Castro, flanked by her husband, former President Manuel Zelaya, and their children, was sworn in on Thursday at a packed open-air soccer stadium, her supporters dancing and shouting. She smiled broadly as the blue and white presidential sash was draped across her chest.
"The economic catastrophe that I'm inheriting is unparalleled in the history of our country," a sombre Castro said in her inaugural address, denouncing a sevenfold jump in debt under her two conservative predecessors.
She said it was "practically impossible" to make current debt payments without a restructuring.
The country's total debt stands at about $US15.5 billion ($A22 billion), or nearly 60 per cent of gross domestic product, an economic problem Castro frequently highlighted on the campaign trail ahead of her landslide election win in November.
"My government will not continue the maelstrom of looting that has condemned generations of young people to pay the debt they incurred behind their back," she added to thunderous applause.
She also vowed to give more than one million poor Hondurans free electricity, with bigger consumers subsidising the cost.
Minutes earlier, the crowd roared its approval after Harris, who has been tasked by President Joe Biden to lead US policy in Central America's impoverished Northern Triangle of countries, was introduced.Â
"Our relationship with Honduras is an important one," Harris wrote on Twitter earlier, adding that she would hold talks with Castro.
Harris' attendance is notable, as lower-ranking officials typically lead such US delegations.
US officials want to work with Castro to curb illegal immigration from Central America and shore up international support for Taiwan as part of its efforts to stem China's influence. Honduras is one of the few countries maintaining diplomatic ties with Taipei instead of Beijing.
Castro assumes office embroiled in a dispute with dissidents in her own party. Rival candidates have declared themselves head of Congress, undermining her ability to pass legislation.
Taiwanese Vice President William Lai also attended the inauguration in a bid to bolster ties with Honduras under Castro, who during her election campaign threatened to switch allegiance to Beijing if elected president.
Harris greeted Lai during the inauguration, a White House official said.
Luis Leon, director of the Netherlands Institute for Multiparty Democracy in Central America, said Harris' arrival is a boost for Castro in the dispute over control of Congress and in addressing Honduras' weak economy.
The US government acknowledges Beijing's position that Taiwan is part of its territory though it does not endorse this stance. The United States does not have formal diplomatic ties with Taiwan.
Harris has been tasked with addressing the "root causes" of Central America migration, but her trip comes as Biden's popularity at home has waned and his immigration strategy has stalled.
