Honduran Congress unanimously cancels special economic zones

A demonstrator waves a banner during a protest against Zones for Employment and Economic Development (ZEDE) and the government of Honduran President Juan Orlando Hernandez, in Tegucigalpa, Honduras September 15, 2021. REUTERS/Fredy Rodriguez

TEGUCIGALPA, April 21 (Reuters) – Honduras’s Congress unanimously repealed a law overnight that allowed the creation of special economic zones exempt from certain national laws and taxes across the country, called employment zones and economic development (ZEDE).

Lawmakers in the unicameral Congress said the law violated the Central American country’s constitution and sovereignty.

The so-called ZEDE law was passed in 2013, but was vigorously promoted under the administration of former President Juan Orlando Hernandez from 2014 to 2022 to encourage international investment and employment in Honduras, where more than 60% of the people live in poverty.

Hernandez was extradited to the United States on Thursday for drug trafficking and possession of weapons. Read more

The legislation was repealed at the behest of leftist President Xiomara Castro, who took office in January. During his campaign, Castro promised to push for the repeal of the law.

The chamber also passed a constitutional reform, to be ratified next year, abolishing the existing ZEDEs.

“These ZEDEs were backed by a legal system that was invalid from the start, unconstitutional, and what we did was give back to Honduras its sovereignty and its constitutional value,” Congress President Luis Redondo said on the nation’s congressional news channel.

The legislation gave the special economic zones administrative, fiscal, monetary and budgetary autonomy, as well as independent judicial bodies.

“Thank you! President (Congress) Luis Redondo, Fernando Garcia and members of Congress; for repealing the criminal #ZEDE and defeating those who tried to steal our sovereignty. This promise kept is another step towards refoundation”, Castro said in a post. on his Twitter account.

Reuters attempted to contact two companies that operate ZEDEs in Honduras, but they were not immediately available for comment.

Reporting by Gustavo Palencia, writing by Kylie Madry; Editing by Christian Schmollinger

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