Disaster recovery

Rebuilding Central American infrastructure after a year of hurricanes.

Hurricane Eta wreaked havoc across parts of Central America earlier this month causing an estimated USD 6.5 billion of damage and directly affecting 2.5 million people. Honduras was worst hit, primarily due to catastrophic flooding, but there was also significant damage done in Florida, Nicaragua and Guatemala.

This comes after an extremely active 2020 Atlantic hurricane season that has seen 28 named storms, 12 hurricanes and 5 major hurricanes so far.

An economist in Honduras told us, “We have lost 20 bridges, 100 roads and 60 communities are isolated. Damage has been estimated at HNL 120 billion [~USD 5 billion]. This comes during the worst economic conditions since World War II.”

“We have lost 20 bridges, 100 roads and 60 communities are isolated. Damage has been estimated at USD 5 billion.”

Economist, Honduras

Aid has come in but it hasn’t all be channeled correctly. For example, El Salvador sent 15 – 20 aid trucks to Guatemala and Honduras, announcing that they were from the government of El Salvador. A few days later, it emerged that these were part of international funds for emergency aid to the region. President Bukele couldn’t resist the photo opportunity!

As the focus shifts from emergency response to rebuilding, Honduras and Guatemala are facing economic and political challenges.

The international development banks: Central American Bank for Economic Integration (CABEI), World Bank and IDB have met to co-ordinate a multilateral strategy to face the problem but a more creative solution is required as the two countries struggle with debt.

“New financial resources are required, but the country’s level of indebtedness make it prohibitive to take on new loans.”

Trade specialist, Honduras

A trade specialist based in Honduras says, “New financial resources are required, but the country’s level of indebtedness make it prohibitive to take on new loans. Reconstructing infrastructure requires investment from the private and international sector.” The Honduran economist agrees, “The current environment must force a rethinking of the regulatory framework, to attract a constant flow of investment through Public Private Partnerships.”

Guatemala has bigger problems: an infrastructure specialist in Guatemala City despairs, “Guatemala has strong internal tensions. The government approved a non-viable budget with huge levels of indebtedness. There have been huge protests, the Congress building was set on fire and after months of acrimony the President and Vice President are calling on each other to resign.”

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