Honduras' new government will not need to restructure debt, official says

By Gustavo Palencia

TEGUCIGALPA, Jan 28 (Reuters) - Honduran President Xiomara Castro's new government does not plan to restructure the country's massive debt burden and is in good shape to comply with scheduled payments, the economic development minister said on Friday.

Castro, speaking in her inaugural address on Thursday, vowed to fix the country's debt problems but said it would be "practically impossible" without a restructuring, noting debt jumped sevenfold under her two conservative predecessors.

Economic Development Minister Pedro Barquero said on Friday, however, that the administration would be able to come through on its obligations, even as he recognized problems with Honduras' public finances.

"We do not want to use a restructure or redesign. What we are going to do is better manage our liabilities," he said in a phone interview.

"We have spoken with international credit organizations and everyone is clear that the obligations will be paid."

The country's total debt stands at about $15.5 billion, or nearly 60% of gross domestic product, an economic problem Castro frequently highlighted ahead of her landslide victory in November.

About $7.3 billion is external debt, while $8.2 billion is internal.

"The country is not in default," Barquero added. "We are going to pay absolutely everything, including the bonds." (Reporting by Gustavo Palencia; Writing by Daina Beth Solomon; Editing by Sandra Maler)