Special Law for the Management, Allocation, Execution, Settlement and Accountability of Public Funds for Social Order Projects, Community Projects, Infrastructure and Social Programs

OBJECT OF THE LAW. This Law is of public order and mandatory compliance. It has as its object to establish the rules relative to the management, allocation, execution, liquidation, and rendering of accounts of public funds that are allocated for projects of social order, community, and social programs through the different Public Institutions of the Central Government and/or Decentralized Entities, Municipal Corporations, National Congress, Non-Governmental Organizations, Trusts, entities or organs of private law auxiliary to the Public Administration, and any Natural or Legal Person that, within its functions or purposes, from the execution of projects and programs of social order, community, infrastructure, equipment of infrastructure, goods and public services of first necessity, and all types of social assistance that are intended for the improvement of the living conditions of citizens in communities, as well as for the attention of urgent needs of these.

SCOPE OF APPLICATION. This Law is subject to compliance and mandatory application. The following are subject to its provisions: Public Institutions of the Central Government and/or Decentralized Entities, Municipal Corporations, National Congress, Non-Governmental Organizations, Trusts, and any Natural or Legal Person to which public funds are allocated intended for the objectives indicated in the preceding Article. The process of management, administration, execution, and liquidation of funds indicated in this Law is independent or autonomous from the public funds that by direct budgetary allocation are established in the annual budget of income and expenses of the Republic.

DEFINITIONS. For the purposes of this Law, the following are understood to mean:

• 1)

  Public Official: Any person who occupies a position in the Public Administration permanent or temporary, paid or honorary, or who occupies a public function or renders a Public Service.

• 2)

  Deputy: Citizen designated through direct election carried out by the people to become their representative in the Legislative Branch, whose principal function is to exercise in an exclusive manner the legislative function.

• 3)

  Community Projects: Activities that are carried out to solve a problem or alleviate a deficit suffered by members of a certain social group.

• 4)

  Social Programs: Initiatives intended to improve the living conditions of the population oriented toward the totality of society or, at least, toward an important sector that has certain unsatisfied needs.

• 5)

  Social Projects: Those actions or ideas that interrelate and are carried out in a coordinated manner with the intention of reaching a goal that culminates once the objective is achieved.

• 6)

  Infrastructure Projects: All infrastructure work that comprises construction and improvement of works to improve the transport of goods and persons or the provision of public services such as roads, building construction, aqueducts, rural electrification, and others, whether or not they have physical existence.

• 7)

  Infrastructure Equipment: All acquisition of equipment, furniture, and supplies whose amount does not exceed that established for private bidding for the acquisition of supply of goods and services in the General Budget of Income and Expenses of the Republic for the corresponding Fiscal Year.

• 8)

  Social Assistance: Actions of assistance, auxiliary support, or aid oriented toward improving the social welfare of citizens due to personal, family, or social situations that may be monetary or in kind.

• 9)

  Manager: Every Public Official and/or Deputy who requests the allocation of public funds to execute projects, develop programs, or deliver social assistance in communities.

• 10)

  Beneficiary: Natural or legal person who obtains a benefit or advantage from the projects, assistance, or social works managed in accordance with this Law.

• 11)

  Executor: Every natural or legal person who receives, administers the funds, and in their execution develops the project for which they were awarded.

• 12)

  Allocation of Funds: The disbursement or delivery by SEFIN, through accreditation in the single account enabled for the approved funds.

• 13)

  Financial Liquidation Report: The detailed and organized document signed by the executor, reporting on the budgetary executions that have occurred from the disbursed funds in order to determine the total cost of the execution of the work, project, or assistance, supporting it with the documentation that backs up the liquidation. The liquidation may also be done through audits conducted by audit firms authorized by the National Commission of Banks and Insurance (CNBS) for auditing financial institutions.

• 14)

  SEFIN: Secretary of State in the Office of Finance.

NATIONALITY AND RESIDENCE REQUIREMENT FOR RESOURCE ADMINISTRATION. The funds that are the object of this Law may only be administered by Honduran citizens who reside in Honduras. The resources must be deposited in institutions domiciled in the country. The Collegiate Bodies that administer these funds must have a majority of Honduran citizens resident in the country, and the beneficiaries of their programs must be Honduran citizens or legal residents in the country.

PROHIBITION ON USE. Public Funds that are the object of this Law shall not be used for the following activities: personal expenses, purchase of luxury or deluxe articles, public relations or advertising activities, granting of loans or matching funds for credits, monthly salaries or remuneration to employees that exceed the sum of three (3) minimum wages in effect, except when it is qualified personnel whose salary by reason of their profession is higher, purchase of airline tickets or passes, except when it is the transfer of a beneficiary for reasons of illness exceeding two (2) minimum monthly wages.

PROHIBITIONS AND INCOMPATIBILITIES. The following shall not be beneficiaries those who find themselves in any of the following circumstances:

• 1)

  Relatives within the fourth degree of consanguinity according to the second of affinity of the manager of the funds.

• 2)

  Deputies of the National Congress, their relatives, and their subordinates.

• 3)

  Directors of Non-Governmental Organizations.

• 4)

  Members and employees of Municipal Corporations.

• 5)

  Officials of the Central Government and/or Decentralized Government.

• 6)

  Any natural or legal person who manages funds for social purposes; and 7) Granting of loans or matching funds for credits to members of the governing bodies of the executors.

PURPOSE OF ALLOCATION OF FUNDS. The allocation has as its purpose to improve the quality of life of the population in the following areas:

• 1)

  Construction and improvement of infrastructure in schools, public health care centers, parks and plazas, sports fields and sports centers, streets and roads, cleaning and maintenance of streets, roads, and drainage systems, electrification and public lighting.

• 2)

  Construction and improvement of housing, floors, roofs, cisterns, walls, latrines, fumigation against insects causing epidemic diseases.

• 3)

  Mitigation of diseases due to natural disasters.

• 4)

  Execution of special programs of the State of Honduras.

• 5)

  Training for the strengthening of democracy, values, civic coexistence, equality, human rights, and others.

• 6)

  Economic and infrastructure support to patronatos, churches, water boards, town halls, rural savings associations, and community associations.

• 7)

  Delivery of uniforms and educational and sports implements, tools and furniture, food provisions, medicines, and economic assistance to sectors in conditions of vulnerability.

• 8)

  Artistic, cultural, and national identity activities, muralism, art festivals, music, painting, museums, cultural centers, and others; and 9) Capital and seed for microenterprises. The Project must comply with the stages of formulation, execution, evaluation, and supervision.

PROCEDURE AND REQUIREMENTS FOR MANAGEMENT AND APPROVAL OF RESOURCES. Fund allocation requests must be submitted to Public Institutions of the Central Government and/or Decentralized Entities, Municipal Corporations, and National Congress with the following documents:

• 1)

  Request for funds and Project Profile with execution schedule and disbursement schedule.

• 2)

  Required amount.

• 3)

  Copy of personal documents and certification of their condition as public official and/or Deputy, manager of the funds.

• 4)

  Copy of documents to accredit the identity of the executor (natural or legal person).

• 5)

  Bank certification of the special account enabled to receive the public funds, an account that must be used uniquely and exclusively for the execution of the project; and 6) Others that are required in relation to the type of project. Once the projects are identified and analyzed, the respective institution must resolve by approving or denying the fund allocation request for the execution of the requested projects. Once the execution of the projects or allocation of social assistance is approved, the disbursement of resources must proceed in the programmed manner. Notwithstanding, if at the beginning of the management of the projects or social assistance these are no longer a priority for the community or group of persons to benefit, prior authorization of the respective institution, the project should be reassigned to another project or social assistance of character and make the corresponding adjustments for their respective liquidation, justifying the change of destination thereof.

REQUIREMENTS FOR DISBURSEMENT. For each disbursement the interested party must present to the respective Institution the request with the following documentation: 1) For the first disbursement, the following is required: a) Projection of the progress of the work or project or social assistance to be carried out with this disbursement; and b) Receipt directed to the respective Institution for the amount of the disbursement. 2) For second or subsequent disbursements, the following is required: a) Financial liquidation report of the first disbursement and so successively until its completion. If there are surpluses from the final liquidation of the project, these must be reimbursed to the respective Institution.

DISBURSEMENT OF FUNDS. Disbursements must be made through transfer carried out by the respective Institution to the Single Account enabled by the executor, in accordance with the amounts or percentages established in the approval of the project. The respective Institution is authorized to request at any time additional information that it considers necessary from the beneficiary institutions.

EXECUTION AND LIQUIDATION OF FUNDS. The execution of transferred funds is the direct responsibility of the executor to whom they have been awarded. The final liquidation of the project must be made by the executor before the respective Institution, accompanied for that purpose by a liquidation report of the project or assistance and all necessary documents that accredit the execution of the project. Such liquidations are subject at all times to any type of review and audit by the Superior Court of Accounts (TSC) for compliance with the obligations and attributions that in accordance with Law correspond to this entity.

CONTENT OF THE FINANCIAL LIQUIDATION REPORT. The financial liquidation report must contain the following information:

• 1)

  Period covered by the execution.

• 2)

  Description of the project subject to liquidation.

• 3)

  Budget of the approved project.

• 4)

  Amount transferred.

• 5)

  Amount executed.

• 6)

  Execution plan and schedule of activities; and 7) Other information that the respective Institution considers convenient.

CONTROL AND AUDIT. The Superior Court of Accounts (TSC), in compliance with Article 231 of the Constitution of the Republic, is the entity in charge of the control and audit of the resources allocated based on this Law to the Public Institutions of the Central Government and/or Decentralized Entities, Municipal Corporations, and the National Congress. For such purpose, designate an internal auditor to each one of the respective Institutions, whose function is the monitoring, supervision, and resolution of internal consultations regarding the funds that are allocated for the purposes of this Law.

CONTROL MEASURES. For the purpose of guaranteeing efficiency and effectiveness in the execution of the funds, the respective Institution must establish the necessary control measures to make transparent the management of the resources.

CONTENT OF THE PHYSICAL LIQUIDATION REPORT. The physical execution report must contain the following information:

• 1)

  Period covered by the physical execution report.

• 2)

  Number of persons who have already received the benefit of the program or number of persons that is projected to be benefited.

• 3)

  Detail of the executed projects.

• 4)

  Photographs that reflect their state before, during, and after the work was completed; and 5) Other information that the respective Institution considers convenient.

AUDIT AND SPECIAL INVESTIGATION. Regarding the execution and rendering of accounts of the funds granted to all types of Public Servants and/or Deputies to the National Congress, Non-Governmental Development Organizations (NGDOs), Private Development Organizations (PDOs), Foundations, patronatos, churches, water boards, municipalities and community associations and in general all those natural or legal persons who at any title received or administered public funds, whatever their origin or granted prior to the approval of this Law and that have been granted in the non-prescribed years and that were allocated for the execution of community projects or the delivery of different types of social aid in the different departments, executed under the different contracting processes of the State or in accordance with the priority need identified in the community, as well as the subcontractors or decentralized Social Investment Expenses and those related to the Strengthening of Governance and Democracy executed through public and private law institutions created to achieve effective political participation of citizens destined for community projects, programs and social projects, minor infrastructure projects and their equipment and all types of social aid in the area of health, education, food, job creation and others that are intended for the improvement of living conditions of citizens in the communities as well as for the attention of urgent and priority needs of these: the Superior Court of Accounts (TSC) is hereby ordered to proceed with an audit and special investigation for which the interested parties must present all corresponding documentation before the Superior Court of Accounts (TSC) which includes Department and Municipality where the Project was executed, list of beneficiaries if it is natural persons or designation of the community if it was a community project, in the case of project including if possible photographs of the progress, execution or completion of the work, in the case of aid presenting a list of beneficiaries so that this entity auditor performs a documentary and field audit and special investigation and verifies the actual execution of the projects, the actual or material delivery of aid or any other illicit destination given to the public funds for the welfare of the population to comply and finalize this audit and special investigation, the Superior Court of Accounts (TSC) has a period of three (3) years from the publication of this Law. For compliance with the provisions of this Article, the Resolution of the Board of Directors of the National Congress No. 052-2018 dated December 13, 2018 shall be applicable, independently of the year of management, disbursement, execution or liquidation of the Project or aid. During the time this audit and special investigation remains in force and until the Superior Court of Accounts (TSC) issues a definitive resolution, any other type of administrative, civil or criminal action is suspended, independently of the stage in which it is found in relation to the deduction of any type of responsibility on the funds being audited. The Certificate of Solvency or Final Quietus extended by the Superior Court of Accounts (TSC) exempts from any type of liability of a civil, criminal or administrative nature in relation to the budgetary allocations audited by said Court and produces this effect.

REGULARIZATION. Upon completion of the audit and special investigation by the Superior Court of Accounts (TSC) ordered in the previous Article or the ordinary financial or legal compliance audits, special or otherwise and the Court determines that all or part of the executed funds have not been liquidated or correctly liquidated, it must issue a motivated resolution indicating the exact amount of the economic damage caused to the State that has not been cleared, to which a fine of two percent (2%) shall be applied on the total amount of the uncleared amount plus the interest that the Superior Court of Accounts (TSC) determines, in order that the amount plus the fine be entered into the General Treasury of the Republic by part of the audited person within a maximum period of four (4) years counted from the date of the resolution. Upon making said payment by the official, the Superior Court of Accounts (TSC) must issue the Certificate of Solvency which shall have the same effects. The Certificate of Solvency or Final Quietus extended by the Superior Court of Accounts (TSC) exempts from any type of liability of a civil, criminal or administrative nature in relation to the budgetary allocations audited. If upon completion of the imposed payment period the audited person has not obtained the Certificate of Solvency or Final Quietus extended by the Superior Court of Accounts (TSC), it is subject to administrative, civil liability or the indication of criminal liability must be determined as appropriate, notifying the corresponding authority. Against the resolutions that put an end to the audit process described in this Article and the previous Article issued by the Superior Court of Accounts (TSC), only the reposition remedy contemplated in the Administrative Procedure Law is available, whereby what is resolved is deemed to have exhausted the administrative proceeding. The funds obtained from the payment of the two percent (2%) corresponding to the fine on the total amount of the uncleared amount plus the interest that the Superior Court of Accounts (TSC) determines shall go to a common fund that is intended for programs in the areas of health and education.

In order to achieve the purposes and objectives of this Law, a special budgetary allocation must be created in the budget of the respective institution for each fiscal year. With respect to the National Congress, this Law derives from Article 1-A of its Organic Law contained in Decree No. 65-2003, and an annual budgetary allocation must be approved that will form part of the Budget of the National Congress.

Allocate a budgetary allocation of TWENTY MILLION LEMPIRAS (L.20,000,000.00) to the Superior Court of Accounts (TSC) for compliance with the mission entrusted in this Law for the present Fiscal Year. For the following fiscal years, a special annual allocation must be assigned in the Budget of Income and Expenses of the Republic.

The Superior Court of Accounts (TSC) shall issue the Regulations of this Law within thirty (30) days.

This Law may be reformed or repealed through a vote of two-thirds (2/3) of the total of Deputies of the National Congress.

This Law shall enter into force from the day of its publication in the Official Gazette "La Gaceta". Given in the city of Tegucigalpa, Municipality of the Central District, in the Session Hall of the National Congress on the sixteenth day of the month of October of two thousand nineteen. ANTONIO CÉSAR RIVERA CALLEJAS PRESIDENT. JOSÉ TOMÁS ZAMBRANO MOLINA SECRETARY. SALVADOR VALERIANO PINEDA SECRETARY. To the Executive Power. Therefore Execute. Tegucigalpa, M.D.C. October 16, 2019. JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC. THE SECRETARY OF STATE IN THE OFFICE OF THE PRESIDENCY. EBAL JAIR DÍAZ LUPIAN.

Prorogue the Ordinary Sessions of the National Congress from November 1 of the year 2019 to January 31 of the year 2020.