite GU813E Color- White with black box, 14.2 m3 Year – 2018 Series: 1M2AX18C2JM041238 Engine: MACK Model: MP8-360C of 360 horsepower of 1500-1950RPM, maximum of 1360LB-FT (per foot) and 1200RPM (revolutions per minute). Clutch: EATON ADVANTAGE EZPEDAL CL39DC13, manual adjustment 15.5in (inches), two plates with 9 coaxial ceramic springs, 6 conductor disc. Transmission: MACK T310M, 10 speeds forward, 6 in reverse, manual. Rear axle: MACK S462, capacity of 46 thousand lb (20,900kg). MACK CamelBack leaf spring suspension capacity of 46,000lb (20,900kg). Front axle: MACK FXL20 capacity of 20,000lb (9,072kg). Mack multi-leaf spring suspension, capacity of 20,000lb (9,072kg). Tires: BRIDGESTONE-TUBELESS RADIAL PLY, 315/80R22.5 22L HSU2+WT (ALL POSITION) front 2 wheels, rear 8 wheels, BRIDGESTONE-TUBELESS RADIAL PLY, (8) 11R22.5 G14GM726EL (TRACTION). Maintenance: 2400 hours or 18 months whichever comes first, includes labor and parts. Does not include site transfer at customer location. Initial service at 100 hours then at 400, 800, 1200, 1600, 2000 and 2400 hours.

This Decree shall enter into force as of its publication in the Official Journal "La Gaceta". Given in the City of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the twelfth day of the month of December of two thousand nineteen. ANTONIO CÉSAR RIVERA CALLEJAS PRESIDENT JOSÉ TOMAS ZAMBRANO MOLINA SECRETARY ROSSEL RENÁN INESTROZA MARTÍNEZ SECRETARY Therefore: Let it be Published ATTY. THELMA LETICIA NEDA JORGE ALBERTO RICO SALINAS Coordinator and Supervisor Miraflores Colony Telephone/Fax: Management 2230-4956 Administration: 2230-3026 Plant: 2230-6767 GOVERNMENT CIVIC CENTER