This review examines the implementation of the FY07-10 Honduras Country Assistance Strategy (CAS), the FY08 CAS Progress Report (CASPR), the FY11 Interim Strategy Note (ISN), and evaluates the Country Assistance Completion Report (CASCR). The FY07-10 CAS was framed around four pillars. The objective under Pillar I was equitable growth for employment generation. This was to be achieved through the pursuit of a sustainable fiscal situation, strengthened competitiveness and effectiveness in the financial, energy, water and sanitation, telecoms, ports and roads sectors as well as the business environment, and increased rural incomes.
The objective under Pillar II was good governance through state modernization and civic participation. This was to be achieved through the pursuit of improved transparency and accountability in public spending, professionalization of key public sector functions and agencies, combating anti-competitive practices, decentralization, and improved access, efficiency and accountability in the judicial sector. The objective under Pillar III was environmental protection and risk management to be pursued through ensuring the viability of protected areas and reducing the impact of natural disasters. The objective under Pillar IV was development of human capital through improving the quality of basic education as well as the quality and coverage of basic health services, and strengthening social assistance and the capacity of Afro-Honduran and Indigenous groups to manage their development.
iii. The picture that emerges from this review of the Bank’s program in Honduras is that in a number of areas slow progress towards CAS objectives did take place, though often with delay: control of the public wage bill, access to water and sanitation, road maintenance, an integrated financial management system for the public sector, or disaster risk management. But in some major areas which are key for long term sustainable development, including fiscal sustainability through greater control of the public sector wage bill and of public subsidies, a professional civil service and improved education quality, limited or no progress was made. The picture could have been better if the strategy objectives had been adjusted properly to take into account the impact of the global financial crisis and the political turmoil on the implementation of the strategy. IEG rates the outcome of the program moderately unsatisfactory.
iv. IEG’s review of the results of the Bank’s program concludes that it is imperative that an effective dialogue with the government be maintained, building on recent progress. In Honduras there are major issues which have long been prime constraints to sustainable development yet have never been addressed effectively. They include, in particular, the fiscal burden of the public sector (especially teachers) wage bill and of energy sector subsidies, the lack of a professional civil service which, among others, impedes implementation of development programs, and the poor quality of education, which limits employment opportunities and thus also contributes to the growth of gangs and crime. In addition, IEG’s review concludes that CASPRs and ISNs are the opportunities to adjust the objectives of a strategy to what can realistically be expected when external shocks have a major impact on the strategy’s implementation and priorities. While, in the case of Honduras, the Bank was flexible and made an effort to adapt its strategy to changing country circumstances, especially with the ISN, objectives remained ambitious in light of the political economy of the country.
Document Date: 2011/11/22.Document Type: Country Assistance Strategy Document Number:65801.Volume No: 1 of 1
