Honduras: An Overview

Political, Economic and Legal Landscape (2026–2030)

Political landscape

Honduras is undergoing a period of political transition with a direct impact on its economic and legal environment following the general elections held on 30 November 2025. The elections marked the return of a conservative, pro-business administration, in contrast to the government that led the country between 2022 and 2026.

These elections were characterised by a narrow margin between the two leading candidates, resulting in a victory for Nasry Asfura after a prolonged vote-counting process and heightened political tension. Although the process was institutionally validated, the close outcome highlighted a politically divided country, posing significant challenges in terms of governability and the building of legislative consensus.

President Asfura’s austere and discreet inauguration sent an early signal of emphasis on efficiency in public administration. The key challenge for the new government will be to translate this political shift into economic stability and regulatory coherence, particularly in areas such as domestic and foreign direct investment attraction, job creation, and anti-corruption efforts.

This approach has been reinforced by official discourse centred on fiscal order, administrative efficiency, and the restoration of institutional confidence. From a business perspective, these early signals have been positively received, as they suggest greater predictability and rationality in public decision-making.

Governance challenges

Despite the change in government, structural challenges remain, including political fragmentation, legislative constraints, and persistent concerns regarding institutional credibility. The executive’s ability to advance reforms will largely depend on its capacity to negotiate political agreements and avoid regulatory deadlock, which has historically hindered policy continuity in Honduras.

Economic landscape

Macroeconomic environment

The political transition occurs against a backdrop of ongoing macroeconomic constraints, including high levels of labour informality, reliance on traditional sectors, and the need to diversify the productive base. The new administration has prioritised investment attraction, formal job creation, and strengthened legal certainty as foundations for sustained economic growth.

Investment climate and private sector expectations

President Asfura’s election represents a shift toward more conservative and pro-business policies, with a focus on strengthening international partnerships and positioning legal certainty as a cornerstone of investment attraction. Market analysts and private sector stakeholders anticipate policies aimed at incentivising foreign investment, reducing administrative burdens, and maintaining a fiscally austere environment that balances public financial sustainability with productivity incentives.

Nevertheless, Honduras continues to face structural burdens such as poverty, inequality, and the need to modernise its productive capacity to gain competitiveness at the regional level. Economic stability perceptions depend largely on the ability to implement reforms effectively, while preserving social cohesion.

Fiscal policy and economic sustainability

The emphasis on austerity and fiscal discipline seeks to balance investment attraction with the sustainability of public finances. The central challenge will be maintaining macroeconomic stability without neglecting social demands, particularly if economic growth does not translate into visible short-term improvements.

Legal and regulatory landscape

Legal certainty and the rule of law

From a legal perspective, the new administration has pointed to the importance of strengthening legal certainty as a fundamental pillar for investors and economic operators. Measures aimed at consolidating a clear and predictable regulatory framework are expected, particularly in sectors considered strategic for investment such as energy, construction, telecommunications, textiles, and petroleum.

Anti-corruption agenda

The legal agenda includes initiatives to combat corruption internally and, notably, with the potential and challenging creation of an International Commission against Corruption and Impunity (Comisión Internacional contra la Corrupción e Impunidad en Honduras – CICIH). The effectiveness of such a mechanism will depend on its institutional design, independence, and co-ordination with national authorities. For the private sector, a credible anti-corruption framework may enhance transparency in public procurement and reduce compliance risks.

Re-entry into international arbitration

One of the most relevant developments has been Honduras’ intention to rejoin the International Centre for Settlement of Investment Disputes (Centro Internacional de Arreglo de Diferencias Relativas a Inversiones – CIADI) system, a move widely interpreted as a signal to restore confidence in investment protection and a legitimate response to international mandates. The practical impact of this decision is related to its formal implementation and the state’s consistent compliance with contractual obligations and respect of arbitral awards.

Labour law and regulatory flexibility

Labour relations in Honduras continue to be shaped by strong union positions and a legal framework perceived as highly protective of workers. Labour rights are constitutionally protected, which places a heavy burden on businesses in terms of cost and agility. In this context, discussions have emerged regarding the possible reintroduction of a partial hourly employment regime, which would require careful legal structuring to ensure compliance with already protected non-waivable labour rights.

Challenges in labour justice

Structural challenges persist within the labour justice system, particularly the heavy caseload of labour courts, which results in prolonged proceedings and significant financial exposure for employers due to accrued unpaid wages, legal costs, and other contingent liabilities. This environment often encourages early out-of-court settlements driven by economic considerations, rather than legal ones.

State payment delays

The state’s delay in making payments under public contracts is a significant risk for companies in the energy and construction sectors. This situation directly affects cash flow and project financing, increasing the likelihood of contractual disputes. Arbitration is the preferred method for resolving these disputes, as established under Honduran investment law and the various free trade agreements to which the country is a party. This underscores the importance of strong contractual safeguards and rigorous counterparty risk management.

Outlook

The next four years are expected to be characterised by moderate political stability, an emphasis on investment promotion, and efforts to consolidate the legal framework. The success of this agenda will depend on the executive’s ability to build legislative consensus, strengthen anti-corruption institutions, and implement reforms that balance private business interests with labour protection and tax collection.

If these policies are implemented coherently, Honduras could improve its competitiveness and country risk perception. However, structural metamorphosis requires sustained attention to ensure that legal certainty translates into tangible benefits for the broader economy and society.