The peace pact signed by Nicaragua and Honduras on Dec. 10, 1937 ended the immediate threat of war over an old boundary dispute, but permanent settlement of the controversy, which has been the subject of mediation by a commission representing Costa Rica, Panama and the United States, has been further postponed. On Jan. 2 President Somoza announced that all Nicaraguan troops had been withdrawn from the Honduran frontier. The pact provided a truce in radio and press comments and in military preparations. Both countries have charged violations of the agreement on the part of the other. Honduras protested against the arrival in January of a shipment of modern armament, purchased by Nicaragua in Europe but prior to the pact with Honduras. In December it was Nicaragua's turn to protest to the boundary commission against the arrival of a shipment of arms for Honduras, although the agreement not to purchase arms for a six months' period had lapsed.
The budget for the fiscal year 1937-38 estimated receipts at 12,224,219 lempiras and expenditures at 11,811,628 lempiras.
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