Whoever Honduras Elects President Faces Tough Road, Broke Country

Hondurans went to the polls this Sunday to elect a new president. The Central American country has a whole host of problems to deal with, including the highest levels of violence in the world and increased drug cartel activity. Most pressing, though, the new leader will inherit a failing economy. Honduras is broke. It just borrowed, for the first time, $500 million on the international bond market, but that wasn't even enough to bail the country out of its devastating financial troubles.

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In Honduras, the ruling party's presidential candidate has a comfortable lead with just over the half of the votes counted. But his main opponent in the race, the wife of the former president who was deposed in a coup four years ago, charges fraud. She's vowed to challenge the election.

A drawn-out political conflict comes at a difficult time for the Central American nation that's suffering from soaring unemployment, poverty and the highest reported murder rate in the world. And as NPR's Carrie Kahn reports from Tegucigalpa, the winner of yesterday's election inherits an economy on the brink of collapse.

CARRIE KAHN, BYLINE: Supporters of the leftist candidate Xiomara Castro, rallied in the capital today. While the candidate didn't show up at a scheduled press conference, her advisors say she's not ready to concede, citing a whole host of problems with the vote count.

Castro trails behind the ruling party's candidate Juan Orlando Hernandez, who campaigned on combating the country's out-of-control violence with the strong arm of the military. Fear has risen of post-electoral violence. But whoever ultimately sits in the presidential palace has a lot of work ahead, especially trying to repair Honduras' shattered economy.

Nowhere is that more apparent than at the country's main public hospital. The emergency room is overflowing and relatives have to wait outside in the parking lot. Jose Francisco Munoz sits on the curb. His daughter went into early labor and her blood pressure shot up. Doctors told Munoz to get her here immediately but that meant a four-hour ambulance ride. Munoz says the drivers had no gas and told him if he didn't pay 1,600 lempiras - about $80 - no ride.

JOSE FRANCISCO MUNOZ: (Foreign language spoken).

KAHN: He says he only had 1,100 but they took him anyway. We are poor farmers, he says. More than two-thirds of Hondurans live on less than $1.25 a day. The government is so broke it hasn't been able to make payroll, which accounts for more than 30 percent of the national budget.

In the hospital hallway, surgeon Emerson Daid says contract nurses and doctors haven't had a paycheck all year. There are no antibiotics. He says he doesn't have the tools to properly do his job.

EMERSON DAID: (Foreign language spoken).

KAHN: All we have is wire, he says, so if we have to do any sort of reconstructive surgery, we do it like they did 50 years ago.

Honduras' economic troubles deteriorated significantly since the 2009 coup that deposed the left of center president. Venezuela pulled its oil subsidies, a coffee leaf disease gutted the country's number one export, and the government recently failed to meet IMF funding goals, which would have slashed the public employee rolls - not a popular move in the run-up to national elections.

Desperate for money the government began borrowing from national banks at short-term high interest rates. Raf Flores Ponce of FOSDEH, a non-governmental economic think tank here, says the debt has skyrocketed. It's now more than 40 percent of GDP.

RAF FLORES PONCE: (Foreign language spoken).

KAHN: Flores says the situation is grave. The government is caught in a vicious cycle of borrowing. International market watchers like Sarah Glendon of Moody's Investors Service says the government's lack of transparency is also a concern in whether it will take the needed steps to cut the bloated state payroll.

SARAH GLENDON: There are significant fiscal decisions that need to be made both on the revenue side and on the expenditure side.

KAHN: She says the government's bond rating has dropped to the second lowest in Central America. That makes plans to borrow again next year a much more expensive proposition and leaves the government with few options.

But Jake Johnston of the Washington-based Center for Economic Policy Research says the new administration does have choices, like closing tax loopholes for the rich instead of implementing austerity programs.

JAKE JOHNSTON: So all the additional wealth that has been created in the two years after the coup, all of it went to the top 10 percent of Honduran society.

KAHN: He says Honduras now has the largest income inequality in all of Latin America. Yesterday, Sandra Carolina Cruz, who works in a bank, cast her vote for the conservative Liberal Party while her twin boys played video games on smartphones.

SANDRA CAROLINA CRUZ: (Foreign language spoken).

KAHN: She says, we need to start thinking about those who aren't as fortunate and begin sharing the little that God has given us. It's unclear, though, whether those few with the most in this country are willing to do that. Carrie Kahn, NPR News, Tegucigalpa.

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