US embassy cable - 05TEGUCIGALPA600

C O N F I D E N T I A L TEGUCIGALPA 000600 
 
SIPDIS 
 
STATE FOR WHA, WHA/CEN, INR/IAA, AND EB/IFD/OMA 
TREASURY FOR DDOUGLASS 
STATE PASS AID FOR LAC/CAM 
 
E.O. 12958: DECL: 03/17/2015 
TAGS: PGOV, ECON, EFIN, PREL, HO 
SUBJECT: HONDURAN LIBRAL PARTY PRESIDENTIAL CANDIDATE MEL 
ZELAYA SUPPORTS FULL IMPLEMENTATION OF CURRENT GOH 
AGREEMENT WITH IMF 
 
 
Classified By: Francisco L. Palmieri, reasons 1.4 (b) and (d). 
 
1.  (C) Summary:  Liberal Party presidential candidate Mel 
Zelaya gave his concurrence to the GOH's current IMF program 
in a "secret" meeting with IMF's Vice President Anoop Singh, 
President Ricard Maduro, and his National Party opponent 
President of Congress Pepe Lobo in Miami last week. Zelaya 
told PolCouns that, in doing so, he explicitly rejected 
pursuing any "populist" political posturing, so popular in 
other parts of Latin America.  Zelaya said he wanted to avoid 
creating populist expectations that could undercut his own 
mandate to govern once elected.  He also hopes, by signaling 
his support for current economic policy goals, he can 
reassure a suspicious private sector about their prospects 
under his government.  END SUMMARY. 
 
2.  (C) Liberal Party presidential candidate Mel Zelaya gave 
his concurrence to the GOH's current IMF program in a 
"secret" meeting with IMF's VP Anoop Singh, President Maduro, 
and his National Party opponent Pepe Lobo in Miami during the 
week of March 8-12.  Zelaya told PolCouns March 12 that, his 
reasons for giving his support to the current agreement were 
directly attributable to his agreement with the underlying 
economic reforms and policies it contains.  He said, since he 
expects to win the presidency in November, full 
implementation of the agreement during this election year 
would ensure that he would inherit a strong public sector 
balance sheet.  He wants a strong financial situation in 
place when he takes office.  He stressed that in return for 
his concurrence, the IMF and President Maduro committed to 
adhere strictly to the agreement's strict fiscal spending 
targets and avoid traditional election year spending booms. 
 
3.  (C)  Zelaya explained that (the debt forgiveness that 
accompanies reaching the completion point of the Highly 
Indebted Poor Countries (HIPC) initiative) completion was a 
critical national economic priority that transcended partisan 
politics.  He added that he explicitly rejected pursuing a 
"populist" political posturing, so popular in other parts of 
Latin America.  Zelaya said he wanted to avoid creating 
populist expectations that could undercut his own mandate to 
govern once elected.  He also stated that his own plans for 
spending to alleviate poverty and to improve education 
required a balance in GOH spending and revenue policies. 
Lastly, he said he wanted to send a message to the private 
sector that there would be economic policy continuity, when 
he is elected.  While avoiding specific details, he said his 
economic program would be consistent with the Maduro 
Government's current plans.  He added such continuity between 
presidential administrations would represent a significant 
economic planning accomplishment for Honduras. 
 
4.  (C)  Zelaya said he was not concerned about removing the 
IMF agreement as an issue in the upcoming political campaign. 
 He pointed out that he would still vigorously attack the 
current Nationalist government's economic policies on three 
fronts.  His key three issues will be "prices" (the high cost 
of living for Hondurans, especially the price of gasoline), 
taxes, and bureaucratic inefficiency.  He expects to let 
interest groups, such as teachers and transportation workers, 
lead the attack against the Nationalists. 
 
5.  (C)  Comment: Zelaya expects the IMF agreement's strict 
fiscal strictures to prevent the GOH from spending wildly in 
its final year in support of Pepe Lobo's campaign.  If 
adhered to, such restrained spending could limit his 
opponent's ability to "buy" support with government projects 
during the campaign.  Zelaya also hopes, by signaling his 
support for current economic policy goals, he can reassure 
the private sector about their prospects under his 
government.  He apparently believes that the current economic 
conditions still favor his campaign, which will ask the 
voters to throw out the Nationalists in favor of his Liberal 
party. End Comment. 
Palmer