Honduras.Country partnership strategy for the period FY07-FY11:IEG review

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

Honduras - Country partnership strategy for the period FY07 - FY11 : IEG reviewx

Honduras.Fiscal Emergency Recovery Development Policy Credit Program

One of the Honduran administration’s top objectives is to foster high economic growth. Putting the economy on a rapid and sustainable growth path will not be easy, but it is feasible. Action will be required on five fronts. First and foremost, a more conducive macroeconomic framework is necessary; in particular, redressing the large imbalances in Central Government finances and unresolved structural weaknesses in public pension funds and public sector enterprises. Second, an integrated citizen security strategy is necessary to tackle the increasing levels of crime and violence that are undermining the country’s growth potential and investment climate. Third, investments in infrastructures are needed to promote the country’s regional development. Fourth, poor governance negatively affects return rates of investment opportunities in Honduras. Finally, low levels of human capital are an important growth constraint. This operation will focus on addressing the first two areas; the rest are being supported by other Bank operations and activities.

2. The Government launched fiscal consolidation efforts in 2010 and has begun tackling the remaining risks to macroeconomic stability and unresolved structural weaknesses in public pension funds and public sector enterprises. To this end, the Government has already introduced measures to close the actuarial deficits of the main public pension institutes—Instituto Nacional de Previsión del Magisterio (INPREMA), which serves the private sector and public sector teachers, and Instituto Nacional de Jubilación y Pensiones de los Empleados Públicos (INJUPEMP), which covers Central Government civil servants.

Similarly, the Government has introduced measures to contain the wage bill and is implementing a strategy to strengthen tax administration.

3. President Lobo’s administration has begun to make significant efforts to fight crime and violence and promote citizen security; however, these efforts will require substantial implementation support in order to be sustained and to have a robust development impact over time. The Government has approved the National Citizen Security and Co-existence Policy 2011-2022, which provides a comprehensive and long-term approach to this challenge, with crime prevention as one of its main pillars. In addition, the Government has mandated the Security, Defense, and Governance Cabinet (Gabinete de Seguridad, Defensa y Gobernabilidad) to provide the intra-governmental coordination which is required to implement the policy. Moreover, Congress has approved legal reforms to secure new resources to finance activities to foster security, including those addressed in the citizen security policy framework.

4. This document describes a proposed First Programmatic Reducing Vulnerabilities For Growth Development Policy Credit (DPC) in the amount of SDR 55.1 million for the Republic of Honduras. The programmatic series, which includes one subsequent loan, is designed to assist the Government in strengthening fiscal management and in implementing an integrated citizen security policy. Specifically, the operation supports four areas that are central to the reform program: (i) tax administration, focused on improving taxpayer compliance; (ii) civil service reform, focused on the rationalization of the public
wage bill by delinking teachers’ salary adjustments from those reflected in the private sector’s minimum wage; (iii) pension reform, designed to lessen contingent fiscal vulnerabilities by reducing the public pension institutions’ actuarial deficits, and (iv) citizen security reform, focused on strengthening institutional coordination mechanisms and programs needed for an integrated violence prevention strategy . The reforms supported by this operation are expected to have a positive impact on poverty and inequality (see section VI).

5. The proposed operation is envisaged in the new Country Partnership Strategy covering the period FY2012-2014 (to be presented jointly with this operation to the Board of Executive Directors) and is closely aligned with other Bank operations. For example, the Improving Public Sector Performance Technical Assistance Loan (P110050, currently under preparation and expected to accompany this operation) provides support to strengthen public sector human resource management. In addition, a Japan Social Development Fund (JSDF) for Employment Generation in Poor Urban Neighborhoods will complement this operation.

World Bank. Document Date:  2011/11/03.Document Type:  Program Document.Report Number:55656.Volume No: 1 of 1

Honduras - Fiscal Emergency Recovery Development Policy Credit Program

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Honduras.Support to Trade and Investment Promotion

aThe competition to attract FDI and exports is placed very intense, and Honduras do not have the right tools to make the fight. Honduras suffers from a modern system of investment attraction and export promotion that allows you to compete effectively for resources with other countries within and outside the region and opportunities for FDI. Despite a major effort by FIDE, both in attracting investment and in export promotion, government initiatives have been isolated, with few levels of coordination, and without the institutional and regulatory sophistication demanded by the international competition in these ields.Sophisticated weapons are needed to re-enter the world.

After choosing a new democratic government has begun a transition toward economic recovery and better integration into global markets. It is essential to generate more speed and dynamism in the growth, and better tools to compete for FDI and increase exports at a time when the macro situation is not favorable.Despite internal and external crises, there are also great opportunities. Low international rates, excess liquidity in global markets and the need for companies in the developed world to reduce costs, encourage greater flows of FDI to lower cost locations with good access to markets. The promotion of investment and exports may act as anti-cyclical phenomenon to face the challenges. Nationally, as part of the response to the political crisis, has developed a National Plan that provides long-term guidance and establishes a set of initiatives to modernize the instruments available to the country to improve their position in the world.In March 2011, the Government of the Republic of Honduras, through the Ministry of Foreign Affairs, the National Program for the Promotion of Investments.

The program, based on the rational and sustainable use of the most significant potential in Honduras, there is a horizon of 3 years service and aims, among other impacts, attracting 4,500 million dollars in foreign direct investment and the creation of 350,000 jobs direct. In its early stages, the program will be conducted by the Ministry of Foreign Affairs (SRE), but given the multisectoral nature of it, has joined the Cabinet Sector Investment and Trade and the National

 Investment Council (CNI).IBD.HO-T1155: Support to Trade and Investment Promotion

Honduras.Country partnership strategy for the period FY2012-2014

Honduras is a lower middle income country with broad macroeconomic, governance, security and growth challenges. Human development challenges persist, particularly with regards to educational attainment, and a notable gender gap constitutes a developmental imperative. The country is still recovering from the effects of the 2008-2009 global economic crisis that negatively impacted the economy.

The 2012-2014 CPS will focus on three strategic areas. 1. Improving citizen security. The Bank's proposed strategy involves assisting the Government, within the Bank's mandate, with building its capacity to implement a multi-sectoral and integrated citizen security strategy at both the national and local levels. 2. Expanding opportunities through reducing vulnerabilities. This strategic objective defines both opportunities and vulnerabilities in an inclusive sense to comprise those of an economic, social, or climatic nature. 3. Enhancing good governance.

The Bank will continue to support the modernization of public sector management systems and expects to continue its work and contribute to results in several areas, including public financial management and service delivery through municipal and other decentralized structures.

World Bank.Document Date: 2011/11/011.Document Type:Country Assistance Strategy Document.Report Number: 63370.Volume No:1 of 1

Honduras - Country partnership strategy for the period FY2012-2014

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Honduras.Improving Public Sector Performance Project

The objectives of the Improving Public Sector Performance Project for Honduras are to strengthen the management of public finances and to establish a more efficient, effective and transparent public procurement system through: (i) upgrading the public financial management system; (ii) upgrading the e-procurement platform; (iii) enhancing the internal control systems over personnel expenditures; and (iv) building capacity of the central administration. There are five components to the project. The first component is strengthening and consolidating financial management systems.

The objective of this component is to upgrade the technological platform of the financial management system (SIAFI) and to strengthen its conceptual and functional framework in order to provide a more efficient processing and effective access to financial management information. The second component is to strengthening the public procurement system.

The objective of this component is to support the government's initiative to create a regulatory body with specific goals and objectives, thus strengthening overall governance in the public procurement system and to improve transparency and compliance. The third component is improving public sector human resource management. This component has the objective to improve human resource management (HRM) in the public sector through: (i) enhancing controls over personnel expenditures, and (ii) improving the attraction and retention of qualified personnel to gradually increase professionalization of the public service in selected institutions. The fourth component is strengthening government monitoring and evaluation capacity.

The objective of this component is to support the implementation and institutionalization of a results-based monitoring and evaluation system for two selected sector cabinets. The fifth component is project coordination.

World Bank.Document Date: 2011/11/01.Document Type: Project Appraisal Document.Report Number: 63307.Volume No:1 of 1

Honduras - Improving Public Sector Performance Project

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Honduras.Financing small rural producers and business units of high value chains

The project will support FUNDER in expanding its working capital and investment financing to small enterprises on financial terms they can afford

IDB.HO-S1021: Financing small rural producers and business units of high value chains in Honduras

Honduras.Inmediate Response Facility Program to emergency for heavy rains in 2011

Emergancy Response Program for the heavy rains occurred in October/2011. The program will finance rehabilitation of water systems and other public infrastructure

HO-L1086 : Inmediate Response Facility Program to emergency for heavy rains in 2011

Latin America.Anchor SMEs promoting production development in the BOP

El objetivo de este proyecto es fomentar la competitividad de los pequeños productores de la base de la pirámide a través del fortalecimiento de las cadenas productivas de pequeñas y medianas empresas (PYME) anclas en los sectores agrícolas, agroindustrial, manufactura y turismo de Bolivia, Nicaragua, Guatemala, Honduras, República Dominicana, Perú, Paraguay, El Salvador y Colombia.

 

A través de este proyecto se espera generar un efecto de demostración positivo en el acceso al financiamiento a largo plazo, el cual potencia el rol del sector de las PYME en las economías regionales como motor de generación de empleo formal, ingreso y aumento en la productividad de pequeños productores que pertenecen a la base de la pirámide y que hacen parte de sus cadenas de suministro y de producción.

 

Latin America.RG-L1040 : Anchor SMEs promoting production development in the BOP

 

Anchor SMEs promoting production development in the BOP

Honduras.Support Programe for Reform of Pension Institutions and the HHRR Management System

The general objective of the program is to help the country macroeconomic and fiscal stability take root through reforms that promote the long-term sustainability of pension institutions and control over unplanned growth of government employee salaries.

The specific objectives are to support efforts by the Government of Honduras to reform its pension institutions and to introduce improvements in systems for administrative and budgetary control over the central governments human resources so as to lay the groundwork for building a more equitable and sustainable pension system and for improving human resources management in the central government.

The program will be structured in three components: (i) macroeconomic stability; (ii) pension institution reform; and (iii) improvement in management of the central government human resources.

IDB, Honduras. HO-L1079 : Support Prog. for Reform of Pension Institutions and the HHRR Management System

Honduras.Strengthen the Financial Security Network and Improve Access to Financing

The program has three components: (i) macroeconomic stability; (ii) srengthening of the financialsafety net (FSN) through: (a) strengthening prudential regulation and supervision, (b) strengthening the other basic institutional elements of the FSN; (iii) improving access to financing, with the following subcomponents:

(a) promoting transparency of information and protection for financial service customers;

(b) improving the regulatory framework and the process for enforcing secured transactions; and

(c) institutional strengthening of the savings & loan cooperatives.

Honduras. HO-L1069:Strengthen the Financial Security Network and Improve Access to Financing

Honduras. Pico Bonito Sustainable Forests Project

After not reaching an agreement with the Project Entity (EcoLogic) to terminate the project with a recovery of the costs of project preparation, and based on a decision made by the  Bio Carbon Fun Participants in their last annual meeting, the Bank proceeded to terminate the project without recovery of preparation costs.

World Bank.Author: Segura Warnholtz,Gerardo. Document Date: 2011/11/17.Document Type: Implementation Status and Results Report. Report Number: ISR4412

Honduras. Pico Bonito Sustainable Forests Project

Honduras-First Programmatic Reducing Vulnerabilities for Growth Development Policy Credit Project

The development objective of the First Programmatic Reducing Vulnerabilities for Growth Development Policy Credit (DPC) for Honduras is to assist the government in strengthening fiscal management and institutional mechanisms and programs responsible for an integrated violence prevention strategy.

The DPC operation supports progress towards the Country Partnership Strategy objectives of expanding opportunities and reducing vulnerabilities and of improving citizen security. Specifically, the operation supports four areas that are central to the reform program:

(1) tax administration, focused on improving taxpayer compliance;

(2) civil service reform, focused on the rationalization of the public wage bill by delinking teachers’ salary adjustments from those reflected in the private sector's minimum wage;

(3) pension reform, designed to lessen contingent fiscal vulnerabilities by reducing the public pension institutions' actuarial deficits, and

(4) citizen security reform, focused on strengthening institutional coordination mechanisms and programs needed for an integrated violence prevention strategy . The reforms supported by this operation are expected to have a positive impact on poverty and inequality.

Document Date: 2011/11/03. Document Type:  Program Document. Report Number: 65556.Volume No:  1 of 1

Honduras-First Programmatic Reducing Vulnerabilities for Growth Development Policy Credit Project

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.

.....

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