One month in, can Honduras’s new president put the country on the path to lasting economic gains?
Bottom lines up front
- President Nasry Asfura’s early reforms signal a focus on fiscal austerity and economic competitiveness, sending positive signals to the private sector and to President Donald Trump, who backed Asfura during the campaign.
- The expansion of the Temporary Import Regime and steps to rejoin the World Bank’s International Centre for Settlement of Investment Disputes aim to strengthen the investment climate and support trade.
- Lasting gains will require structural reforms in trade, investment, and energy, and securing promised deals with Washington and Taiwan, alongside reducing crime.
Asfura’s narrow win
Nasry “Tito” Asfura was sworn in as Honduras’s president on January 27, following one of the country’s most contentious electoral cycles in years. The former mayor of Tegucigalpa won the November 2025 general election with 40.27 percent of the vote, a margin of less than 1 percentage point over Salvador Nasralla, the Liberal Party candidate.
Mirroring the pro-business approach that characterized his tenure as mayor of the country’s capital from 2014 to 2022, when he advanced 1,142 infrastructure projects, Asfura won with a platform emphasizing job creation and legal certainty for businesses. With about 60 percent of Hondurans living in poverty and more than 38 percent in extreme poverty, economic concerns were the main issue for voters. Against this backdrop, Asfura’s “Vamos a Estar Bien [We Are Going to Be OK]” campaign emphasized attracting national and international investment and reducing red tape for starting businesses, while also reforming social services and fighting corruption.
Endorsed by President Donald Trump in the final hours of the campaign, Asfura entered office with a commitment to strengthen cooperation with the United States on shared priorities, one of the pillars of his so-called “Five-Star Vision.” He also campaigned on broader shifts in foreign and commercial policy, including cutting ties with China, rebuilding relations with Taiwan, and strengthening engagement with Israel. In the days leading up to his inauguration, Asfura traveled to Washington to meet with Secretary of State Marco Rubio, as well as to Israel to engage with President Isaac Herzog and Prime Minister Benjamin Netanyahu.
More broadly, the first month of Asfura’s presidency has signaled a sharp departure from his predecessor’s ideological orientation. While former President Xiomara Castro’s LIBRE party pursued a progressive social agenda, including alignment with left-leaning regional partners, Asfura’s National Party is more conservative. The changes in ideology and aligned partners will likely reshape the direction of domestic policy debates, whether concerning education, social spending, or health.
A congress tilted toward traditional parties
In the November 2025 elections, Hondurans also elected all 128 members of the National Congress. In the new congress, Asfura’s National Party makes up the largest bloc with forty-nine seats, followed by the Liberal Party with forty-one and LIBRE with thirty-five. Smaller parties hold just three seats combined.
While no party holds an absolute majority of sixty-five seats, the National and Liberal Parties together control ninety, marking the legislature’s return to the more traditional two-party dynamic that dominated politics for decades prior to LIBRE’s 2021 victory. The legislature’s new makeup also marks a return to a more conservative agenda. The new configuration will generally allow the government to pass legislation without relying on LIBRE’s support, but negotiations between the National and Liberal Parties will still be essential. Tensions from the contested elections remain, with some legislators from the Liberal Party still demanding the verification of electoral results by independent or international entities. Differences over policy priorities and these lingering disputes could complicate efforts to move proposals forward. After such a contested election, translating campaign promises on the economy and social progress into tangible outcomes will be key for consolidating trust.
Early actions in office
Asfura’s governing style became visible within his first hours in office. He was sworn in during an austere ceremony, with no international guests in attendance. In his inaugural address, he framed his presidency’s focus on fiscal efficiency by reducing the size of the state and highlighted infrastructure, education, and health as priority areas. Reporting afterward noted that the government plans to cut or merge twenty institutions to optimize resources. That framing carried into the president’s first policy actions. He closed the inauguration ceremony by signing three bills into law that reflected broader efforts to reallocate public resources and prioritize economic activity. These included authorizing the sale of the presidential plane, broadening the presence of the National Autonomous University by opening new campuses in eight additional national departments, and expanding the Temporary Import Regime. Through this last measure, 125 additional companies will benefit from the duty-free import of inputs used for export-oriented production. The government argued this will lower costs for exporters, improve national competitiveness, and generate approximately forty-seven thousand additional jobs.
One day into the role, Asfura moved on health priorities, requesting that congress declare a national emergency to tackle surgical backlogs, which currently affect more than ten thousand patients, and to ensure the adequate supply and distribution of medicine.
On the international front, the administration initiated Honduras’s return to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), reversing the previous government’s 2024 withdrawal. This earlier decision came after investors in the Prospera special economic zone filed arbitration claims against the government following the National Congress’s 2022 attempt to repeal the 2013 Zones of Economic, Development, and Employment (ZEDE) law, which underpinned Prospera’s legal and operational framework. Castro’s move last year to withdraw from ICSID contributed to heightened investor concerns about legal certainty and access to dispute resolution mechanisms for companies operating in Honduras. Rejoining ICSID signals renewed adherence to international norms, an important first step toward attracting foreign capital and creating jobs.
Asfura’s early February meeting with Trump was another concrete step in advancing his foreign policy priorities. The Mar-a-Lago meeting reportedly focused on trade, investment, and security. In line with these priorities, Asfura has announced plans to pursue reciprocal trade negotiations with the United States to strengthen economic ties and attract investment. But the context has since shifted, with Trump now imposing global tariffs under Section 122 of the Trade Act of 1974 rather than under the International Emergency Economic Powers Act (IEEPA). The new legal justification could shift the objective of these engagements. Asfura is also one of a select few Latin American heads of state who will participate in the March 7 regional summit convened by Trump in Miami.
Opportunities ahead: How to turn early reforms into lasting gains
Asfura’s first reforms have sent positive signals to different stakeholders, including local and international investors and the US administration. The follow-through work will now be critical. To deliver on campaign promises and achieve results, Asfura needs to consider structural reforms on trade, investment, and energy, leveraging Honduras’s early engagement with the Trump administration and the possibility of renewed ties with Taiwan.
1. Shape the economic agenda with the United States beyond tariffs
The United States is Honduras’s largest trading partner, accounting for roughly 37 percent of its total trade. With the Supreme Court’s IEEPA ruling, Honduran exports to the United States—primarily textiles, coffee, and agricultural products—will continue to benefit from preferential access under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). As Washington continues to advance and sign reciprocal trade frameworks with partners across the region, Honduras could have an opportunity to reframe the bilateral US trade agenda beyond tariffs, focusing more on customs and trade facilitation, as well as long-standing labor concerns. Locking in a reciprocal trade deal would help Honduras address investment fundamentals and better weather US domestic trade volatility.
Asfura and US Trade Representative (USTR) Jamieson Greer already met and announced their intent to “launch negotiations as soon as possible.” The Asfura administration should expect Greer to seek commitments in areas that the United States has previously identified as constraints on US economic engagement, including the following:
- Reducing trade barriers: Since February 2023, exporters of US poultry products and rice (and onions starting in 2024) must complete an annual registration process andapply for import permits for each shipment. The process requires engaging with multiple Honduran government agencies and navigating numerous administrative steps, which can increase costs and delay shipments. These guidelines were introduced without advance notification or a phase-in period. Reducing duplication and clarifying procedures will be key to opening opportunities for US exporters.
- Improving labor standards and oversight: According to the US Bureau of Labor Statistics, Honduras made moderate progress in strengthening labor laws, especially those regarding child labor, in 2024 and 2025. Progress will likely remain slow because the relevant Honduran agencies lack both financial and human resources to effectively carry out their mandates, but it is important that the government continues advancing reforms. Demonstrating progress on freedom of association and collective bargaining, and guaranteeing acceptable working conditions and wages in priority sectors, will be important goalposts.
- Intellectual property (IP) enforcement: Honduras must reinforce the implementation of IP laws under CAFTA-DR, addressing concerns about the lack of border enforcement regarding the sale of counterfeit goods, online piracy, and cable signal piracy. Alignment and modernization of IP laws has issue in the new White House’s reciprocal trade frameworks with several partners in Latin America and the Caribbean (LAC).
With these priorities in mind, the government should start consultations with local private-sector actors and coordinate across relevant ministries to define commitments and ensure their timely implementation.
2. Explore targeted investment and trade deals with Taiwan
Until 2023, Honduras and Taiwan maintained a free trade agreement that was particularly important for Honduras’s shrimp sector, a key component of the country’s aquaculture industry. In 2022, for example, shrimp exports to Taiwan alone generated more than $105 million, accounting for roughly 30 percent of Honduras’s total shrimp exports, which represented the country’s fifth-largest export sector at the time.
As part of its new economic engagement with China, which followed the diplomatic switch from Taiwan in March 2023, Honduras sought to expand shrimp exports through the early harvest agreement. Producers hoped that access to China’s 1.4 billion consumers would increase demand. However, of the 250 containers initially projected for export, China purchased only one in 2024. At the same time, the loss of preferential access to Taiwan and the imposition of a 20-percent tariff led to a significant decline in export volumes to the sector’s main market, which fell to $25 million that same year, down from $51.7 million in 2023 and $105 million in 2022. It is safe to say that Honduran trade with China has been underwhelming.
Producers attempted to mitigate these losses by tapping into alternative destinations, including the European Union and Mexico. These markets, however, could only take in much smaller volumes at lower prices. As a result, total shrimp exports were 67 percent lower by 2025 compared to pre-diplomatic switch levels. This downturn also forced more than sixty companies, including two processing plants, to close, resulting in the loss of about fourteen thousand jobs.
Restoring relations with Taiwan could offer Honduras a pathway to rebuild the sector. Taiwan has a track record of providing targeted assistance and investment to its diplomatic partners, including support for aquaculture sectors in Fiji, Grenada, and Belize.
For Honduras, potential areas of support from Taiwan could include:
- aquaculture infrastructure, including processing facilities;
- technical cooperation programs to improve production and supply chain efficiency; and
- investment in complementary sectors such as transport logistics connecting key shrimp-producing departments, such as Choluteca and Valle, to major distribution hubs such as San Pedro Sula and Puerto Cortes, strengthening the sector’s competitiveness and export capacity.
Recently, Taiwanese business actors have expressed interest in restoring shrimp import levels to pre-2023 volumes. If Asfura moves forward with reestablishing relations with Taiwan, diplomatic engagements could be accompanied by trade missions that include representatives from the aquaculture sector. In parallel, consultations with producers and industry associations would help assess current production capacity and inform the design of a renewed trade framework supported by technical assistance and investment cooperation.
3. Reform the energy sector
During his Washington visit in late 2025, when he was still president-elect, Asfura emphasized the importance of attracting US capital into critical sectors such as energy. The cost and reliability of electricity are among the most significant constraints on Honduras’s investment climate. Energy reform should not be seen simply as a route to fiscal stabilization but as a key part of the country’s national competitiveness strategy.
The state-owned Empresa Nacional de Energía Eléctrica (ENEE) has been in financial and operational distress for years. As of early 2026, according to the new ENEE manager, ENEE carried an accumulated debt of more than $3 billion, including nearly $1 billion owed to private power generators. This high level of debt, combined with limited cash flow, has constrained the company’s ability to invest in critical improvements and maintenance of the energy sector.
Technical and non-technical losses in Honduras’s distribution system remain among the highest in Latin America, at roughly 40 percent. This means that more than one-third of generated electricity is either lost in transmission or goes unbilled. The country’s average industrial electricity tariff also ranks among the highest in Central America, directly undermining the competitiveness of its manufacturing and agro-industrial sectors.
To restore the sector’s stability, the government should work on a multi-layered strategy.
- Restructure ENEE’s debt while laying the groundwork for future growth and reforms: While debt restructuring is essential for short-term stabilization, long-term credibility will depend on institutional reform. Honduras should engage with multilateral banks and financial institutions to secure short-term financing and alleviate cash flow constraints. Prioritize clearing arrears with private generators to restore confidence and normalize commercial relationships. In parallel, ENEE’s new leadership should advance a restructuring of ENEE’s cash flow through transparent and competitive procurement processes. This would help ensure that future power purchases are contracted under market-based conditions that improve cost efficiency, reduce structural deficits, and avoid the accumulation of new payment arrears.
- Infrastructure investment for today: Upgrade generation and transmission systems to reduce losses and improve reliability. Public-private partnerships and international cooperation could support grid upgrades, including anti-theft measures such as automated meters. Other targeted projects, similar to the Inter-American Development Bank’s Remote Area Rural Electrification Program, could support efforts to ensure adequate supply in remote areas through mini-grids and solar systems. Investments in infrastructure will also be key if the country wants to attract data centers.
- Operational and governance reforms: To ensure reliable service and timely payments to generators, Honduras should strengthen billing and collection systems, enforce the legal framework to address non-payment and arrears, and improve ENEE’s operational capacity. In parallel, it should update existing laws to ensure the country’s regulatory framework is aligned with open and competitive market principles. Doing so would also strengthen energy-sector public institutions, provide legal certainty to investors, and establish predictable regulation that sends credible signals for long-term investment, while enabling lower electricity prices and security of supply.
4. Address crime to improve investor confidence
Honduras’s security environment remains a real, tangible constraint on investment, as noted by the 2024 update to the country guide published by the US Department of Commerce’s International Trade Administration. While homicide rates have declined from their peak earlier in the decade, the country still faces elevated levels of extortion, gang-related violence, and organized crime—all of which increase operating costs and deter both domestic and foreign investors. A 2022 World Bank “Country Private Sector Diagnostic” report also highlighted crime and insecurity as top obstacles for firms operating in Honduras.
Asfura has signaled a tough-on-crime posture, but the approach must go beyond policing. International experience suggests that sustained reductions in crime require institutional reform in the justice system, professionalization of security forces, and investment in violence prevention programs. For investors, predictability matters as much as headline security gains: clear and enforceable property rights, transparent permitting, and judicial processes that function without corruption are all part of the security equation.
The Honduran government should work with the United States to ensure that cooperation frameworks address both traditional security threats and the governance deficiencies that enable corruption and impunity. Strengthening the attorney general’s office and supporting anti-corruption institutions would reinforce the legal certainty message that Asfura’s early economic moves have tried to communicate.
Conclusion
Asfura has moved quickly to set the tone for four years in office. The early steps on fiscal discipline, trade openness, and alignment with Washington respond directly to Honduras’s most pressing economic realities. The expansion of the Temporary Import Regime, the move to rejoin ICSID, and the outreach to the Trump administration on trade, security, and broader cooperation are all positive signs. Turning these initial moves into lasting results will require technically sound reforms, particularly after a contested election. With favorable congressional alignment, international partners ready to engage, and a population eager for economic improvement, the administration has an opportunity to strengthen Honduras’s investment climate, support broader economic growth, and consolidate the country’s position as a reliable partner for Washington in the years ahead.
About the authors
Related reading
Explore the program
The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.
Image: Skyline of Tegucigalpa, the capital city of Honduras in Central America. Photo via Shutterstock.