US embassy cable - 04TEGUCIGALPA2531

UNCLAS TEGUCIGALPA 002531 
 
SIPDIS 
 
STATE PASS OPIC FOR JRIVERA-MONTES AND DERB 
 
E.O. 12958: N/A 
TAGS: EINV, ECON, HO 
SUBJECT: HONDURAS HOMES HOUSING PROJECT 
 
REF: SECSTATE 225570 
 
1. Reftel requests embassy comments and recommendations 
regarding the possibility of OPIC providing a $9.8 million 
direct loan to Honduras Homes, to construct 1,450 low-cost 
houses.   ZIP Buffalo is a maquila (light-assembly) operation 
active in Honduras.  Incohnsa Group and the Arguello family 
are well and favorably known to the USAID mission in 
Honduras, and it is therefore Post,s opinion that they are 
creditworthy and reliable business partners. 
 
2. The rapid growth of the light assembly and textiles 
industries in Honduras, and particularly in the Sula Valley 
between San Pedro Sula and Puerto Cortes, has led to 
localized labor shortages and consequently higher average 
wages and educational levels for workers.  This growth 
continues to draw immigrants from other parts of Honduras to 
the Sula Valley, putting increasing pressure on social 
services and basic infrastructure, including low-cost 
housing.  Addressing this issue is thus both a social and a 
business imperative, and would benefit both workers and 
employers.  The GOH has a fully-elaborated strategy for 
poverty reduction, including support for low-cost housing 
purchases.  Under the recent GOH agreement with the IMF, 
fiscal austerity is the rule, and resources are dear. 
However, in Post,s view, given low cost housing,s 
associated impact on poverty reduction and its direct support 
for continued growth in an economically vibrant sector, GOH 
support for low cost housing is likely to continue. 
 
PIERCE 
Pierce