The Americas Blog

El Blog de las Americas

The Americas Blog seeks to present a more accurate perspective on economic and political developments in the Western Hemisphere than is often presented in the United States. It will provide information that is often ignored, buried, and sometimes misreported in the major U.S. media.

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NACLA

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Book Review: International Solidarity in Action: The Relationship Between the United Electrical Workers (UE) and Frente Auténtico del Trabajo, by Robin Alexander

On February 3, workers at a General Motors plant in Silao, Mexico, secured an important victory for organized labor when a huge majority voted to join the Sindicato Independiente Nacional de Trabajadores y Trabajadoras de la Industria Automotriz (SINTTIA), an independent labor union. Major international media outlets such as The New York Times and Reuters covered the election, noting its historic importance. Organized labor in Mexico has long been infamous for charro unions, company unions that typically offer workers little actual recourse for improving workplace conditions or in negotiating better compensation. This situation has contributed to prolonged wage stagnation. As the Times reported:

Though the country has become one of the richest in Latin America, its workers still earn among the lowest salaries of almost any nation in the region. One important reason, economists say, is that for decades, Mexican workers have had little say in choosing the unions that represent them.

The SINTTIA victory in Silao comes after decades of hard-fought struggles by independent and democratic labor unions in Mexico that have challenged hostile and sometimes violent anti-unionization campaigns. Their efforts have confronted employers, corrupt and entrenched charro unions, and the system of neoliberal globalization itself, manifest in structures such as the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) that pit workers in Mexico against their counterparts in the United States and Canada. “These deals were about putting US manufacturing workers in direct competition with much-lower-paid workers in the developing world….” economist (and my colleague) Dean Baker has written. “This also put downward pressure on the wages of the manufacturing workers who kept their jobs, as well as on the wages of less-educated workers more generally, since manufacturing has historically been a source of relatively high-paying employment for workers without college degrees.”

The effects of 28 years of NAFTA — and its successor, the US-Mexico-Canada Agreement — on Mexico should surprise no one. As NAFTA was being debated in the early 1990s, Mexican President Carlos Salinas de Gortari claimed that the trade and investment arrangement would make Mexico a “first world” country and lift living standards up closer to those in the United States and Canada. But after 20 years, the poverty rate in Mexico was higher than in 1994 when NAFTA first went into effect.

Now that Mexico’s workers are having more of a say in choosing their union representation, will they finally start to see real improvements in how they live? It’s an important step in obtaining and exercising more power and agency to make further demands on the business sector and the government, and it is the latest chapter in a history of labor organizing and campaigns going back 30 years. International labor solidarity is also an important part of this story.

The new e-book, International Solidarity in Action: The Relationship Between the United Electrical Workers (UE) and Frente Auténtico del Trabajo, by Robin Alexander tells some of this history from a first-hand perspective. As the first International Affairs Director of the UE, Alexander was there at the start of cross-border labor union campaigning against NAFTA, through to the deal’s 20-year anniversary. It was their shared opposition to NAFTA that led the UE and the FAT, both independent unions, to develop a close working relationship, beginning in 1992. As Alexander details, the bonds between the two unions soon became much closer, and their combined efforts came to include support for shop organizing, strike support, fundraising, labor law reform, and other activities. Along the way, the FAT and other independent unions in Mexico scored historic victories, leading eventually to the labor law reforms that made organizing wins, like the one at Silao, possible. These included holding the first secret-ballot union election in Mexico’s history (in the early ‘90s), and, along with the UE and other unions such as the Teamsters, lodging some of the first complaints under the North American Agreement on Labor Cooperation (NAALC), NAFTA’s labor side-agreement, in attempts to defend workers’ rights (in 1994).

The UE and the FAT would seem to be natural partners. Both are highly democratic in structure, with rank-and-file governance, and both are independent of labor union federations that might exert influence or control over their decisions and activities. This has allowed the unions to be out front in important struggles, and early labor opposition to NAFTA was one such case. The FAT was the only Mexican union to go to an initial, important pan-North American labor meeting in 1992 to organize against NAFTA. The UE, one of the only industrial unions to survive the McCarthy era purges of communists from US labor, and which did not cooperate with the related witch hunts at the time, has long been independent of the major US-Canadian union federation, the AFL-CIO. It was also one of the first unions to begin organizing across borders against NAFTA.

The reluctance of the AFL-CIO — as well as the Canadian Labor Congress — to partner with the FAT, even against as serious a threat as NAFTA, was itself a legacy of Cold War thinking and practice, stemming from the AFL-CIO and CLC belonging to the International Confederation of Free Trade Unions (ICFTU). Unlike the FAT, ICFTU Mexican labor partner the Confederación de Trabajadores de Mexico, which was closely aligned with Salinas’s political party (the PRI), supported NAFTA. The AFL-CIO would soon abandon this self-defeating stance and also partner with the FAT — an early example of how UE-FAT solidarity would lead to important changes.

Solidarity in practice

Alexander recounts many examples of how exchanges between the two unions, and others in Canada, Japan, India, and elsewhere, enabled various forms of direct and concrete solidarity. These included meetings, speaking tours, shop visits, and other in-person travel that both gave rank-and-file members a political education and fostered solidarity and comradery among union members. These interactions often led US and Canadian unionists to abandon previously xenophobic ideas about immigration and its root causes. “ONLY through a serious, concerted member-to-member international solidarity effort will US workers understand that their boss at home is the same boss of workers abroad and then take the next step to link arms with these workers in an active international expression that ‘An injury to one IS an injury to all,’” Alexander quotes former UE president Peter Knowlton as saying.

Sometimes cross-border solidarity resulted in concrete advances for FAT members. Alexander describes how fundraising by UE members in a campaign called “Buck-a-Brick” helped to construct a new union hall for municipal workers in Guerrero, Chihuahua:

This initiative, which came from Local 222…not only raised funds for UE’s allies in Mexico but became a mechanism for the local to engage its members and those of other UE locals in discussions about the importance of international solidarity. Each person who donated a dollar received a paper with an image of the number of symbolic bricks he or she had contributed. The campaign was subsequently adopted by UE’s Northeast Region, which proudly presented a check for $1,300 to the FAT representative who attended the UE convention that Fall as a contribution to the next phase of construction of the union hall in Guerrero, Chihuahua. In addition to raising funds for their sister union in Mexico, this effort helped to create a broader understanding of the UE’s international work within the union’s national membership, as well as education on the question of immigration.

International pressure from the UE also led to the reversal of public sector worker layoffs in Guerrero, which Alexander rightly recalls as “some amazingly effective international solidarity.”

As Alexander, a labor attorney, details, all of these efforts and others also facilitated historic changes to Mexican labor law that would pave the way for the growth of independent unions. Initial changes to labor law under former president Felipe Calderon in 2012 were “a serious step backward.” But Mexican union resistance, with international support from the UE and other US and Canadian labor unions — as well as the US and Canadian governments, which have seen Mexico’s pervasive and chronically low wages as an unfair trade advantage — led to the drafting of new, more union-friendly laws under the subsequent administration of Enrique Peña Nieto, and to more reforms under the current Andrés Manuel López Obrador government. Under López Obrador, following the renegotiation of NAFTA, workers have challenged unfair labor practices via the US-Mexico-Canada Agreement, often with the support of unions in the United States and Canada.

These landmark reforms are the result of 30 years of struggle for more democratic unions, democratic workplaces, and the freedom for workers to choose independent union representation. While Mexican workers and their independent unions have definitely been the driving forces in pushing through meaningful and lasting advances for labor, international solidarity has been an important factor as well. As with countless other examples of societal advances through collective action, this is a history that might not be told accurately and honestly, if at all, except by those who were there. Robin Alexander’s account is a valuable people’s history, told from the US side, filled with examples to be emulated, some pitfalls to avoid, and above all, boundless inspiration.

NACLA

See article on original site

Book Review: International Solidarity in Action: The Relationship Between the United Electrical Workers (UE) and Frente Auténtico del Trabajo, by Robin Alexander

On February 3, workers at a General Motors plant in Silao, Mexico, secured an important victory for organized labor when a huge majority voted to join the Sindicato Independiente Nacional de Trabajadores y Trabajadoras de la Industria Automotriz (SINTTIA), an independent labor union. Major international media outlets such as The New York Times and Reuters covered the election, noting its historic importance. Organized labor in Mexico has long been infamous for charro unions, company unions that typically offer workers little actual recourse for improving workplace conditions or in negotiating better compensation. This situation has contributed to prolonged wage stagnation. As the Times reported:

Though the country has become one of the richest in Latin America, its workers still earn among the lowest salaries of almost any nation in the region. One important reason, economists say, is that for decades, Mexican workers have had little say in choosing the unions that represent them.

The SINTTIA victory in Silao comes after decades of hard-fought struggles by independent and democratic labor unions in Mexico that have challenged hostile and sometimes violent anti-unionization campaigns. Their efforts have confronted employers, corrupt and entrenched charro unions, and the system of neoliberal globalization itself, manifest in structures such as the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) that pit workers in Mexico against their counterparts in the United States and Canada. “These deals were about putting US manufacturing workers in direct competition with much-lower-paid workers in the developing world….” economist (and my colleague) Dean Baker has written. “This also put downward pressure on the wages of the manufacturing workers who kept their jobs, as well as on the wages of less-educated workers more generally, since manufacturing has historically been a source of relatively high-paying employment for workers without college degrees.”

The effects of 28 years of NAFTA — and its successor, the US-Mexico-Canada Agreement — on Mexico should surprise no one. As NAFTA was being debated in the early 1990s, Mexican President Carlos Salinas de Gortari claimed that the trade and investment arrangement would make Mexico a “first world” country and lift living standards up closer to those in the United States and Canada. But after 20 years, the poverty rate in Mexico was higher than in 1994 when NAFTA first went into effect.

Now that Mexico’s workers are having more of a say in choosing their union representation, will they finally start to see real improvements in how they live? It’s an important step in obtaining and exercising more power and agency to make further demands on the business sector and the government, and it is the latest chapter in a history of labor organizing and campaigns going back 30 years. International labor solidarity is also an important part of this story.

The new e-book, International Solidarity in Action: The Relationship Between the United Electrical Workers (UE) and Frente Auténtico del Trabajo, by Robin Alexander tells some of this history from a first-hand perspective. As the first International Affairs Director of the UE, Alexander was there at the start of cross-border labor union campaigning against NAFTA, through to the deal’s 20-year anniversary. It was their shared opposition to NAFTA that led the UE and the FAT, both independent unions, to develop a close working relationship, beginning in 1992. As Alexander details, the bonds between the two unions soon became much closer, and their combined efforts came to include support for shop organizing, strike support, fundraising, labor law reform, and other activities. Along the way, the FAT and other independent unions in Mexico scored historic victories, leading eventually to the labor law reforms that made organizing wins, like the one at Silao, possible. These included holding the first secret-ballot union election in Mexico’s history (in the early ‘90s), and, along with the UE and other unions such as the Teamsters, lodging some of the first complaints under the North American Agreement on Labor Cooperation (NAALC), NAFTA’s labor side-agreement, in attempts to defend workers’ rights (in 1994).

The UE and the FAT would seem to be natural partners. Both are highly democratic in structure, with rank-and-file governance, and both are independent of labor union federations that might exert influence or control over their decisions and activities. This has allowed the unions to be out front in important struggles, and early labor opposition to NAFTA was one such case. The FAT was the only Mexican union to go to an initial, important pan-North American labor meeting in 1992 to organize against NAFTA. The UE, one of the only industrial unions to survive the McCarthy era purges of communists from US labor, and which did not cooperate with the related witch hunts at the time, has long been independent of the major US-Canadian union federation, the AFL-CIO. It was also one of the first unions to begin organizing across borders against NAFTA.

The reluctance of the AFL-CIO — as well as the Canadian Labor Congress — to partner with the FAT, even against as serious a threat as NAFTA, was itself a legacy of Cold War thinking and practice, stemming from the AFL-CIO and CLC belonging to the International Confederation of Free Trade Unions (ICFTU). Unlike the FAT, ICFTU Mexican labor partner the Confederación de Trabajadores de Mexico, which was closely aligned with Salinas’s political party (the PRI), supported NAFTA. The AFL-CIO would soon abandon this self-defeating stance and also partner with the FAT — an early example of how UE-FAT solidarity would lead to important changes.

Solidarity in practice

Alexander recounts many examples of how exchanges between the two unions, and others in Canada, Japan, India, and elsewhere, enabled various forms of direct and concrete solidarity. These included meetings, speaking tours, shop visits, and other in-person travel that both gave rank-and-file members a political education and fostered solidarity and comradery among union members. These interactions often led US and Canadian unionists to abandon previously xenophobic ideas about immigration and its root causes. “ONLY through a serious, concerted member-to-member international solidarity effort will US workers understand that their boss at home is the same boss of workers abroad and then take the next step to link arms with these workers in an active international expression that ‘An injury to one IS an injury to all,’” Alexander quotes former UE president Peter Knowlton as saying.

Sometimes cross-border solidarity resulted in concrete advances for FAT members. Alexander describes how fundraising by UE members in a campaign called “Buck-a-Brick” helped to construct a new union hall for municipal workers in Guerrero, Chihuahua:

This initiative, which came from Local 222…not only raised funds for UE’s allies in Mexico but became a mechanism for the local to engage its members and those of other UE locals in discussions about the importance of international solidarity. Each person who donated a dollar received a paper with an image of the number of symbolic bricks he or she had contributed. The campaign was subsequently adopted by UE’s Northeast Region, which proudly presented a check for $1,300 to the FAT representative who attended the UE convention that Fall as a contribution to the next phase of construction of the union hall in Guerrero, Chihuahua. In addition to raising funds for their sister union in Mexico, this effort helped to create a broader understanding of the UE’s international work within the union’s national membership, as well as education on the question of immigration.

International pressure from the UE also led to the reversal of public sector worker layoffs in Guerrero, which Alexander rightly recalls as “some amazingly effective international solidarity.”

As Alexander, a labor attorney, details, all of these efforts and others also facilitated historic changes to Mexican labor law that would pave the way for the growth of independent unions. Initial changes to labor law under former president Felipe Calderon in 2012 were “a serious step backward.” But Mexican union resistance, with international support from the UE and other US and Canadian labor unions — as well as the US and Canadian governments, which have seen Mexico’s pervasive and chronically low wages as an unfair trade advantage — led to the drafting of new, more union-friendly laws under the subsequent administration of Enrique Peña Nieto, and to more reforms under the current Andrés Manuel López Obrador government. Under López Obrador, following the renegotiation of NAFTA, workers have challenged unfair labor practices via the US-Mexico-Canada Agreement, often with the support of unions in the United States and Canada.

These landmark reforms are the result of 30 years of struggle for more democratic unions, democratic workplaces, and the freedom for workers to choose independent union representation. While Mexican workers and their independent unions have definitely been the driving forces in pushing through meaningful and lasting advances for labor, international solidarity has been an important factor as well. As with countless other examples of societal advances through collective action, this is a history that might not be told accurately and honestly, if at all, except by those who were there. Robin Alexander’s account is a valuable people’s history, told from the US side, filled with examples to be emulated, some pitfalls to avoid, and above all, boundless inspiration.

On January 27, Xiomara Castro was sworn in as president of Honduras after a decisive win in the November 28, 2021 general election. The incoming government inherits an economy struggling to recover from the COVID-19 pandemic as well as from two devastating hurricanes in 2020. Even without these crises, the situation is challenging: the 2009 coup that overthrew the democratically elected government of Castro’s husband, Manuel Zelaya (2006–2009), was followed by 12 years of National Party rule marred by endemic corruption, electoral fraud and interference, social unrest, and violent state-led repression.

In 2009, 2013, and 2017, the Center for Economic and Policy Research (CEPR) published research on the evolving social and economic situations in Honduras. This post will do the same, in order to provide more context to Castro’s historic inauguration.

Economic growth: From 2006 to 2008, Honduras experienced steady annual per capita GDP growth averaging 3.3 percent[1], higher than in El Salvador and Guatemala, but significantly less than in Costa Rica.

In the decade following the 2009 coup in Honduras and the global recession (2010–2019), Honduras averaged per capita GDP growth of just 1.8 percent per year, higher than Guatemala, but below El Salvador and Costa Rica. However, the decline in average per capita GDP growth from the pre-coup period to the post-coup period was 1.5 percentage points, the largest drop among these countries, except for Costa Rica.

In 2020, under the weight of the pandemic-induced recession, the Honduran economy contracted more heavily than all of these Central American neighbors, seeing a drop in per capita GDP of more than 10.5 percent. This was also due in part to the economic effects of Hurricanes Eta and Iota, which hit Honduras less than two weeks apart in November 2020.

Despite a partial recovery in 2021 — outpaced by neighboring Guatemala and El Salvador, though slightly stronger than Costa Rica — Honduras’s per capita GDP in 2021 was still lower than it was as far back as 2015.

Poverty:[2] Addressing poverty will be an important task for the Castro administration. Poverty trended downward in the 2005–2009 pre-coup era, dipping below 60 percent. But after the coup, from 2010 to 2018, the number of households living in poverty remained above 60 percent. This figure reached as high as 66.5 percent in 2012 before trending downward to 59.3 percent in 2019.

The pandemic and its subsequent economic recession erased those modest gains, however. As noted in a Honduran government estimate from July 2021, the poverty rate reached as high as 73.6 percent, with 53.7 percent of households in extreme poverty, the highest level for both measures in the entire period from 2005 to 2021.

Income inequality: Honduras was a very unequal country in the pre-coup era, and has remained that way since. This is evident when looking at income share received by the lowest 20 percent of the population versus the highest 20 percent of the population, for the latest year available. In 2019, the poorest 20 percent received 3.6 percent of income, while the richest 20 percent received 52.2 percent — almost 15 times as much.

As seen in the figure below, the income share for the richest 20 percent generally trended downward from 2005 to 2019, dropping a total of 10.7 percentage points. For the poorest 20 percent, the income share had a modest trend upward over the same period, rising 1.7 percentage points.

However, these modest reductions in inequality were concentrated in the pre-coup era. The income share for the poorest 20 percent rose by 74 percent (1.4 percentage points) from 2005 to 2009, yet it only rose by 9 percent (0.3 percentage points) over the next 10 years.

The losses for the richest 20 percent also slowed after the coup. Pre-coup (2005–2009), the richest 20 percent saw their income share fall by 12 percent (7.5 percentage points). After the coup, it fell by only 6 percent (3.2 percentage points), despite the time period being twice as long (2009–2019).

Unemployment:[3] Headline unemployment figures only provide part of the picture of the labor market, especially in developing countries such as Honduras that have large informal work sectors. The graph below shows total underemployment, which includes unemployment and subemployment.

During the Zelaya administration (2006–2009), unemployment and underemployment generally declined. Unemployment hovered around 3 percent, with total underemployment reaching as low as 35.6 percent in 2008.

In contrast, underemployment trended upwards in the decade since the coup — dropping to pre-coup rates briefly in 2014 — before exploding to 81.6 percent in 2020. Unemployment followed a similar, but more muted trend, before also jumping to 10.9 percent in 2020.

In 2021, these figures decreased, but not enough to reach pre-pandemic levels — much less pre-coup levels.

Underemployment by gender: Again, underemployment by gender follows a pre-coup and postcoup pattern. Pre-coup underemployment for both men and women trended downward. Postcoup, both measures have trended upward. Although women in Honduras have historically experienced a lower underemployment rate than men, the rates became comparable in 2015.

In many countries, the COVID-19 pandemic has had an especially disproportionate impact on women’s participation in the labor force, and this holds true in the case of Honduras. Underemployment among women increased to a shocking 84.6 percent in 2020. This is more than a 20 percentage point increase from 2019, and affected over 385,000 additional women in a country with a total population of less than 5 million women. In contrast, the underemployment rate for men had a much more muted increase in 2020.

In 2021, unemployment for men recovered more significantly than it did for women, suggesting that underemployment for women may remain higher than for men in the near future.

Remittances: Remittances to Honduras — the vast majority of which come from family members living in the United States — represent a significant portion of the Honduran economy. Honduras’s remittances received as a percent of GDP track closely with neighboring El Salvador’s, and are vastly higher than both Guatemala and Costa Rica’s — the latter being a country in which remittances play a very small role in the economy. This reflects, in part, decades of migration flows from Honduras and El Salvador due to poor social and economic conditions and increased insecurity.

After hovering around 20 percent of the country’s GDP prior to the global recession and the coup and then declining in the wake of the global recession in 2009, remittances have steadily increased as a share of Honduras’s GDP since 2012.

That figure could reach as high as 28 percent for 2021, due in part to Honduras’s modest economic growth, as discussed above, and because of an increase in the volume of remittances. It is estimated that from 2020 to 2021 alone, the total value of remittances Hondurans received increased by more than 20 percent.

Expenditures:[4] Since Juan Orlando Hernández took office in 2014, defense and security expenditures have risen steadily as a percent of government spending. This contrasts with social spending on health services and education, which have not experienced similar increases, and even decreased some. In 2019, defense and security spending outpaced health spending.

In 2020 — the first year of the pandemic — education and defense spending declined, while health spending experienced only a modest increase. Though defense spending as a percent of government spending declined a full percentage point from 2019 to 2020 — due in part to a large increase in debt service payments in 2020 — education expenditures saw an even larger decrease over that same time period.

COVID-19:[5] COVID has caused more than 10,000 reported deaths in Honduras since the pandemic began, a mortality rate higher than in both El Salvador and Guatemala. Honduras has managed to vaccinate less than half of its population based on the latest data, which is significantly lower than for Costa Rica and El Salvador, though 15 percentage points higher than for Guatemala.

Public debt: Better management of the country’s debt burden will be an important task for the incoming government, as President Castro noted in her inaugural address. In the pre-coup era, both debt as a percent of GDP and interest payments as a percent of GDP declined and somewhat stabilized.

After the coup and global recession, both debt and interest payments as a percent of GDP generally trended upward and reached highs during the pandemic. Countries for whom interest payments represent a large portion of their external debt service can be in an unsustainable position, especially when the external debt is held mostly in foreign currencies (as is the case in Honduras).

Recent IMF projections for Honduras, however, show Honduras’s debt as a percent of GDP peaking in 2020 before beginning to slowly decline over the next four years.

[1] Data for 2009 are excluded in this graph. Per capita GDP growth figures for that year reflect the effects of the global economic recession.

[2] Honduras defines poverty as those households whose income is less than the cost of the market basket, which includes basic provisions and needs such as housing, education, heath, and transportation. Extreme poverty is a measure of households that have a per capita income below the cost of a basic food basket. In 2020, Honduras released a new methodology for measuring poverty. This new methodology results in a significantly lower poverty rate — by nearly 20 percent — than the original methodology. The above graph employs the original methodology and is consistent with prior CEPR research.

[3] Honduras defines as unemployed all those who are not employed, yet desire to be, and have searched for employment during the four weeks prior to the time of the survey. Underemployment includes unemployment and subemployment. Subemployment is a measure of labor insecurity which includes workers who earn less than the minimum wage or work fewer hours than they would like, and thus provides a more complete picture of the labor market.

[4] Data on 2021 expenditures are not yet available. Expenditures data include central and decentralized government spending.

[5] Excess deaths, instead of deaths per 100,000 people, would likely be a more accurate measure of mortality due to the pandemic. However, excess deaths data for many countries, including Honduras, are not widely available. Because Costa Rica is about 3.5 times richer than Honduras on a per capita GDP basis, and a little less than 2.5 times richer than El Salvador and Guatemala, it may have health infrastructure that more accurately accounts for COVID-19 mortality. This might suggest that El Salvador, Guatemala, and Honduras’s performance in preventing COVID-19 deaths is overstated when compared to Costa Rica.

On January 27, Xiomara Castro was sworn in as president of Honduras after a decisive win in the November 28, 2021 general election. The incoming government inherits an economy struggling to recover from the COVID-19 pandemic as well as from two devastating hurricanes in 2020. Even without these crises, the situation is challenging: the 2009 coup that overthrew the democratically elected government of Castro’s husband, Manuel Zelaya (2006–2009), was followed by 12 years of National Party rule marred by endemic corruption, electoral fraud and interference, social unrest, and violent state-led repression.

In 2009, 2013, and 2017, the Center for Economic and Policy Research (CEPR) published research on the evolving social and economic situations in Honduras. This post will do the same, in order to provide more context to Castro’s historic inauguration.

Economic growth: From 2006 to 2008, Honduras experienced steady annual per capita GDP growth averaging 3.3 percent[1], higher than in El Salvador and Guatemala, but significantly less than in Costa Rica.

In the decade following the 2009 coup in Honduras and the global recession (2010–2019), Honduras averaged per capita GDP growth of just 1.8 percent per year, higher than Guatemala, but below El Salvador and Costa Rica. However, the decline in average per capita GDP growth from the pre-coup period to the post-coup period was 1.5 percentage points, the largest drop among these countries, except for Costa Rica.

In 2020, under the weight of the pandemic-induced recession, the Honduran economy contracted more heavily than all of these Central American neighbors, seeing a drop in per capita GDP of more than 10.5 percent. This was also due in part to the economic effects of Hurricanes Eta and Iota, which hit Honduras less than two weeks apart in November 2020.

Despite a partial recovery in 2021 — outpaced by neighboring Guatemala and El Salvador, though slightly stronger than Costa Rica — Honduras’s per capita GDP in 2021 was still lower than it was as far back as 2015.

Poverty:[2] Addressing poverty will be an important task for the Castro administration. Poverty trended downward in the 2005–2009 pre-coup era, dipping below 60 percent. But after the coup, from 2010 to 2018, the number of households living in poverty remained above 60 percent. This figure reached as high as 66.5 percent in 2012 before trending downward to 59.3 percent in 2019.

The pandemic and its subsequent economic recession erased those modest gains, however. As noted in a Honduran government estimate from July 2021, the poverty rate reached as high as 73.6 percent, with 53.7 percent of households in extreme poverty, the highest level for both measures in the entire period from 2005 to 2021.

Income inequality: Honduras was a very unequal country in the pre-coup era, and has remained that way since. This is evident when looking at income share received by the lowest 20 percent of the population versus the highest 20 percent of the population, for the latest year available. In 2019, the poorest 20 percent received 3.6 percent of income, while the richest 20 percent received 52.2 percent — almost 15 times as much.

As seen in the figure below, the income share for the richest 20 percent generally trended downward from 2005 to 2019, dropping a total of 10.7 percentage points. For the poorest 20 percent, the income share had a modest trend upward over the same period, rising 1.7 percentage points.

However, these modest reductions in inequality were concentrated in the pre-coup era. The income share for the poorest 20 percent rose by 74 percent (1.4 percentage points) from 2005 to 2009, yet it only rose by 9 percent (0.3 percentage points) over the next 10 years.

The losses for the richest 20 percent also slowed after the coup. Pre-coup (2005–2009), the richest 20 percent saw their income share fall by 12 percent (7.5 percentage points). After the coup, it fell by only 6 percent (3.2 percentage points), despite the time period being twice as long (2009–2019).

Unemployment:[3] Headline unemployment figures only provide part of the picture of the labor market, especially in developing countries such as Honduras that have large informal work sectors. The graph below shows total underemployment, which includes unemployment and subemployment.

During the Zelaya administration (2006–2009), unemployment and underemployment generally declined. Unemployment hovered around 3 percent, with total underemployment reaching as low as 35.6 percent in 2008.

In contrast, underemployment trended upwards in the decade since the coup — dropping to pre-coup rates briefly in 2014 — before exploding to 81.6 percent in 2020. Unemployment followed a similar, but more muted trend, before also jumping to 10.9 percent in 2020.

In 2021, these figures decreased, but not enough to reach pre-pandemic levels — much less pre-coup levels.

Underemployment by gender: Again, underemployment by gender follows a pre-coup and postcoup pattern. Pre-coup underemployment for both men and women trended downward. Postcoup, both measures have trended upward. Although women in Honduras have historically experienced a lower underemployment rate than men, the rates became comparable in 2015.

In many countries, the COVID-19 pandemic has had an especially disproportionate impact on women’s participation in the labor force, and this holds true in the case of Honduras. Underemployment among women increased to a shocking 84.6 percent in 2020. This is more than a 20 percentage point increase from 2019, and affected over 385,000 additional women in a country with a total population of less than 5 million women. In contrast, the underemployment rate for men had a much more muted increase in 2020.

In 2021, unemployment for men recovered more significantly than it did for women, suggesting that underemployment for women may remain higher than for men in the near future.

Remittances: Remittances to Honduras — the vast majority of which come from family members living in the United States — represent a significant portion of the Honduran economy. Honduras’s remittances received as a percent of GDP track closely with neighboring El Salvador’s, and are vastly higher than both Guatemala and Costa Rica’s — the latter being a country in which remittances play a very small role in the economy. This reflects, in part, decades of migration flows from Honduras and El Salvador due to poor social and economic conditions and increased insecurity.

After hovering around 20 percent of the country’s GDP prior to the global recession and the coup and then declining in the wake of the global recession in 2009, remittances have steadily increased as a share of Honduras’s GDP since 2012.

That figure could reach as high as 28 percent for 2021, due in part to Honduras’s modest economic growth, as discussed above, and because of an increase in the volume of remittances. It is estimated that from 2020 to 2021 alone, the total value of remittances Hondurans received increased by more than 20 percent.

Expenditures:[4] Since Juan Orlando Hernández took office in 2014, defense and security expenditures have risen steadily as a percent of government spending. This contrasts with social spending on health services and education, which have not experienced similar increases, and even decreased some. In 2019, defense and security spending outpaced health spending.

In 2020 — the first year of the pandemic — education and defense spending declined, while health spending experienced only a modest increase. Though defense spending as a percent of government spending declined a full percentage point from 2019 to 2020 — due in part to a large increase in debt service payments in 2020 — education expenditures saw an even larger decrease over that same time period.

COVID-19:[5] COVID has caused more than 10,000 reported deaths in Honduras since the pandemic began, a mortality rate higher than in both El Salvador and Guatemala. Honduras has managed to vaccinate less than half of its population based on the latest data, which is significantly lower than for Costa Rica and El Salvador, though 15 percentage points higher than for Guatemala.

Public debt: Better management of the country’s debt burden will be an important task for the incoming government, as President Castro noted in her inaugural address. In the pre-coup era, both debt as a percent of GDP and interest payments as a percent of GDP declined and somewhat stabilized.

After the coup and global recession, both debt and interest payments as a percent of GDP generally trended upward and reached highs during the pandemic. Countries for whom interest payments represent a large portion of their external debt service can be in an unsustainable position, especially when the external debt is held mostly in foreign currencies (as is the case in Honduras).

Recent IMF projections for Honduras, however, show Honduras’s debt as a percent of GDP peaking in 2020 before beginning to slowly decline over the next four years.

[1] Data for 2009 are excluded in this graph. Per capita GDP growth figures for that year reflect the effects of the global economic recession.

[2] Honduras defines poverty as those households whose income is less than the cost of the market basket, which includes basic provisions and needs such as housing, education, heath, and transportation. Extreme poverty is a measure of households that have a per capita income below the cost of a basic food basket. In 2020, Honduras released a new methodology for measuring poverty. This new methodology results in a significantly lower poverty rate — by nearly 20 percent — than the original methodology. The above graph employs the original methodology and is consistent with prior CEPR research.

[3] Honduras defines as unemployed all those who are not employed, yet desire to be, and have searched for employment during the four weeks prior to the time of the survey. Underemployment includes unemployment and subemployment. Subemployment is a measure of labor insecurity which includes workers who earn less than the minimum wage or work fewer hours than they would like, and thus provides a more complete picture of the labor market.

[4] Data on 2021 expenditures are not yet available. Expenditures data include central and decentralized government spending.

[5] Excess deaths, instead of deaths per 100,000 people, would likely be a more accurate measure of mortality due to the pandemic. However, excess deaths data for many countries, including Honduras, are not widely available. Because Costa Rica is about 3.5 times richer than Honduras on a per capita GDP basis, and a little less than 2.5 times richer than El Salvador and Guatemala, it may have health infrastructure that more accurately accounts for COVID-19 mortality. This might suggest that El Salvador, Guatemala, and Honduras’s performance in preventing COVID-19 deaths is overstated when compared to Costa Rica.

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. 

SDRs, which are an international reserve asset, can be exchanged for hard currency, used to pay the IMF, or donated among member countries. The injection of these assets by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said

Around a third of the SDRs were allocated to developing countries (excluding China, whose currency is included in the basket of currencies that determines the value of SDRs). 

CEPR has been publishing monthly reports on the use of SDRs based on accounting calculations derived from IMF SDR data, IMF country reports, and statements by government officials. 

The following is a preview of key findings that we will explore in greater depth in our upcoming report on the use of SDRs since August 2021:

  • 80 developing countries have used SDRs since the August allocation. 

  • 32 countries have exchanged SDRs for hard currency, for $11.6 billion.

  • 55 countries have paid the IMF with SDRs, for $6.5 billion.

  • 39 countries have recorded the SDRs in government budgets or have used them for fiscal purposes, for $37.3 billion. 

  • These numbers are significantly higher than those of the 2009 SDR allocation, suggesting both a greater need for these resources and a higher level of awareness among policymakers on how they can be used. 

  • The large majority of these transactions took place during the first three months since the SDR allocation, showing an urgent need for those resources.

  • The SDR allocation was initially proposed by IMF leadership in March 2020, but it took 17 months to become a reality. Two-thirds of the SDRs remain in the hands of high-income countries. Some rich countries have committed to lending a part of their excess SDRs to developing countries via special trusts. It has been reported that a new trust — called the Resilience and Sustainability Trust — will be run by the IMF (not development banks) and will include traditional IMF conditionality. Furthermore, it would only be ready by year-end.

  • In November, the chairs of the Progressive Caucus, the Black Caucus, the Hispanic Caucus, and the Asian Pacific American Caucus of the US Congress urged US Treasury Secretary Janet Yellen to back the issuance of $2 trillion more in SDRs. Legislation to this effect has already passed the House of Representatives and an accompanying bill was already proposed in the Senate. 

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. 

SDRs, which are an international reserve asset, can be exchanged for hard currency, used to pay the IMF, or donated among member countries. The injection of these assets by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said

Around a third of the SDRs were allocated to developing countries (excluding China, whose currency is included in the basket of currencies that determines the value of SDRs). 

CEPR has been publishing monthly reports on the use of SDRs based on accounting calculations derived from IMF SDR data, IMF country reports, and statements by government officials. 

The following is a preview of key findings that we will explore in greater depth in our upcoming report on the use of SDRs since August 2021:

  • 80 developing countries have used SDRs since the August allocation. 

  • 32 countries have exchanged SDRs for hard currency, for $11.6 billion.

  • 55 countries have paid the IMF with SDRs, for $6.5 billion.

  • 39 countries have recorded the SDRs in government budgets or have used them for fiscal purposes, for $37.3 billion. 

  • These numbers are significantly higher than those of the 2009 SDR allocation, suggesting both a greater need for these resources and a higher level of awareness among policymakers on how they can be used. 

  • The large majority of these transactions took place during the first three months since the SDR allocation, showing an urgent need for those resources.

  • The SDR allocation was initially proposed by IMF leadership in March 2020, but it took 17 months to become a reality. Two-thirds of the SDRs remain in the hands of high-income countries. Some rich countries have committed to lending a part of their excess SDRs to developing countries via special trusts. It has been reported that a new trust — called the Resilience and Sustainability Trust — will be run by the IMF (not development banks) and will include traditional IMF conditionality. Furthermore, it would only be ready by year-end.

  • In November, the chairs of the Progressive Caucus, the Black Caucus, the Hispanic Caucus, and the Asian Pacific American Caucus of the US Congress urged US Treasury Secretary Janet Yellen to back the issuance of $2 trillion more in SDRs. Legislation to this effect has already passed the House of Representatives and an accompanying bill was already proposed in the Senate. 

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. SDRs, which are an international reserve asset, can be exchanged for hard currency or donated among member countries, meaning the injection by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said

As a reminder, not all uses of SDRs involve operations at the SDR Department that modify member countries’ SDR holdings; some are domestic operations leveraged on SDR holdings. And simply having SDRs increase central bank reserves also improves a country’s financial position.


Shortly after the new allocation of SDRs in August 2021, we reported how countries were using them after the first week; later, we reported on countries’ use of SDRs during the month of September. The report for October includes data that compares the first three months of this SDR allocation with the 2009 allocation. 

The $650 billion allocation of SDRs continues to be an example of international cooperation leading to a concrete success. Several recent initiatives have sought to build on this success. In November, the chairs of the Congressional Progressive Caucus, the Black Caucus, the Hispanic Caucus, and the Asian Pacific American Caucus urged US Treasury Secretary Janet Yellen to back the issuance of $2 trillion more SDRs in a new allocation. Jubilee USA Network held a high-level panel with Africa Union Ambassador Hilda Suka-Mafudze, President of Bread for the World Reverend Eugene Cho, and Sam Brownback, former US senator, that discussed, in part, how a new allocation of SDRs can meet the continuing challenges of the pandemic.

Barbados Prime Minister Mia Mottley called for “$500 billion in SDRs annually for 20 years” — in total, 10 trillion dollars — to help vulnerable countries address the impacts of climate change. 

Lastly, there are also efforts to rechannel SDRs to poorer countries from countries that do not need them. China pledged to rechannel $10 billion worth of SDRs to African countries, or about 25 percent of its recent allocation. Other commitments to rechannel SDRs include those from Canada, Italy, Spain, the United Kingdom (20 percent), Japan (10 percent), the Republic of Korea (5 percent), Belgium (4 percent), and the Netherlands (3 percent). The United States has not yet pledged a specific amount.

Key takeaways from November data:

  • Paraguay, Maldives, and Moldova exchanged all, or almost all, of their SDRs for hard currency.
  • Argentina made a significant payment to the IMF with the recently allocated SDRs.
  • The IMF General Resources Account increased its SDR position by over $1.37 billion, with around half of this increase attributable to known payments to the IMF.
  • France had a significant decline of $344 million worth of SDRs.
  • The United States led the world with a purchase of $274 million worth of SDRs.

IMF Data: SDR accounts with large decreases

While reductions in countries’ SDR holdings usually imply an exchange of SDRs for hard currency, decreases in SDR holdings may also result from a payment in SDRs to the IMF for a loan or a transaction (such as a deposit) with a prescribed holder of SDRs. Countries may also lend SDRs to each other. Countries that exchange SDRs for hard currencies usually cite liquidity problems, dwindling foreign exchange reserves, and a need for more imports, as well as a desire to implement measures to address the pandemic.

There was a net total of $2.049 billion worth of SDRs exchanged in November.

Paraguay

$270 million decrease (100 percent reduction of its recent allocation)

On August 25, Paraguay’s parliament approved a law that transferred the SDRs from the central bank to the government budget for COVID-19 relief investments. In November, the government requested the SDR conversion into US dollars to use for fiscal spending.

Moldova 

$225 million decline (100 percent reduction of its recent allocation)

Moldova’s parliament approved a law that authorizes transfer of the SDRs from the central bank to the government budget. According to press reports, “Moldova will be able to use the 165.3 million Special Drawing Rights (SDRs), the equivalent of about 236 million dollars, agreed with the International Monetary Fund. The decision was approved by the Parliament on Thursday, October 14, in order to finance the budget deficit.”

Maldives

$28 million decline (97 percent reduction of its recent allocation)

There is no publicly available information on how Maldives used its SDRs. However, during October, the IMF issued its staff report on the Maldives economy, warning there are downside risks due to COVID-19 effects. It appears that the SDR cash equivalents were incorporated as grants into the revised 2021 budget. 

Argentina 

$385 million decline (9.0 percent reduction of its recent allocation)

Argentina paid part of its obligations to the IMF in November. The Argentine government used the SDRs for a complex set of operations that helped alleviate its external position marked by its IMF debt. The Argentine minister of finance has announced Argentina will pay its December obligations with the SDRs recently allocated. 

Other notable accounts:

The following countries reduced their SDR holdings because of payments to the International Monetary Fund. Some countries only paid interest charges, not principal, with SDRs.

  • Bangladesh. $38.8 million decline (2.7 percent reduction of its recent allocation)
  • Egypt. $141 million decline (5.2 percent reduction)
  • Iraq. $104 million decline (4.7 percent reduction)
  • Ukraine. $62 million decline (2.3 percent reduction)
  • Ecuador. $39 million decline (4.2 percent reduction)
  • Pakistan. $33 million decline (1.2 percent reduction)
  • Côte d’Ivoire. $24 million decline (3.8 percent reduction)
  • Angola. $19 million decline (1.9 percent reduction)
  • Tunisia. $13 million decline (1.8 percent reduction)
  • Albania. $9 million decline (4.8 percent reduction)
  • Dominica. $0.863 million decline (5.6 percent reduction)
  • Samoa. $0.813 million decline (3.7 percent reduction)

The following accounts reduced their SDR holdings.

  • France. $344 million decline (1.3 percent reduction of its recent allocation)
  • Mexico. $138 million decline (1.2 percent reduction)
  • Bank for International Settlements. $104 million decline

IMF Data: SDR accounts with large increases

These countries likely exchanged or issued hard currencies for SDRs. 

  • United States. $275 million increase 
  • The Netherlands. $225 million increase
  • Israel. $83 million increase

Ukraine received a substantial disbursement for $700 million, but it did not increase its SDR holdings. Tanzania restructured its debt with the IMF: it migrated from the General Resources Account to the Poverty Relief and Growth Trust. 

IMF General Resources Account

$1370 million increase in its SDR holdings in November

The IMF’s SDR holdings had a significant increase, $647 million of which were attributable to countries’ payments of past IMF debts. It is important to remember that no SDRs are allocated to the IMF; its holdings increase primarily on the basis of loan repayments. 


Countries to Watch

Apart from the IMF data, reporting on — or statements from — countries may give information on the use, or future use, of SDRs. It may also highlight the domestic use of SDRs, which would not appear as transactions in the IMF data. These are countries to watch in future months.

Several countries did not exchange their SDRs, but did use them for domestic fiscal purposes.

Here are countries to watch in future months.

  • Argentina will make payments to the IMF in December. There are reports that as part of a new agreement with the IMF, the IMF will disburse an amount equivalent to that paid back to the IMF throughout 2021, so as to have a net-zero SDR effect.
  • Mexico announced a capital injection to Pemex, its state oil company, linked to previous announcements on foreign exchange acquired from its central bank as a result of the SDR allocation. This capital will be used for foreign debt relief, through bond repurchases (presumably below par), and restructurings.
  • Sudan was blocked by the IMF from accessing approximately $150 million of its SDRs after the recent change in government. The main impact of the freeze “would be on development projects covering areas including water supply, electricity, agriculture, health and transport. An internationally funded basic income programme to lessen the impact of subsidy reform has also been frozen.”
  • Democratic Republic of Congo will use half of its SDR allocation to strengthen central bank reserves and the other half to improve the quality of public investments. The DR Congo will enter a new agreement with the IMF.
  • Zimbabwe. A post-2022 National Budget analysis states that out of $958 million, “Treasury has withdrawn US$311 million from the facility, with most of the funds (US$144 million) going to the rehabilitation of the Harare-Beitbridge Highway and the remainder being allocated to Covid-19 vaccination programmes (US$77 million) and agriculture social protection (US$80 million). Of the remaining amount, US$280 million has been set aside for foreign exchange reserves.”

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. SDRs, which are an international reserve asset, can be exchanged for hard currency or donated among member countries, meaning the injection by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said

As a reminder, not all uses of SDRs involve operations at the SDR Department that modify member countries’ SDR holdings; some are domestic operations leveraged on SDR holdings. And simply having SDRs increase central bank reserves also improves a country’s financial position.


Shortly after the new allocation of SDRs in August 2021, we reported how countries were using them after the first week; later, we reported on countries’ use of SDRs during the month of September. The report for October includes data that compares the first three months of this SDR allocation with the 2009 allocation. 

The $650 billion allocation of SDRs continues to be an example of international cooperation leading to a concrete success. Several recent initiatives have sought to build on this success. In November, the chairs of the Congressional Progressive Caucus, the Black Caucus, the Hispanic Caucus, and the Asian Pacific American Caucus urged US Treasury Secretary Janet Yellen to back the issuance of $2 trillion more SDRs in a new allocation. Jubilee USA Network held a high-level panel with Africa Union Ambassador Hilda Suka-Mafudze, President of Bread for the World Reverend Eugene Cho, and Sam Brownback, former US senator, that discussed, in part, how a new allocation of SDRs can meet the continuing challenges of the pandemic.

Barbados Prime Minister Mia Mottley called for “$500 billion in SDRs annually for 20 years” — in total, 10 trillion dollars — to help vulnerable countries address the impacts of climate change. 

Lastly, there are also efforts to rechannel SDRs to poorer countries from countries that do not need them. China pledged to rechannel $10 billion worth of SDRs to African countries, or about 25 percent of its recent allocation. Other commitments to rechannel SDRs include those from Canada, Italy, Spain, the United Kingdom (20 percent), Japan (10 percent), the Republic of Korea (5 percent), Belgium (4 percent), and the Netherlands (3 percent). The United States has not yet pledged a specific amount.

Key takeaways from November data:

  • Paraguay, Maldives, and Moldova exchanged all, or almost all, of their SDRs for hard currency.
  • Argentina made a significant payment to the IMF with the recently allocated SDRs.
  • The IMF General Resources Account increased its SDR position by over $1.37 billion, with around half of this increase attributable to known payments to the IMF.
  • France had a significant decline of $344 million worth of SDRs.
  • The United States led the world with a purchase of $274 million worth of SDRs.

IMF Data: SDR accounts with large decreases

While reductions in countries’ SDR holdings usually imply an exchange of SDRs for hard currency, decreases in SDR holdings may also result from a payment in SDRs to the IMF for a loan or a transaction (such as a deposit) with a prescribed holder of SDRs. Countries may also lend SDRs to each other. Countries that exchange SDRs for hard currencies usually cite liquidity problems, dwindling foreign exchange reserves, and a need for more imports, as well as a desire to implement measures to address the pandemic.

There was a net total of $2.049 billion worth of SDRs exchanged in November.

Paraguay

$270 million decrease (100 percent reduction of its recent allocation)

On August 25, Paraguay’s parliament approved a law that transferred the SDRs from the central bank to the government budget for COVID-19 relief investments. In November, the government requested the SDR conversion into US dollars to use for fiscal spending.

Moldova 

$225 million decline (100 percent reduction of its recent allocation)

Moldova’s parliament approved a law that authorizes transfer of the SDRs from the central bank to the government budget. According to press reports, “Moldova will be able to use the 165.3 million Special Drawing Rights (SDRs), the equivalent of about 236 million dollars, agreed with the International Monetary Fund. The decision was approved by the Parliament on Thursday, October 14, in order to finance the budget deficit.”

Maldives

$28 million decline (97 percent reduction of its recent allocation)

There is no publicly available information on how Maldives used its SDRs. However, during October, the IMF issued its staff report on the Maldives economy, warning there are downside risks due to COVID-19 effects. It appears that the SDR cash equivalents were incorporated as grants into the revised 2021 budget. 

Argentina 

$385 million decline (9.0 percent reduction of its recent allocation)

Argentina paid part of its obligations to the IMF in November. The Argentine government used the SDRs for a complex set of operations that helped alleviate its external position marked by its IMF debt. The Argentine minister of finance has announced Argentina will pay its December obligations with the SDRs recently allocated. 

Other notable accounts:

The following countries reduced their SDR holdings because of payments to the International Monetary Fund. Some countries only paid interest charges, not principal, with SDRs.

  • Bangladesh. $38.8 million decline (2.7 percent reduction of its recent allocation)
  • Egypt. $141 million decline (5.2 percent reduction)
  • Iraq. $104 million decline (4.7 percent reduction)
  • Ukraine. $62 million decline (2.3 percent reduction)
  • Ecuador. $39 million decline (4.2 percent reduction)
  • Pakistan. $33 million decline (1.2 percent reduction)
  • Côte d’Ivoire. $24 million decline (3.8 percent reduction)
  • Angola. $19 million decline (1.9 percent reduction)
  • Tunisia. $13 million decline (1.8 percent reduction)
  • Albania. $9 million decline (4.8 percent reduction)
  • Dominica. $0.863 million decline (5.6 percent reduction)
  • Samoa. $0.813 million decline (3.7 percent reduction)

The following accounts reduced their SDR holdings.

  • France. $344 million decline (1.3 percent reduction of its recent allocation)
  • Mexico. $138 million decline (1.2 percent reduction)
  • Bank for International Settlements. $104 million decline

IMF Data: SDR accounts with large increases

These countries likely exchanged or issued hard currencies for SDRs. 

  • United States. $275 million increase 
  • The Netherlands. $225 million increase
  • Israel. $83 million increase

Ukraine received a substantial disbursement for $700 million, but it did not increase its SDR holdings. Tanzania restructured its debt with the IMF: it migrated from the General Resources Account to the Poverty Relief and Growth Trust. 

IMF General Resources Account

$1370 million increase in its SDR holdings in November

The IMF’s SDR holdings had a significant increase, $647 million of which were attributable to countries’ payments of past IMF debts. It is important to remember that no SDRs are allocated to the IMF; its holdings increase primarily on the basis of loan repayments. 


Countries to Watch

Apart from the IMF data, reporting on — or statements from — countries may give information on the use, or future use, of SDRs. It may also highlight the domestic use of SDRs, which would not appear as transactions in the IMF data. These are countries to watch in future months.

Several countries did not exchange their SDRs, but did use them for domestic fiscal purposes.

Here are countries to watch in future months.

  • Argentina will make payments to the IMF in December. There are reports that as part of a new agreement with the IMF, the IMF will disburse an amount equivalent to that paid back to the IMF throughout 2021, so as to have a net-zero SDR effect.
  • Mexico announced a capital injection to Pemex, its state oil company, linked to previous announcements on foreign exchange acquired from its central bank as a result of the SDR allocation. This capital will be used for foreign debt relief, through bond repurchases (presumably below par), and restructurings.
  • Sudan was blocked by the IMF from accessing approximately $150 million of its SDRs after the recent change in government. The main impact of the freeze “would be on development projects covering areas including water supply, electricity, agriculture, health and transport. An internationally funded basic income programme to lessen the impact of subsidy reform has also been frozen.”
  • Democratic Republic of Congo will use half of its SDR allocation to strengthen central bank reserves and the other half to improve the quality of public investments. The DR Congo will enter a new agreement with the IMF.
  • Zimbabwe. A post-2022 National Budget analysis states that out of $958 million, “Treasury has withdrawn US$311 million from the facility, with most of the funds (US$144 million) going to the rehabilitation of the Harare-Beitbridge Highway and the remainder being allocated to Covid-19 vaccination programmes (US$77 million) and agriculture social protection (US$80 million). Of the remaining amount, US$280 million has been set aside for foreign exchange reserves.”

Book Review: Blood Gun Money: How America Arms Gangs and Cartels by Ioan Grillo

In August, the Mexican government sued US gunmakers for facilitating the high gun homicide rate in Mexico. Most people in the US who heard this news were probably confused, not understanding what US gunmakers have to do with homicides in Mexico. If they were to read Ioan Grillo’s excellent book, Blood Gun Money: How America Arms Gangs and Cartels, they would understand completely. They would learn that Mexican law enforcement estimates that 2.5 million guns have been smuggled from the United States into Mexico over the past decade. They might even wonder why other countries in Latin America aren’t also suing US gunmakers.

The Americas is the most homicidal region on the planet due, in no small part, to the “iron river” of guns flowing from the United States to Latin America and the Caribbean. The above figure from Our World in Data, based on data from the Institute for Health Metrics and Evaluation, shows that Canada had a gun homicide rate of 0.5 deaths per 100,000 in 2017. In the US, the rate was 4.63, approaching 10 times the rate in Canada, while in Mexico, it was 11.49, more than 20 times the Canada rate. Excluding the Americas, all countries in Europe, and most countries in the rest of the world had lower gun homicide rates than the US. (Some people incorrectly believe that there is a higher rate of gun ownership in Canada than in the US, but the Small Arms Survey reports that in 2017 Canada had 34.7 guns per 100 residents, compared to 120.5 in the United States. The gun ownership rate in the US is more than three times the rate in Canada.)

Criminals in Latin America and the Caribbean have easy access to US guns because US gun-rights extremists are continually weakening our gun safety laws, making it easier for gun traffickers. Grillo quotes the US Department of Justice: “There is no federal statute specifically prohibiting firearms trafficking.” Only tangential laws can be used against trafficking. Although the second and third words of the Second Amendment to the US Constitution indicate that guns should be “well regulated,” the US Supreme Court has recently only stripped away the government’s power to regulate guns, ignoring the actual words of the amendment. Grillo informs us that US pharmacies have stronger safety and security requirements than US gun stores.

In Mexico, there is only one legal gun shop in the entire country, and it is very difficult, if not impossible, for criminals to obtain guns from this shop. In the US, however, criminals can purchase guns with extreme ease. It is simple for a known criminal to pay someone — a “straw buyer” — to buy a weapon for them. The criminal can even buy guns directly from private sellers, who do not need to do background checks; known criminals, and even terrorists, face no obstacles.

One of Grillo’s Mexican informants, Jorge, thought that he was making an illegal purchase when he bought guns for a Mexican criminal gang at US gun shows without showing identification. But all of Jorge’s purchases were legal because of the “gun show loophole” which exempts private sellers from conducting background checks. “It really was possible to walk into a gun show and buy an AR-15 [military-style assault rifle] with no paperwork,” Grillo discovered on a trip to a gun show in Texas. There, Grillo noted, “On various tables, so-called private sellers had dozens of weapons, including many AR-15s and Kalashnikovs. Many looked brand-new, with some boxed up.” Although there can be little difference between the inventory of so-called private sellers of guns and licensed gun dealers, private sellers are unregulated, while licensed dealers have to try to do background checks.  

Licensed dealers have to try to do background checks, but a completed background check is not required for a sale. If the background check is not completed within three business days, the dealer can sell the gun to the purchaser without proof that the purchaser is legally eligible to own a gun. Dylan Roof, the white racist who shot and killed nine Black people in South Carolina while they prayed in church, was prohibited from obtaining a firearm. The FBI was not able to complete his background check within the three-day limit, and so he was able to obtain the gun that he used to kill the parishioners. This is another example of how pathetically weak US gun safety laws are.

Grillo was able to speak with several people in the US and Mexico involved in purchasing guns for criminals. A Mexican gang hit man informed Grillo, “[Our guns] come from El Paso [a city in Texas bordering Mexico] . . . . We get them on demand, and anything we want come from there.” And by anything, he means almost anything. In recent years, Mexican drug cartels have even purchased .50 caliber sniper rifles, which are powerful enough to shoot through concrete walls. Grillo describes the .50 caliber:

These supersize weapons fire bullets the size of small knives, and army snipers use them to shoot long distance and blow through armor. Despite their military potential, customers can buy them in stores in Texas and Arizona as easily as buying a pistol.

Customers buying .50 calibers in Texas and Arizona include people like Jorge who work for Mexican drug cartels.

This ease of access to AR-15s, .50 calibers, and other guns means that local Mexican police are literally outgunned. US guns help to undermine the power of the Mexican government to secure the safety of its citizens and to prosecute crime. US guns are also being used to kill journalists who report on crime in Mexico. Mexican journalist Miroslava Breach was shot with a gun from the US gun manufacturer Colt — a limited edition Colt .38 engraved with the image of Mexican revolutionary Emiliano Zapata. “An American gun with a picture of a Mexican freedom fighter was used to try to silence Mexico’s freedom of speech,” observes Grillo.

Grillo reports, “Of the 16,343 firearms that Mexico submitted to the ATF [the US Bureau of Alcohol, Tobacco, Firearms, and Explosives] for tracing in 2018, 70.4 percent were definitively confirmed to have been made or sold in the United States.” He makes clear that the US share could be higher because some searches are inconclusive, in part because US law prevents the ATF from using computerized systems. Yes, the ATF is prohibited from establishing a gun database, so a search that should take a few seconds with a computer database instead involves searching for several days through mountains of paper files.

While Grillo’s main focus is the trafficking of guns from US states on the US-Mexico border into Mexico, he also discusses gun trafficking within the United States, and between the US and other Latin American countries and the Caribbean. For example, Grillo reports, “between 2014 and 2017, almost half, or 45 percent, of the firearms that Honduras submitted to the ATF for tracing were confirmed to be made or sold in the United States.” Again, this is likely to be an underestimate because some inconclusive trace results are probably also from the US. Honduras had a firearm murder rate of 26.14 deaths per 100,000 in 2017 — more than 50 times the Canadian rate. Grillo notes, “Honduras [is the] home of the biggest number of refugees arriving at the southern U.S. border.” This broader discussion makes it clear that US-Mexico gun trafficking is only one example of a much wider problem.

The lawlessness and terror enabled, in part, by the trafficking of US guns causes people to flee Latin America and the Caribbean for the relative safety of the United States. When people in the US are distressed by refugees at the southern US border, they should be aware that many of these refugees are fleeing criminals armed with guns legally purchased in the United States.

Blood Gun Money includes a lot of information about gun trafficking in the Americas, but it is also filled with stories of people on both sides of the law, police and criminals, murderers and gun victims. It is a well-researched, well-written, and informative book.

Grillo concludes with several policy recommendations to reduce the easy flow of guns to criminals on both sides of the US-Mexico border. He calls for universal background checks: a criminal who is prohibited from owning a gun should not be able to go to a private seller and purchase a gun because no background check is required. Grillo also thinks that there should be stronger punishments for straw buyers, who currently face minimal punishment. Grillo recommends limits on the number of guns a person can purchase at one time, which would likely make it easier to identify and differentiate straw buyers from real buyers since straw buyers would not be able to buy 10 identical Kalashnikovs at the same time, to use a real-life example discussed in Blood Gun Money. Grillo calls for the United States to regulate “ghost guns” as real guns. Ghost guns require some assembly before they are functional, and are popular among criminals because by law they are not considered guns and therefore can be obtained without a background check. They also don’t have serial numbers so they are harder for police to track. And Grillo proposes stronger regulation of gun shop security, as some criminals obtain guns by stealing them from shops with weak security. Grillo has other policy ideas that may make a lot of sense to people who are not gun-rights extremists.

In the US, such extremists tend to view the government as the enemy and support the weakening of gun regulations, which makes it easier for criminals and terrorists to obtain weapons. These individuals sometimes say it is their AR-15 that preserves their “freedom.” Grillo suggests these individuals take a close look at criminal gangs in Latin America. He writes:

But it is not those guns in civilian hands that make the difference between the United States and Latin America—it is institutions. Most Americans are not safe from a cartel storming their home to kidnap them because they have an AR-15. They are safe because the police and federal agencies have been hammering organized crime for decades. In Mexico, you see what a cartel hit squad looks like, and it is not something that you can stop on your own if they come for you, even if you have a bunch of guns.

US gun extremists say that by opposing gun safety laws they are making people in the US freer, but what they are really doing is making it easier for criminals to murder, terrorize, and traumatize law-abiding people in high-crime communities in the United States, and even more so people in countries with weaker institutions south of the US border.

The Mexican suit against US gun manufacturers is a desperate attempt to try to reduce the “iron river” of guns flowing into Mexico. The Mexican government cannot turn to US laws on gun trafficking to stop the flow, since US gun safety laws are a joke. One hopes that, at the very least, the suit will bring attention to the US role in making the Americas the most homicidal region on the planet. If people in the United States are aware of this problem, maybe more of them will demand more sensible gun laws from policymakers.

Book Review: Blood Gun Money: How America Arms Gangs and Cartels by Ioan Grillo

In August, the Mexican government sued US gunmakers for facilitating the high gun homicide rate in Mexico. Most people in the US who heard this news were probably confused, not understanding what US gunmakers have to do with homicides in Mexico. If they were to read Ioan Grillo’s excellent book, Blood Gun Money: How America Arms Gangs and Cartels, they would understand completely. They would learn that Mexican law enforcement estimates that 2.5 million guns have been smuggled from the United States into Mexico over the past decade. They might even wonder why other countries in Latin America aren’t also suing US gunmakers.

The Americas is the most homicidal region on the planet due, in no small part, to the “iron river” of guns flowing from the United States to Latin America and the Caribbean. The above figure from Our World in Data, based on data from the Institute for Health Metrics and Evaluation, shows that Canada had a gun homicide rate of 0.5 deaths per 100,000 in 2017. In the US, the rate was 4.63, approaching 10 times the rate in Canada, while in Mexico, it was 11.49, more than 20 times the Canada rate. Excluding the Americas, all countries in Europe, and most countries in the rest of the world had lower gun homicide rates than the US. (Some people incorrectly believe that there is a higher rate of gun ownership in Canada than in the US, but the Small Arms Survey reports that in 2017 Canada had 34.7 guns per 100 residents, compared to 120.5 in the United States. The gun ownership rate in the US is more than three times the rate in Canada.)

Criminals in Latin America and the Caribbean have easy access to US guns because US gun-rights extremists are continually weakening our gun safety laws, making it easier for gun traffickers. Grillo quotes the US Department of Justice: “There is no federal statute specifically prohibiting firearms trafficking.” Only tangential laws can be used against trafficking. Although the second and third words of the Second Amendment to the US Constitution indicate that guns should be “well regulated,” the US Supreme Court has recently only stripped away the government’s power to regulate guns, ignoring the actual words of the amendment. Grillo informs us that US pharmacies have stronger safety and security requirements than US gun stores.

In Mexico, there is only one legal gun shop in the entire country, and it is very difficult, if not impossible, for criminals to obtain guns from this shop. In the US, however, criminals can purchase guns with extreme ease. It is simple for a known criminal to pay someone — a “straw buyer” — to buy a weapon for them. The criminal can even buy guns directly from private sellers, who do not need to do background checks; known criminals, and even terrorists, face no obstacles.

One of Grillo’s Mexican informants, Jorge, thought that he was making an illegal purchase when he bought guns for a Mexican criminal gang at US gun shows without showing identification. But all of Jorge’s purchases were legal because of the “gun show loophole” which exempts private sellers from conducting background checks. “It really was possible to walk into a gun show and buy an AR-15 [military-style assault rifle] with no paperwork,” Grillo discovered on a trip to a gun show in Texas. There, Grillo noted, “On various tables, so-called private sellers had dozens of weapons, including many AR-15s and Kalashnikovs. Many looked brand-new, with some boxed up.” Although there can be little difference between the inventory of so-called private sellers of guns and licensed gun dealers, private sellers are unregulated, while licensed dealers have to try to do background checks.  

Licensed dealers have to try to do background checks, but a completed background check is not required for a sale. If the background check is not completed within three business days, the dealer can sell the gun to the purchaser without proof that the purchaser is legally eligible to own a gun. Dylan Roof, the white racist who shot and killed nine Black people in South Carolina while they prayed in church, was prohibited from obtaining a firearm. The FBI was not able to complete his background check within the three-day limit, and so he was able to obtain the gun that he used to kill the parishioners. This is another example of how pathetically weak US gun safety laws are.

Grillo was able to speak with several people in the US and Mexico involved in purchasing guns for criminals. A Mexican gang hit man informed Grillo, “[Our guns] come from El Paso [a city in Texas bordering Mexico] . . . . We get them on demand, and anything we want come from there.” And by anything, he means almost anything. In recent years, Mexican drug cartels have even purchased .50 caliber sniper rifles, which are powerful enough to shoot through concrete walls. Grillo describes the .50 caliber:

These supersize weapons fire bullets the size of small knives, and army snipers use them to shoot long distance and blow through armor. Despite their military potential, customers can buy them in stores in Texas and Arizona as easily as buying a pistol.

Customers buying .50 calibers in Texas and Arizona include people like Jorge who work for Mexican drug cartels.

This ease of access to AR-15s, .50 calibers, and other guns means that local Mexican police are literally outgunned. US guns help to undermine the power of the Mexican government to secure the safety of its citizens and to prosecute crime. US guns are also being used to kill journalists who report on crime in Mexico. Mexican journalist Miroslava Breach was shot with a gun from the US gun manufacturer Colt — a limited edition Colt .38 engraved with the image of Mexican revolutionary Emiliano Zapata. “An American gun with a picture of a Mexican freedom fighter was used to try to silence Mexico’s freedom of speech,” observes Grillo.

Grillo reports, “Of the 16,343 firearms that Mexico submitted to the ATF [the US Bureau of Alcohol, Tobacco, Firearms, and Explosives] for tracing in 2018, 70.4 percent were definitively confirmed to have been made or sold in the United States.” He makes clear that the US share could be higher because some searches are inconclusive, in part because US law prevents the ATF from using computerized systems. Yes, the ATF is prohibited from establishing a gun database, so a search that should take a few seconds with a computer database instead involves searching for several days through mountains of paper files.

While Grillo’s main focus is the trafficking of guns from US states on the US-Mexico border into Mexico, he also discusses gun trafficking within the United States, and between the US and other Latin American countries and the Caribbean. For example, Grillo reports, “between 2014 and 2017, almost half, or 45 percent, of the firearms that Honduras submitted to the ATF for tracing were confirmed to be made or sold in the United States.” Again, this is likely to be an underestimate because some inconclusive trace results are probably also from the US. Honduras had a firearm murder rate of 26.14 deaths per 100,000 in 2017 — more than 50 times the Canadian rate. Grillo notes, “Honduras [is the] home of the biggest number of refugees arriving at the southern U.S. border.” This broader discussion makes it clear that US-Mexico gun trafficking is only one example of a much wider problem.

The lawlessness and terror enabled, in part, by the trafficking of US guns causes people to flee Latin America and the Caribbean for the relative safety of the United States. When people in the US are distressed by refugees at the southern US border, they should be aware that many of these refugees are fleeing criminals armed with guns legally purchased in the United States.

Blood Gun Money includes a lot of information about gun trafficking in the Americas, but it is also filled with stories of people on both sides of the law, police and criminals, murderers and gun victims. It is a well-researched, well-written, and informative book.

Grillo concludes with several policy recommendations to reduce the easy flow of guns to criminals on both sides of the US-Mexico border. He calls for universal background checks: a criminal who is prohibited from owning a gun should not be able to go to a private seller and purchase a gun because no background check is required. Grillo also thinks that there should be stronger punishments for straw buyers, who currently face minimal punishment. Grillo recommends limits on the number of guns a person can purchase at one time, which would likely make it easier to identify and differentiate straw buyers from real buyers since straw buyers would not be able to buy 10 identical Kalashnikovs at the same time, to use a real-life example discussed in Blood Gun Money. Grillo calls for the United States to regulate “ghost guns” as real guns. Ghost guns require some assembly before they are functional, and are popular among criminals because by law they are not considered guns and therefore can be obtained without a background check. They also don’t have serial numbers so they are harder for police to track. And Grillo proposes stronger regulation of gun shop security, as some criminals obtain guns by stealing them from shops with weak security. Grillo has other policy ideas that may make a lot of sense to people who are not gun-rights extremists.

In the US, such extremists tend to view the government as the enemy and support the weakening of gun regulations, which makes it easier for criminals and terrorists to obtain weapons. These individuals sometimes say it is their AR-15 that preserves their “freedom.” Grillo suggests these individuals take a close look at criminal gangs in Latin America. He writes:

But it is not those guns in civilian hands that make the difference between the United States and Latin America—it is institutions. Most Americans are not safe from a cartel storming their home to kidnap them because they have an AR-15. They are safe because the police and federal agencies have been hammering organized crime for decades. In Mexico, you see what a cartel hit squad looks like, and it is not something that you can stop on your own if they come for you, even if you have a bunch of guns.

US gun extremists say that by opposing gun safety laws they are making people in the US freer, but what they are really doing is making it easier for criminals to murder, terrorize, and traumatize law-abiding people in high-crime communities in the United States, and even more so people in countries with weaker institutions south of the US border.

The Mexican suit against US gun manufacturers is a desperate attempt to try to reduce the “iron river” of guns flowing into Mexico. The Mexican government cannot turn to US laws on gun trafficking to stop the flow, since US gun safety laws are a joke. One hopes that, at the very least, the suit will bring attention to the US role in making the Americas the most homicidal region on the planet. If people in the United States are aware of this problem, maybe more of them will demand more sensible gun laws from policymakers.

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. SDRs, which are an international reserve asset, can be exchanged for hard currency or donated among member countries, meaning the injection by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said.  


Shortly after the new allocation of SDRs in August, we reported how countries were using them after the first week; later, we reported on countries’ use of SDRs during the month of September. This update reports observations based on SDR holdings as reported by the IMF for the month of October. 

As a reminder, not all uses of SDRs involve operations at the SDR Department that modify member countries’ SDR holdings; some are domestic operations leveraged on SDR holdings. And simply having SDRs “unused” on central bank accounts also improves a country’s financial position. 

In other news: in early November, at the Conference on Parties on Climate Change (COP26), Barbados Prime Minister Mia Mottley called for “500 billion dollars in SDRs annually for 20 years, that is, ten trillion dollars for climate action.” This was supported by the head of the Economic Commission for Latin America and the Caribbean, Alicia Bárcena.

The $650 billion allocation of SDRs continues to be an example of international cooperation leading to a concrete success. To build on this success, on November 23, the chairs of the Congressional Progressive, Black, Hispanic, and Asian Pacific American Caucuses urged US Treasury Secretary Yellen to back the issuance of $2 trillion more SDRs.

Key takeaways from October data:

  • Iraq, Mauritania, Djibouti, and Cabo Verde exchanged all or almost all of their SDRs for hard currency.
  • São Tomé and Príncipe exchanged half of its SDRs for hard currency. 
  • The Bank of Central African States used all of its SDRs. 
  • Chile continues to be a disproportionately active buyer of SDRs.

Summary information about the new SDR allocation:

In the first three months after the SDRs were issued, a total of 24 countries from Europe, Africa, Asia, and Latin America have used the majority or all of the newly allocated SDRs. Three countries in Latin America have used them for fiscal purposes. In the first three months after the 2009 issuance, eight countries had exchanged over half of their SDRs. This is clear evidence of the importance of this new allocation of SDRs.

  • An analysis of the first three months of data demonstrates that many countries exchanged large portions of their share of the new $650 billion allocation for hard currencies. $12.7 billion worth of SDR transactions took place. This is 6 percent of the allocation of developing countries (excluding China). 
  • If we add the domestic SDR operations detected to date (Paraguay, Colombia, Argentina, and Mexico), the SDR transactions amount to $27.1 billion. This is 21 times more than what all countries had used in the first three months after the 2009 issuance ($1.26 billion). 
  • Several richer countries, including some with Voluntary Trading Agreements with the IMF, exchanged hard currencies for SDRs.

IMF Data: SDR accounts with large decreases

While reductions in countries’ SDR holdings usually imply an exchange of SDRs for hard currency, decreases in SDR holdings may also result from a payment in SDRs to the IMF for a loan or a transaction (such as a deposit) with a prescribed holder of SDRs. Countries may also lend SDRs to each other. Countries that exchange SDRs for hard currencies usually cite liquidity problems, dwindling foreign exchange reserves, and a need for more imports, as well as a desire to implement measures to address the pandemic.

There was a net total of $2.927 billion worth of SDRs exchanged in October.

Bank of Central African States (BEAC)

$471 million decrease (representing a 100 percent reduction of its members’ deposits)

The IMF can qualify supranational monetary or financial institutions as “prescribed holders,” i.e., entities that can also have accounts at the SDR Department and engage in transactions with SDRs. BEAC is a prescribed holder. Between August and September, the BEAC had received a transfer of $471 million worth of SDRs from Chad and the Republic of Congo. In October, the BEAC decreased its holdings of SDRs but did not increase its members’ holdings; thus it likely exchanged them for hard currency. The Republic of Congo has said the resources from the IMF will be used to support the 2022 budget. Chad’s minister of finance and budget stated that SDRs were an essential lifeline to “hold on” as the country negotiates separate financial issues: “To help deal with the [pandemic-related financial] situation, the Chadian authorities have decided to spend their share of the recent Special Drawing Right (SDR) allocation to meet urgent social needs…”

Mauritania 

$164.2 million decline (94 percent reduction of its recent allocation)

Mauritania used almost all of its recently received allocations to fund its government budget. Mauritania is currently facing severe debt distress. Mauritania’s Minister of Finance signed a statement in October recognizing the importance of SDRs and advocated for onlending of more SDRs to regional development and multilateral banks to respond better to the recovery.

Iraq

$2068 million decline (92 percent reduction of its recent allocation)

There is no publicly available information on how Iraq used its SDRs. Iraq’s external public debt declined significantly between October and November. In addition, Iraq is still recovering from low oil prices in 2020 and rebuilding its foreign exchange reserves, both of which threatened its 2021 and 2022 public budgets.

São Tomé and Príncipe 

$10.0 million decline (50 percent reduction of its recent allocation)

In its August review, IMF staff projected that around $5.6 million in SDRs could be onlent by the central bank to the government for budget purposes. “Additional SDR allocation will provide welcome boost to our external reserves in 2021 and a portion of it could safeguard critical priority expenditures in 2022 onwards…could support well-defined and monitorable priority expenditures in 2022, including those related to the immediate health, education, pro-poor spending, and clearing arrears.”

Djibouti

$43.1 million decline (100 percent reduction of its new recent allocation) 

Djibouti exchanged all of its SDRs from the recent allocation. Djibouti’s Minister Of Finance, Economy & Industry signed a statement in October recognizing the importance of SDRs and advocated for onlending of more SDRs to respond better to the recovery. The conflict in Ethiopia has the potential to hurt Djibouti’s economy. We have found no publicly available information on how Djibouti used its SDRs

Cabo Verde

$32.2 million decline (100 percent reduction of its recent allocation)

Cabo Verde exchanged all of its recently allocated SDRs. Cabo Verde will use SDRs to finance its 2021 and 2022 budgets. The government signed a memorandum of understanding with its central bank regarding the treatment of SDRs: “‘This operation has no implication on public debt…this gives us more steps to maneuver in terms of the debt and the budget, and above all, because it is a resource that will be made available to the Government directly [it] enters directly into the treasury account with the Central Bank…’”

Other notable accounts:

  • Bangladesh. $38.8 million decline (2.7 percent reduction of its recent allocation)

IMF Data: SDR accounts with large increases

These countries likely exchanged or issued hard currencies for SDRs. Alternatively, they could have accepted SDRs as payment for previous loans.

In October, countries with Voluntary Trading Arrangements collectively purchased $2.7 billion in SDRs.[1]

  • Japan. $358 million increase 
  • Canada. $326 million increase
  • Chile. $326 million increase
  • France. $229 million increase
  • Sweden. $212 million increase
  • Switzerland. $212 million increase
  • United Kingdom. $212 million increase
  • Germany. $212 million increase
  • Korea. $142 million increase
  • Portugal. $142 million increase
  • Norway. $105 million increase
  • Ireland. $71 million increase
  • Slovak Republic. $57 million increase
  • Italy. $23 million increase
  • China. $12 million increase
  • Israel. $10 million increase
  • Spain. $3.4 million increase

The total holdings of SDRs of the countries in the list above was worth $217 billion. They increased their total SDR holdings by less than 1 percent.

In addition, other net SDR purchasers were Oman ($71 million), Lithuania ($32 million), and the Arab Monetary Fund ($16 million). 

Interestingly, countries that had exchanged all or nearly all of their SDRs only months ago bought back a small portion of SDRs during October. Ukraine repurchased $59 million, Ecuador repurchased $55 million, and Tunisia repurchased $40 million. In October, Ecuador received an $800 million disbursement from the IMF, corresponding to its program in effect. 

IMF General Resources Account

$52 million drop in its SDR holdings in October

The IMF’s SDR holdings decreased slightly. It is important to remember that no SDRs are allocated to the IMF; its holdings increase primarily on the basis of loan repayments. The reason for this drop is unclear.


Countries to Watch

Apart from the IMF data, reporting on — or statements from — countries may give information on the use, or future use, of SDRs. It may also highlight the domestic use of SDRs, which would not appear as transactions in the IMF data. These are countries to watch in future months.

Several countries did not exchange their SDRs but did use them for domestic fiscal purposes.

  • Argentina. The Argentine government used the SDRs for a complex set of operations that helped alleviate its external position marked by its IMF debt. The Argentine Minister of Finance has announced it will pay its December obligations with the SDRs recently allocated. 

These are countries to watch in future months.

  • Barbados Prime Minister Mia Mottley called for “500 billion dollars in SDRs annually for 20 years, that is, ten trillion dollars for climate action”. It is thus likely that Barbados will make use of its SDRs.
  • It is reported Saudi Arabia deposited hard currency at the Central Bank of Egypt equivalent to $5.5 billion. Likewise, it deposited $3 billion at the central bank of Pakistan and extended a $1.2 billion trade financing facility. These facilities are linked to Saudi Arabia’s recently allocated $13.6 billion worth of SDRs. 
  • The European Union (EU) forbid eurozone central banks from exchanging euros with SDRs from Belarus.
  • Senegal has added the SDRs to its 2021 budget: “The added resources will be used for health, social protection and economic recovery. In part, this will involve paying off debts in the energy and construction sector, construction and public works.” Senegal has approved the use of SDRs for its 2022 budget. 
  • Yemen’s “Saudi-backed and internationally recognized central bank” is looking for another central bank to exchange its SDRs. 
  • Zimbabwe received advice from the IMF: “The SDRs should be spent on priority areas within a medium-term plan and follow good governance and transparency practices.”
  • Ghana is planning to use its SDRs in 2022 to cover its deficit, “for liability management and budget support, particularly, capital expenditure.”
  • Togo has included SDRs in its government budget. 
  • Zambia is including the SDRs to its government budget. 
  • Niger has approved a part of its SDRs to its government budget.

[1] The IMF has reached Voluntary Trading Arrangements (VTA) for SDRs with several entities: Australia, China, Japan, Korea, New Zealand; the European Central Bank, Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Malta, the Netherlands, Norway, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom; Canada, Chile, Mexico, United States; and Saudi Arabia. Therefore, these countries will likely show increases in their holdings to fulfill the requests of those countries whose holdings have decreased. Conversely, countries not on this list with increases in SDR holdings are candidates for other types of transactions.

The October SDR amounts are very similar and are round numbers for many of the VTA countries; it appears those are proactively requested by the IMF SDR department. From these data, It appears Oman may be a prospective or a new VTA partner.

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. SDRs, which are an international reserve asset, can be exchanged for hard currency or donated among member countries, meaning the injection by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said.  


Shortly after the new allocation of SDRs in August, we reported how countries were using them after the first week; later, we reported on countries’ use of SDRs during the month of September. This update reports observations based on SDR holdings as reported by the IMF for the month of October. 

As a reminder, not all uses of SDRs involve operations at the SDR Department that modify member countries’ SDR holdings; some are domestic operations leveraged on SDR holdings. And simply having SDRs “unused” on central bank accounts also improves a country’s financial position. 

In other news: in early November, at the Conference on Parties on Climate Change (COP26), Barbados Prime Minister Mia Mottley called for “500 billion dollars in SDRs annually for 20 years, that is, ten trillion dollars for climate action.” This was supported by the head of the Economic Commission for Latin America and the Caribbean, Alicia Bárcena.

The $650 billion allocation of SDRs continues to be an example of international cooperation leading to a concrete success. To build on this success, on November 23, the chairs of the Congressional Progressive, Black, Hispanic, and Asian Pacific American Caucuses urged US Treasury Secretary Yellen to back the issuance of $2 trillion more SDRs.

Key takeaways from October data:

  • Iraq, Mauritania, Djibouti, and Cabo Verde exchanged all or almost all of their SDRs for hard currency.
  • São Tomé and Príncipe exchanged half of its SDRs for hard currency. 
  • The Bank of Central African States used all of its SDRs. 
  • Chile continues to be a disproportionately active buyer of SDRs.

Summary information about the new SDR allocation:

In the first three months after the SDRs were issued, a total of 24 countries from Europe, Africa, Asia, and Latin America have used the majority or all of the newly allocated SDRs. Three countries in Latin America have used them for fiscal purposes. In the first three months after the 2009 issuance, eight countries had exchanged over half of their SDRs. This is clear evidence of the importance of this new allocation of SDRs.

  • An analysis of the first three months of data demonstrates that many countries exchanged large portions of their share of the new $650 billion allocation for hard currencies. $12.7 billion worth of SDR transactions took place. This is 6 percent of the allocation of developing countries (excluding China). 
  • If we add the domestic SDR operations detected to date (Paraguay, Colombia, Argentina, and Mexico), the SDR transactions amount to $27.1 billion. This is 21 times more than what all countries had used in the first three months after the 2009 issuance ($1.26 billion). 
  • Several richer countries, including some with Voluntary Trading Agreements with the IMF, exchanged hard currencies for SDRs.

IMF Data: SDR accounts with large decreases

While reductions in countries’ SDR holdings usually imply an exchange of SDRs for hard currency, decreases in SDR holdings may also result from a payment in SDRs to the IMF for a loan or a transaction (such as a deposit) with a prescribed holder of SDRs. Countries may also lend SDRs to each other. Countries that exchange SDRs for hard currencies usually cite liquidity problems, dwindling foreign exchange reserves, and a need for more imports, as well as a desire to implement measures to address the pandemic.

There was a net total of $2.927 billion worth of SDRs exchanged in October.

Bank of Central African States (BEAC)

$471 million decrease (representing a 100 percent reduction of its members’ deposits)

The IMF can qualify supranational monetary or financial institutions as “prescribed holders,” i.e., entities that can also have accounts at the SDR Department and engage in transactions with SDRs. BEAC is a prescribed holder. Between August and September, the BEAC had received a transfer of $471 million worth of SDRs from Chad and the Republic of Congo. In October, the BEAC decreased its holdings of SDRs but did not increase its members’ holdings; thus it likely exchanged them for hard currency. The Republic of Congo has said the resources from the IMF will be used to support the 2022 budget. Chad’s minister of finance and budget stated that SDRs were an essential lifeline to “hold on” as the country negotiates separate financial issues: “To help deal with the [pandemic-related financial] situation, the Chadian authorities have decided to spend their share of the recent Special Drawing Right (SDR) allocation to meet urgent social needs…”

Mauritania 

$164.2 million decline (94 percent reduction of its recent allocation)

Mauritania used almost all of its recently received allocations to fund its government budget. Mauritania is currently facing severe debt distress. Mauritania’s Minister of Finance signed a statement in October recognizing the importance of SDRs and advocated for onlending of more SDRs to regional development and multilateral banks to respond better to the recovery.

Iraq

$2068 million decline (92 percent reduction of its recent allocation)

There is no publicly available information on how Iraq used its SDRs. Iraq’s external public debt declined significantly between October and November. In addition, Iraq is still recovering from low oil prices in 2020 and rebuilding its foreign exchange reserves, both of which threatened its 2021 and 2022 public budgets.

São Tomé and Príncipe 

$10.0 million decline (50 percent reduction of its recent allocation)

In its August review, IMF staff projected that around $5.6 million in SDRs could be onlent by the central bank to the government for budget purposes. “Additional SDR allocation will provide welcome boost to our external reserves in 2021 and a portion of it could safeguard critical priority expenditures in 2022 onwards…could support well-defined and monitorable priority expenditures in 2022, including those related to the immediate health, education, pro-poor spending, and clearing arrears.”

Djibouti

$43.1 million decline (100 percent reduction of its new recent allocation) 

Djibouti exchanged all of its SDRs from the recent allocation. Djibouti’s Minister Of Finance, Economy & Industry signed a statement in October recognizing the importance of SDRs and advocated for onlending of more SDRs to respond better to the recovery. The conflict in Ethiopia has the potential to hurt Djibouti’s economy. We have found no publicly available information on how Djibouti used its SDRs

Cabo Verde

$32.2 million decline (100 percent reduction of its recent allocation)

Cabo Verde exchanged all of its recently allocated SDRs. Cabo Verde will use SDRs to finance its 2021 and 2022 budgets. The government signed a memorandum of understanding with its central bank regarding the treatment of SDRs: “‘This operation has no implication on public debt…this gives us more steps to maneuver in terms of the debt and the budget, and above all, because it is a resource that will be made available to the Government directly [it] enters directly into the treasury account with the Central Bank…’”

Other notable accounts:

  • Bangladesh. $38.8 million decline (2.7 percent reduction of its recent allocation)

IMF Data: SDR accounts with large increases

These countries likely exchanged or issued hard currencies for SDRs. Alternatively, they could have accepted SDRs as payment for previous loans.

In October, countries with Voluntary Trading Arrangements collectively purchased $2.7 billion in SDRs.[1]

  • Japan. $358 million increase 
  • Canada. $326 million increase
  • Chile. $326 million increase
  • France. $229 million increase
  • Sweden. $212 million increase
  • Switzerland. $212 million increase
  • United Kingdom. $212 million increase
  • Germany. $212 million increase
  • Korea. $142 million increase
  • Portugal. $142 million increase
  • Norway. $105 million increase
  • Ireland. $71 million increase
  • Slovak Republic. $57 million increase
  • Italy. $23 million increase
  • China. $12 million increase
  • Israel. $10 million increase
  • Spain. $3.4 million increase

The total holdings of SDRs of the countries in the list above was worth $217 billion. They increased their total SDR holdings by less than 1 percent.

In addition, other net SDR purchasers were Oman ($71 million), Lithuania ($32 million), and the Arab Monetary Fund ($16 million). 

Interestingly, countries that had exchanged all or nearly all of their SDRs only months ago bought back a small portion of SDRs during October. Ukraine repurchased $59 million, Ecuador repurchased $55 million, and Tunisia repurchased $40 million. In October, Ecuador received an $800 million disbursement from the IMF, corresponding to its program in effect. 

IMF General Resources Account

$52 million drop in its SDR holdings in October

The IMF’s SDR holdings decreased slightly. It is important to remember that no SDRs are allocated to the IMF; its holdings increase primarily on the basis of loan repayments. The reason for this drop is unclear.


Countries to Watch

Apart from the IMF data, reporting on — or statements from — countries may give information on the use, or future use, of SDRs. It may also highlight the domestic use of SDRs, which would not appear as transactions in the IMF data. These are countries to watch in future months.

Several countries did not exchange their SDRs but did use them for domestic fiscal purposes.

  • Argentina. The Argentine government used the SDRs for a complex set of operations that helped alleviate its external position marked by its IMF debt. The Argentine Minister of Finance has announced it will pay its December obligations with the SDRs recently allocated. 

These are countries to watch in future months.

  • Barbados Prime Minister Mia Mottley called for “500 billion dollars in SDRs annually for 20 years, that is, ten trillion dollars for climate action”. It is thus likely that Barbados will make use of its SDRs.
  • It is reported Saudi Arabia deposited hard currency at the Central Bank of Egypt equivalent to $5.5 billion. Likewise, it deposited $3 billion at the central bank of Pakistan and extended a $1.2 billion trade financing facility. These facilities are linked to Saudi Arabia’s recently allocated $13.6 billion worth of SDRs. 
  • The European Union (EU) forbid eurozone central banks from exchanging euros with SDRs from Belarus.
  • Senegal has added the SDRs to its 2021 budget: “The added resources will be used for health, social protection and economic recovery. In part, this will involve paying off debts in the energy and construction sector, construction and public works.” Senegal has approved the use of SDRs for its 2022 budget. 
  • Yemen’s “Saudi-backed and internationally recognized central bank” is looking for another central bank to exchange its SDRs. 
  • Zimbabwe received advice from the IMF: “The SDRs should be spent on priority areas within a medium-term plan and follow good governance and transparency practices.”
  • Ghana is planning to use its SDRs in 2022 to cover its deficit, “for liability management and budget support, particularly, capital expenditure.”
  • Togo has included SDRs in its government budget. 
  • Zambia is including the SDRs to its government budget. 
  • Niger has approved a part of its SDRs to its government budget.

[1] The IMF has reached Voluntary Trading Arrangements (VTA) for SDRs with several entities: Australia, China, Japan, Korea, New Zealand; the European Central Bank, Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Malta, the Netherlands, Norway, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom; Canada, Chile, Mexico, United States; and Saudi Arabia. Therefore, these countries will likely show increases in their holdings to fulfill the requests of those countries whose holdings have decreased. Conversely, countries not on this list with increases in SDR holdings are candidates for other types of transactions.

The October SDR amounts are very similar and are round numbers for many of the VTA countries; it appears those are proactively requested by the IMF SDR department. From these data, It appears Oman may be a prospective or a new VTA partner.

10:21 P.M. EST: While Libre Party supporters, and opponents of the governing National Party, celebrate, many observers are still voicing caution. While Castro’s lead in the preliminary results appears decisive, if indeed the 16 percent sample is representative of the total vote, it is worth remembering that early results in 2017 also gave the opposition a significant (although much smaller) lead. As our own Alex Main summarized:

After a long, unexplained delay, the TSE announced that Salvador Nasralla ― candidate of the Opposition Alliance Against the Dictatorship ― was in the lead by 5 points with 57 percent of votes counted. But then the electronic vote count was delayed for more than 30 hours. Over the following days, additional “technical failures” occurred. When the count resumed, Nasralla’s lead gradually evaporated and, by late in the day on November 30, Hernández was ahead by 1.5 percentage points.

Considering this precedent, as well as the many irregularities witnessed today (which we have attempted to document on this blog), continued scrutiny of the tabulation process and the official results is warranted. And irregularities should be investigated by credible authorities.

9:52 EST: Announcing preliminary results based on 2,929 presidential actas that comprise 16.01 percent of the total (18,293), the CNE says Libre Party candidate Xiomara Castro obtained 53.4 percent of the vote, with National Party candidate Nasry Asfura second with 34 percent, and Liberal Party candidate Yani Rosenthal third with 9 percent.

The CNE announces preliminary results in Honduras's 2021 elections.

9:38 P.M. EST: CNE President Kelvin Aguirre announced that over 3 million Honduras voted, meaning voter participation of about 62 percent. Watch the CNE press conference underway here.

9:16 P.M. EST: An exit poll from CESPAD, and another reported by right-wing outlet La Tribuna, give Xiomara Castro a decisive lead.

8:38 P.M. EST: Scattered reports of ongoing Libre presence at voting centers, and diminishing National Party presence, continue. The CNE is supposed to announce preliminary results at 8:00 p.m. Honduras time (9:00 p.m. EST).

CORRECTION: 8:26 P.M. EST: Honduras Now reported how the disenfranchisement and chaos at [one JRV] at the Escuela Republica de Panamá in Buenos Aires, Tegucigalpa concluded:

8:15 P.M. EST: Election observer Burke Bindbeutel sends this photo of presidential ballot counting at the Escuela Republica de Panamá in Buenos Aires, Tegucigalpa. Many voters there reportedly were unable to cast ballots today (see below).

Counting presidential ballots at the the Escuela Republica de Panamá in barrio Buenos Aires Tegucigalpa. Photo: Burke Bindbeutel

7:59 P.M. EST: The US government-funded non-profit organization Association for a More Just Society has told the media it too is concerned by many irregularities today, including that people with invalid identity cards being allowed to vote, ballots lacking stamps put in ballot boxes, and “non-application of indelible ink to voters or inclusion of deceased persons in the electoral roll.” 

7:49 P.M. EST: Honduran national and well-known professor Suyapa Portillo Tweeted earlier this evening that voting was “non-operational” at the consulate in Los Angeles, CA, another example of impediments to voting in the US (see below).

7:37 P.M. EST: An election observer at Instituto España Jesus Milla Silva in Colonia Kennedy, Tegucigalpa reports “Crowds rush the polling site after an onlooker says they saw a stack of IDs during the vote count.”

7:26 P.M. EST: Manuel Zelaya, former president and possibly future first gentleman, announced earlier that the Opposition Alliance will hold a press conference at 8:00 p.m. Honduras time, the same time the CNE is expected to make its first statements after the conclusion of the election.

7:18 P.M. EST: Honduras Now reports:

 

7:15 P.M. EST: An election observer at the CEB Monseñor Jacobo Cáceres in Suyapa, Tegucigalpa reports they are “In a vote count preceding calmly and orderly. The public is standing outside the classroom and watching through the windows as the JRV LIBRE and PN members each look at hold up the ballot for the people outside to see.”

6:19 P.M. EST: The PJE and CESPAD have issued a new alert denouncing obstruction of the voting center at the Escuela Republica de Panamá, Buenos Aires, Tegucigalpa, and apparent conflict between electoral authorities and voters there (see below).

6:12 P.M. EST: Election observers documented the lack of accessibility for disabled people to vote at the Escuela Republica de Panamá, Buenos Aires, Tegucigalpa.

6:07 P.M. EST: Honduran media reported at 6:00 ET that CNE president Kelvin Aguirre said voting will be extended for an extra hour at voting centers where there is unanimous agreement.

5:59 P.M. EST: As voting centers prepare to close, election observers talk to media.

An election observer talks to media

Election observer talking to media

5:42 P.M. EST: The CNE statement denouncing an attack on its web server also calls on candidates and media to abstain from publicly (and illegally) declaring victory or other information about election results, in an apparent reference to the National Party press conference earlier today. The CNE also said that voting should be extended so that the last person still in line will be able to vote, in accordance with Article 265 of the Electoral Law, and that the fingerprint registry shows that 36 percent of eligible voters came out to vote today.

5:19 P.M. EST: Contra Corriente’s Jennifer Avila reported at 4:55 p.m. that the CNE claimed there had been an attack on its web server. The site has been offline throughout the day (see below).

5:16 P.M. EST: An election observer reports: “Ruinas Copan 2801: One hour before closing time. Just over 2/3 of the possible votes are in. Things have pretty much ground to a halt. There are no people outside waiting to vote.”

5:15 P.M. EST: National Party leader Fernando Aduray is blaming alleged incidents of “violence” and disorder on the Libre Party, whom he said want to “generate chaos and anarchy” after learning of the adverse primary results at noon” [presumably the National Party’s much-condemned televised press conference declaring victory]. Aduray also linked the Libre Party with “communism in Venezuela and the Sao Paulo Forum.”

5:05 P.M. EST: The PJE and CESPAD have issued a statement denouncing the “threat of fraud” in public statements made by David Chávez, of the central committee of the National Party, declaring victory before voting has concluded. (See below.)

5:00 P.M. EST: Honduran newspaper El País reportsProblems with some people who are not on the voting lists at the Paz Barahona School in San Pedro Sula.”

4:40 P.M. EST: Election observers at a voting center in in Buenos Aires, Tegucigalpa documented the tense scene outside as party representatives worked to determine a more efficient system to allow the many people waiting, for hours, outside, to vote, while inside there are reportedly JRVs with few voters waiting.

4:30 P.M. EST: Just before 4:00 EST, Nuestra Red and Global Exchange, which both have many observers on the ground in Honduras today, denounced the “buying and selling [of] votes in the department of Francisco Morazán through tickets issued by political activists.”

3:57 P.M. EST: An election observer in Buenos Aires, Tegucigalpa, reports: “Allegations at the Buenos Aires voting center that there is a guy in a blue hat (with a B on it) collaborating with police to only let in people voting for the Partido Nacional.”

A man in a blue hat with a letter B on it allegedly works with police to only allow NP voters into a voting center.

3:41 P.M. EST: An election observer documented very long lines outside a voting center in the Buenos Aires neighborhood of Tegucigalpa. “A woman in line told me that they had already been in line for two hours, and that the line isn’t moving at all.  She has worked the polls before, and it’s never been like this.” 

3:33 P.M. EST: An election observer in Lepaera, Lempira sent this photo from inside a voting center:

A voting center in Lepaera, Lempira.

3:22 P.M. EST: Honduran media report that the voting center at the Fraternidad de Villanueva school finally received their technological kit at around 2:00 p.m. local time. Voting center workers had been trying to get the kits since 9:00 a.m. local time.

3:18 P.M. EST: Independent media organization Report Without Fear notes that some voting table supervisors in San Pedro Sula are not stamping ballots prior to depositing them.

3:01 P.M. EST: An election observer documented a lull in voting at Monseñor Cáceres at 2:37 P.M. EST.

"A lull in voting here at Monseñor Cáceres"

2:39 P.M. EST: Honduran TV network HCH broadcast a press conference by governing National Party representatives declaring victory, some four hours before voting centers close. This has drawn condemnation from the Progressive International, among others, who see it as  an “effort to disinform voters, dissuade participation, and endanger democracy in Honduras.” EU Electoral Observation Mission head Željana Zovko has expressed concern about political parties claiming victory already.

2:19 P.M. EST: Right-wing newspaper site La Tribuna posted an article earlier citing the defense secretary as claiming that the armed forces delivered election materials to “each designated place,”  “even in the most remote areas of the country,” But numerous election observer and media reports have shown that this is not true.

2:12 P.M. EST: The CNE census site, which voters rely on to find out their voting location, continues to be offline, drawing complaints and condemnation.

1:44 P.M. EST: The PJE and CESPAD have issued a new alert about election irregularities, including that “at least 17  Voting Table Supervisory Groups” in 5 departments did not receive their technological kits to process votes, that some Voting Table Supervisory Groups do not have equipment to collect fingerprints, and that there are reports of party propaganda inside of 19 voting centers.

1:32 P.M. EST: El Pulso reports, with video, that armed forces closed a voting center in Tela, Atlántida, after a conflict broke out there. 

1:28 P.M. EST: An election observer reports: “At a polling site in Tegucigalpa, a scuffle broke out amid complaints of people taking photos of their ballots in exchange for 5000 Lempiras.”

12:47 P.M. EST: Televicentro HN reported at 12 noon ET that voting kits had finally arrived in Choluteca and Siguatepeque, four hours after voting was supposed to have started.

12:43 P.M. EST: The PJE and CESPAD have issued an alert about election observers being hindered from entering a voting center: “In the Saúl Bueso Castañeda school, a voting center in the municipality of Santa Rita in the department of Copán, the secretary of the Municipal Electoral Council impeded the access of accredited observers of the Youth Electoral Platform into the voting center.”

12:39 P.M. EST: Peninsula 360 Press reports on vote buying, and delays. They interviewed Marco Castillo of Global Exchange, who told the outlet earlier, “We have been observing and, above all, what they are reporting to me is that the whole process is super delayed here in the Colón area…” He also told Peninsula 360 that yesterday they documented a federal government official wearing  a cap promoting a National Party political candidate while making payments for a social program “in the same school” that is serving as a voting center today.

12:24 P.M. EST: Independent media outlet Contra Corriente reports that CESPAD’s Lucía Vijil has witnessed “political patronage” by the ruling National Party, with “state resources being used in voting centers, for example, to buy food in exchange for votes.”

12:17 P.M. EST: The Plataforma Juvenil Electoral (PJE), and CESPAD, which each have observers at various voting centers today, issued an alert that party representatives are instructing people how to vote at the Federico Padilla Rubi school in the town of Arenalitos, La Paz department.

12:02 P.M. EST: The International Honduran Diaspora has issued a statement denouncing that few national ID cards (DNI) have been delivered to Hondurans residing in the United States, “where more than 1 million compatriots live.” “Only 12,858 DNI enrollments were made and only 1,090 were delivered,” the group says, noting that consular offices also used the Thanksgiving holiday as an excuse to delay delivery.

The lack of ID cards among Hondurans abroad has been a major concern ahead of the election.

11:52 A.M. EST: An election observer reports: “A Partido Nacional team is ‘capturing’ votes outside Monseñor Cáceres school. Every time a voter comes to the school, they pick them by the arm and push them to their tent. At the tent they are recording their IDs, and voters get instructions. After voting, they receive a mug.”

Outside Monseñor Cáceres school

A voter with a mug he received from National Party members after he voted.

11:43 A.M. EST: How much will dissatisfaction with incumbent president Juan Orlando Hernández affect how people vote today? Much of US reporting on the elections stresses the scandals, corruption, and repression of the Hernández era, and the current government’s failures in improving the living standards of most Honduras, and in responding to the COVID-19 pandemic. For example, Jared Olson reports for the Los Angeles Times:

Hernandez has left the nation in ruins as tens of thousands of Hondurans flee for better lives in the U.S. and elsewhere. The president’s years in power have been marked by human rights violations, extrajudicial killings, stolen public money, poverty and complicity in drug trafficking at the highest levels of government.

“Juan Orlando is leaving us with a broken country,” said Lenín Laínez, a congressman for the opposition Libre party. “A country in debt, with serious narco-corruption, with high levels of criminality and one of the most unequal populations in Latin America.”

The National Party “has left us with a Honduras where it’s impossible to access quality, free healthcare or education,” said Anabel Melgar, a member of the National Front for Youth in Resistance. “They embezzled the health fund, and thousands of people have died because, with the money from the fund stolen, they handed out [poor-quality] pills.”

This graffiti in Tegucigalpa reflects anti-Hernández sentiment.

Fuera JOH graffiti
(Photo: Burke Bindbeutel)

11:07 A.M. EST: Various purported opinion polls, or images of supposed poll results, are already circulating. Observers caution to be wary of such purported polls, and numerous Honduran media outlets have committed to avoid reporting any such polls until after the CNE makes its first official announcement, which it is supposed to do after 8:00 p.m. Honduras time.

11:01 A.M. EST: Journalist José Luis Granados Ceja is documenting the situation in various voting centers today. These photos illustrate aspects of the voting process, from fingerprint scanning to depositing of ballots:

A voter has their fingerprint scanned. Photo: José Luis Granados Ceja

An election official with ballots. Honduras 2021 elections. Photo: José Luis Granados Ceja

A voter deposits her ballot for president. Honduras 2021 elections. Photo: José Luis Granados Ceja

10:38 A.M. EST: An election observer reports: “The JRV [Voting Table Supervisory Group] where I am stationed [in Distrito Central, Francisco Morazán] opened late (8am instead of 7) because of a problem with the password for the fingerprint ID machine. Voting has been consistent and one of the JRV members told me that she has worked mesas before and it seems like more traffic than before.”

10:15 A.M. EST: The CNE census site is still offline, making it difficult for people to find out where they are supposed to vote, as Honduras Now (which also has a useful podcast episode providing background on this election) explains:

9:51 A.M. EST: Honduran media report long lines at voting centers in Comayagüela (northwest of Tegucigalpa) 
and at the Centro de Educación Básica Gubernamental Dr José Antonio Peraza de la colonia 6 de Mayo del sector Rivera Hernández in San Pedro Sula, where the voting center still had not opened as of 9:00 a.m. EST, an hour after voting was supposed to have started. 

9:42 A.M. EST: Honduras’s major trade association, the Honduran Council of Private Enterprise (COHEP) issued a statement calling on the National Electoral Council (CNE) “to adhere to the constitutional framework, and perform rigorous and transparent work, which guarantees the legitimacy of this electoral process,” and urging “that all relevant information, is communicated in a clear, accurate and timely manner” by the CNE.

9:22 A.M. EST: A number of political candidates, including presidential candidate Xiomara Castro and vice presidential candidate Salvador Nasralla, are voting early. “We set the example of going out to vote early. Honduras needs a real change,” Castro told reporters.

9:13 A.M. EST: Honduran media are reporting late openings of some voting centers, in La Ceiba and la Villa Olímpica in Tegucigalpa where a voting center reportedly opened more than 40 minutes late. Meanwhile, the website of the National Electoral Council (CNE), one of the electoral institutions created as part of reforms following election-rigging in 2017, is experiencing problems.

8:59 A.M. EST: Election observers reportLines at the polls, lots of excitement & lots difficulties with the system that will transmit preliminary results to the CNE center in Tegucigalpa (TREP).” Honduran media and foreign correspondents also are reporting long lines at polling places in some urban areas.

Today, November 28, Hondurans head to the polls for crucial elections amid escalating political violence across the country. Voters will be electing a new president, the entirety of the 128-seat National Congress, every mayor of the country’s 298 municipalities, and over 2000 municipal councilors, as well as 20 representatives to the Central American Parliament.

At the presidential level, the leading contenders are ruling National Party candidate Nasry “Tito” Asfura and Xiomara Castro of the Liberty and Refoundation Party (LIBRE). The most recent polling, from late October (Honduran law forbids polling within one month of scheduled elections) showed Castro with a significant lead over Asfura: 38 to 21 percent, with Liberal Party candidate Yani Rosenthal well behind both.

Honduras has experienced political violence in the run-up to the elections. The United Nations Office of the High Commissioner for Human Rights most recently cited 29 political killings. Recent high-profile assassinations include a Liberal Party mayor running for reelection, Francisco Gaitán, and Luis Casaña, a LIBRE Party candidate for municipal councilor who was shot shortly after leaving a campaign event with presidential candidate Xiomara Castro.

Electoral reforms negotiated after the 2017 elections and subsequent protests, but not approved until after party primaries in March of this year, have given rise to hope for a more transparent process. Crucial technical aspects of the electoral process, however — such as the newly implemented fingerprint identification system — are presenting serious challenges. This includes problems stemming from this year’s electoral census and the administration of new identification cards required for voting. According to reports, more than 350,000 Hondurans were still without these new ID cards as of mid-November, including many in the US. Already, the day before the elections, observers reported irregularities, including apparent vote-buying, voter intimidation, and failure the deliver materials and equipment needed to transmit vote results. 

Also a product of the negotiated reforms is the highly political makeup of the National Electoral Council (CNE), whereby each of the three major parties has one voting member in the CNE. Given that the contenders for the presidency are from LIBRE and the National Party, the Liberal Party CNE councilor could act as a potential key swing vote on Sunday night, and after.

Yet many are expressing cautious optimism — including Gustavo Irías, executive director of Honduras’s Center for Democracy Studies (CESPAD) — that Sunday’s elections could signal a turning point following 12 years of crisis since the coup. In order to monitor conditions on the ground during the elections, CESPAD has partnered with US-based human rights organization Global Exchange to deploy dozens of international, and more than 250 national, observers to polling stations across the country.

Read this post for more background and context on Honduras’s 2021 elections.

10:21 P.M. EST: While Libre Party supporters, and opponents of the governing National Party, celebrate, many observers are still voicing caution. While Castro’s lead in the preliminary results appears decisive, if indeed the 16 percent sample is representative of the total vote, it is worth remembering that early results in 2017 also gave the opposition a significant (although much smaller) lead. As our own Alex Main summarized:

After a long, unexplained delay, the TSE announced that Salvador Nasralla ― candidate of the Opposition Alliance Against the Dictatorship ― was in the lead by 5 points with 57 percent of votes counted. But then the electronic vote count was delayed for more than 30 hours. Over the following days, additional “technical failures” occurred. When the count resumed, Nasralla’s lead gradually evaporated and, by late in the day on November 30, Hernández was ahead by 1.5 percentage points.

Considering this precedent, as well as the many irregularities witnessed today (which we have attempted to document on this blog), continued scrutiny of the tabulation process and the official results is warranted. And irregularities should be investigated by credible authorities.

9:52 EST: Announcing preliminary results based on 2,929 presidential actas that comprise 16.01 percent of the total (18,293), the CNE says Libre Party candidate Xiomara Castro obtained 53.4 percent of the vote, with National Party candidate Nasry Asfura second with 34 percent, and Liberal Party candidate Yani Rosenthal third with 9 percent.

The CNE announces preliminary results in Honduras's 2021 elections.

9:38 P.M. EST: CNE President Kelvin Aguirre announced that over 3 million Honduras voted, meaning voter participation of about 62 percent. Watch the CNE press conference underway here.

9:16 P.M. EST: An exit poll from CESPAD, and another reported by right-wing outlet La Tribuna, give Xiomara Castro a decisive lead.

8:38 P.M. EST: Scattered reports of ongoing Libre presence at voting centers, and diminishing National Party presence, continue. The CNE is supposed to announce preliminary results at 8:00 p.m. Honduras time (9:00 p.m. EST).

CORRECTION: 8:26 P.M. EST: Honduras Now reported how the disenfranchisement and chaos at [one JRV] at the Escuela Republica de Panamá in Buenos Aires, Tegucigalpa concluded:

8:15 P.M. EST: Election observer Burke Bindbeutel sends this photo of presidential ballot counting at the Escuela Republica de Panamá in Buenos Aires, Tegucigalpa. Many voters there reportedly were unable to cast ballots today (see below).

Counting presidential ballots at the the Escuela Republica de Panamá in barrio Buenos Aires Tegucigalpa. Photo: Burke Bindbeutel

7:59 P.M. EST: The US government-funded non-profit organization Association for a More Just Society has told the media it too is concerned by many irregularities today, including that people with invalid identity cards being allowed to vote, ballots lacking stamps put in ballot boxes, and “non-application of indelible ink to voters or inclusion of deceased persons in the electoral roll.” 

7:49 P.M. EST: Honduran national and well-known professor Suyapa Portillo Tweeted earlier this evening that voting was “non-operational” at the consulate in Los Angeles, CA, another example of impediments to voting in the US (see below).

7:37 P.M. EST: An election observer at Instituto España Jesus Milla Silva in Colonia Kennedy, Tegucigalpa reports “Crowds rush the polling site after an onlooker says they saw a stack of IDs during the vote count.”

7:26 P.M. EST: Manuel Zelaya, former president and possibly future first gentleman, announced earlier that the Opposition Alliance will hold a press conference at 8:00 p.m. Honduras time, the same time the CNE is expected to make its first statements after the conclusion of the election.

7:18 P.M. EST: Honduras Now reports:

 

7:15 P.M. EST: An election observer at the CEB Monseñor Jacobo Cáceres in Suyapa, Tegucigalpa reports they are “In a vote count preceding calmly and orderly. The public is standing outside the classroom and watching through the windows as the JRV LIBRE and PN members each look at hold up the ballot for the people outside to see.”

6:19 P.M. EST: The PJE and CESPAD have issued a new alert denouncing obstruction of the voting center at the Escuela Republica de Panamá, Buenos Aires, Tegucigalpa, and apparent conflict between electoral authorities and voters there (see below).

6:12 P.M. EST: Election observers documented the lack of accessibility for disabled people to vote at the Escuela Republica de Panamá, Buenos Aires, Tegucigalpa.

6:07 P.M. EST: Honduran media reported at 6:00 ET that CNE president Kelvin Aguirre said voting will be extended for an extra hour at voting centers where there is unanimous agreement.

5:59 P.M. EST: As voting centers prepare to close, election observers talk to media.

An election observer talks to media

Election observer talking to media

5:42 P.M. EST: The CNE statement denouncing an attack on its web server also calls on candidates and media to abstain from publicly (and illegally) declaring victory or other information about election results, in an apparent reference to the National Party press conference earlier today. The CNE also said that voting should be extended so that the last person still in line will be able to vote, in accordance with Article 265 of the Electoral Law, and that the fingerprint registry shows that 36 percent of eligible voters came out to vote today.

5:19 P.M. EST: Contra Corriente’s Jennifer Avila reported at 4:55 p.m. that the CNE claimed there had been an attack on its web server. The site has been offline throughout the day (see below).

5:16 P.M. EST: An election observer reports: “Ruinas Copan 2801: One hour before closing time. Just over 2/3 of the possible votes are in. Things have pretty much ground to a halt. There are no people outside waiting to vote.”

5:15 P.M. EST: National Party leader Fernando Aduray is blaming alleged incidents of “violence” and disorder on the Libre Party, whom he said want to “generate chaos and anarchy” after learning of the adverse primary results at noon” [presumably the National Party’s much-condemned televised press conference declaring victory]. Aduray also linked the Libre Party with “communism in Venezuela and the Sao Paulo Forum.”

5:05 P.M. EST: The PJE and CESPAD have issued a statement denouncing the “threat of fraud” in public statements made by David Chávez, of the central committee of the National Party, declaring victory before voting has concluded. (See below.)

5:00 P.M. EST: Honduran newspaper El País reportsProblems with some people who are not on the voting lists at the Paz Barahona School in San Pedro Sula.”

4:40 P.M. EST: Election observers at a voting center in in Buenos Aires, Tegucigalpa documented the tense scene outside as party representatives worked to determine a more efficient system to allow the many people waiting, for hours, outside, to vote, while inside there are reportedly JRVs with few voters waiting.

4:30 P.M. EST: Just before 4:00 EST, Nuestra Red and Global Exchange, which both have many observers on the ground in Honduras today, denounced the “buying and selling [of] votes in the department of Francisco Morazán through tickets issued by political activists.”

3:57 P.M. EST: An election observer in Buenos Aires, Tegucigalpa, reports: “Allegations at the Buenos Aires voting center that there is a guy in a blue hat (with a B on it) collaborating with police to only let in people voting for the Partido Nacional.”

A man in a blue hat with a letter B on it allegedly works with police to only allow NP voters into a voting center.

3:41 P.M. EST: An election observer documented very long lines outside a voting center in the Buenos Aires neighborhood of Tegucigalpa. “A woman in line told me that they had already been in line for two hours, and that the line isn’t moving at all.  She has worked the polls before, and it’s never been like this.” 

3:33 P.M. EST: An election observer in Lepaera, Lempira sent this photo from inside a voting center:

A voting center in Lepaera, Lempira.

3:22 P.M. EST: Honduran media report that the voting center at the Fraternidad de Villanueva school finally received their technological kit at around 2:00 p.m. local time. Voting center workers had been trying to get the kits since 9:00 a.m. local time.

3:18 P.M. EST: Independent media organization Report Without Fear notes that some voting table supervisors in San Pedro Sula are not stamping ballots prior to depositing them.

3:01 P.M. EST: An election observer documented a lull in voting at Monseñor Cáceres at 2:37 P.M. EST.

"A lull in voting here at Monseñor Cáceres"

2:39 P.M. EST: Honduran TV network HCH broadcast a press conference by governing National Party representatives declaring victory, some four hours before voting centers close. This has drawn condemnation from the Progressive International, among others, who see it as  an “effort to disinform voters, dissuade participation, and endanger democracy in Honduras.” EU Electoral Observation Mission head Željana Zovko has expressed concern about political parties claiming victory already.

2:19 P.M. EST: Right-wing newspaper site La Tribuna posted an article earlier citing the defense secretary as claiming that the armed forces delivered election materials to “each designated place,”  “even in the most remote areas of the country,” But numerous election observer and media reports have shown that this is not true.

2:12 P.M. EST: The CNE census site, which voters rely on to find out their voting location, continues to be offline, drawing complaints and condemnation.

1:44 P.M. EST: The PJE and CESPAD have issued a new alert about election irregularities, including that “at least 17  Voting Table Supervisory Groups” in 5 departments did not receive their technological kits to process votes, that some Voting Table Supervisory Groups do not have equipment to collect fingerprints, and that there are reports of party propaganda inside of 19 voting centers.

1:32 P.M. EST: El Pulso reports, with video, that armed forces closed a voting center in Tela, Atlántida, after a conflict broke out there. 

1:28 P.M. EST: An election observer reports: “At a polling site in Tegucigalpa, a scuffle broke out amid complaints of people taking photos of their ballots in exchange for 5000 Lempiras.”

12:47 P.M. EST: Televicentro HN reported at 12 noon ET that voting kits had finally arrived in Choluteca and Siguatepeque, four hours after voting was supposed to have started.

12:43 P.M. EST: The PJE and CESPAD have issued an alert about election observers being hindered from entering a voting center: “In the Saúl Bueso Castañeda school, a voting center in the municipality of Santa Rita in the department of Copán, the secretary of the Municipal Electoral Council impeded the access of accredited observers of the Youth Electoral Platform into the voting center.”

12:39 P.M. EST: Peninsula 360 Press reports on vote buying, and delays. They interviewed Marco Castillo of Global Exchange, who told the outlet earlier, “We have been observing and, above all, what they are reporting to me is that the whole process is super delayed here in the Colón area…” He also told Peninsula 360 that yesterday they documented a federal government official wearing  a cap promoting a National Party political candidate while making payments for a social program “in the same school” that is serving as a voting center today.

12:24 P.M. EST: Independent media outlet Contra Corriente reports that CESPAD’s Lucía Vijil has witnessed “political patronage” by the ruling National Party, with “state resources being used in voting centers, for example, to buy food in exchange for votes.”

12:17 P.M. EST: The Plataforma Juvenil Electoral (PJE), and CESPAD, which each have observers at various voting centers today, issued an alert that party representatives are instructing people how to vote at the Federico Padilla Rubi school in the town of Arenalitos, La Paz department.

12:02 P.M. EST: The International Honduran Diaspora has issued a statement denouncing that few national ID cards (DNI) have been delivered to Hondurans residing in the United States, “where more than 1 million compatriots live.” “Only 12,858 DNI enrollments were made and only 1,090 were delivered,” the group says, noting that consular offices also used the Thanksgiving holiday as an excuse to delay delivery.

The lack of ID cards among Hondurans abroad has been a major concern ahead of the election.

11:52 A.M. EST: An election observer reports: “A Partido Nacional team is ‘capturing’ votes outside Monseñor Cáceres school. Every time a voter comes to the school, they pick them by the arm and push them to their tent. At the tent they are recording their IDs, and voters get instructions. After voting, they receive a mug.”

Outside Monseñor Cáceres school

A voter with a mug he received from National Party members after he voted.

11:43 A.M. EST: How much will dissatisfaction with incumbent president Juan Orlando Hernández affect how people vote today? Much of US reporting on the elections stresses the scandals, corruption, and repression of the Hernández era, and the current government’s failures in improving the living standards of most Honduras, and in responding to the COVID-19 pandemic. For example, Jared Olson reports for the Los Angeles Times:

Hernandez has left the nation in ruins as tens of thousands of Hondurans flee for better lives in the U.S. and elsewhere. The president’s years in power have been marked by human rights violations, extrajudicial killings, stolen public money, poverty and complicity in drug trafficking at the highest levels of government.

“Juan Orlando is leaving us with a broken country,” said Lenín Laínez, a congressman for the opposition Libre party. “A country in debt, with serious narco-corruption, with high levels of criminality and one of the most unequal populations in Latin America.”

The National Party “has left us with a Honduras where it’s impossible to access quality, free healthcare or education,” said Anabel Melgar, a member of the National Front for Youth in Resistance. “They embezzled the health fund, and thousands of people have died because, with the money from the fund stolen, they handed out [poor-quality] pills.”

This graffiti in Tegucigalpa reflects anti-Hernández sentiment.

Fuera JOH graffiti
(Photo: Burke Bindbeutel)

11:07 A.M. EST: Various purported opinion polls, or images of supposed poll results, are already circulating. Observers caution to be wary of such purported polls, and numerous Honduran media outlets have committed to avoid reporting any such polls until after the CNE makes its first official announcement, which it is supposed to do after 8:00 p.m. Honduras time.

11:01 A.M. EST: Journalist José Luis Granados Ceja is documenting the situation in various voting centers today. These photos illustrate aspects of the voting process, from fingerprint scanning to depositing of ballots:

A voter has their fingerprint scanned. Photo: José Luis Granados Ceja

An election official with ballots. Honduras 2021 elections. Photo: José Luis Granados Ceja

A voter deposits her ballot for president. Honduras 2021 elections. Photo: José Luis Granados Ceja

10:38 A.M. EST: An election observer reports: “The JRV [Voting Table Supervisory Group] where I am stationed [in Distrito Central, Francisco Morazán] opened late (8am instead of 7) because of a problem with the password for the fingerprint ID machine. Voting has been consistent and one of the JRV members told me that she has worked mesas before and it seems like more traffic than before.”

10:15 A.M. EST: The CNE census site is still offline, making it difficult for people to find out where they are supposed to vote, as Honduras Now (which also has a useful podcast episode providing background on this election) explains:

9:51 A.M. EST: Honduran media report long lines at voting centers in Comayagüela (northwest of Tegucigalpa) 
and at the Centro de Educación Básica Gubernamental Dr José Antonio Peraza de la colonia 6 de Mayo del sector Rivera Hernández in San Pedro Sula, where the voting center still had not opened as of 9:00 a.m. EST, an hour after voting was supposed to have started. 

9:42 A.M. EST: Honduras’s major trade association, the Honduran Council of Private Enterprise (COHEP) issued a statement calling on the National Electoral Council (CNE) “to adhere to the constitutional framework, and perform rigorous and transparent work, which guarantees the legitimacy of this electoral process,” and urging “that all relevant information, is communicated in a clear, accurate and timely manner” by the CNE.

9:22 A.M. EST: A number of political candidates, including presidential candidate Xiomara Castro and vice presidential candidate Salvador Nasralla, are voting early. “We set the example of going out to vote early. Honduras needs a real change,” Castro told reporters.

9:13 A.M. EST: Honduran media are reporting late openings of some voting centers, in La Ceiba and la Villa Olímpica in Tegucigalpa where a voting center reportedly opened more than 40 minutes late. Meanwhile, the website of the National Electoral Council (CNE), one of the electoral institutions created as part of reforms following election-rigging in 2017, is experiencing problems.

8:59 A.M. EST: Election observers reportLines at the polls, lots of excitement & lots difficulties with the system that will transmit preliminary results to the CNE center in Tegucigalpa (TREP).” Honduran media and foreign correspondents also are reporting long lines at polling places in some urban areas.

Today, November 28, Hondurans head to the polls for crucial elections amid escalating political violence across the country. Voters will be electing a new president, the entirety of the 128-seat National Congress, every mayor of the country’s 298 municipalities, and over 2000 municipal councilors, as well as 20 representatives to the Central American Parliament.

At the presidential level, the leading contenders are ruling National Party candidate Nasry “Tito” Asfura and Xiomara Castro of the Liberty and Refoundation Party (LIBRE). The most recent polling, from late October (Honduran law forbids polling within one month of scheduled elections) showed Castro with a significant lead over Asfura: 38 to 21 percent, with Liberal Party candidate Yani Rosenthal well behind both.

Honduras has experienced political violence in the run-up to the elections. The United Nations Office of the High Commissioner for Human Rights most recently cited 29 political killings. Recent high-profile assassinations include a Liberal Party mayor running for reelection, Francisco Gaitán, and Luis Casaña, a LIBRE Party candidate for municipal councilor who was shot shortly after leaving a campaign event with presidential candidate Xiomara Castro.

Electoral reforms negotiated after the 2017 elections and subsequent protests, but not approved until after party primaries in March of this year, have given rise to hope for a more transparent process. Crucial technical aspects of the electoral process, however — such as the newly implemented fingerprint identification system — are presenting serious challenges. This includes problems stemming from this year’s electoral census and the administration of new identification cards required for voting. According to reports, more than 350,000 Hondurans were still without these new ID cards as of mid-November, including many in the US. Already, the day before the elections, observers reported irregularities, including apparent vote-buying, voter intimidation, and failure the deliver materials and equipment needed to transmit vote results. 

Also a product of the negotiated reforms is the highly political makeup of the National Electoral Council (CNE), whereby each of the three major parties has one voting member in the CNE. Given that the contenders for the presidency are from LIBRE and the National Party, the Liberal Party CNE councilor could act as a potential key swing vote on Sunday night, and after.

Yet many are expressing cautious optimism — including Gustavo Irías, executive director of Honduras’s Center for Democracy Studies (CESPAD) — that Sunday’s elections could signal a turning point following 12 years of crisis since the coup. In order to monitor conditions on the ground during the elections, CESPAD has partnered with US-based human rights organization Global Exchange to deploy dozens of international, and more than 250 national, observers to polling stations across the country.

Read this post for more background and context on Honduras’s 2021 elections.

Note: CEPR will live-blog the Honduras elections here on Sunday, with updates from people on the ground in Honduras, statements from candidates and other political figures, media reports, and more. 

This Sunday, November 28, Hondurans will head to the polls for crucial elections amid escalating political violence across the country. Voters will be electing a new president, the entirety of the 128-seat National Congress, every mayor of the country’s 298 municipalities, and over 2000 municipal councilors, as well as 20 representatives to the Central American Parliament.

At the presidential level, the leading contenders are ruling National Party candidate Nasry “Tito” Asfura and Xiomara Castro of the Liberty and Refoundation Party (LIBRE). The most recent polling, from late October (Honduran law forbids polling within one month of scheduled elections) showed Castro with a significant lead over Asfura: 38 to 21 percent, with Liberal Party candidate Yani Rosenthal well behind both.

Castro’s candidacy is supported by a broad coalition of forces opposed to the government of President Juan Orlando Hernández (often referred to by his initials “JOH”), which has been involved in far-reaching corruption within state institutions and has carried out violent repression targeting protest movements and activists. JOH’s brother, Tony Hernández, was sentenced to life in prison in the United States earlier this year for trafficking cocaine to the US, among other charges. JOH himself is under investigation by the US, and is believed to likely face prosecution once he leaves office. The stakes are high for Hernández, as Asfura may protect him from extradition should Asfura win the presidency, while other candidates are not likely to shield JOH (Rosenthal has already said he would consider extraditing Hernández should Rosenthal win).

Castro’s husband is former president Manuel Zelaya, who was deposed in a 2009 coup that succeeded thanks in part to the support of Obama administration officials, including then secretary of state Hillary Clinton.

The 12 years since the 2009 coup have been marked by social, economic, and political crises. According to the World Bank, Honduras currently has the second-highest poverty rate in Latin America and the Caribbean, and one of the highest homicide rates in the world. All of these factors, along with serious human rights violations committed at the hands of state security forces and gangs, have contributed to the high rate of Honduran nationals — nearly one in ten — who have left the country in recent years.

It is widely believed that electoral fraud was committed during the November 26, 2017 elections, which gave JOH a controversial second term in office. As CEPR Co-Director Mark Weisbrot denounced at the time, the electoral process, including the initial tabulation and subsequent partial recount, severely lacked transparency and was rife with irregularities.

On December 17, the Organization of American States (OAS) Electoral Observation Mission released a statement raising concerns as to the validity of the electoral results released by the Supreme Electoral Tribunal (TSE) that same day.

The OAS is once again sending an electoral mission to Honduras for Sunday’s elections. The OAS’s role in creating a narrative of electoral fraud, however — without evidence — around Bolivia’s 2019 elections, have since cost the institution credibility, and have spurred new scrutiny of the OAS’s role in overturning elections in Haiti in 2000 and 2010 as well.

Mass mobilizations against electoral fraud broke out across the country. Security forces brutally repressed the protests, killing at least 31 and detaining more than 1,000 people in subsequent weeks.

As CEPR’s Alex Main explained in a piece published shortly after, the US was far from a neutral party in the 2017 elections. In a December 18, 2017 statement, the US State Department recognized the TSE results and ignored both clear irregularities in the vote count and calls for a redo of the election — including from the OAS. Instead, on December 22, the State Department congratulated JOH on his victory.

If the Biden administration intends to act on its claimed commitment to defending human rights and democracy in the hemisphere, and break with its pattern of unconditional support for corrupt, repressive, and undemocratic governments in Honduras, Sunday’s elections present a good opportunity to do that. To that end, nearly 30 members of the US Congress wrote a letter to Secretary of State Antony Blinken last week, urging him to ensure that the US remains neutral in the Honduran electoral process and “support[s] an outcome that is genuinely democratic and inclusive.”

In a House Foreign Services Committee hearing last week, Assistant Secretary for Western Hemisphere Affairs Brian A. Nichols discussed his plans to visit Honduras to meet with government officials, civil society organizations, and high-ranking members of the Honduran armed forces and police before the elections. Nichols also assured Representative Joaquin Castro that the Blinken State Department will be “judicious in their remarks” regarding this weekend’s elections.

The letter from Congress also raised concerns about the political violence that Honduras has witnessed in the run-up to the elections, noting that the United Nations Office of the High Commissioner for Human Rights “has documented 23 murders of candidates and their family members.” That figure has, tragically, already become outdated in the less than two weeks since the letter was published, as the OHCHR most recently cited 29 political killings. Recent high-profile assassinations include a Liberal Party mayor running for reelection, Francisco Gaitán, and Luis Casaña, a LIBRE Party candidate for municipal councilor who was shot shortly after leaving a campaign event with presidential candidate Xiomara Castro.

Electoral reforms negotiated after the 2017 elections and subsequent protests, but not approved until after party primaries in March of this year, have given rise to hope for a more transparent process. Crucial technical aspects of the electoral process, however — such as the newly implemented fingerprint identification system — are presenting serious challenges with mere hours before voting is set to begin Sunday morning. This includes problems stemming from this year’s electoral census and the administration of new identification cards required for voting. According to reports, more than 350,000 Hondurans were still without these new ID cards as of mid-November, including many in the US.

Also a product of the negotiated reforms is the highly political makeup of the National Electoral Council (CNE), whereby each of the three major parties has one voting member in the CNE. Given that the contenders for the presidency are from LIBRE and the National Party, the Liberal Party CNE councilor could act as a potential key swing vote on Sunday night, and after.

Many are expressing cautious optimism, however — including Gustavo Irías, executive director of Honduras’s Center for Democracy Studies (CESPAD) — that Sunday’s elections could signal a turning point following 12 years of crisis since the coup. In order to monitor conditions on the ground during the elections, CESPAD has partnered with US-based human rights organization Global Exchange to deploy dozens of international, and more than 250 national, observers to polling stations across the country.

Progressives in the US who care about democracy and human rights in Honduras need to pay close attention to these elections, and be prepared to mobilize to ensure that neither the Biden administration nor the OAS secretary general again intervene to recognize a fraudulent process.

CEPR will live-blog the Honduras elections here on Sunday, with updates from people on the ground in Honduras, statements from candidates and other political figures, media reports, and more. CEPR previously live-blogged elections in Honduras in 2013 and closely followed the elections in 2017 and 2009.

Note: CEPR will live-blog the Honduras elections here on Sunday, with updates from people on the ground in Honduras, statements from candidates and other political figures, media reports, and more. 

This Sunday, November 28, Hondurans will head to the polls for crucial elections amid escalating political violence across the country. Voters will be electing a new president, the entirety of the 128-seat National Congress, every mayor of the country’s 298 municipalities, and over 2000 municipal councilors, as well as 20 representatives to the Central American Parliament.

At the presidential level, the leading contenders are ruling National Party candidate Nasry “Tito” Asfura and Xiomara Castro of the Liberty and Refoundation Party (LIBRE). The most recent polling, from late October (Honduran law forbids polling within one month of scheduled elections) showed Castro with a significant lead over Asfura: 38 to 21 percent, with Liberal Party candidate Yani Rosenthal well behind both.

Castro’s candidacy is supported by a broad coalition of forces opposed to the government of President Juan Orlando Hernández (often referred to by his initials “JOH”), which has been involved in far-reaching corruption within state institutions and has carried out violent repression targeting protest movements and activists. JOH’s brother, Tony Hernández, was sentenced to life in prison in the United States earlier this year for trafficking cocaine to the US, among other charges. JOH himself is under investigation by the US, and is believed to likely face prosecution once he leaves office. The stakes are high for Hernández, as Asfura may protect him from extradition should Asfura win the presidency, while other candidates are not likely to shield JOH (Rosenthal has already said he would consider extraditing Hernández should Rosenthal win).

Castro’s husband is former president Manuel Zelaya, who was deposed in a 2009 coup that succeeded thanks in part to the support of Obama administration officials, including then secretary of state Hillary Clinton.

The 12 years since the 2009 coup have been marked by social, economic, and political crises. According to the World Bank, Honduras currently has the second-highest poverty rate in Latin America and the Caribbean, and one of the highest homicide rates in the world. All of these factors, along with serious human rights violations committed at the hands of state security forces and gangs, have contributed to the high rate of Honduran nationals — nearly one in ten — who have left the country in recent years.

It is widely believed that electoral fraud was committed during the November 26, 2017 elections, which gave JOH a controversial second term in office. As CEPR Co-Director Mark Weisbrot denounced at the time, the electoral process, including the initial tabulation and subsequent partial recount, severely lacked transparency and was rife with irregularities.

On December 17, the Organization of American States (OAS) Electoral Observation Mission released a statement raising concerns as to the validity of the electoral results released by the Supreme Electoral Tribunal (TSE) that same day.

The OAS is once again sending an electoral mission to Honduras for Sunday’s elections. The OAS’s role in creating a narrative of electoral fraud, however — without evidence — around Bolivia’s 2019 elections, have since cost the institution credibility, and have spurred new scrutiny of the OAS’s role in overturning elections in Haiti in 2000 and 2010 as well.

Mass mobilizations against electoral fraud broke out across the country. Security forces brutally repressed the protests, killing at least 31 and detaining more than 1,000 people in subsequent weeks.

As CEPR’s Alex Main explained in a piece published shortly after, the US was far from a neutral party in the 2017 elections. In a December 18, 2017 statement, the US State Department recognized the TSE results and ignored both clear irregularities in the vote count and calls for a redo of the election — including from the OAS. Instead, on December 22, the State Department congratulated JOH on his victory.

If the Biden administration intends to act on its claimed commitment to defending human rights and democracy in the hemisphere, and break with its pattern of unconditional support for corrupt, repressive, and undemocratic governments in Honduras, Sunday’s elections present a good opportunity to do that. To that end, nearly 30 members of the US Congress wrote a letter to Secretary of State Antony Blinken last week, urging him to ensure that the US remains neutral in the Honduran electoral process and “support[s] an outcome that is genuinely democratic and inclusive.”

In a House Foreign Services Committee hearing last week, Assistant Secretary for Western Hemisphere Affairs Brian A. Nichols discussed his plans to visit Honduras to meet with government officials, civil society organizations, and high-ranking members of the Honduran armed forces and police before the elections. Nichols also assured Representative Joaquin Castro that the Blinken State Department will be “judicious in their remarks” regarding this weekend’s elections.

The letter from Congress also raised concerns about the political violence that Honduras has witnessed in the run-up to the elections, noting that the United Nations Office of the High Commissioner for Human Rights “has documented 23 murders of candidates and their family members.” That figure has, tragically, already become outdated in the less than two weeks since the letter was published, as the OHCHR most recently cited 29 political killings. Recent high-profile assassinations include a Liberal Party mayor running for reelection, Francisco Gaitán, and Luis Casaña, a LIBRE Party candidate for municipal councilor who was shot shortly after leaving a campaign event with presidential candidate Xiomara Castro.

Electoral reforms negotiated after the 2017 elections and subsequent protests, but not approved until after party primaries in March of this year, have given rise to hope for a more transparent process. Crucial technical aspects of the electoral process, however — such as the newly implemented fingerprint identification system — are presenting serious challenges with mere hours before voting is set to begin Sunday morning. This includes problems stemming from this year’s electoral census and the administration of new identification cards required for voting. According to reports, more than 350,000 Hondurans were still without these new ID cards as of mid-November, including many in the US.

Also a product of the negotiated reforms is the highly political makeup of the National Electoral Council (CNE), whereby each of the three major parties has one voting member in the CNE. Given that the contenders for the presidency are from LIBRE and the National Party, the Liberal Party CNE councilor could act as a potential key swing vote on Sunday night, and after.

Many are expressing cautious optimism, however — including Gustavo Irías, executive director of Honduras’s Center for Democracy Studies (CESPAD) — that Sunday’s elections could signal a turning point following 12 years of crisis since the coup. In order to monitor conditions on the ground during the elections, CESPAD has partnered with US-based human rights organization Global Exchange to deploy dozens of international, and more than 250 national, observers to polling stations across the country.

Progressives in the US who care about democracy and human rights in Honduras need to pay close attention to these elections, and be prepared to mobilize to ensure that neither the Biden administration nor the OAS secretary general again intervene to recognize a fraudulent process.

CEPR will live-blog the Honduras elections here on Sunday, with updates from people on the ground in Honduras, statements from candidates and other political figures, media reports, and more. CEPR previously live-blogged elections in Honduras in 2013 and closely followed the elections in 2017 and 2009.

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. SDRs, which are an international reserve asset, can be exchanged for hard currency or donated among member countries, meaning the injection by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said


In September, we reported on the use of SDRs by countries during the first week following the $650 billion allocation of these IMF reserve assets. On this occasion, we analyze SDR holdings as reported by the IMF at the end of September and compare them to previous months’ reports. It is important to note that not all uses of SDRs involve operations at the SDR Department that modify member countries’ SDR holdings; some are domestic operations leveraged on SDR holdings. For example, a recent report by Latindadd discusses domestic SDR operations in Paraguay, Colombia and Mexico. Argentina has also conducted domestic SDR operations that enhanced the impact of its SDRs. These operations are noteworthy but will not appear as changes in the IMF’s accounting.

Here are some key takeaways from the IMF’s September data and other recent SDR news:

  • Lebanon, Ecuador, Malawi, Tunisia, Ethiopia, Guyana and Jordan exchanged all, or virtually all, of their SDRs for hard currency. 
  • Armenia, South Sudan, Ukraine and Haiti exchanged over half of their SDRs for hard currency. 
  • Many countries are transferring or onlending the SDR equivalent amounts to government budgets. 
  • Argentina’s SDR holdings declined by over 43 percent. The country’s president decreed that the SDRs belong to the government, sold them for pesos to the Central Bank, then borrowed them back from the Central Bank and used them to make a significant payment to the IMF. Along with Paraguay, Colombia, and Mexico, more countries are conducting domestic SDR operations to increase the impact of the allocation.
  • The Republic of Congo deposited its remaining amount of SDRs at the Bank of Central African States. 
  • Several richer countries, including some with Voluntary Trading Agreements with the IMF, exchanged hard currencies for SDRs. Fifteen countries saw increases in their holdings of SDRs in excess of $100 million, with China leading the way with a nearly $1 billion increase.
  • In September, there was a net total of $8.2 billion SDRs exchanged, representing about a $6.6 billion increase compared to the previous month.
  • Since the allocation, about $9.8 billion worth of transactions involving SDRs have taken place, according to the IMF data.

The September data further strengthens the case that the $650 billion allocation of SDRs in August was a success. In addition to the calls and Congressional legislation in support of an additional allocation of SDRs  (which has already passed the US House of Representatives) the Prime Minister of Barbados, Mia Amor Mottley, called for annual $500 billion allocations of SDRs to developing countries at COP26.

In addition to the October 4th event Making the Most of Special Drawing Rights: Approaches to Maximize Impact and Create a Sustainable and Just Recovery, another event on October 5, IMF Surcharges: A Necessary Tool or Counter-productive Obstacle To a Just and Green Recovery, was hosted by the IMF as part of its annual meetings and was co-sponsored by CEPR and many other groups.


IMF Data: SDR accounts with large decreases

While reductions in countries’ SDR holdings usually imply an exchange of SDRs for hard currency, decreases in SDR holdings may also result from a payment in SDRs to the IMF for a loan or a transaction (such as a deposit) with a prescribed holder of SDRs. Countries may also lend SDRs to each other. Countries that exchange SDRs for hard currencies usually cite liquidity problems, dwindling foreign exchange reserves and a need for more imports, as well as a desire to implement measures to address the pandemic.

There was a net total of $8.193 billion worth of SDRs exchanged in September.

Lebanon

$1128 million decline (representing a 132 percent reduction of its new recent allocation) 

Lebanon exchanged not only all of its 2021 allocation, but also exchanged its SDRs from previous allocations. The new Lebanese government initially said SDRs were reserved for transfers to the disadvantaged via ration cards (funded “via the World Bank and the Special Drawing Rights (SDR) of the IMF.”) More recent reporting suggests this is still the case. Lebanon is currently negotiating with the IMF for a separate program due to its severe economic crisis which included a precipitous drop in the value of its currency.

Ecuador

$944.3 million decline (100 percent reduction of its recent allocation)

Ecuador exchanged all of its SDRs. The SDRs were allocated directly to the 2021 government budget and were used to cover financing shortfalls of its capital expenditures while the IMF program in force was under review by IMF staff. The Ecuadorian parliament objected to the fact that the (unexchanged) SDRs were recorded as a liability considering the fact that there is no mandate to repay the principal. The Ecuadorian government said, “[p]roceeds from the SDR distribution will go to investment and social services.

Tunisia

$736 million decline (100 percent reduction of its recent allocation)

On September 14, a Presidential decree established that 100 percent of the SDRs allocated to Tunisia would be retroactively transferred from the Central Bank of Tunisia to the government’s budget. An initial quantity corresponding to 26 percent of the allocation was transferred immediately. According to press reports, most of the amount went to paying government employee wages.

Malawi 

$187.4 million decline (100 percent reduction of its recent allocation)

Malawi is considered a country with a high probability of imminent default on its external debt and Malawi has taken several IMF loans last year. Malawi has stated that SDRs “bolster confidence and strengthen the resilience of the country’s economy.” Given the pressure on its currency, Malawi may be using SDRs to stabilize its exchange rate or import necessities. Malawi received two loan disbursements from the Rapid Credit Facility in 2020.

Republic of Congo 

$219 million decrease (representing a 100 percent of new SDR allocations)

The Republic of Congo had a significant decrease in holdings that exactly matches an increase in holdings of the regional central bank, the Bank of Central African States (BEAC, its acronym in French). The IMF can qualify supranational monetary or financial institutions as “prescribed holders,” which are entities that can also have accounts at the SDR Department and engage in SDR transactions. BEAC is a prescribed holder. 

In August the Republic of Congo delivered 27.9 percent of its new $221 million SDR holdings to the BEAC; in September it delivered the remaining amount to the BEAC. The government has said the resources from the IMF will be used to support the 2022 budget. 

Guyana

$245.1 million decline (99.9 percent reduction of its recent allocation)

In August, Bank of Guyana Governor General, Gobind Ganga said, “The allocation is expected to aid in the fight against the coronavirus pandemic as well boost productivity and growth of the Guyanese economy through its capital spending that focuses on the infrastructural transformation of the country.” The drawdown of SDRs together with the central bank governor’s comments suggest full fiscal use of the SDRs.

Ethiopia 

$405.8 million decline (99.9 percent reduction of its recent allocation)

There is little information on how the SDRs are being used, although the allocation was seen as a boost to the economy and reserves. The IMF is engaging with the Ethiopian government due to worsening economic conditions, but not discussing a separate loan program due to the political situation. Ethiopia received a $411 million loan from the IMF in 2020 via the Rapid Financing Instrument.

Jordan

$455.1 million decline (98.2 percent reduction of its recent allocation)

There is no publicly available information on how Jordan used its SDRs. Jordan received a $396 million loan in 2020 under the Rapid Financing Instrument due to the effects of the pandemic. 

Armenia

$113.9 million decline (65.5 percent reduction of its recent allocation)

There is no publicly available information on how Armenia used its SDRs. In the context of meeting with the IMF, the Armenian government emphasized its commitment to building out education infrastructure. 

South Sudan

$211.3 million decline (63.6 percent reduction of its recent allocation)

South Sudan has said that SDRs “will address budget support and the economic impacts of the COVID-19 pandemic” in the context of “implementing essential economic reforms, including monetary and far-reaching foreign exchange market reforms, which involves refraining from monetary financing of the deficit.” South Sudan received two loans disbursements from the Rapid Credit Facility in 2020 and 2021, respectively.

Ukraine

$1408.9 million decline (51.9 percent reduction of its recent allocation)

SDRs “provide more financing space to meet higher budget needs in the remainder of 2021…” according to ratings agency Fitch. Ukraine has said SDRs could be used for the current budget period or future period. Ukraine entered into a new stand-by agreement in June 2020 due to the effects of the pandemic.

Haiti

$110.6 million decline (50 percent reduction of its recent allocation)

The Haitian central bank will gradually onlend the domestic currency equivalent of the SDR amount to the government budget in exchange for long-term debt. According to the central bank “the [SDR] allocation represents a very positive element for the Haitian economy because it will ease pressure on the central bank’s foreign exchange reserves and it will allow the creation of some fiscal space to face the challenges of the health crisis and the peoples’ hardship after the August 14, 2021 earthquake and the tropical storm Grace.”

Argentina

$1869.2 million decline (43.4 percent reduction of its recent allocation)

The Argentine government used the SDRs for a complex set of operations that helped alleviate its external position marked by its existing IMF debt. It was decreed the SDRs belong to the government’s current budget, not the central bank. Then, the government sold the SDRs to the central bank, for pesos. The government used the pesos to prepay previous central bank financing. The government then borrowed the SDRs from the central bank to pay part of its 2021 obligations to the IMF. The Argentine Minister of Finance has announced it will pay its December obligations with the SDRs recently allocated: “Argentina’s Central Bank paid the maturity with special drawing rights (SDRs) received by the country last month, two sources told the Bloomberg news agency.

Other notable accounts:

  • Somalia. $51.6 million decline (23.3 percent reduction of its recent allocation)
  • Zimbabwe. $70.4 million decline (7.4 percent reduction)

IMF Data: SDR accounts with large increases

These countries likely exchanged or issued hard currencies for SDRs. Alternatively, they could have accepted SDRs as payment for previous loans.

In September, countries with Voluntary Trading Arrangements collectively purchased $5.8 billion in SDRs.[1]

  • China. $995 million increase 
  • Japan. $976 million increase
  • United Kingdom. $706 million increase
  • Belgium. $596 million increase
  • Australia. $579 million increase
  • The Netherlands. $322 million increase
  • Italy. $293 million increase
  • Korea. $282 million increase
  • Spain. $227 million increase
  • Sweden. $211 million increase
  • Mexico. $211 million increase
  • France. $154 million increase
  • Chile. $141 million increase
  • New Zealand. $70 million increase
  • Switzerland. $52 million increase

The participating countries’ total holdings of SDRs was worth $348 billion. They increased their total SDR holdings by 1.7 percent.

In addition, the European Central Bank increased its SDR holdings by $282 million, a major increase in its SDR holdings. The ECB is a prescribed holder; it did not receive a direct allocation from the IMF. 

IMF General Resources Account

$1875.4 million increase in its SDR holdings in September

The IMF received a significant payment from Argentina (see above). The IMF’s SDR holdings increased slightly over the amount that Argentina’s decreased. It is important to remember that no SDRs are allocated to the IMF; its holdings increase primarily due to loan repayments. 


Countries to Watch

Apart from the IMF data, reporting on — or statements from — countries may give information on the use, or future use, of SDRs. It may also highlight the domestic use of SDRs, which would not appear as transactions in the IMF data. These are countries to watch in future months.


[1] The IMF has reached Voluntary Trading Arrangements (VTA) for SDRs with several entities: Australia, China, Japan, Korea, New Zealand; the European Central Bank, Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Malta, the Netherlands, Norway, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom; Canada, Chile, Mexico, United States; and Saudi Arabia. Therefore, these countries will likely show increases in their holdings to fulfill the requests of those countries whose holdings have decreased. Conversely, countries not on this list with increases in SDR holdings are candidates for other types of transactions.

The October SDR amounts are very similar and are round numbers for many of the VTA countries; it appears those are proactively requested by the IMF SDR department. From these data, It appears Oman may be a prospective or a new VTA partner.

On August 23, 2021, the International Monetary Fund (IMF) allocated $650 billion worth of Special Drawing Rights (SDRs) to its members to add liquidity to the global economy during the unprecedented health and economic crises caused by COVID-19. SDRs, which are an international reserve asset, can be exchanged for hard currency or donated among member countries, meaning the injection by the IMF can be used by governments to stabilize their currencies and shore up their reserves, or for a number of social or health policies — the latter being an especially important use for SDRs during the pandemic, as IMF Managing Director Kristalina Georgieva has said


In September, we reported on the use of SDRs by countries during the first week following the $650 billion allocation of these IMF reserve assets. On this occasion, we analyze SDR holdings as reported by the IMF at the end of September and compare them to previous months’ reports. It is important to note that not all uses of SDRs involve operations at the SDR Department that modify member countries’ SDR holdings; some are domestic operations leveraged on SDR holdings. For example, a recent report by Latindadd discusses domestic SDR operations in Paraguay, Colombia and Mexico. Argentina has also conducted domestic SDR operations that enhanced the impact of its SDRs. These operations are noteworthy but will not appear as changes in the IMF’s accounting.

Here are some key takeaways from the IMF’s September data and other recent SDR news:

  • Lebanon, Ecuador, Malawi, Tunisia, Ethiopia, Guyana and Jordan exchanged all, or virtually all, of their SDRs for hard currency. 
  • Armenia, South Sudan, Ukraine and Haiti exchanged over half of their SDRs for hard currency. 
  • Many countries are transferring or onlending the SDR equivalent amounts to government budgets. 
  • Argentina’s SDR holdings declined by over 43 percent. The country’s president decreed that the SDRs belong to the government, sold them for pesos to the Central Bank, then borrowed them back from the Central Bank and used them to make a significant payment to the IMF. Along with Paraguay, Colombia, and Mexico, more countries are conducting domestic SDR operations to increase the impact of the allocation.
  • The Republic of Congo deposited its remaining amount of SDRs at the Bank of Central African States. 
  • Several richer countries, including some with Voluntary Trading Agreements with the IMF, exchanged hard currencies for SDRs. Fifteen countries saw increases in their holdings of SDRs in excess of $100 million, with China leading the way with a nearly $1 billion increase.
  • In September, there was a net total of $8.2 billion SDRs exchanged, representing about a $6.6 billion increase compared to the previous month.
  • Since the allocation, about $9.8 billion worth of transactions involving SDRs have taken place, according to the IMF data.

The September data further strengthens the case that the $650 billion allocation of SDRs in August was a success. In addition to the calls and Congressional legislation in support of an additional allocation of SDRs  (which has already passed the US House of Representatives) the Prime Minister of Barbados, Mia Amor Mottley, called for annual $500 billion allocations of SDRs to developing countries at COP26.

In addition to the October 4th event Making the Most of Special Drawing Rights: Approaches to Maximize Impact and Create a Sustainable and Just Recovery, another event on October 5, IMF Surcharges: A Necessary Tool or Counter-productive Obstacle To a Just and Green Recovery, was hosted by the IMF as part of its annual meetings and was co-sponsored by CEPR and many other groups.


IMF Data: SDR accounts with large decreases

While reductions in countries’ SDR holdings usually imply an exchange of SDRs for hard currency, decreases in SDR holdings may also result from a payment in SDRs to the IMF for a loan or a transaction (such as a deposit) with a prescribed holder of SDRs. Countries may also lend SDRs to each other. Countries that exchange SDRs for hard currencies usually cite liquidity problems, dwindling foreign exchange reserves and a need for more imports, as well as a desire to implement measures to address the pandemic.

There was a net total of $8.193 billion worth of SDRs exchanged in September.

Lebanon

$1128 million decline (representing a 132 percent reduction of its new recent allocation) 

Lebanon exchanged not only all of its 2021 allocation, but also exchanged its SDRs from previous allocations. The new Lebanese government initially said SDRs were reserved for transfers to the disadvantaged via ration cards (funded “via the World Bank and the Special Drawing Rights (SDR) of the IMF.”) More recent reporting suggests this is still the case. Lebanon is currently negotiating with the IMF for a separate program due to its severe economic crisis which included a precipitous drop in the value of its currency.

Ecuador

$944.3 million decline (100 percent reduction of its recent allocation)

Ecuador exchanged all of its SDRs. The SDRs were allocated directly to the 2021 government budget and were used to cover financing shortfalls of its capital expenditures while the IMF program in force was under review by IMF staff. The Ecuadorian parliament objected to the fact that the (unexchanged) SDRs were recorded as a liability considering the fact that there is no mandate to repay the principal. The Ecuadorian government said, “[p]roceeds from the SDR distribution will go to investment and social services.

Tunisia

$736 million decline (100 percent reduction of its recent allocation)

On September 14, a Presidential decree established that 100 percent of the SDRs allocated to Tunisia would be retroactively transferred from the Central Bank of Tunisia to the government’s budget. An initial quantity corresponding to 26 percent of the allocation was transferred immediately. According to press reports, most of the amount went to paying government employee wages.

Malawi 

$187.4 million decline (100 percent reduction of its recent allocation)

Malawi is considered a country with a high probability of imminent default on its external debt and Malawi has taken several IMF loans last year. Malawi has stated that SDRs “bolster confidence and strengthen the resilience of the country’s economy.” Given the pressure on its currency, Malawi may be using SDRs to stabilize its exchange rate or import necessities. Malawi received two loan disbursements from the Rapid Credit Facility in 2020.

Republic of Congo 

$219 million decrease (representing a 100 percent of new SDR allocations)

The Republic of Congo had a significant decrease in holdings that exactly matches an increase in holdings of the regional central bank, the Bank of Central African States (BEAC, its acronym in French). The IMF can qualify supranational monetary or financial institutions as “prescribed holders,” which are entities that can also have accounts at the SDR Department and engage in SDR transactions. BEAC is a prescribed holder. 

In August the Republic of Congo delivered 27.9 percent of its new $221 million SDR holdings to the BEAC; in September it delivered the remaining amount to the BEAC. The government has said the resources from the IMF will be used to support the 2022 budget. 

Guyana

$245.1 million decline (99.9 percent reduction of its recent allocation)

In August, Bank of Guyana Governor General, Gobind Ganga said, “The allocation is expected to aid in the fight against the coronavirus pandemic as well boost productivity and growth of the Guyanese economy through its capital spending that focuses on the infrastructural transformation of the country.” The drawdown of SDRs together with the central bank governor’s comments suggest full fiscal use of the SDRs.

Ethiopia 

$405.8 million decline (99.9 percent reduction of its recent allocation)

There is little information on how the SDRs are being used, although the allocation was seen as a boost to the economy and reserves. The IMF is engaging with the Ethiopian government due to worsening economic conditions, but not discussing a separate loan program due to the political situation. Ethiopia received a $411 million loan from the IMF in 2020 via the Rapid Financing Instrument.

Jordan

$455.1 million decline (98.2 percent reduction of its recent allocation)

There is no publicly available information on how Jordan used its SDRs. Jordan received a $396 million loan in 2020 under the Rapid Financing Instrument due to the effects of the pandemic. 

Armenia

$113.9 million decline (65.5 percent reduction of its recent allocation)

There is no publicly available information on how Armenia used its SDRs. In the context of meeting with the IMF, the Armenian government emphasized its commitment to building out education infrastructure. 

South Sudan

$211.3 million decline (63.6 percent reduction of its recent allocation)

South Sudan has said that SDRs “will address budget support and the economic impacts of the COVID-19 pandemic” in the context of “implementing essential economic reforms, including monetary and far-reaching foreign exchange market reforms, which involves refraining from monetary financing of the deficit.” South Sudan received two loans disbursements from the Rapid Credit Facility in 2020 and 2021, respectively.

Ukraine

$1408.9 million decline (51.9 percent reduction of its recent allocation)

SDRs “provide more financing space to meet higher budget needs in the remainder of 2021…” according to ratings agency Fitch. Ukraine has said SDRs could be used for the current budget period or future period. Ukraine entered into a new stand-by agreement in June 2020 due to the effects of the pandemic.

Haiti

$110.6 million decline (50 percent reduction of its recent allocation)

The Haitian central bank will gradually onlend the domestic currency equivalent of the SDR amount to the government budget in exchange for long-term debt. According to the central bank “the [SDR] allocation represents a very positive element for the Haitian economy because it will ease pressure on the central bank’s foreign exchange reserves and it will allow the creation of some fiscal space to face the challenges of the health crisis and the peoples’ hardship after the August 14, 2021 earthquake and the tropical storm Grace.”

Argentina

$1869.2 million decline (43.4 percent reduction of its recent allocation)

The Argentine government used the SDRs for a complex set of operations that helped alleviate its external position marked by its existing IMF debt. It was decreed the SDRs belong to the government’s current budget, not the central bank. Then, the government sold the SDRs to the central bank, for pesos. The government used the pesos to prepay previous central bank financing. The government then borrowed the SDRs from the central bank to pay part of its 2021 obligations to the IMF. The Argentine Minister of Finance has announced it will pay its December obligations with the SDRs recently allocated: “Argentina’s Central Bank paid the maturity with special drawing rights (SDRs) received by the country last month, two sources told the Bloomberg news agency.

Other notable accounts:

  • Somalia. $51.6 million decline (23.3 percent reduction of its recent allocation)
  • Zimbabwe. $70.4 million decline (7.4 percent reduction)

IMF Data: SDR accounts with large increases

These countries likely exchanged or issued hard currencies for SDRs. Alternatively, they could have accepted SDRs as payment for previous loans.

In September, countries with Voluntary Trading Arrangements collectively purchased $5.8 billion in SDRs.[1]

  • China. $995 million increase 
  • Japan. $976 million increase
  • United Kingdom. $706 million increase
  • Belgium. $596 million increase
  • Australia. $579 million increase
  • The Netherlands. $322 million increase
  • Italy. $293 million increase
  • Korea. $282 million increase
  • Spain. $227 million increase
  • Sweden. $211 million increase
  • Mexico. $211 million increase
  • France. $154 million increase
  • Chile. $141 million increase
  • New Zealand. $70 million increase
  • Switzerland. $52 million increase

The participating countries’ total holdings of SDRs was worth $348 billion. They increased their total SDR holdings by 1.7 percent.

In addition, the European Central Bank increased its SDR holdings by $282 million, a major increase in its SDR holdings. The ECB is a prescribed holder; it did not receive a direct allocation from the IMF. 

IMF General Resources Account

$1875.4 million increase in its SDR holdings in September

The IMF received a significant payment from Argentina (see above). The IMF’s SDR holdings increased slightly over the amount that Argentina’s decreased. It is important to remember that no SDRs are allocated to the IMF; its holdings increase primarily due to loan repayments. 


Countries to Watch

Apart from the IMF data, reporting on — or statements from — countries may give information on the use, or future use, of SDRs. It may also highlight the domestic use of SDRs, which would not appear as transactions in the IMF data. These are countries to watch in future months.


[1] The IMF has reached Voluntary Trading Arrangements (VTA) for SDRs with several entities: Australia, China, Japan, Korea, New Zealand; the European Central Bank, Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Malta, the Netherlands, Norway, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom; Canada, Chile, Mexico, United States; and Saudi Arabia. Therefore, these countries will likely show increases in their holdings to fulfill the requests of those countries whose holdings have decreased. Conversely, countries not on this list with increases in SDR holdings are candidates for other types of transactions.

The October SDR amounts are very similar and are round numbers for many of the VTA countries; it appears those are proactively requested by the IMF SDR department. From these data, It appears Oman may be a prospective or a new VTA partner.

Two years ago, the streets of Santiago, Chile were overrun by tear gas, fire, and armored military vehicles. The clash between peaceful protesters and armed forces evoked memories of the violent oppression under former dictator Augusto Pinochet. What began as a protest against a $0.04 price hike in subway fares turned into a mass movement against inequality, referred to as the “Estallido Social” (Social Outburst). Fed up with Pinochet-era neoliberalism that had deprived Chileans of educational opportunities, fair access to water, and health care, protesters demanded a complete overhaul of the system. After months of demonstrations, their calls finally came to fruition when the government agreed to a referendum in October 2020 on whether to rewrite the constitution, which was subsequently approved by an overwhelming 78% of voters. 

With the first round of presidential elections this Sunday, November 21, it is imperative to consider the historical implications of the current constitution and the structural changes a new constitution could bring to the very topics that candidates are currently debating. If approved, a new constitution would be put into place under the incoming administration. Moreover, the next president could threaten the autonomy of the Constitutional Convention (CC), the body responsible for rewriting the constitution, and potentially influence its agenda.  

Augusto Pinochet’s Economic Legacy 

The protesters’ grievances, and the push for a new constitution, were rooted in the legacy of Chile’s military dictatorship. In 1973, Chile’s democratically elected socialist president Salvador Allende was overthrown in a violent US-backed coup led by Pinochet. Shortly after, Pinochet ordered the drafting of a new constitution that embodied his views for Chile’s future. In 1980, the new constitution was ratified after a questionable plebiscite that “did not have electoral records,” as EFE notes. 

The new constitution was heavily influenced by the economic philosophy of neoliberal pioneers Friedrich Hayek, Milton Friedman, and James Buchanan. They viewed the constitution as a necessary means to “limit sovereign states, anchor economic freedoms and protect markets from democratic pressures for greater equality” to institutionalize and uphold their neoliberal agenda. Hayek even dubbed Chile as “one of the great economic miracles of our time.” The millions who drew the short end of the privatization stick saw this as anything but a miracle. 

Some historians of Chile’s economy separate the Pinochet era into, roughly, two periods: 1973–1982, and 1982–1990. In the former, the “Chicago Boys,” a group of Chilean economists educated at the University of Chicago under Milton Friedman and Arnold Harberger, rolled out neoliberal reforms — privatization, deregulation, and decreased government spending. A subsequent economic crisis in 1982 forced the military dictatorship to renationalize (temporarily) the Chilean banking system, reverse various liberalization reforms, and reintroduce regulations in the financial sector. By 1990, GDP per capita recovered to $2,494.527, nearly reaching the same levels as in 1981, $2,979.608. It wasn’t until after the nation’s transition to democracy in the 1990s that center-left governments began to implement tax reforms and social programs to reduce unemployment and poverty. 

Even with these reforms, Chile remains one of the most unequal countries among wealthy nations, where “the income of the richest [is] 13.6 times greater than those of the poorest.” Ultimately, the 1980 constitution provided the foundation for policies that prioritized business interests over the well-being and health of Chile’s citizens. Rewriting the constitution has been an ongoing battle for Chileans. In her 2013 presidential bid, former President Michelle Bachelet campaigned on the promise of a new constitution and unsuccessfully pushed legislation to initiate the process of a rewrite just five days before she left office in 2018. Failed attempts and growing inequality led Chileans to take to the streets in 2019. It was both an “awakening” and continued fight against deep-rooted ideologies and policies that were never intended to benefit the majority of Chileans.

The Referendum and Constitutional Convention 

In an attempt to quell the protests, Chile’s right-wing president, Sebastian Piñera, sent in the military and reversed the subway price increase, along with promising higher pensions, better health care coverage, and tax reform. But Chileans weren’t convinced that another round of patchy social programs and empty promises would address their needs. To appease protesters, the Piñera administration agreed to hold a referendum. It asked the Chilean people two questions: Do you want a new constitution? And if yes, who should write it: a combination of parliament members and popularly elected members, or exclusively popularly elected members?

An overwhelming 78 percent of Chileans who participated in the referendum voted “yes” to drafting a new constitution, and 79 percent wanted an exclusively popularly elected body to do it. The Constitutional Convention (CC), responsible for drafting the new constitution, is made up of 155 members, with an equal number of men and women, and with 17 seats reserved for Indigenous peoples. While there is much work to be done, ensuring Indigenous representation and gender parity was a step in the right direction for the CC, especially as the current constitution is the only one in Latin America that does not recognize Indigenous peoples.

The Piñera administration declared the CC would need a two-thirds majority to approve any new constitutional articles. In an astonishing victory, independent, anti-elite, and left-leaning candidates won a majority of seats in the Convention, defeating members of Piñera’s Chile Vamos party and the center-right coalition who ended up with only 37 out of 155 seats. 

The CC convened in July and will have nine months to rewrite the constitution, with a three-month extension period if needed. Chileans will then vote to approve or reject the new constitution in an “exit referendum.” If approved, the new constitution will be put into effect immediately; if rejected, the current constitution will remain. Critics of the CC argue the constitution has transformed over the years, making it distinct from its ties to the military dictatorship, but proponents claim much of the document is intact and must be rewritten to truly address the demands of protesters.

Impact of the 1980 Constitution

The independent, antiestablishment CC members have wide-ranging goals, shaped by their understanding of how the 1980 constitution continues to impact Chilean society and stifle progressive reforms. The 1980 constitution consolidated the power of the president, strengthened the civil-military relationship, restricted political freedoms, and established a new neoliberal social and economic order by giving the state a subsidiary role and enabling private entities to take control of essential industries — including education, health care, and water. 

According to Martín Arias-Loyola, the current constitution equates “freedom with private property, free enterprise and individual rights,” resulting in the privatization of education, health care, water, and the pension system, among a multitude of other sectors. Chilean political scientist Claudia Heiss explains that the constitution does this by guaranteeing citizens “freedoms” rather than “rights.” Chileans have the “freedom” to health care and higher education, but rights to these are not guaranteed under the constitution. In short: if you can pay, the privilege is all yours. The grievances of the Estallido Social and previous student, Indigenous, and feminist-led protests boil down to one main demand: social protection. Instead of overhauling the status quo in order to guarantee such protection, past governments only implemented ad hoc social programs and policies to address the system’s failings. 

Beyond the content of the text, the constitution was designed to be difficult to change. Conservative constitutional lawyer Jaime Guzmán played a role in ensuring that the right wing had the power to prevent any major reforms, thus maintaining the status quo that Pinochet wanted to uphold. Guzmán states the constitution “must ensure that if the adversaries come to govern, they are constrained to follow an action not so different from what one would hope for …” In an attempt to neutralize adversaries, any changes to the constitution had to be made by more than a majority, giving the right wing veto power. While Heiss hopes to see both the dogmatic (i.e., pertaining to rights) and the organic (i.e., distribution of power) sections of the constitution addressed in the rewriting, she argues that more attention should focus on changing the organic parts to rework the distribution of power.

Changes to the 1980 Constitution

While the constitution has undergone many reforms since Chile’s return to democracy in 1990, Contexto, a group of organizations analyzing and encouraging public participation in the constitutional process, finds that at least 43 percent of the constitution remains the same as the 1980 version. The most harmful legacies of the 1980 constitution pertain to education, health care, water rights, transportation, reproductive rights, the pension system, and police reform. New policies in all these areas were implemented in accordance with the 1980 constitution. 

For example, prior to Pinochet, Chile had a state-run centralized education system. Pinochet decentralized the system by giving municipalities control, created new rules for funding public education, and imposed further deregulation, resulting in a 50 percent increase in private schools financed with public funds between 1980 and 1990. The privatization and segregation of education resulted in a massive opportunity gap for primary and secondary school students. Higher education also became a for-profit industry, attainable almost exclusively for wealthy families who can afford to send their children to private universities or to receive high quality primary and secondary education, which can set them up for acceptance into academically competitive public universities.

Another legacy rooted in the 1980 constitution is the denial of reproductive rights. Guzmán drafted a “right-to-life clause” in the 1980 constitution, and helped pass legislation in 1989 that effectively banned abortion. A landmark ruling in 2017 “decriminalized abortion under three circumstances: if the life of the pregnant woman or girl is at risk; if the pregnancy is the result of rape; or if the fetus suffers severe conditions not compatible with life outside of the womb.” However, there is still a concession that allows doctors to deny patients abortion services on moral grounds, with the exception of life-threatening cases. While commendable, it is only a small step toward securing reproductive rights in Chile.

Some critics of the CC argue the constitution has been substantially modified over the past 40 years. In 2005, President Ricardo Lagos declared that after 54 modifications to the constitution, Chile had broken from the military dictatorship and would no longer follow a document that divides the Chilean people. Some positive changes include declaring “men and women are equal before the law” (No.2); guaranteed state legal representation for defendants (No.3); guarantees of political pluralism (No.15); and increases in the right to primary and secondary education (No.10). While these and other changes influenced the state’s role and provided a degree of greater social protection, there are 16 rights that remain the same in relation to the “moral life of citizens and economic development,” as Contexto describes it.

Regardless of the modifications, the real-world impacts and social relations established by the constitution continue to dominate Chilean society long after its transition from dictatorship to democracy in the 1990s. Jonathan Barton argues the authoritarian capitalist state became a democratic capitalist state, maintaining Pinochet’s vision of Chile as emulated in his constitution. In other words, regime change did not include structural economic change. Neoliberalism’s beneficiaries kept control of the means of production, and with inadequate state-provided social protection, Chile continues to be one of the most unequal countries in the region. Chile’s institutions and established social relations kept the Pinochet-era constitution — and neoliberalism — alive, despite some tweaks.

Objectives of the Constitutional Convention 

Despite the modifications made over the years, the constitution has failed to meet the demands of most Chileans. The CC’s left-leaning members are pushing for “ending the subsidiary role of the state, overcoming the extractivist economy, recovering lands for native peoples, plurinationality, recovering labor rights, establishing food sovereignty, changing the pension system and establishing the right to quality public education, among other issues.” The minority of right-wing members from Vamos por Chile, hope to uphold the status quo of a private sector-dominated economy and the “freedoms” outlined in the current constitution. This includes protecting the freedoms of private economic activity and maintaining the central bank’s autonomy.  

However, the CC is not composed of two distinct, cohesive left and right blocs. There are idiosyncratic coalitions and independents, and constant shifting, of both “left” and “right” blocs, that has resulted in no one coalition having a supermajority. The most contentious divides within and among the various blocs include changes to private land, water rights, education, and the pension system. 

What’s next for Chile?

It is unclear yet what this all means for Chile, for the region, for women, for Indigenous peoples, and for other marginalized groups. Some warn that the CC already is not living up to progressives’ expectations. While the popular demand for rewriting the constitution in itself debunks the Chilean neoliberal “miracle,” the success of a new constitution would play a crucial role in fundamentally challenging the status quo. If successful, Chile would no longer have to work within the constraints of the current economic order, and could reimagine a new social formation that promotes collective values and secures rights to education, health care, and water, among others. This reimagining could offer momentum for other countries to follow suit, as already seen in the new constitutions of Bolivia and Ecuador that prioritized Indigenous rights over a decade ago. In addition, the process by which the CC was created can act as a model for other countries to fairly and justly rewrite their constitutions, namely by ensuring gender parity and Indigenous representation in the constituent assemblies.

Without downplaying its importance, the constitution would not, of course, be a panacea to Chile’s deeply entrenched social divisions, racism, sexism, and inequity. The established social relations and geographic divides among the winners and losers of economic growth persist. Constitutional changes must be accompanied by behavioral change and new legislation to provide social protections and wealth redistribution. Therefore, the winner of Sunday’s presidential elections — and the subsequent second round between the top two candidates, scheduled for December 19 — will largely determine how impactful a new constitution could be, as it would be enacted during their time in office. Moreover, the CC’s autonomous status will be put under political pressure with a new president, potentially derailing or uplifting its goals. While a new constitution’s historic impact would not be known for years to come, the 2019 Estallido Social protesters have undeniably left their mark on Chile, and signaled to the world their determination to overhaul a system that institutionalized economic disparities. 

Two years ago, the streets of Santiago, Chile were overrun by tear gas, fire, and armored military vehicles. The clash between peaceful protesters and armed forces evoked memories of the violent oppression under former dictator Augusto Pinochet. What began as a protest against a $0.04 price hike in subway fares turned into a mass movement against inequality, referred to as the “Estallido Social” (Social Outburst). Fed up with Pinochet-era neoliberalism that had deprived Chileans of educational opportunities, fair access to water, and health care, protesters demanded a complete overhaul of the system. After months of demonstrations, their calls finally came to fruition when the government agreed to a referendum in October 2020 on whether to rewrite the constitution, which was subsequently approved by an overwhelming 78% of voters. 

With the first round of presidential elections this Sunday, November 21, it is imperative to consider the historical implications of the current constitution and the structural changes a new constitution could bring to the very topics that candidates are currently debating. If approved, a new constitution would be put into place under the incoming administration. Moreover, the next president could threaten the autonomy of the Constitutional Convention (CC), the body responsible for rewriting the constitution, and potentially influence its agenda.  

Augusto Pinochet’s Economic Legacy 

The protesters’ grievances, and the push for a new constitution, were rooted in the legacy of Chile’s military dictatorship. In 1973, Chile’s democratically elected socialist president Salvador Allende was overthrown in a violent US-backed coup led by Pinochet. Shortly after, Pinochet ordered the drafting of a new constitution that embodied his views for Chile’s future. In 1980, the new constitution was ratified after a questionable plebiscite that “did not have electoral records,” as EFE notes. 

The new constitution was heavily influenced by the economic philosophy of neoliberal pioneers Friedrich Hayek, Milton Friedman, and James Buchanan. They viewed the constitution as a necessary means to “limit sovereign states, anchor economic freedoms and protect markets from democratic pressures for greater equality” to institutionalize and uphold their neoliberal agenda. Hayek even dubbed Chile as “one of the great economic miracles of our time.” The millions who drew the short end of the privatization stick saw this as anything but a miracle. 

Some historians of Chile’s economy separate the Pinochet era into, roughly, two periods: 1973–1982, and 1982–1990. In the former, the “Chicago Boys,” a group of Chilean economists educated at the University of Chicago under Milton Friedman and Arnold Harberger, rolled out neoliberal reforms — privatization, deregulation, and decreased government spending. A subsequent economic crisis in 1982 forced the military dictatorship to renationalize (temporarily) the Chilean banking system, reverse various liberalization reforms, and reintroduce regulations in the financial sector. By 1990, GDP per capita recovered to $2,494.527, nearly reaching the same levels as in 1981, $2,979.608. It wasn’t until after the nation’s transition to democracy in the 1990s that center-left governments began to implement tax reforms and social programs to reduce unemployment and poverty. 

Even with these reforms, Chile remains one of the most unequal countries among wealthy nations, where “the income of the richest [is] 13.6 times greater than those of the poorest.” Ultimately, the 1980 constitution provided the foundation for policies that prioritized business interests over the well-being and health of Chile’s citizens. Rewriting the constitution has been an ongoing battle for Chileans. In her 2013 presidential bid, former President Michelle Bachelet campaigned on the promise of a new constitution and unsuccessfully pushed legislation to initiate the process of a rewrite just five days before she left office in 2018. Failed attempts and growing inequality led Chileans to take to the streets in 2019. It was both an “awakening” and continued fight against deep-rooted ideologies and policies that were never intended to benefit the majority of Chileans.

The Referendum and Constitutional Convention 

In an attempt to quell the protests, Chile’s right-wing president, Sebastian Piñera, sent in the military and reversed the subway price increase, along with promising higher pensions, better health care coverage, and tax reform. But Chileans weren’t convinced that another round of patchy social programs and empty promises would address their needs. To appease protesters, the Piñera administration agreed to hold a referendum. It asked the Chilean people two questions: Do you want a new constitution? And if yes, who should write it: a combination of parliament members and popularly elected members, or exclusively popularly elected members?

An overwhelming 78 percent of Chileans who participated in the referendum voted “yes” to drafting a new constitution, and 79 percent wanted an exclusively popularly elected body to do it. The Constitutional Convention (CC), responsible for drafting the new constitution, is made up of 155 members, with an equal number of men and women, and with 17 seats reserved for Indigenous peoples. While there is much work to be done, ensuring Indigenous representation and gender parity was a step in the right direction for the CC, especially as the current constitution is the only one in Latin America that does not recognize Indigenous peoples.

The Piñera administration declared the CC would need a two-thirds majority to approve any new constitutional articles. In an astonishing victory, independent, anti-elite, and left-leaning candidates won a majority of seats in the Convention, defeating members of Piñera’s Chile Vamos party and the center-right coalition who ended up with only 37 out of 155 seats. 

The CC convened in July and will have nine months to rewrite the constitution, with a three-month extension period if needed. Chileans will then vote to approve or reject the new constitution in an “exit referendum.” If approved, the new constitution will be put into effect immediately; if rejected, the current constitution will remain. Critics of the CC argue the constitution has transformed over the years, making it distinct from its ties to the military dictatorship, but proponents claim much of the document is intact and must be rewritten to truly address the demands of protesters.

Impact of the 1980 Constitution

The independent, antiestablishment CC members have wide-ranging goals, shaped by their understanding of how the 1980 constitution continues to impact Chilean society and stifle progressive reforms. The 1980 constitution consolidated the power of the president, strengthened the civil-military relationship, restricted political freedoms, and established a new neoliberal social and economic order by giving the state a subsidiary role and enabling private entities to take control of essential industries — including education, health care, and water. 

According to Martín Arias-Loyola, the current constitution equates “freedom with private property, free enterprise and individual rights,” resulting in the privatization of education, health care, water, and the pension system, among a multitude of other sectors. Chilean political scientist Claudia Heiss explains that the constitution does this by guaranteeing citizens “freedoms” rather than “rights.” Chileans have the “freedom” to health care and higher education, but rights to these are not guaranteed under the constitution. In short: if you can pay, the privilege is all yours. The grievances of the Estallido Social and previous student, Indigenous, and feminist-led protests boil down to one main demand: social protection. Instead of overhauling the status quo in order to guarantee such protection, past governments only implemented ad hoc social programs and policies to address the system’s failings. 

Beyond the content of the text, the constitution was designed to be difficult to change. Conservative constitutional lawyer Jaime Guzmán played a role in ensuring that the right wing had the power to prevent any major reforms, thus maintaining the status quo that Pinochet wanted to uphold. Guzmán states the constitution “must ensure that if the adversaries come to govern, they are constrained to follow an action not so different from what one would hope for …” In an attempt to neutralize adversaries, any changes to the constitution had to be made by more than a majority, giving the right wing veto power. While Heiss hopes to see both the dogmatic (i.e., pertaining to rights) and the organic (i.e., distribution of power) sections of the constitution addressed in the rewriting, she argues that more attention should focus on changing the organic parts to rework the distribution of power.

Changes to the 1980 Constitution

While the constitution has undergone many reforms since Chile’s return to democracy in 1990, Contexto, a group of organizations analyzing and encouraging public participation in the constitutional process, finds that at least 43 percent of the constitution remains the same as the 1980 version. The most harmful legacies of the 1980 constitution pertain to education, health care, water rights, transportation, reproductive rights, the pension system, and police reform. New policies in all these areas were implemented in accordance with the 1980 constitution. 

For example, prior to Pinochet, Chile had a state-run centralized education system. Pinochet decentralized the system by giving municipalities control, created new rules for funding public education, and imposed further deregulation, resulting in a 50 percent increase in private schools financed with public funds between 1980 and 1990. The privatization and segregation of education resulted in a massive opportunity gap for primary and secondary school students. Higher education also became a for-profit industry, attainable almost exclusively for wealthy families who can afford to send their children to private universities or to receive high quality primary and secondary education, which can set them up for acceptance into academically competitive public universities.

Another legacy rooted in the 1980 constitution is the denial of reproductive rights. Guzmán drafted a “right-to-life clause” in the 1980 constitution, and helped pass legislation in 1989 that effectively banned abortion. A landmark ruling in 2017 “decriminalized abortion under three circumstances: if the life of the pregnant woman or girl is at risk; if the pregnancy is the result of rape; or if the fetus suffers severe conditions not compatible with life outside of the womb.” However, there is still a concession that allows doctors to deny patients abortion services on moral grounds, with the exception of life-threatening cases. While commendable, it is only a small step toward securing reproductive rights in Chile.

Some critics of the CC argue the constitution has been substantially modified over the past 40 years. In 2005, President Ricardo Lagos declared that after 54 modifications to the constitution, Chile had broken from the military dictatorship and would no longer follow a document that divides the Chilean people. Some positive changes include declaring “men and women are equal before the law” (No.2); guaranteed state legal representation for defendants (No.3); guarantees of political pluralism (No.15); and increases in the right to primary and secondary education (No.10). While these and other changes influenced the state’s role and provided a degree of greater social protection, there are 16 rights that remain the same in relation to the “moral life of citizens and economic development,” as Contexto describes it.

Regardless of the modifications, the real-world impacts and social relations established by the constitution continue to dominate Chilean society long after its transition from dictatorship to democracy in the 1990s. Jonathan Barton argues the authoritarian capitalist state became a democratic capitalist state, maintaining Pinochet’s vision of Chile as emulated in his constitution. In other words, regime change did not include structural economic change. Neoliberalism’s beneficiaries kept control of the means of production, and with inadequate state-provided social protection, Chile continues to be one of the most unequal countries in the region. Chile’s institutions and established social relations kept the Pinochet-era constitution — and neoliberalism — alive, despite some tweaks.

Objectives of the Constitutional Convention 

Despite the modifications made over the years, the constitution has failed to meet the demands of most Chileans. The CC’s left-leaning members are pushing for “ending the subsidiary role of the state, overcoming the extractivist economy, recovering lands for native peoples, plurinationality, recovering labor rights, establishing food sovereignty, changing the pension system and establishing the right to quality public education, among other issues.” The minority of right-wing members from Vamos por Chile, hope to uphold the status quo of a private sector-dominated economy and the “freedoms” outlined in the current constitution. This includes protecting the freedoms of private economic activity and maintaining the central bank’s autonomy.  

However, the CC is not composed of two distinct, cohesive left and right blocs. There are idiosyncratic coalitions and independents, and constant shifting, of both “left” and “right” blocs, that has resulted in no one coalition having a supermajority. The most contentious divides within and among the various blocs include changes to private land, water rights, education, and the pension system. 

What’s next for Chile?

It is unclear yet what this all means for Chile, for the region, for women, for Indigenous peoples, and for other marginalized groups. Some warn that the CC already is not living up to progressives’ expectations. While the popular demand for rewriting the constitution in itself debunks the Chilean neoliberal “miracle,” the success of a new constitution would play a crucial role in fundamentally challenging the status quo. If successful, Chile would no longer have to work within the constraints of the current economic order, and could reimagine a new social formation that promotes collective values and secures rights to education, health care, and water, among others. This reimagining could offer momentum for other countries to follow suit, as already seen in the new constitutions of Bolivia and Ecuador that prioritized Indigenous rights over a decade ago. In addition, the process by which the CC was created can act as a model for other countries to fairly and justly rewrite their constitutions, namely by ensuring gender parity and Indigenous representation in the constituent assemblies.

Without downplaying its importance, the constitution would not, of course, be a panacea to Chile’s deeply entrenched social divisions, racism, sexism, and inequity. The established social relations and geographic divides among the winners and losers of economic growth persist. Constitutional changes must be accompanied by behavioral change and new legislation to provide social protections and wealth redistribution. Therefore, the winner of Sunday’s presidential elections — and the subsequent second round between the top two candidates, scheduled for December 19 — will largely determine how impactful a new constitution could be, as it would be enacted during their time in office. Moreover, the CC’s autonomous status will be put under political pressure with a new president, potentially derailing or uplifting its goals. While a new constitution’s historic impact would not be known for years to come, the 2019 Estallido Social protesters have undeniably left their mark on Chile, and signaled to the world their determination to overhaul a system that institutionalized economic disparities. 

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