Decree 66-2022

This decree cancels 19 laws that created public trusts (funds managed by banks with special committees) and orders transferring all their resources to the State Treasury. The goal is to centralize public money management, increase transparency, and allow the government to use these funds to pay debts and urgent needs.

Whereas Article 355 of the Constitution of the Republic clearly provides that: "The administration of public funds corresponds to the Executive Branch. For the collection, custody and disbursement of said funds, there shall be a general treasury service. The Executive Branch, however, may delegate to the Central Bank the functions of collector and depositary. The law may also establish special payment services" and the first paragraph of Article 363 of the same legal body establishes that: "All ordinary fiscal revenues shall constitute a single fund".

Whereas Article 364 of the Constitution of the Republic establishes that: "No commitment may be made nor any payment made outside of the appropriations voted in the budget, or in violation of budgetary norms. Violators shall be liable civilly, criminally and administratively". However, hundreds of billions of lempiras are deposited in public and private banks, under trust contracts that are administered by committees of diverse composition and nature, whose operations are not recorded in the Budget of the Republic, they independently decide their investment plans, contract loans and invest even in State bonds, without the State itself being able to use those resources to cover its pressing needs, including debt payment obligations.

Whereas in accordance with what is established by Article 84 of the Organic Budget Law, contained in Decree No. 83-2004, dated June 21, 2004, regarding the deposit of Public Funds Subject to the Single Account System, all funds of the Public Sector must be deposited in the Single Account System at the General Treasury of the Republic, which has as its purpose the orderly management of public funds; and it corresponds to the Secretariat of State in the Ministry of Finance to establish the operational mechanisms that guarantee efficient and timely operation, both regarding the collection of revenues and the execution of payments derived from the fulfillment of obligations that State institutions carry out, coordinating the relevant matters with the Central Bank of Honduras (BCH).

Whereas in accordance with Article 354 of the Constitution of the Republic, fiscal or patrimonial assets may only be adjudicated or sold to persons and in the form and conditions determined by law, and in accordance with what is provided by the Commercial Code, a trust is a legal transaction by virtue of which the trustee bank is attributed with full ownership of certain assets, with the limitation, of an obligatory character, to carry out only those acts required for the fulfillment of the lawful and determined purpose to which they are destined; it implies the assignment of rights or the transfer of ownership of assets in favor of the trustee and before third parties, the trustee (bank) shall be considered the owner of the rights or trust assets; sufficient reason to sustain that national assets cannot be granted under trust contracts under any justification.

Whereas in accordance with Article 1 of the Commercial Code, it regulates merchants, commercial acts and commercial things. Without prejudice to other laws on the matter, commercial customs and practices and, in their absence, the norms of the Civil Code.

Whereas trusts are regulated in Subsection IV of the Commercial Code, articles 1,033 to 1,062, where among others it is clearly established that: "A trust is a legal transaction by virtue of which the bank authorized to operate as trustee is attributed with full ownership of certain assets, with the limitation, of an obligatory character, to carry out only those acts required for the fulfillment of the lawful and determined purpose to which they are destined"; "The trust implies the assignment of rights or the transfer of ownership of assets in favor of the trustee"; "Before third parties, the trustee (bank) shall be considered the owner of the rights or trust assets"; "Consent for the constitution of the trust must be express". Each trust contract constitutes and operates as if it were a law among the parties. Only in the year 2019, by means of Executive Decree PCM-029-2019, published in the Official Gazette La Gaceta on November 23, 2019, the General Directorate of Trusts was created, attached to the Undersecretary of Finance and Budget of SEFIN, as responsible for participating in the creation or structuring of trusts, control and monitoring of their execution, providing technical support to Technical Committees and participating when appropriate in the liquidation of all public trusts existing and in force in the Republic; as well as those that are to be constituted or may be constituted in the future, and maintaining the control and monitoring of the registry of each of the Trusts.

Whereas in accordance with Articles 10 and 12 of the Constitution of the Republic, the territories situated on the mainland within its territorial limits belong to Honduras, and its domain is inalienable and imprescriptible and must therefore exercise its sovereignty and full jurisdiction. This cannot and should not be subject to trust contracts for an indefinite period, subscribed by Secretaries of State or heads of decentralized or deconcentrated entities, even if approved by the National Congress since they are equivalent to an expropriation. Rivers and all waters flowing through natural channels are assets of public fluvial domain.

Whereas the creation of trusts with public funds administered by committees composed of members from the public sector, private sector and civil society has seriously weakened the Single Treasury Account, reducing the transparency with which public funds must be administered, therefore it is necessary to end this form of administration, which may exceptionally be implemented among State institutions and in accordance with the Single Treasury Cash system.

Whereas, under Trust contracts subscribed by the State with public and private credit institutions, loan contracts have been constituted in turn with interest rates ranging from eight percent (8%) to twelve percent (12%) with institutions of the National Financial System, which are not registered as public debt and consequently contribute to distorting public finances and issuing reports that do not reflect the fiscal and financial reality of the State and its institutions.

Whereas hundreds of billions of lempiras are under the figure of trusts, deposited in public and private banking institutions; while the Government has had to resort to requesting a seasonal loan and the use of Special Drawing Rights to meet the maturity of internal and external inherited debt, including the three (3) sovereign bonds described below: 1) $500.0 mm placed in 2013, at a rate of 7.50%, maturing in 2024, 2025 and 2026. Last March we paid the maturity corresponding to 2022 for an amount of $166.7 million. 2) $700 mm, placed in 2017, at a rate of 6.25%, maturing in 2027. 3) $600 mm, placed in 2020, coupon of 5.625%, maturing in 2030.

Whereas in accordance with Article 275-B by Legislative Decree No. 30-2022 dated April 8, 2022, which contains the Modification of the General Budget of Revenues and Expenditures of the Republic 2022, all Technical Committees of Public-Private Partnership (PPP) Contracts were instructed to hire international audit firms in order to audit the projects administered through PPPs; said audit shall be financed with resources from the Trust Funds patrimony, in the cases of PPPs that do not have the Trust figure the grantor shall finance the costs thereof. Likewise, the Trust Settlors and the Technical Committees of the Trusts were instructed to hire an audit firm Category A according to the External Auditors Registry (RAE) of the National Commission of Banks and Insurance (CNBS), to proceed to audit the public funds administered through the Trusts, constituted by different institutions of the public sector, said audit shall be financed with funds available within each Trust, if there is no availability the Trust Settlors must identify the funds to cover said audit.

Whereas in accordance with Attribution 1) of Article 205 of the Constitution of the Republic, it is the power of the National Congress to: Create, decree, interpret, reform and repeal laws.

Whereas the Law of the Public Ministry, contained in Decree No. 228-93, dated December 13, 1993, establishes within its institutional missions that it shall be responsible for the fulfillment of the following purposes and objectives: Represent, defend and protect the general interests of society; Collaborate and ensure the prompt, proper and effective administration of justice, especially in the criminal sphere; carrying out the investigation of crimes until discovering those responsible and requiring before the competent courts the application of the law, through the exercise of public criminal action.

Whereas during the period between 2016 and 2017 the defunct MACCIH-OEA promoted legislative and institutional reforms that were necessary to address the problem of corruption in the country. Among them the creation of the National System against Corruption, with the generation of a scheme of special prosecutors with national competence for knowledge of corruption crimes. Likewise, this system created a Special Fiscal Unit against Impunity for Corruption (UFECIC), in January 2017, to address major cases of corruption.

Whereas upon the completion of the MACCIH mandate, the Special Fiscal Unit against Impunity