World Bank. Honduras-Country partnership strategy for the period FY2012-2014

i.   Honduras is a lower middle income country with broad macroeconomic, governance,
       security and growth challenges. The country remains one of the poorest and most unequal
       countries in Latin America. About half of the population of Honduras is rural, 80 percent of
       which live in hillside areas practicing subsistence agriculture. The trend in poverty had been
       one of gradual decline; however, poverty in Honduras may have risen by more than 150,000
       people between 2009 and 2010 as a result of the economic contraction in 2009, before
       starting to fall again slowly as growth recovers. Human development challenges persist,
       particularly with regards to educational attainment, and a notable gender gap constitutes a
       developmental imperative. Honduras is also one of the most at-risk countries to natural
       hazards, and 1998‘s Hurricane Mitch and subsequent storms have periodically battered the
       national infrastructure.

ii.    On June 28, 2009, Honduras experienced a governance crisis when the Honduran
       Supreme Court ordered the removal of President Zelaya. Porfirio Lobo from the
       National Party won the November 2009 elections and, following a period of international
       reconciliation, Honduras‘ membership in the Organization of American States was restored.
       The 2009 political crisis should be considered in the context of broader unresolved national
       governance issues. Though Honduras has put forth several efforts in recent years aimed at
       improving governance, progress has been slow and uneven.

iii.   The country is still recovering from the effects of the 2008-2009 global economic crisis
       that negatively impacted the economy. The Honduran economy staged a moderate
       recovery in 2010, with exports and public investment being the key drivers of growth. The
       recovery was, however, accompanied by deterioration in the external balance and an increase
       in inflation. The Government is committed to fiscal consolidation efforts and reducing public
       sector vulnerabilities after the significant growth expenditures during the global crisis and the
       period before President Lobo‘s election.

iv.    Crime and violence is now one of the most important development challenges for
       Honduras and the government has prioritized citizen security as its top priority. At
       82.4 homicides per 100,000 inhabitants, in 2010 Honduras had the highest homicide rate in
       the world. Weak governance, low growth, and poor social outcomes have contributed to a
       more favorable environment for crime and violence that is attracting organized crime such as
       narco-trafficking and youth gangs. The impact of these external stresses has been amplified
       and exacerbated by the high prevalence of many of the risk factors that make individuals and
       communities vulnerable to violence, largely a result of the weak and fragmented social safety
       net system. The criminal justice system has been ineffective in its preventive, deterrence, or
       punitive roles, weakened by the corrupting influence of organized crime, and thus
       undermining good governance and the rule of law.

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Document Date:2011/11/01.Document Type:Country Assistance Strategy Document.Report Number: 63370.Volume No: 1 of 1.Country:Honduras. World Bank.Report No. 63370-HN.INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL FINANCE CORPORATION COUNTRY PARTNERSHIP STRATEGY FOR THE REPUBLIC OF HONDURAS FOR THE PERIOD FY2012-2014.November 1, 2011

 Honduras-Country partnership strategy for the period FY2012-2014