Honduras Country Assistance Strategy

See below for the main points and documents of the current World Bank Country Assistance Strategy for Honduras.  The full documents are available on the top right side of this page, and the print version of the CAS is also available at the Public Information Center.

More information on the Country Assistance Strategies

COUNTRY ASSISTANCE STRATEGY APPROVED BY THE BOARD OF DIRECTORS

The World Bank’s Board of Directors approved a new Country Assistance Strategy (CAS) for Honduras, with IDA (zero-interest) financing likely to total $260 million (nearly Lps. 4,900 million) through the end of 2010. The four year strategy will be closely linked to performance on equitable economic growth and employment generation, good governance, environmental protection and risk management as well as the development of human capital in the areas of health, education and social protection.

“A key element of the new strategy strongly supports good governance across a broad front, focusing on reforms that build on past successes,” said Jane Armitage, World Bank Director for Central America. “We are delighted that the President Zelaya’s administration has made citizen participation a priority, which will greatly improve the performance of economic development and poverty reduction programs nation wide, particularly for poor people in rural areas.”

The key development challenges for Honduras, according to the new strategy which has been developed with the input of key stakeholders, are to accelerate its recent growth performance and to translate growth into poverty reduction. Four interventions are critical for accelerating growth: increased educational attainment; improved provision of economic infrastructure; development of financial markets; and improved governance.

The new strategy support’s the Government’s Poverty Reduction Strategy (PRS) through the support of a series of Poverty Reduction Support Credits (PRSCs). The Government is currently updating the PRS to reflect President Zelaya’s government program by giving greater attention to public sector transparency, employment generation, environmental protection and a strong emphasis on results across the public sector.

New Strategy Focuses on Results

Over the next four years, the scope and composition of the Bank’s financial support will be structured in line with performance. Key considerations in assessing performance include the sustainability of the Government of Honduras’ macro-economic framework and progress in improving governance, the quality of education and the performance of the electricity utility.

“The Bank’s assistance over the next four years will be will be determined by Honduras performance,” said Adrian Fozzard, World Bank Country Manager for Honduras. “The timing of financial support in relation to the budgetary support of PRSCs will be adjusted in line with progress in implementing the Government’s reform program. Should progress on reforms stall or the macro-economic situation deteriorate significantly, financing will be reallocated from the PRSC series to investment projects.”

Honduras’ accession to DR-CAFTA in April 2006 offers the opportunity to expand trade, boost investment and growth and make progress in poverty reduction. The new strategy highlights that poverty is particularly acute in rural areas and among indigenous groups, with about 74 percent of the poor and 86 percent of the extreme poor reside in rural areas, comprising approximately one-half of the national population.

The Impact of Debt Relief

On July 1, 2006, the World Bank canceled the International Development Association (IDA) debt of Honduras under the Multilateral Debt Relief Initiative (MDRI). Honduras will receive US$1.293 billion, which is the total amount of additional IDA debt relief provided under the MDRI and the IDA portion of debt relief already committed under the Heavily Indebted Poor Countries Initiative (HIPC). HIPC and MDRI have contributed to a significant decline in Honduras’ external debt, which is expected to remain sustainable over the medium-term if fiscal deficits and rates of growth are maintained at their current levels.

The World Bank’s current portfolio in Honduras comprises 17 active projects totaling $393.9 million in net commitments.

(Full text of CAS documents in PDF format at the top right side of this page)