Remittances, external dependence, and growing risks

• 1 in 4 Honduran households receives remittances (25%)Footnote 1^[1].
• They equal 30% of Honduras's GDP (over USD 12 billion), placing the country among the ten most remittance-dependent in the world and among the top recipients in Latin America — ahead of El Salvador (24%) and Guatemala (20%) (World Bank, 2025).
• They account for half of all foreign exchange entering the country, making them essential for maintaining exchange rate stability and financing imports (Banco Central de Honduras, 2025).

• Around 1 million Hondurans live in the United States, equivalent to 10% of the country's total population (Figure 2). Of these, more than half have irregular immigration status, representing 5% of all undocumented people in the United States (Migration Policy Institute, 2023)Footnote 3^[3].
• Honduran migrants in the United States send an average of $400 per remittance, making approximately 16 transfers per year (Orozco, 2025).
• Any measure that restricts the economic activity of Hondurans in the United States or reduces their income has direct effects on transfers to Honduras.

• More non-poor households receive remittances (25%) than poor households (22%).
• Yet these transfers represent a larger share of income in poor households that receive them: 31% compared to 19% in non-poor households (Figure 3).
• More than 75% of households that receive remittances use this income primarily for consumption (food, clothing, and household goods).Footnote 4^[4]

Between 2014 and 2019, remittances had a positive but limited effect on poverty reduction, mainly because most of these funds were received by households not classified as poor.Footnote 5^[5]

• The Center for Global Development estimates that the 1% remittance tax could reduce the annual flow to Honduras by USD 175 million.
• The law passed by the United States government sets specific identification requirements for the tax to apply. The 1% rate — reduced from the originally proposed 5% — exempts only those who send remittances through formal financial institutions or qualified providers, presenting a Social Security number or other valid identification document.
• By contrast, remittances sent in cash or via money orders or cashier's checks will be subject to the tax.
• This measure directly affects undocumented migrants who cannot meet these requirements because they cannot access bank accounts. While it does not involve a direct immigration check, it acts as an exclusionary filter for this group.
• Undocumented migrants could be pushed to resort to informal methods that are more expensive and less secure, which could reduce the flow of remittances to Honduras (Jacobstein and Mendrala, 2025).

• In June 2025, Honduras received USD 1,127 million in remittances, an increase of 49% compared to the same month the previous year — the largest growth recorded in the past three years (Figure 4).
• It is important to watch how the flow evolves in the coming months, particularly given the 1% tax taking effect in 2026 and a potential increase in deportations from the United States.
• This may result in a temporary increase in remittances. This could reflect many people seeking to send money in advance, taking advantage of the fact that the 1% tax and stricter identification requirements are not yet in force.

• While the 1% remittance tax adds a cost, the more significant risks stem from the economic and immigration environment facing Hondurans in the United States.
• An increase in deportations, adverse changes in immigration policy — such as the cancellation of Temporary Protected Status (TPS) — or a possible economic recession could reduce the presence of Hondurans in the United States and limit their capacity to earn income.
• A drop in remittances could produce a deficit in the foreign exchange balance and undermine the country's macroeconomic stability.

This highlights the need to diversify the economy and develop new sources of income and growth, reducing the country's high dependence on remittances.