Document of The World Bank FOR OFFICIAL USE ONLY Report No. 56405-HN INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL FINANCE CORPORATION INTERIM STRATEGY NOTE FOR THE REPUBLIC OF HONDURAS September 29, 2010 Central America Country Management Unit Latin America and Caribbean Region International Bank for Reconstruction and Development This document is being made publicly available prior to the Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's Policy on Access to Information. The date of the CAS Progress Report for Honduras was May 8, 2008 GOVERNMENT FISCAL YEAR January 1 ­ December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective as of March 8, 2010) Currency Unit Lempira US$1.00 18.86 ABBREVIATION AND ACRONYMS AAA Analytical and Advisory Activities BCH Central Bank of Honduras CABEI Central American Bank of Economic Integration CCT Conditional Cash Transfer CPS Country Partnership Strategy CEM Country Economic Memorandum CNBS National Banking and Insurance Commission CPI Consumer Price Index DPC Development Policy Credit DSA Debt Sustainability Analysis EFA Education For All ENDESA National Survey on Population and Health EU European Union FHIS Honduras Social Investment Fund FY Fiscal Year G16 Local Donor Group C-GAC Governance and Anticorruption Country GDP Gross Domestic Product GEF Global Environment Fund IDA International Development Association IDB Inter-American Development Bank IFC International Finance Corporation IGR Institutional and Governance Review INE National Statistics Institute IMF International Monetary Fund INT Institutional Integrity ISN Interim Strategy Note JSDF Japan Social Development Fund MCC Millennium Challenge Corporation MIGA Multilateral Investment Guarantee Agency MDRI Multilateral Debt Relief Initiative OP Operational Policy PER Public Expenditure Review PETS Public Expenditure Tracking Survey PIPS Integrated Social Protection Program PPIAF Public-Private Infrastructure Advisory Facility PRAF The Family Allowance Program (Programa de Asignacion Familiar) i PRS Poverty Reduction Strategy PRSC Poverty Reduction Support Credit PRS-TAC Poverty Reduction Strategy Technical Assistance Credit ROSC Report on the Observance of Standards and Codes SANAA Public Water & Sanitation Company SEFIN Ministry of Finance SBA Stand By Arrangement SEPA Procurement Planning System SIAFI Integrated Financial Management Information System SIDA Swedish International Development Cooperation Agency SINAP National Property Registration System SME Small- and Medium-Sized Enterprises TA Technical Assistance UNDP United Nations Development Program USAID United States Agency for International Development WBG World Bank Group WBI World Bank Institute WEF World Economic Forum WTO World Trade Organization ii HONDURAS INTERIM STRATEGY NOTE TABLE OF CONTENTS I. INTRODUCTION 1 II. COUNTRY CONTEXT 2 Political Developments .............................................................................................................. 2 Key Macro and Debt Developments ......................................................................................... 2 Poverty and Human Development............................................................................................. 5 III. HONDURAS - WORLD BANK PARTNERSHIP 8 IV. PROPOSED BANK GROUP INTERIM STRATEGY 9 (i) Macro stability and growth ............................................................................................... 10 (ii) Support for poverty reduction........................................................................................... 11 (iii) Support for efforts to improve governance and fight corruption ..................................... 11 (iv) Portfolio implementation .................................................................................................. 12 V. RISKS TO INTERIM STRATEGY 15 Tables Table 1. Honduras - Selected Economic Indicators .................................................................. 3 Table 2. Active World Bank Portfolio in Honduras .................................................................. 9 Table 3. Revised Bank Assistance Program for ISN period ................................................... 13 Annexes Annex 1. Revised CPS Results Matrix and Outcomes Achieved to Date ............................... 16 Annex 2 Honduras ISN: Revised Core CPS Outcomes .......................................................... 25 Annex 3 Honduras At a Glance .............................................................................................. 30 Annex 4 Selected Indicators of Portfolio Performance and Management .............................. 33 Annex 5 IDA Program Summary ............................................................................................. 34 Annex 6 IDA and Grants Operations Portfolio ........................................................................ 35 Annex 7 Summary of Non-Lending Services .......................................................................... 36 Annex 8 Honduras: IFC Investment Operations Program 2007-2010 .................................... 37 Annex 9 IFC Operations Portfolio ........................................................................................... 38 IBRD IFC Regional Vice President Pamela Cox Regional Vice President Thierry Tanoh Country Director Laura Frigenti Regional Director Paolo Martelli Task Managers Andrea Kucey Task Managers Edgar Restrepo Geoffrey Bergen John Barham HONDURAS INTERIM STRATEGY NOTE I. INTRODUCTION 1. This Interim Strategy Note (ISN) sets out a twelve month strategy to help the new administration in Honduras address urgent priorities and bridge the gap until a full Country Partnership Strategy (CPS) can be prepared. Since the CPS Progress Report (Report No.43244-HN) was discussed by the Board on June 10, 2008, political turmoil following the removal from power of President Manuel Zelaya on June 28, 2009, has negatively impacted the implementation of the World Bank Group (WBG) Program. With the arrival of a new democratically-elected government in November 2009, international partners have gradually resumed their programs and dialogue with the authorities. The Bank has engaged in an intensive dialogue with the Government on its development priorities. This ISN lays out the short-term WBG program for Honduras to bridge the gap until a full CPS incorporating the Government's medium-term priorities can be elaborated. The new CPS would also coincide with the first year of the IDA16 cycle providing greater clarity on availability of future IDA resources. 2. Honduras is in a difficult economic and social situation and in need of urgent support. Prior to June 2009, the economic situation was already complex due to the impact of the global economic downturn, and to macroeconomic imbalances that had emerged in the second half of 2008. As a result of these imbalances, the IMF was unable to complete the First Review of the Stand-by Arrangement that had been approved in early 2008. The situation was further complicated after June 28, 2009, as the international community reduced and/or paused its assistance to the country. Bank estimates indicate that the combination of these events may have resulted in an increase of poverty rates of about 2 percentage points during 2009. The authorities have reached an agreement with the IMF on an economic program geared at re-establishing macroeconomic stability, strengthening public finances, restoring investor confidence, and supporting economic recovery. In this regard, on October 1, 2010 the IMF Board approved blended 18-month arrangements supported under the Stand-by Credit Facility and the Stand-By Arrangement with total access of 100 percent of quota (about US$202 million). 3. The ISN has been prepared in parallel with a proposed Development Policy Credit (DPC) that supports the Government's efforts to address the economic and social crises. The Government has indicated that its immediate priorities are to restore macroeconomic stability and reignite growth, and address the needs of the poorest segments in society. The need to address macroeconomic imbalances appears to have some urgency given the economic uncertainty created by the fiscal situation (which has been assessed to be unsustainable both over the short and long run) inherited by the new administration and its negative impact on private investment. The proposed DPC has been prepared in close consultation with the IMF, the IDB and CABEI, as part of a coordinated multilateral effort to support the Government's efforts to bring the fiscal framework to a sustainable position. Taking into account recent IDA commitments in support of the Government's Conditional Cash Transfer (CCT) program, Bono 10,000, the DPC will 1 absorb the remainder of IDA funds allocated to Honduras until the end of the IDA 15 cycle. II. COUNTRY CONTEXT Political Developments 4. On June 28, 2009, the Honduran Supreme Court ordered the removal of President Zelaya following his decision to conduct a referendum that, if won, would have allowed him to convene a National Constituent Assembly to rewrite the Constitution. The same day Congress approved Roberto Micheletti as the interim President and he installed a new administration, replacing many within the Cabinet. As a result of these political developments, much of the international community put aid programs on hold, although a number of donors continued implementation of projects, particularly those focused on the poor. The Bank followed a process consistent with Operational Policy (OP 7.30), which included conducting an assessment of the prevailing situation with respect to the de facto Government. During the assessment period the Bank paused the implementation of the existing portfolio and no new lending was approved. The situation remained fluid for much of 2009 and the Bank began to resume disbursements in December 2009, once it was clear that the conditions of OP 7.30 were fulfilled. 5. On November 29, national elections took place. Porfirio Lobo, from the National Party, won with 55 percent of votes cast, which resulted in 71 seats in Congress, out of 115. International observers (including the National Democratic Institute and the EU) concluded that the elections were free and fair. 6. Following his inauguration as President on January 27, 2010, Mr. Lobo named a Government of national reconciliation which included some political rivals, and quickly set about reengaging with the international community and development partners. The new Government has agreed to carry out a series of forward-looking actions detailed in the agreement dated October 31, 2009 ("Acuerdo Tegucigalpa/San Jose para la Reconciliacion Nacional y el Fortalecimiento de la Democracia en Honduras"). The Truth and Reconciliation Commission, established under this agreement, became operational on May 4, 2010. Key Macro and Debt Developments 7. The global economic crisis, pre-existing macroeconomic imbalances, and the domestic political crisis have all negatively affected the Honduran economy. GDP contracted by 1.9 percent in 2009 following growth of 4 percent in 2008 and an average of 6.3 percent in 2004 to 2007. This contraction was the result of lower exports (which in 2009 declined 21.2 percent with respect to 2008), lower international remittances flows (estimated to have declined from 20 percent of GDP in 2008 to 17.1 percent of GDP in 2009), and lower fixed investment, which declined from 33 percent of GDP in 2008 to 23 percent in 2009. Foreign direct investment is estimated to have contributed to this decline in domestic investment by falling from 6.4 percent of GDP in 2008 to 3.5 percent in 2009. 2 Table 1. Honduras - Selected Economic Indicators Output and Inflation 2007 2008 2009 2010 b/ 2011 p/ 2012 p/ Real GDP Growth 6.3 4.0 (1.9) 2.4 3.5 4.0 Consumer Prices 8.9 10.8 3.0 2.7 5.8 5.5 Public Sector Central Government 2007 2008 2009 2010 b/ 2011 p/ 2012 p/ Central Government Total Revenues 19.2 19.8 17.4 18.0 18.3 18.1 Current Revenues 17.6 17.7 15.5 16.4 17.3 16.6 Tax Revenues 16.4 16.0 14.4 15.1 16.1 16.1 Non Tax Revenues 1.2 1.7 1.1 1.2 1.3 0.5 Other 1.6 2.1 1.9 1.7 1.0 1.5 Central Government Total Expenditures 22.1 22.2 23.5 22.5 21.7 20.8 Current Expenditures 18.1 17.4 19.0 18.7 17.5 16.2 Wages and Salaries 9.2 9.3 11.1 11.1 10.3 9.4 Capital Expenditures 4.1 4.9 5.2 3.7 4.3 4.6 Other (0.1) (0.1) (0.7) 0.2 - - Central Government Balance (2.9) (2.4) (6.2) (4.5) (3.4) (2.8) b/ p/ Combined Public Sector 2007 2008 2009 2010 2011 2012 p/ Combined Public S ector Total Revenues 25.4 26.2 24.8 24.5 24.5 25.0 Current Revenues 23.4 24.0 22.8 22.6 23.3 23.8 Tax Revenues 16.8 16.5 15.0 15.8 16.7 16.7 Non Tax Revenues 6.6 7.5 7.8 6.8 6.6 7.1 Other 2.0 2.3 2.1 1.9 1.2 1.2 Combined Public S ector Total Expenditures 27.0 27.9 29.4 28.3 27.5 27.0 Current Expenditures 20.7 21.2 23.6 21.7 20.0 19.1 Wages and Salaries 11.7 11.8 13.9 13.7 12.8 11.7 Capital Expenditures 5.6 6.0 5.9 5.1 5.8 6.2 Other 0.7 0.8 (0.1) 1.4 1.8 1.7 Combined Public S ector Balance (1.6) (1.7) (4.6) (3.7) (3.0) (2.0) Total Public S ector Debt 19.7 20.6 23.7 27.7 29.4 29.9 External Sector 2007 2008 2009 2010 b/ 2011 p/ 2012 p/ Current account balance (% of GDP) (9.0) (12.9) (3.2) (6.2) (6.7) (6.8) (excluding official transfers) (10.3) (14.1) (4.0) (6.9) (7.4) (7.5) Exports (annual percentage change) b/ 9.6 11.7 (21.2) 9.2 6.8 7.2 Imports (annual percentage change) b/ 21.7 18.2 (28.1) 11.4 7.6 6.3 Gross international reserves (US$ million) 2,733.0 2,691.0 2,331.0 2,386.0 2,600.0 2,850.0 In months of imports 3.5 4.7 3.6 3.4 3.5 3.6 Net International Reserves (US million) 2,409.0 2,236.0 2,069.0 2,130.0 2,350.0 2,600.0 a/ Preliminary. Fiscal balance does not include recently identified arrears. b/ Goods only. Sources: Ministry of Finance; IMF, and Bank staff estimates. 3 8. The fiscal situation deteriorated dramatically in 2009. The overall deficit of the combined public sector rose to 4.6 percent of GDP (up from 1.7 percent of GDP in 2008), reflecting lower tax revenue but also a large increase in budgeted expenditures (mostly public sector wages) and extraordinary spending.1 The deficit of the Central Government increased to 6.2 percent of GDP (up from 2.4 percent of GDP) and was financed largely by costly short-term bonds, while the position of the largest public sector enterprises and the pension funds worsened. While this increase in the fiscal deficit is not unlike those observed in many other countries, it took place in the midst of a political crisis which resulted in a suspension of much of planned international development assistance. Honduras experienced an estimated shortfall of US$130 million in grants and US$190 million in credits during the second half of 2009. By end 2009, arrears had accumulated to roughly 3.4 percent of GDP. 9. Soon after taking office, the Government projected that in the absence of corrective actions, the Central Government fiscal deficit could have reached about 7 percent of GDP in 2010. This deficit, together with the need to clear arrears of about 4.4 of GDP, a projected deterioration in the operating balance of the public enterprises (which in 2010 are expected to record losses of 0.1 percent of GDP), and amortization obligations of 2.4 percent of GDP, would have resulted in financing needs of the combined public sector in excess of 14 percent of GDP. This figure is well above any reasonable estimate of available financing resources. 10. The Government has implemented key fiscal reforms. Congress has approved legislation aimed at lowering the 2010 fiscal deficit by about 3 percentage points of GDP. In April 2010, Congress approved the Ley de Fortalecimiento de los Ingresos, Equidad Social y Racionalizacion del Gasto that: (i) eliminates the zero-rated value-added tax (Impuesto Sobre las Ventas, ISV) on goods and services, except for exporters; (ii) raises the tax on electricity to 12 percent to those households with a monthly consumption of more than 750 kwh; (iii) reforms the tax bases on tobacco and alcohol excise taxes and implements a specific tax combined with an ad-valorem component; (iv) removes tax exemptions on imported vehicles and introduces different rates depending on the size and the price of the vehicle; and (v) creates a rental income tax with an annual withholding rate of 10 percent over the lease price. 11. The Government has also passed some additional measures to control public spending and address a number of structural problems. These new measures impose a hiring freeze in all ministries, introduce a legal framework for the adoption of public- private partnerships and initiate an audit of the accumulated public sector arrears. By taking the necessary fiscal measures, the Government will improve its budget composition with lower interest payments and higher public investment, and reduce its deficit. In addition, the Government is working on a new fiscal package that includes measures to address more structural problems. This package includes measures such as reforming the pension systems and civil service reform. 1 The combined public sector includes Central Government, Social Security Institutions, Public Enterprises, Local Governments and Decentralized agencies. 4 12. In the absence of major external shocks, the economy is expected to recover gradually. Since prospects for improving domestic demand (through domestic stability, investment, remittances and credit) and external demand (through exports and foreign direct investment) are expected to recover strongly, it is likely that GDP growth will rebound to around 3-4 percent through 2012. Industrial production is expected to continue to be driven by maquila exports, demand for which will be affected by growth in the US. 13. The economic recovery and higher commodity prices are expected to widen the current account deficit. As the US economy recovers, export growth is expected to increase to about 9 percent in 2010 and gradually stabilize at around 7 percent in 2011 and 2012. Worker remittances are expected to remain at about 16 percent of GDP over the 2010-2012 period. Imports are anticipated to grow close to 11 percent; combined with lower exports, this would keep the current account deficit at 6.2 percent of GDP in 2010, but it is expected to increase to 6.7 percent of GDP in 2011 and 2012. Foreign direct investment is projected to increase from 4.5 percent in 2010 to 5 percent of GDP in 2012. 14. The Government's medium-term fiscal framework aims to lower the deficit to 2 percent of GDP by 2012. The fiscal measures taken by the Government would help contain the overall consolidated public sector deficit at 3.7 percent of GDP in 2010 and would be supported by additional measures included in the IMF program to lower the fiscal deficit to 3 percent of GDP in 2011 and 2 percent of GDP in 2012. The improved composition of public sector expenditure, together with a tight monetary policy would support a faster recovery and stronger position in international reserves (Table 1). 15. A Debt Sustainability Analysis, prepared jointly by the Bank and the IMF, suggests that Honduras' public debt is on a sustainable trajectory. In the baseline scenario, the public-debt-to-GDP is expected to increase from 27.7 percent of GDP in 2010 to 30.4 percent of GDP in 2013 and afterwards it will gradually decline. The trajectory of public debt is projected to decline even under the most pessimistic alternative scenarios. Poverty and Human Development 16. Honduras remains one of the poorest and most unequal countries Figure 1: Poverty and Extreme Poverty in Honduras in Latin America and recent 60 progress on the poverty reduction 50 Poverty front is under threat. Consumption- 40 based poverty figures for 2009 show 30 Extreme Poverty that about 44.5 percent of the 20 population was living in poverty and 10 20.1 percent in extreme poverty.2 The 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Gini coefficient for 2007 stood at 0.57. Poverty in Honduras may have risen by more than 150,000 people between Source: Bank staff simulations based on household survey data from INE. 2 Honduras official figures may differ from Bank data as they are based on household income and use a different methodology in the calculation. 5 2008 and 2009 and no major declines are expected to have occurred in 2010 as per capita growth is estimated at 0.3 percent. Staff analysis suggests that as a result of the modest recovery projected in the medium term, poverty could decline to between 42 and 43 percent by 2012 (see Figure 1). 17. One of the reasons for Honduras high poverty rates is that female labor force participation in Honduras is the lowest in Central America at 40 percent. Policy actions aimed at skills formation, availability of child care and micro finance schemes that help poor female entrepreneurs would improve participation. This is an important opportunity as increased gender equity in labor markets has been associated with poverty reduction and economic growth. A gender analysis will be prepared under the next CPS and will be informed by analytical work currently under preparation, including the Central America Regional Study on Gender and Income Generation which has a specific focus on poor and rural women income generation. 18. The negative impact of the growth slowdown on poverty rates has been compounded by the trend in remittances, which in 2009 declined by about 14 percent. The impact of the decline in workers' remittances is particularly relevant in this context given the importance of these flows: in 2008 workers remittances represented about 20 percent of Honduran GDP and it is estimated that around a quarter of the poorest quintile of the population receive remittances (representing around a quarter of their total incomes). Since more than half of all migrants come from urban areas, the urban poor are more vulnerable to the decline in remittances. 19. The country has made some progress in improving health sector outcomes. Honduras has made progress in improving maternal and child health. Significant reductions have been achieved in infant and under-five mortality ratios. Chronic malnutrition in children less than 2 years has decreased from 27 percent in 2001 to 24 percent in 2005. The numbers remain well below the Lower Middle Income Country averages, however, and hide stark regional differences. 20. Education performance is low, despite high levels of spending. Over the past two decades, Honduras has devoted an increasing share of public spending to the education sector. The public sector education expenditures rose from 5 percent to 8.6 percent of GDP between 1990 and 2007. 3 In spite of increased public expenditures on education, Honduras has not been able to increase the level of education outcomes of its students. Standardized test scores in mathematics and Spanish language have not changed significantly since 1997.4 The difference in enrollment for poor families is also an issue in secondary education, above all in rural areas. In 2007, school enrollment among 14 year- olds was only 50 percent for students in the poorest quintile, compared to 90 percent in the richest quintile; and, in 2009, less than 30 percent of the children aged 13-15 years old in rural areas were enrolled in school. 3 Source: Honduras Institutional Governance Review (Report No. 53517) and Public Expenditure Tracking Survey. 4 In 1997, the average 6th grade standardized test scores were 35 percent in math and 42 percent in language. The data for 2007 shows little improvement: 39 percent in math and 45 percent in Spanish (Transparency and Accountability in the Education and Health Sectors in Honduras. World Bank, 2008). 6 21. Despite a multitude of small social programs and the creation of the new Ministry of Social Development, effective social safety net programs to protect the poor and help mitigate the impact of shocks and crises are largely missing. Most programs have low coverage and are excessively fragmented (over 80 programs/projects and over twenty agencies). The key safety net program, Bono Solidario involving cash transfers to the poor, covers less than 8 percent of the population. 22. Crime and insecurity have worsened in recent years, representing a clear development challenge. Honduras has one of the highest rates of murder and kidnapping in Latin America, occurrences resulting from its growing role as a central transshipment point in the international drugs trade. A murder rate of 43 per 100,000 habitants5 places Honduras among the top five most violent countries in Latin America, and insecurity has increased during the political crisis of 2009. According to a recent Bank study (Crime, Violence, and Economic Development in Central America) on this issue, crime, violence and more generally lack of security may be costing the Honduran economy more than 9 percent of GDP annually. 23. In addition, the impact of climate-related disasters is a critical consideration in the vulnerability of the Honduran economy. Based on the estimated normalized damage in millions of 2007-equivalent US$), Honduras shows the highest cumulative losses due to three landfalling tropical cyclones in Central America during the 1976-2005 period.6 This underscores the need to support Honduras in integrating climate resilient measures into core development programs across sectors (e.g., agriculture, water, transport etc.) and targeting specific hazardous or vulnerable places and people such as coastal zones, or the urban and rural poor. Governance 24. Honduras is making advances towards a stronger governance framework, but less rapidly than would be expected in a country with its trajectory of institutional and democratic reforms. The Government is aware of the conclusions of the 2009 Bank Institutional Governance Review (Report No. 53517) which indicates the need to strengthen the country's accountability framework and in particular, the accountability of policymakers towards citizens and to focus the policy discussion on performance. Three factors are highlighted that, if addressed, could help the country to improve its governance framework: (i) the lack of transparency around decision-making; (ii) the lack of available information to assess performance which makes it difficult for citizens to hold policymakers accountable; and (iii) the weak organizational capacity of groups representing public interest. 5 2006 data. 6 J. Curry, M. Jelinek, B. Foskey, A. Suzuki & P. Webster. 2009. Potential Economic Impacts of Hurricanes in Mexico, Central America, and the Caribbean ca. 2020-2025. In: Assessing the Potential Consequences of Climate Destabilization in Latin America. Latin America and Caribbean Region. Sustainable Development Working Paper 32. 7 KEY DEVELOPMENT ISSUES AND GOVERNMENT STRATEGY 25. As one of its first acts, the Honduran Congress approved the Government's proposed National Vision 2010-2038 and National Plan 2010-2022, setting forth long- term development objectives which will serve as the basis for successive short-term government plans beginning in 2010. The overarching long-term objectives are: (i) a Honduras without extreme poverty, educated and healthy with consolidated provision of social services; (ii) a Honduras with a developing democracy, with security and without violence; (iii) a productive Honduras generating opportunities for dignified employment while making sustainable use of resources and reducing environmental vulnerability; and (iv) a modern, transparent, responsible, efficient and competitive state. 26. Consistent with these broad objectives, the National Plan 2010-2022 lays out 11 strategic pillars, combined with a set of 58 specific goals. These are: (i) sustainable development for the population; (ii) democracy, citizenship and good governance; (iii) poverty reduction with generation of assets and equal opportunity; (iv) education and culture as mediums of social emancipation; (v) health as the basis for improved conditions of life; (vi) security as a prerequisite of development; (vii) development of Honduras' regions; (viii) productive infrastructure as the motor of economic development; (ix) macroeconomic stability as the basis for internal savings; (x) competitiveness, an improved image of the country, and development of productive sectors; and (xi) adaptation to and mitigation of climate change. 27. The Government is designing a short- and medium-term operational plan that will serve as the basis for the future Country Partnership Strategy. The administration has convened a series of regional events aimed at generating feedback from the public with respect to its 4-year Government Plan (2010-2013) and the summarized proposal for the 2011 National Budget. This is the first time in Honduras that the National Budget proposal is widely publicized for comment; it is also the first time that the National Budget proposal is identified by region, by municipality and by development objective, within the framework of the Country Vision and National Plan. 28. The Bank will continue to work with the Government to identify development and governance priorities to be supported in a Country Partnership Strategy. The Bank's operational response to support the Government over the period covered by this ISN is detailed in the sections below. III. HONDURAS - WORLD BANK PARTNERSHIP 29. The FY2007-10 CAS (November 30, 2006), whose underlying goals were reconfirmed by the CAS Progess Report (May 8, 2008), was based on 4 pillars: The first pillar, Equitable Economic Growth for Employment Generation, has supported the Government's efforts to maintain macro-economic stability, improve the performance of economic services (notably the energy and transport sectors) and promote competitiveness, particularly in rural areas. The second pillar, Good Governance through State Modernization and Civic Participation, has supported the Government's public sector reform agenda, focusing on improvements in transparency, social monitoring and public expenditure management at the central and local levels, as well as interventions aimed at 8 strengthening competition and the judiciary. The third pillar, Environmental Protection and Risk Management, continued the Bank's support to the management of protected areas and the implementation of disaster risk mitigation strategies at the national and local level with grant funding. The fourth pillar, Development of Human Capital, included Bank support to education, health and social protection. The 2006 CAS pillars were based on Honduras' Poverty Reduction Strategy. Table 2. Active World Bank Portfolio in Honduras as of September 2, 2010 Commitment Undisbursed Active Portfolio Pillar US$ million Balance (Closing Fiscal Year) US$ million Equitable Economic Financial Sector TA (12) 9.9 5.8 Growth for Trade Facilitation (11) 28.1 5.1 Employment Rural Infrastructure (12) 47.0 29.5 Generation Water & Sanitation Project (13) 30.0 24.2 Rural Competitiveness (16) 30.0 28.2 Second Road Reconstruction Improvement (13) 73.6 69.0 Power Sector (14) 30.0 29.5 GEF Rural Electrification (12) 2.4 1.6 Good Governance Poverty Reduction Strategy TA Credit (11) 8.0 1.0 Through State Barrio Ciudad (11) 15.0 8.9 Modernization and Judicial Reform Project (11) 15.0 4.5 Civic Participation Environmental Disaster Mitigation (11) 19.7 1.2 Protection and Risk GEF Corazon (12) 12.0 7.76 Management Development of Nutrition and Social Protection (12) 20.0 9.1 Human Capital Social Protection (15) 40.0 40.35 Education Quality (12) 15.4 12.4 Total 15 Projects 396.1 278.1 30. Since the Progress Report (Report No. 43244-HN) was discussed by the Board on June 10, 2008, the Bank has continued to concentrate its efforts on improving the conditions of the poor, particularly in rural areas. While the Progress Report included a provision of both budget support and investment lending, subsequent crises diverted the Bank's focus from some of its original objectives in response to emergency-related demands including additional financing for roads damaged by heavy rains, and an operation to respond to the food crisis. The Bank has continued to focus on the poor through education and health projects, and in rural areas through agriculture projects such as the recently effective Rural Competitiveness Project. There has also been a particular effort to support youth in both the Mi Primer Empleo Project and Barrio Ciudad. The recently approved Social Protection Project directly supports Government's poverty reduction efforts. Moving forward the Bank's program will continue to be aligned with the country's poverty reduction goals, as articulated through the national planning process. IV. PROPOSED BANK GROUP INTERIM STRATEGY 31. The Bank's approach to programming operations during this period of transition to a fuller CPS-based strategy involves four basic principles: (i) support for a return to macroeconomic stability and growth following the economic and political crises 9 of 2008-09; (ii) support for poverty reduction and higher employment as the basis for social stability; (iii) intensified support for efforts to improve governance and fight corruption; and (iv) continued implementation of the current portfolio in support of the CAS pillars. (i) Macro stability and growth 32. The new Government has requested a DPC to support its efforts to stabilize the economy and reestablish the groundwork for growth. The Bank proposes to support the authorities with a US$74.7 million Development Policy Credit (DPC) to tackle the current fiscal difficulties and to launch a number of structural reforms that will pay off in the medium to long run. Specific priority areas supported by the DPC are: (i) tax reform, including closing tax loopholes, widening some tax bases, and improving tax administration; (ii) civil service reform, focused on human resource management in the education sector and a rationalization of the public wage bill; (iii) reform of power sector tariffs to support the financial sustainability of the state-owned electricity company; and (iv) strengthening public financial management and transparency by resolving outstanding public sector arrears and investigating the shortcomings of the financial management information system. 33. IFC's activities in Honduras support economic growth. IFC engagement has been increasing significantly in recent years. After relative inactivity over the past decade, IFC committed investments for US$38 million in FY08, US$163 million in FY09, and US$100.9 million in FY10. The Corporation's outstanding investments in Honduras totaled US$156.51 million as of June 30, 2010. The bulk of IFC activity over the past two years has been in financial markets, telecoms, and agribusiness. IFC has based a resident Principal Investment Officer in Tegucigalpa since 2008 to increase operations in the country. 34. In agribusiness, IFC is focusing on competitive export sectors as well as processed foods. IFC has approved loans in the palm oil and sugar sectors, and is pursuing opportunities in coffee, dairy, and beverages. In financial markets, IFC is supporting banks with trade finance facilities and special-purpose facilities to reach SMEs and housing finance and supporting SMEs through microfinance institutions. It is also selectively looking for equity opportunities to further capitalize local financial institutions. 35. IFC is also working with subnationals in the infrastructure sector. IFC recently approved a US$15.9 million risk-sharing facility with local banks to finance Tegucigalpa's 2010-11 US$44 million investment program in road infrastructure. If successful, this program could be rolled out to reach other municipalities. 36. Honduras was selected as one of six pilot countries to participate in the Climate Investment Funds' Scaling Up Renewable Energy Program for Low Income Countries (SREP). The Fund would give the country access to up to US$30 million in potential co-financing for projects to support energy efficiency, renewable energy and access to modern sustainable energy. The Bank plans to work with the Government of Honduras to identify projects for investment during the ISN period. Most recently, IFC is 10 also considering investing in renewable energy projects. IFC is working alongside local banks to develop mezzanine or risk-sharing facilities to reach small renewable energy projects and can support directly projects greater than 10MW. IFC is currently analyzing financing a run-of-the-river hydro project located downstream from the existing 300 MW El Cajon hydro. (ii) Support for poverty reduction 37. The new Government has made it a priority to provide direct support to Honduras' poorest families and is proposing the implementation of a new Conditional Cash Transfer (CCT) Program, Bono 10,000, building on the lessons learned from the successes of Oportunidades in Mexico and Bolsa Familia in Brazil. This Program would cover a large share of the extreme poor (600,000 families living in extreme poverty, which corresponds to roughly 30 percent of all households in Honduras) and provide more adequate benefits (US$45 per month, per family) conditional on investments in human capital accumulation through regular monitoring of child growth and use of health and education services. The US$40 million Bank Social Protection Project (Report No: 54132- HN) approved by the Board in June 2010 focuses on building both the central and local capacity necessary to implement and operate the CCT Program, as well as providing co- financing for conditional cash transfers to extremely poor families with children 0 to 17 years old, conditional on the children's school attendance and regular health check-ups. (iii) Support for efforts to improve governance and fight corruption 38. Honduras is one of the Governance and Anti-Corruption Country (C-GAC) pilots within the LAC Region, which has allowed for additional resources to support governance priorities. The Bank support will continue to support the Government's efforts in the following areas: (i) implementation of the access to information law; (ii) strengthening check and balance institutions to enhance accountability of the Executive and provide support to the Legislature to conduct its oversight role; (iii) supporting efforts to make performance information available to the public and focus the policy discussion on performance in the sectors where the Bank is engaged; and (iv) supporting social monitoring activities and strengthening the voice of stakeholders representing public interest in the sectors where the Bank is engaged. Several grants support these initiatives. 39. During the ISN period the Bank will also work with authorities to define new governance priorities to be supported in the next CPS. This could include support for developing a National Anticorruption Plan that could be supported in coordination with other development partners. The Bank will also seek to improve coordination between governance and fiduciary actions to enhance the development effectiveness of Bank operations through an integrated approach that mitigates fiduciary risks while addressing weaknesses in the broader governance framework. This integrated approach will be developed during the ISN period and defined in detail in the next CPS. The Bank will also support the governance agenda through sector-based approaches (see Box 1). 11 Box 1. The Water Sector - An Example of a Country-Driven Agenda Supported by the Bank In 2003, the Government of Honduras passed a water sector framework law that dramatically reformed the water and sanitation sector organization by promoting a full decentralization to municipalities. Shortly thereafter the Bank engaged in a significant effort, initially through technical assistance and later through lending, to help the country implement these complex reforms. As a result the Bank's current portfolio includes four operations under supervision covering most of the sector's aspects, including a project supporting the reform implementation and creation of urban water utilities (PROMOSAS), a project supporting rural water and sanitation coverage extension (PIR), an output-based project for coverage extension financed by GPOBA and a project supporting water, sanitation and slum upgrading in low-income neighborhoods (Barrio-Ciudad). In addition, the Bank also provides technical assistance on sector governance and transparency and efficiency improvements through a series of trust funds, and has been actively coordinating its involvement with that of other donors. Starting in March 2010, and in response to a severe drought affecting the capital's water supply, the Bank also launched an extensive public dialogue about short- and long-term solutions to better manage water in the City, which has involved several workshops and the creation of a number of working groups to help shape a common solution. Through this extensive engagement, the Bank has positioned itself as a key partner of the Government in promoting its sector policy agenda, increasing water and sanitation coverage in rural and poor areas and improving service quality and sustainability in the main cities. (iv) Portfolio implementation 40. Portfolio implementation will be a focus for the ISN period. Renewed efforts were made to improve the portfolio since the CPS Progress Report was delivered to the Board. Disbursements had fallen off in FY09, but performance indicators were picking up due to increased Bank and Government attention to portfolio management. Weaker projects were restructured and issues delaying start-up of newer operations were addressed by early FY10. 41. Before these advances could take hold, portfolio implementation was setback by the political crisis and the government transition. In line with OP7.30 the Bank stopped processing withdrawal applications during the process of assessing the prevailing situation. Without new resources from the Bank, most projects were unable to continue financing ongoing contracts. The Government also put a hold on entering into new contracts. Before resuming disbursements the Bank carried out individual project supervision in line with its fiduciary responsibilities. However, as resources from the Bank began to flow again in December 2009 project implementation slowed due to the political transition. As a result, considerable efforts were required to stabilize the portfolio, including the normalization of contracts implementation, reinforcement of project implementation arrangements including staffing, and ensuring that operational plans for 2010 are consistent with government fiscal constraints and emergency priorities. 42. Performance of the portfolio is improving and the Government has created a task force for follow-up and rapid response to portfolio issues. At a portfolio review held in June 2010, the Bank and Government agreed to jointly focus on portfolio management, including monthly reviews of progress and rapid resolution of identified problems. This should help to accelerate disbursements and ensure that projects are implemented according to their operational plans. In addition, the Bank will be holding quarterly mini-reviews of the portfolio with the Government to ensure that high-level attention is given to any persisting problem areas. 12 Table 3. Revised Bank Program CPS Progress Report ISN Additional Projects not envisioned at time of PR FY09 FY10 FY10 FY11 Land Administration II Health Sector Social Protection Project Development Policy (US$30m) * Decentralized Service (US$40 million) Credit (US$75 million) Delivery (US$15m) * Utility restructuring Public Sector Project (US$30m) [A] Management Program (US$20m) - dropped DPC (US$20m) - Third Road dropped Reconstruction & Improvement Project (US$20m) [A ­ Additional Financing (US$25 million)] US$80 million US$50 million US$40 million US$75 million A: Actual; *: The Land Administration II and Health Sector Decentralized Service Delivery projects had been prepared before June 28, 2009, but not submitted to the Board. Note: US$10 million in Supplemental Financing for the Financial Sector DPC was approved in FY09 under the Global Food Crisis Response Program. 43. The Government is considering restructuring elements of the portfolio. The objective would be to shift resources from slow-disbursing projects to free resources to fund key government priorities, in particular rapid disbursing employment-generating activities either in the form of new projects or as additional financing to well-performing components of ongoing operations. Because all remaining IDA 15 resources for Honduras have been committed, the Bank-Government task force mentioned above is undertaking an exercise of identifying resources that might be available for reallocation. 44. Gender. The current Bank portfolio includes several projects that target female beneficiaries. These include the Land Administration project that has provided land titles to female head of households; the Health Reform program which supports rural health centers operated by the community and seek to improve the conditions of pregnant women and mothers; and the Nutrition and Social Protection Project that includes a program of nutritional supplements for women and children under two. Gender will continue to be mainstreamed in WBG activities as appropriate. 45. Economic and Sector Work. The Bank's ESW program will include a return to core diagnostic research that is directly applicable to support the Government's development priorities. Given the significant changes in the country since the Progress Report, an integrative piece of analytical work to assess the country's economic situation and prospects for growth would be particularly valuable as an input for the next CPS and to inform government policy-making. For this reason, the AAA program will include a Country Economic Memorandum during the period covered by the ISN. 13 Box. 2 Examples of Ongoing IFC Advisory Services in Honduras In 2005, IFC in collaboration with a Bank project launched a Municipal Simplification program in Tegucigalpa and San Pedro Sula to help improve processes related to obtaining a Municipal Operating License. IFC has expanded this program to other municipalities: Puerto Cortés, La Ceiba, El Progreso, Roatán and Copán Ruinas. IFC is also coordinating its Trade Facilitation program with IBRD in Puerto Cortés. IFC has signed access to finance projects with existing IFC clients Banco Popular Covelo (BANCOVELO), Banco FICOHSA, and Banco Atlántida. These engagements are aimed at improving bank performance, adopting best practices, and expanding access to finance for underserved sectors (e.g. SMEs). More recently, IFC launched its Business Edge program April 2010, providing local SMEs with customized management training to help them improve performance and competitiveness. With respect to Infrastructure Advisory Services (IAS), IFC is seeking to participate as government and/or municipal advisor to structure transactions under PPP-schemes in the telecommunications, energy, health, and transport sectors. IFC is in advanced negotiations with the Government to provide advice on Hondutel and has signed a mandate to advise the Municipality of La Ceiba on its "Calle 8" road project. 46. Trust Funds are an important source of resources in Honduras. The Bank will continue implementation of the trust fund portfolio in support of the CPS pillars. There are twenty active trust funds in Honduras for a total commitment of approximately US$20 million (see Annex 7 Summary of Non-Lending Services). Over 50 percent of commitments are undisbursed. The trust fund portfolio is well targeted to the poor, including for vulnerable youth and women. There are also several trust funds aimed at improving governance and transparency in the public sector. Objectives and Results 47. The CAS Progress Report Results Matrix will continue to be used to assess progress during the CPS and ISN period, as many of the outcomes have not yet been achieved. Due to the lag in implementation and political situation many development outcomes (and some intermediate indicators) have not yet been achieved (see status update in Annex 1). As many of the outcomes identified in the Progress Report continue to be relevant for the longer term development prospects, the ISN proposes to continue to use the existing results matrix with some revisions (see Annex 2). It is possible that some development outcomes will still not be achieved and as such would likely feature in the Results Matrix of the next CPS. Partnerships and collaboration with other donors 48. The complexity of the crisis in Honduras calls for collaboration among all major donors. The US$75 million DPC is being prepared in coordination with a number of other donors such as the Inter-American Development Bank (IDB), the European Union (EU), and the Central American Bank for Economic Integration (BCIE) who are preparing similar operations, and with the IMF. The Bank is also playing an active role in the G16 donor coordination forum. 14 V. RISKS TO INTERIM STRATEGY 49. A critical risk is related to the challenges the Government will face to bring the fiscal situation under control. The economic and political crises of 2009 have exacerbated an already difficult fiscal situation. In order to bring the public finances under control the Government will need to implement tough and unpopular policies. As a result, there is a risk that approval and implementation of the planned fiscal package could be more difficult than anticipated and jeopardize the needed fiscal adjustment. The Government's fiscal consolidation efforts are being discussed with the donor community, including the Bank, the IMF, the IDB and CABEI, in order to obtain funding support. 50. The downturn in the US economy has had a significant impact on Honduras' economic performance and poverty levels. The US slowdown has negatively affected exports and flows of remittances. Remittances are a critical source of external finance and of household income for around one in ten households. Honduras is also vulnerable to increases in oil and food prices. To the extent that the global slowdown lasts longer than expected, there is a risk that the fiscal situation will remain difficult and poverty and unemployment levels fail to decline significantly. The Bank will remain actively engaged through dialogue, and analytical work. 51. Companies may take longer than expected to recover from the twin effects of the global financial crisis and the political crisis. Uncertainty over the currency, and interest rates could hamper bank lending and weaken business confidence. IFC is developing risk-sharing structures to provide local currency loans to clients which would help mitigate at least the currency risk. IFC is also supporting local banks through its Global Trade Facility Program in order to provide trade financing opportunities for businesses. 52. The Central America region remains highly vulnerable to multiple natural disaster risks. Recent analysis of the area shows an increase in tropical cyclone landfalls since 1995 which indicate a broader increase in average tropical cyclone wind speeds and a shift toward a greater number of Category 4 and 5 hurricanes (see paragraph 23). While the severity of the impacts vary from sector to sector, the key impacts that are already manifesting with negative consequences for the economy include: increased flood risk and loss or damage of key infrastructure/facilities; soil erosion and loss of land; increased destructiveness of tropical storms; loss of protective coastal systems such as coral reefs partly due to higher ocean surface temperatures; loss of livelihoods, especially those dependent on fisheries. The country's past experience has highlighted the value of investing in early warning systems, institutional strengthening and mitigation efforts. Building on progress to date, the Bank is providing both lending resources and analytical support to strengthen the country's natural disaster mitigation systems. 15 Annex 1. Revised CPS Results Matrix and Outcomes Achieved to Date BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] OBJETIVE 1: EQUITABLE ECONOMIC GROWTH FOR EMPLOYMENT GENERATION 1. Reduce Public wage pressures7 1. Total central government Ongoing portfolio (Ends): Progressive reduction of total central expenditure in salaries: 11.1% of GDP Development Policy Credit: (11) government expenditure in salaries to in 2009. [IMF] TTL: Christian Gonzalez less than 10.6% of GDP by 2011. AAA - Delivered (2009 baseline: 11.1%) HN Fiscal Emergency NLTA (10) PER (08) 2. Improve public enterprise finances 2. Total central government current Preservation of total central revenue: 15.5% of GDP in 2009. [IMF] government current income above Combined public sector income: 24.8 17.3% of GDP (as in 2010) and % of GDP in 2009 [IMF] combined public sector income over 24.5 % of GDP (as in 2010). 3. Improve tax collection Central Government tax revenues as a share of GDP increase to 16.1 percent in 2011 (baseline: 2009 14.4 percent) OBJECTIVE 1A: Strengthening Competitiveness 1. Strengthen competitiveness and 1.1 Money Laundering: While some 1.1.a The FIU remains operational from 2007 1.1.a The FIU has been operational since 2007 and Ongoing Portfolio (Ends) resilience of the financial sector. progress in the prevention of anti and every year thereafter. remains in need for capacity building. The Financial Sector TA (11) money laundering and financing of assessment of Honduras' AML/CFT was conducted TTL: Juan Bucheneau 1.1 Prevention of money-laundering terrorism has been achieved, additional 1.2.a CNBS maintains updated its relational by the Bank and was adopted by the Caribbean Development Policy Credit (11) and financing of terrorism. [CNBS] capacity building measures are required database of financial-system's borrowers from Financial Action Task Force in 2009. TTL: Christian Gonzalez to achieve full compliance with 2007 and every year thereafter. international standards. 1.2.a The relational database is being maintained. AAA-Delivered 1.2.b BCH continues implementing its plan Remittances (09) 1.2 System for Payments, Financial 1.2 Control of Systemic Risks: The for the modernization of the national payments 1.2.b The introduction of a payment system has been TTL: Isaku Endo Supervision and Control of Systemic institutional arrangement proposed by and settlements system from 2007 and every delayed as the original contractor resigned. Financial Risks in place with comprehensive the Financial Sector Policy Committee year thereafter. supervision and control of systemic risks has AML/CFT Assessment (09) coverage. to deal with systemic risks has been improved and is in process of consolidation. TTL: Gabriella Ferencz adopted and implemented. Credit Reporting Assessment (10) WHCRI IFC 7 All figures are based on the new methodology to estimate GDP that Honduras adopted in 2007. 16 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] 2. Improve performance of economic 2.1 Energy system losses: ENEE has 2.1.a Approval of a plan to restructure ENEE 2.1.a Restructuring of ENEE : CPME is Portfolio (Ends) services: Energy initiated the remote metering process in separating its accounts in business units procuring consultancy services to support the Power Sector Efficiency Enhancement (14) 2.1 The losses in the energy system San Pedro Sula and has started to (generation, dispatch, and distribution) by government in the restructuring. The contract is TTL: Ariel Yepez (ENEE) have decreased by 4% from reduce losses. Loses as of 2010 at: 2011. [ENEE] expected to be signed by end of 2010. [ENEE] Development Policy Credit (11) 2005 to 2011. Baseline: 24.6% losses 22.5% (2% reduction). TTL: Christian Gonzalez in 2005, 22.5% in 2010. [ENEE] Rural Infrastructure (12) 2.2 Subsidies: Targeting measures have TTL: Stephen Brushett improved with the reduction of the GEF Rural Electrification (12) TTL: Ariel 2.2 Improvement in the transparency, scope of Bono 80 in the 2008 budget to Yepez focus and the cost of subsidies to users that consume less than 150 AAA ­ Delivered households consuming less than 150 mwh/month. [ENEE] Energy Study (07) kwh/month by 2010. [ENEE] 2.3 Electricity has been extended to: 5,596 households through grid 2.3 Extend electricity services to rural extension and 1,250 households and 13 households: 8,100 through grid and schools through the installation of solar 2,500 through the installation of solar systems. The Solar System Program systems by 2011. Baseline: (Dec 2009) (PROSOL) has been created for rural 5,066 grid installations electrification with the participation of 1,070 solar installations private providers -solar companies and availability of micro-financing if needed; a wind power measurement study has been completed with satisfactory wind levels to be public to the private sector to develop wind power electrification 3. Improve performance of economic 3.1 The reform is fully implemented in 3.1.a At least 3 of the 6 greater systems 3.1.a Transfer of systems: Two have been Ongoing Portfolio (Ends) services: Water & Sanitation 5 of the 10 largest municipalities and is operated by SANAA transferred to transferred, Singuatepeque and Comayagua. A third Water & Sanitation Sector Modernization(13) 3.1 Implementation of the Water Sector on track to be achieved in another 3 by Autonomous Municipal Service Providers by one is expected to be transferred in 2011 (Danli). TTL: David Michaud Law, including the transfer of water 2011. National institutions have been 2011. [SANAA, CONASA, ERSAPS, SEFIN] The Bank is also providing support for a possible Rural Infrastructure (12) services and sanitation to Municipal strengthened and the sector is regulated transfer in Tegucigalpa, although whether the actual TTL: Stephen Brushett, entities, properly regulated by the by ERSAPS. transfer will take place is uncertain. Barrio-Ciudad (12) ERSAPS by 2011. TTL: Ellen Hamilton 3.1.b At least 10 Municipalities have 3.1.b Development of Autonomous Water and developed fully functioning Autonomous Sanitation services providers: Done in 9 Other Bank Instruments (Ends) 3.2 Improvement in the transparency, Water and Sanitation Services Providers by municipalities, namely Puerto Cortes, Choloma, GPOBA Water (11) efficiency, and effectiveness of the 2010. [FHIS, SANAA, SEFIN]] Choluteca, San Pedro Sula, Siguatepeque and subsidy allocation in the water and Comayagua, Catacamacas, Tela and Santa Rosa. sanitation sector [ERSAPS, 2010]. At least 2 more expected by the end of 2011 (Danli and La Lima). 3.2 The 2 Bank supported projects have 3.2 Progress has been made on sector governance 17 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] transparent subsidy allocation schemes based and transparency: ERSAPS has started publishing an on poverty and performance of service annual benchmarking report and the Bank is providers. In addition the design of a country supporting customer accountability and transparency wide Water Fund to scale up this experience is at utility level in a number of municipalities. ongoing. 3.3 Extend and improve water and 3.3 Water and Sanitation contracts signed for 3.3 As of Dec 2009 10,608 contracts signed (so far sanitation services to 9,900 households extending access and improving quality to no service has been extended, just contracts) through OBA Facility by 2011. 11,664 households of subprojects selected through the OBA Facility and with subsidy allocation upon the verification of outputs. 3.4 Extend water and sanitation 3.4 Water services extended and improved to connections to 9,300 rural households 3,701 rural households, and sanitation services and build 3,100 latrines by 2011. [As of extended to 2,619 rural households through the Dec 2009 1,246 water connections construction of latrines. installed 884 latrines installed] 4. Improve performance of economic 4.1 Improvements in road 4.1.a A long-term maintenance plan for all 4.1.a Long-term maintenance plan for all public Ongoing Portfolio (Ends) services: Roads maintenance: Substantial, but uneven public networks is approved by 2010 and networks was approved in 2007 and budget Road Construction and Infrastructure (10) 4.1 Ensure sustainable and substantial progress achieved. Road Fund budget is provided each year from 2010 in line allocations have increased 2007-2009 in line with its TTL: Anna Okola, improvements in road maintenance projected to meet 74% of national with the requirements of the plan. [Fondo Vial provisions. [Fondo Vial / SOPTRAVI] Rural Infrastructure (12) through financing covering at least 75% network requirements in 2009 and / SOPTRAVI] TTL Stephen Brushett of the public network, including 100% 100% of maintainable primary paved Road Reconstruction and Improvement of the paved primary network by 2010. network in 2010. [Fondo Vial / 4.1.b Budget is provided to support 100% of 4.1.b Budget was provided to support 100% Project II ( 13) [SOPTRAVI] SOPTRAVI] routine maintenance of the primary paved maintenance of the primary paved network in 2010. network by at least 70 micro-businesses by [Fondo Vial] IFC 4.2 Rehabilitation of 400km of rural 4.2 195 km of rural roads rehabilitated 2007 and each year thereafter. [Fondo Vial] roads, by 2011 for improved all-season as of August 2010. access. [105km as of Dec 2009] 5. Improved business environment 5.1. Competition Policy Law was 5.1.a Reduction in the time to start a business 5.1.a Time to start a business reduced to 14 days in Ongoing Portfolio (Ends) and strengthen competition approved by Congress and more than reduced from 44 days in Doing Business 2007 Doing Business 2010. Trade Facilitation (11) 35 economic concentration cases were to 15 days in Doing Business 2011. TTL: Thomas Haven 5.1 The Competition Policy Law is resolved by the Comisión para la AAA being effectively implemented by 2011: Defensa y Promoción de la 5.1.b Reduction of the time to export from 28 5.1.b Time to export reduced to 20 days in days in Regional Investment Climate Assessment -At least 4 anti-trust cases presented Competencia (CDPC) between 2007 days in Doing Business 2007 to 15 days in Doing Business 2010. (09) and resolved by the new entity by 2011. and May 2010. Doing Business 2011. ROSC Study (08) 5.1.c Reduction of the time to deal with 5.1.c Time to deal with licenses reduced to 106 IFC licenses (environmental and other building days in Doing Business 2010. permits) from 199 days in Doing Business 2007 to 100 days in Doing Business 2011. 18 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] 5.1.d The responsible entity for the 5.1.d The Competition Policy Agency (CDPC) is implementation of the competition policy law fully operational. (CDPC) operating effectively (adequate budget, appointed personnel) by 2008. [Honduras Comisión para la Defensa y Promoción de la Competencia (CDPC).] OBJECTIVE 1B: Increasing Rural Incomes 1.1.a Increase in new property titles in urban 1.1.a 40,237 new property titles in urban areas as of Portfolio (Ends) 1. Improve security of access to areas from 30,000 in 2007 to 50,000 in 2011 June 2010. PATH Land Administration (10) . land 8 (aprox.). [Instituto de la Propiedad (SINAP)] TTL: Enrique Pantoja 1.1 A transparent, efficient and reliable 1. Number of land parcels property registrations system measured incorporated in SINAP under the 1.1.b Increase in urban and rural cadastered 1.1.b Number of cadastered properties by an increase in urban and rural land parcel-based system: 100,932 in June properties incorporated into SINAP from incorporated into SINAP:.364,238 since project parcels incorporated in SINAP under 2010. [PATH] 240,000 in 2007 to 550,000 in 2011. [Instituto start. [PATH] the parcel-based system from 120,000 de la Propiedad] by 2011. [Instituto de la Propiedad] 1.1.c Registration offices integrated into the 1.1.c Integration of registration offices to SINAP: SINAP network: 8 by 2009 and 18 by 2012. 9 registration offices as of June 2010. [PATH] [Instituto de la Propiedad] 2.1.a 1,330 rural beneficiaries benefiting from Portfolio 2. Promote rural competitiveness in rural productive alliances by 2011. Rural Competitiveness (16) farm, agro-forestry and off-farm TTL: Marie-Hélène Collion employment. 2.1.b. Increase the percentage of Rural 2.1 30 productive alliances established Productive Alliances that favorably rate the AAA by 2011. technical assistance received by service Regional Investment Climate Assessment(09) providers to 85% by 2011. IFC 8 Indicators and Outcomes refer to the Project area of PATH, which is Comayagua, Siguatepeque, Cortés y Tegucigalpa 19 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] OBJETIVE 2: GOOD GOVERNANCE THROUGH STATE MODERNIZATION AND CIVIC PARTICIPATION Improve transparency and accountability 1. Improving the effectiveness and 1.1 SIAFI is used for 100% of the 1.1.a SIAFI is linked to Honducompras and 1.1.a The interface between SIAFI and Ongoing Portfolio (Ends) transparency of public spending public spending by central government. SIARH as of 2008. Honducompras is operational, and the HR module of PRS TAC (11) TTL: Ana Dodero 1.1 SIAFI is used for 100% of the All decentralized agencies use SIAFI to SIAFI (SIARH) is operational for all central Aid Coordination PHRD (09) public spending by central government formulate their budget, but only a few government agencies, including health workers AAA and decentralized agencies and is for budget execution. Data is sometimes (only pending the incorporation of the education IGR (09), PETS (10) PER (08) published on the web page in a timely published with delays and usability sector). and accessible format as of 2008. could be improved. 1.2. The Results Based Management (RBM) System was used by all central government agencies to monitor institutional goals. The new administration is currently developing a new monitoring system based on the RBM System - it is too early to assess scope and impact. 2. Professionalization of key 2.1. Professionalization Plan: The 2.1.a New implementing regulations for the 2.1 a Implementing Regulations: New regulations Ongoing Portfolio (Ends) functions and agencies in public Professionalization plan was published Civil Service Law have been promulgated of the Civil Law were published on July, 28 2008 in PRS TAC (11) sector on September 11, 2009 in the Official through Executive Decree by 2008. [DGSC] the Official Gazzette. There is currently a draft TTL: Ana Bellver 2.1 The first phase of the Gazzette. However, due to the legislation to amend the Civil Law which will be professionalization and accreditation proximity of the elections, the plan was submitted to Congress shortly. AAA program has been implemented in at only implemented in the tax agency IGR (09), PETS (10) least 4 central government agencies, (DEI) but not in the rest of the public 2.1.b A Monitoring and Validation Committee 2.1.b The Validation Committee was established and PER (08) and in key cross-cutting functions of administration. with members from civil society, the private held two meetings during the first half of 2009. public administration (financial sector and the donor community established management, human resources, 2008. [DGSC] acquisitions and internal control) by 2009. [Central Civil Service Office, DGSC] 3. Strengthen Transparency through 3.1 Transparency Law: Approved in 3.1.a Implementing Regulation promulgated 3.1.a Implementing Regulations: Approved and Ongoing Portfolio (Ends) implementation of the Transparency Dec 2006 and fully implemented in Jan by Executive Decree by 2008. published in La Gazeta on March 6, 2008. IDF Law 2008. Access to Public Information AAA 3.1 Transparency Law effectively Institute (IAIP) established in August 3.1.b 100 % of the Government institutions' 3.1.b Has not reached 100% of government IGR (09) implemented measured by: 2007. Information officials named for information offices with equipment and human institutions. Some information offices lack adequate Other Partners -100 % of the de oficio information most central and decentralized resources necessary to operate by 2008. equipment. Also, according to IAIP, there is SIDA, DFID required by the law is published on the government agencies, although many instability in the employment of Public Information web by the obliged institutions by 2008 institutions are lagging behind. Data on Officials; several have been recently replaced (with and each year thereafter. the publication of de oficio information the change in Administration of the GoH) and others 20 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] -100% of the information requests from and the treatment of information are also expected to soon be replaced. public have been responded to by the requests is not yet available, but a web- obliged institutions by 2009 and each based system and transparency year thereafter. indicators are being designed for this purpose. In 2010 there have been advances in compliance with publication of de oficio information on web portals, on the part of most involved institutions of GoH, although there remains much to be done in order to reach expected results. According to IAIP, Municipal Governments are in a weaker situation; fewer than 100 of the 298 municipalities have transparency offices/officials9. Government institutions, with support from the IAIP, are working to improve this in 2010. 4. Improving access, efficiency and 4.1 Judicial channels broadened: New 4.1.a Clearance rates for non-criminal cases 4.1.a Increase in clearance rates for non-criminal Ongoing Portfolio (Ends) accountability in the judicial sector. Peace Courts established in five increased from 26% to 66% by 2011 [CSJ]. cases: Increase from 26% in 2005 to 56% in 2007. Judicial Reform Project (11) 4.1 The judicial channels to make provinces. Rehabilitation and [CSJ]. TTL: David Varela justice more accessible have been refurbishment of Family and Domestic 4.1.b Users perception of judicial performance broadened and diversified, particularly Violence Courts in Tegucigalpa and improved: More than 33% of businesses and 4.1.b Improved user perception of judicial for minorities or vulnerable groups, San Pedro Sula carried out. A mobile users consider that the judicial system is fair performance: 47.2% of enterprises, and 42% of with the result that the number of new court pilot operational from January and judges are credible, by end of 2011. [CSJ] citizens consider that judicial performance has court users from those groups has 2008. [CSJ]. improved. [CSJ]. increased by 40,000 a year by end- 4.1.c Justice more accessible: Number of 2011. [Supreme Court, CSJ] women, poor, youth and small businesses 4.1.c Justice more accessible: Number of women, accessing courts or related justice services poor, youth and small businesses accessing courts or increased by 100,000 a year by end of 2011. related justice services already increased by 65,000 a [CSJ] year in 2009. [CSJ]. 9 According to IAIP, from June to December of 2009 (during some of the most difficult months of the Honduran crisis), transparency web portals were operating irregularly: there was no updating of information, and some portals were removed. During that period, only 12 of 64 web portals were "moderately updated." 21 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] OBJETIVE 3: ENVIRONMENTAL PROTECTION AND RISK MANAGEMENT 1. Ensuring sustainability of 1.1 Demarcation: Delimited in 6 of 8 1.1.a Creation of a Fund (fideicomiso) to 1.1.a Fondo Hondureño de Areas Protegidas Ongoing Portfolio (Ends) protected areas. protected areas, 2 already demarcated finance the conservation of priority SINAPH (FHAP) has been established, but is not yet GEF Corazón Grant (13) TTL: Catalina 1.1 10 protected areas (approx. 280,000 as of June 2010. [ICF] PAs by 2007. [SERNA] operational. Pending actions are to develop a Marulanda ha) demarcated and with management financing plan, internal regulations and an AAA plans by the end of 2011. [ICF] 1.1 Management Plans: Implementation 1.1.b Implementation of management plans operations manual. [SERNA] Environmental Assessment (08) of the Patuca management plan has for Tawahka and Patuca areas, specifically. 1.2 At least 1,500 families benefiting begun; preparation of the Tawahka [SERNA/ICF] 1.1.b Preparation and implementation of Projects Closed: from sustainable natural resources management plan is in the process of management plans for the Río Plátano Bioshpere PATH (08) management programs being contracted as of July 2010. 1.1.c Approval of a new Forestry Law that Reserve have also been supported. The effectiveness GEF Pico Bonito Grant (07) [SERNA/ICF] transforms COHDEFOR to an institution not management rating for the Tawahka, Patuca, and Forestry & Rural Productivity (10) sustained by sales of forestry products. RPBR protected areas are Regular according to the 1.2 1,252 families benefiting from PROARCA rating system. sustainable production and conservation 1.2 Financing community-based subprojects projects in protected areas as of July that promote natural resource management 1.1.c New Forestry Law approved by Congress and 2010. through local socio-economic development. sanctioned by the Executive in February 2008. COHDEFOR replaced by Instituto Nacional de Conservación y Desarrollo Forestal Áreas Protegidas y Vida Silvestre (ICF). 1.2 The second round of subprojects is currently being reviewed; at this rate, it is expected that at least 2,000 families will benefit from a total of 50 subprojects by the end of FY11. 2. Reducing the impact of natural 2.1 Plans are in place for 61 2.1.a Disaster mitigation and risk reduction 2.1 The flood early warning system is operational Ongoing Portfolio (Ends) disasters. municipalities and are at an advanced plans developed and approved by the and 44 municipalities were participating in the Disaster Mitigation (11) 2.1 Implementation of a national stage for the additional 20. Municipalities in 60 of the most vulnerable national emergency system through local emergency AAA disaster risk management system for municipalities by 2007, and for a total of 81 of committees by April 2010. CAPRA (11) early warning, response, risk and the most vulnerable municipalities by 2010. vulnerability assessment, and [SGJ, COPECO] 2.1.a DR Management Plans and Territorial mitigation investments at the local level Development Plans completed in 61 municipalities. (81 participating municipalities by Design of mitigation works done in 61 2009). [SGJ, COPECO] municipalities and 30 works had been executed by April 2010. 22 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] OBJETIVE 4: DEVELOPMENT OF HUMAN CAPITAL 1. Improving coverage, efficiency 1. Percentage of students completing 1.a 2,100 PROHECO schools staffed and 1.a PROHECO: Target exceeded. 2909 Ongoing Portfolio (Ends) and quality of Basic Education (1st to 6th grade: 84% in 2009. [Secretaría de functioning by 2008. [Secretaría de Educación] PROHECO schools in 2009. [Secretaría de Community Education (08), Education 9th Grade) by Educación] Educación] Quality Project (13) 6th to 7th grade transition rate: 86% in 1.b The Ministry of Education has designed a Proposed Portfolio (Starts) - Increasing the percentage of students 2009 [UPEG/Secretaría de Educación] mechanism to disseminate information (the 1.b Improved information to parents: Significant DPC (11) completing 6th grade (all ages) from number of teachers assigned to each school progress. The number of teachers per department is AAA 72% in 2005 to 85% by 2010. and the school calendar) to parents and published on the Education Ministry's web page and PETS (09), IGR (09), Regional Service [Secretaría de Educación] publishes it in all schools by 2010. [Secretaría a single official school calendar for the whole Delivery Study (09), Poverty Assessment - Increasing the 6th to 7th grade de Educación] country has been established. The Ministry of (09), PER (08) transition rate from 70% in 2005 to Education have plans to publish the information on 80% by 2010. [Secretaría de 1.c Nationally representative assessment of teachers per school and per district. Educación] student learning implemented and published in the Presidency's Results Based Management 1.c Student learning assessment: Significant System in 2008, participation of the country in progress. UMCE assessed in math and language and PISA and PIRLS in 2010 and every other year for grades 1st to 6th a nationally representative thereafter. [Secretaría de Educación] sample of students from 854 schools in 2008. The results were presented by the Ministry of Education in February 2009. The 2009 EFA POA established the evaluation of student learning in Math and Spanish . However, because of the political situation in the country no evaluation was conducted in 2009. 1.d Human Resource Management in 1.d Teacher Post Audit: Important progress. Education improved, measured by: Teacher Census of teachers and post audit completed in late post audit completed by August 2008; 100% 2008. Recommendations have arisen from the of the personnel records updated in SIARH by Tribunal Superior de Cuentas to the Ministry of March 2011; and 100% of salary payments Education based on the findings. As of June 2010, made through SIAFI by March 2011. not all the recommendations have been incorporated, but the current administration has a clear plan and, it seems, they have the political commitment to address all the recommendations. The new database which will be linked to SIAFI is in the process of being created. 23 BANK ACTIVITIES [Includes partners that INTERMEDIATE INDICATORS AND EXPECTED RESULTS (REVISED) ACTUAL RESULTS ACHIEVED ACTUAL INDICATORS directly support activities identified in MILESTONES TO TRACK (REVISED) matrix] 2. Improving quality and coverage of 2.1 Coverage of institutional delivery is 2.1.a 300,000 persons in the poorest rural 2.1.a [Secretaría de Salud] Ongoing Portfolio (Ends) basic health services.10 67% (2005-2006) [ENDESA]11 communities have access to health service Health Sector Reform Project (09), Nutrition 2.1 Increased coverage of institutional through the contracting of at least 25 service 2.2.a 263 communities with AIN-C strategy in and Social Protection (12), Regional delivery from 57% in 2004 to 75% by 2.2 The malnutrition rate is 30.15% suppliers by 2008. [Secretaría de Salud] Lempira, Intibuca, La Paz, and Copán. [Secretaría de HIV/AIDS Project (11) Social Protection 2010. [Secretaría de Salud] (2005-2006) [ENDESA]12 Salud] Coverage was extended in Ocotepeque and El (14) 2.2 Reduced chronic malnutrition in 2.2.a Childhood integral attention in the Paraíso to 24 municipalities and 314 households AAA children less than 5 yrs. of age from 2.3 In 2004 the prevalence rate in community (AIN-C) strategy expanded to with a population under 2 of approximately 4300 as PETS (10), IGR (09), Regional Service 33% in 2004 to 26% by 2010. pregnant women was 0.5% and in 2009 1,000 new communities in Lempira, Intibuca, of June 2010. Delivery Study (09), Poverty Assessment [Secretaría de Salud] it was 0.3%. The growth rate was La Paz, and Copán by 2010. (09), Addressing the challenges of 2.3 Reduced HIV/AIDS prevalence negative. [Source: Asamblea General [Secretaría de Salud] 2.3.a Target accomplished. The new strategy HIV/AIDS in LAC (07) PER (08) growth rate in pregnant women from Extraordinaria de las Naciones Unidas 2.3.a National HIV/AIDS prevention and (PENSIDA III) was presented by CONASIDA Other Bank Instruments 12% in 2005 to less than 10% by 2010. sobre el VIH y Sida (UNGASS)] control strategy updated for the 2008-2011 (National Committee for HIV/AIDS) on December Reproductive Health in Central America [Secretaría de Salud] period. [Secretaría de Salud] 7, 2007[CONASIDA] (07), UNAIDS ASAP Initiative 3. Improve the impact of social 3.1 Children zero to five in 800 rural 3.1.a Design of a complete, well-focused and 3.1.a Since 2008, the government has identified the Ongoing Portfolio (Ends) assistance to vulnerable groups. communities benefit from an improved integrated social assistance strategy to attend 200,000 poorest households using the Sistema de Nutrition & Social Protection (12) 3.1 Children and at-risk youth are community based nutrition intervention to the 80 thousand poorest households Registro de Benficiarios (SIRBHO). This system is TTL: Cornelia Tesliuc, benefiting from effective safety net (AIN-C) and about 4000 at risk youth including the definition of baselines, objective being used to identify beneficiaries for the Bono Social Protection (15) interventions have participated in training to increase information and monitoring and evaluation 10,000 project as well. An evaluation scheme will TTL: Cornelia Tesliuc their employability. methods by 2008. [First Lady Office/PRAF] be finalized by the second half of 2010. AAA Regional Service Delivery Study (09), Poverty Assessment (09) PER (08) Other Bank Instruments Social Assistance ­ Children and Youth Innovation Fund (10) 4. Strengthen the capacity of Afro- 4.1 FHIS project cycle: 100% of the 4.1.a Elaboration of 9 indigenous people 4.1.a Number of plans: 9 indigenous people Ongoing Portfolio (Ends) Honduran and indigenous groups to sub-projects financed by Nuestras development plans by their corresponding development plans have been elaborated. Nuestras Raíces (10) manage their development. Raices have been incorporated into federations by 2008. [FHIS] TTL: Cornelia Tesliuc 4.1 100% of the sub-projects financed FHIS's project cycle by 2010. [FHIS] 4.1.b Number of sub-projects: 1,666 subprojects by Nuestras Raices have been 4.1.b Design and implementation of 1,400 designed and under implementation. [FHIS, 2007] incorporated into FHIS's project cycle development plans (and sub-projects) to be by 2010. [FHIS] 4.2 Sustainability: 75% of sub-projects incorporated into the 9 ethnic development 4.2 At least 70% of the sub-projects were declared sustainable by 2009. plans by 2009. financed by Nuestras Raices declared [FHIS] sustainable by FHIS by 2009. [FHIS] 10 The Health Sector Project closed May 31, 2010 and the follow-up Project that was prepared will be financed by IADB. Thus the indicators for health services will not be monitored going forward. 11 ENDESA, the national health survey, is typically completed every 5 years. Given the trend the Government of Honduras would complete the next ENDESA in 2010-11, however this may be delayed pending funding. Attempts were made to measure this indicator under the Health Project, but due to staff changes in the project implementation unit performance indicators were not monitored. 12 More recent ENDESA results not available (see above). 24 Annex 2 Honduras ISN: Revised Core CPS Outcomes Original Core CAS Indicator Key Change Made OBJETIVE 1: Equitable Economic Growth for employment generation 1. Reduce Public wage pressures13 1. Target Revised Progressive reduction of total central government Progressive reduction of total central government expenditure in salaries to less than 9% of GDP by expenditure in salaries to less than 10.6% of GDP 2010. (2005 baseline: 8.2%) by 2011. (2009 baseline: 11.1%) 2. Improve public enterprise finances 2. Improve public enterprise finances Preservation of total central government current Preservation of total central government current income above 16.4% of GDP (as in 2005) and income above 17.3% of GDP (as in 2010) and combined public sector income over 24.2 % of GDP combined public sector income over 24.5 % of GDP (as in 2005). (as in 2010). Indicators added: 3. Central Government tax revenues as a share of GDP increase to 16.1 percent in 2011 (baseline: 2009 14.4 percent). OBJECTIVE 1A: Strengthening Competitiveness 1. Strengthen competitiveness and resilience of No Change the financial sector. 1.1 Prevention of money-laundering and financing of terrorism. [CNBS] 1.2 System for Payments, Financial Supervision and Control of Systemic Risks in place with comprehensive coverage. 2. Improve performance of economic services: Target Revised: Energy 2.1 The losses in the energy system (ENEE) have 2.1 The losses in the energy system (ENEE) have been decreased by 5% from 2005 to 2010. Baseline: been decreased by 4% from 2005 to 2011. [ENEE] 24.6% losses in 2005. [ENEE] 2.2 Improvement in the transparency, focus and the 2.2. No change cost of subsidies to households consuming less than 150 kwh/month by 2010. [ENEE] Indicators Added: 2.3 Extend electricity services to rural households: 8,100 through grid and 2,500 through the installation of solar systems by 2011. 3. Improve performance of economic services: Water & Sanitation 3.1 Implementation of the Water Sector Law, 3.1. Indicator extended until 2011. including the transfer of water services and sanitation to Municipal entities, properly regulated by the Indicators Added: ERSAPS by 2010. 3.2 Improvement in the transparency, efficiency, and effectiveness of the subsidy allocation based upon the verification of outputs in the water and sanitation sector. 13 All figures are based on the new methodology to estimate GDP that Honduras adopted in 2007. 25 3.3 Extend access of water and sanitation services to urban and rural communities. 3.2 The 2 Bank supported projects have transparent subsidy allocation schemes based on poverty and performance of service providers. In addition the design of a country wide Water Fund to scale up this experience is ongoing. Finally, progress has been made on sector governance and transparency: ERSAPS has started publishing an annual benchmarking report and the Bank is supporting customer accountability and transparency at utility level in a number of municipalities. 3.3 Extend and improve water and sanitation services to 9,900 households through OBA Facility by 2011. 3.4 Extend water and sanitation connections to 9,300 rural households and build 3,100 latrines by 2011. Improve performance of economic services: Indicators dropped. No lending in sector. Telecommunications Approval of a regulatory framework for the Telecommunications sector by 2008. [CONATEL] HONDUTEL with a private partner by 2010 4. Improve performance of economic services: Roads Target revised: 4.1 Ensure sustainable and substantial improvements 4.1 Ensure sustainable and substantial improvements in road maintenance through financing covering at in road maintenance through financing covering at least 85% of the public network, including 100% of least 75% of the public network, including 100% of the primary network by 2010. [SOPTRAVI] the paved primary network by 2010. [SOPTRAVI] Indicator added: 4.2 Rehabilitation of 400km of rural roads, by 2011 for improved all-season access. 5. Improved business environment and strengthen competition 5.1 Indicator Dropped14 5.1 Honduras ranks 80 in the WEF Business Competitiveness index by 2010 and ranks 110 in the Ease of Doing Business 2010. 5.2 Indicator and Intermediate Indicators 5.2 The Competition Policy Law is being effectively extended to 2011 implemented by 2010: -At least 4 anti-trust cases presented and resolved by the new entity by 2010. 14 Business Competitiveness Index indicator removed as it is no longer tracked by the WEF. Ease of Doing Business ranking removed since ranking is highly dependent on performance of other countries. Absolute Doing Business indicators (e.g. number of days) remain as intermediate indicators. 26 OBJECTIVE 1B: Increasing Rural Incomes Improve security of access to land.15 Target Revised: 1.1 A transparent, efficient and reliable property 1.1 A transparent, efficient and reliable property registrations system measured by an increase in registrations system measured by an increase in urban and rural land parcels incorporated in SINAP urban and rural land parcels incorporated in SINAP under the parcel-based system from 130,000 in 2007 under the parcel-based system from 120,000 by to 210,000 in 2009. [Instituto de la Propiedad] 2011. [Instituto de la Propiedad] Promote rural competitiveness in farm, agro- forestry and off-farm employment. Indicator Replaced: 2.1 10% increase in farm and forest product exports 2.1 30 productive alliances established by 2011. for productive alliances by 2011, compared to baseline. Intermediate Indicators Added: 2.1.a. 1,330 rural beneficiaries benefiting from rural productive alliances by 2011. 2.1.b. Increase the percentage of Rural Productive Alliances that favorably rate the technical assistance received by service providers to 85% by 2011. Governance 1. Improving the effectiveness and transparency of public spending 1.1 SIAFI is used for 100% of the public spending by 1.1 No change central government and decentralized agencies and is published on the web page in a timely and accessible format by 2008. 1.2. Sistema de Gerencia por Resultados links 1.2 Government is developing new results based sectoral and institutional goals in 5 institutions by management system so this indicator no longer 2009. relevant. 1.3 Updated PRS and annual reports, including 1.3 Indicator dropped. The previous definition of PRS spending and financial administration published a National Plan that programming, validated and socialized with the absorbed the PRS, so it is difficult to continue CCERP from 2008 and thereafter. [UNAT] measuring this indicator. 2. Professionalization of key functions and agencies in public sector. 2.1 The first phase of the professionalization and 2.1 Target extended to 2011. accreditation program has been implemented in at least 4 central government agencies, and in key cross-cutting functions of public administration (financial management, human resources, acquisitions and internal control) by 2009. [Central Civil Service Office, DGSC] 3. Strengthen Transparency 3.1 Transparency Law effectively implemented 3.1 No change measured by: -100 % of the de oficio information required by the law is published on the web by the obliged institutions by 2008 and each year thereafter. -100% of the information requests from public have been responded to by the obliged institutions by 2009 and each year thereafter. 15 Indicators and Outcomes refer to the Project area of PATH, which is Comayagua, Siguatepeque, Cortés y Tegucigalpa 27 4. Improving access, efficiency and accountability in the judicial sector. Targets revised: 4.1 The judicial channels to make justice more 4.1 The judicial channels to make justice more accessible have been broadened and diversified, accessible have been broadened and diversified, particularly for minorities or vulnerable groups, with particularly for minorities or vulnerable groups, with the result that the number of expedients by each the result that the number of new court users from 100,000 people has increased in 5%. [Corte Suprema those groups has increased by 40,000 a year by de Justicia, CSJ] end-2011. [Supreme Court, CSJ] 4.1.a Clearance rates for noncriminal cases increased 4.1.a Clearance rates for non-criminal cases from 26% to 45% by 2010 [CSJ]. increased from 26% to 66% by 2011 [CSJ]. 4.1.b Users perception of judicial performance 4.1.b Users perception of judicial performance improved: Less than 50% of businesses and users improved: More than 33% of businesses and users consider that the judicial system is unfair and judges consider that the judicial system is fair and judges are not credible, by 2010. [CSJ] are credible, by end of 2011. [CSJ] 4.1.c Justice more accessible: Number of women, 4.1.c Justice more accessible: Number of women, poor, youth and small businesses accessing courts or poor, youth and small businesses accessing courts or related justice services increased from 10% to 20%, related justice services increased by 100,000 a year by 2010. [CSJ] by end of 2011. [CSJ] OBJETIVE 3: Environmental Protection and Risk Management 1. Ensuring sustainability of protected areas. 1.1 Extended to 2011. 1.1 10 protected areas (approx. 280,000 ha) demarcated and with management plans by the end Indicator Added:16 of 2010. [ICF] 1.2 At least 1,500 families are benefiting from sustainable natural resources management programs 1.1.b Implementation of management plans for Tawahka and Patuca areas, specifically. [SERNA/ICF] 1.2 Financing community-based subprojects that promote natural resource management through local socio-economic development. 2. Reducing the impact of natural disasters. All targets met or on track for completion. 2.1 Implementation of a national disaster risk management system for early warning, response, risk and vulnerability assessment, and mitigation investments at the local level (81 participating municipalities by 2009). [SGJ, COPECO] OBJETIVE 4: Development of Human Capital 1. Improving coverage, efficiency and quality of 1. Target Revised: Basic Education (1st to 9th Grade) by - Increasing the percentage of students completing - Increasing the percentage of students completing 6th grade (all ages) from 72% in 2005 to 87% by 6th grade (all ages) from 72% in 2005 to 85% by 2010. [Secretaría de Educación] 2010. [Secretaría de Educación] - Increasing the 6th to 7th grade transition rate from - Target Exceeded 70% in 2005 to 80% by 2010. [Secretaría de Educación] 16 Indicators added to reflect Regional GEF Corazon project. 28 2. Improving quality and coverage of basic health Indicator dropped, no active lending in Sector17 services. 2.1 Increased coverage of institutional delivery from 2.1. The Health Sector Project closed May 31, 2010 57% in 2004 to 75% by 2010. [Secretaría de Salud] and the follow-up Project that was prepared will be financed by IADB. Thus the indicators for health 2.2 Reduced chronic malnutrition in children less services will not be monitored going forward. than 5 yrs. of age from 33% in 2004 to 26% by 2010. [Secretaría de Salud] 2.2 Extend to 2011 or next ENDESA survey. 2.3 Reduced HIV/AIDS prevalence growth rate in 2.3 Target Exceeded pregnant women from 12% in 2005 to less than 10% by 2010. [Secretaría de Salud] 3. Improve the impact of social assistance to vulnerable groups. Indicator changed: 3.1 A social protection policy with a medium and 3.1 Children and at-risk youth are benefiting from long term vision, agreed by consensus in the Social effective safety net interventions. Protection Sectorial Table framework by 2008. [First Lady Office/PRAF] Intermediate Indicator Changed: 3.1.a Design a well-targeted conditional cash 3.1.a Design of a complete, well-focused and transfer program, Bono 10,000, to cover the extreme integrated social assistance strategy to attend to the poor and provide adequate benefits linked to 80 thousand poorest households including the compliance with investments in human capital of definition of baselines, objective information and children, including the definition of baselines, monitoring and evaluation methods by 2008. [First objective information and monitoring and impact Lady Office/PRAF] evaluation methods by 2011. 4. Strengthen the capacity of Afro-Honduran and All targets met or exceeded. indigenous groups to manage their development. 4.1 100% of the sub-projects financed by Nuestras Raices have been incorporated into FHIS's project cycle by 2010. [FHIS] 4.2 At least 70% of the sub-projects financed by Nuestras Raices declared sustainable by FHIS by 2009. [FHIS] 17 Indicators dropped as there is no active lending in the Sector. New Health project was approved before "pause" but dropped by new government. IDB has continued lending in the sector. 29 Annex 3 Honduras At a Glance Honduras at a glance 2/25/10 Latin Lo wer Ke y D e v e lo pm e nt Indic a t o rs A merica middle Ho nduras & Carib. inco me Age distribution, 2008 (2008) Male Female P o pulatio n, mid-year (millio ns) 7.2 565 3,702 75-79 Surface area (tho usand sq. km) 1 12 20,421 32,309 60-64 P o pulatio n gro wth (%) 1.9 1.1 1.2 Urban po pulatio n (% o f to tal po pulatio n) 48 79 41 45-49 30-34 GNI (A tlas metho d, US$ billio ns) 12.7 3,833 7,692 15-19 GNI per capita (A tlas metho d, US$ ) 1,760 6,780 2,078 GNI per capita (P P P , internatio nal $ ) 3,870 10,309 4,592 0-4 10 5 0 5 10 GDP gro wth (%) 4.0 4.4 7.6 percent of total population GDP per capita gro wth (%) 2.0 3.2 6.3 ( m o s t re c e nt e s t im a t e , 2 0 0 3 ­ 2 0 0 8 ) .25 P o verty headco unt ratio at $ 1 a day (P P P , %) 18 8 .. Under-5 mortality rate (per 1,000) P o verty headco unt ratio at $ 2.00 a day (P P P , %) 30 17 .. Life expectancy at birth (years) 70 73 68 80 Infant mo rtality (per 1,000 live births) 20 22 46 Child malnutritio n (% o f children under 5) 9 5 26 60 5 A dult literacy, male (% o f ages 1 and o lder) 84 92 88 40 5 A dult literacy, female (% o f ages 1 and o lder) 83 90 77 Gro ss primary enro llment, male (% o f age gro up) 120 1 19 121 Gro ss primary enro llment, female (% o f age gro up) 19 1 15 1 106 20 0 A ccess to an impro ved water so urce (% o f po pulatio n) 84 91 86 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 66 78 52 1990 1995 2000 2007 Honduras Latin America & the Caribbean N e t A id F lo ws 19 8 0 19 9 0 2000 2008 a (US$ millio ns) Net ODA and o fficial aid 102 448 449 464 Growth of GDP and GDP per capita (%) To p 3 do no rs (in 2007): Spain .. 6 35 1 11 9 United States 19 215 1 10 71 6 Euro pean Co mmissio n 5 10 18 41 3 A id (% o f GNI) 4.2 16.0 6.5 4.0 0 A id per capita (US$ ) 28 92 72 65 -3 Lo ng- T e rm E c o no m ic T re nds -6 95 05 Co nsumer prices (annual % change) .. 23.3 1 1 .0 3.8 GDP implicit deflato r (annual % change) 13.2 21.2 30.8 9.8 GDP GDP per capita Exchange rate (annual average, lo cal per US$ ) 2.0 4.1 15.0 20.1 Terms o f trade index (2000 = 100) .. 129 1 00 .. 19 8 0 ­ 9 0 19 9 0 ­ 2 0 0 0 2 0 0 0 ­ 0 8 (average annual gro wth %) P o pulatio n, mid-year (millio ns) 3.6 4.9 6.2 7.2 3.0 2.4 1.9 GDP (US$ millio ns) 2,566 3,049 7,106 13,343 2.7 3.2 5.3 (% o f GDP ) A griculture 23.7 22.4 15.9 13.6 2.7 2.2 3.8 Industry 24.3 26.4 32.5 31.0 3.3 3.6 4.6 M anufacturing 15.0 16.3 22.7 21.7 3.7 4.0 5.4 Services 52.0 51.2 51.7 55.4 2.5 3.8 6.4 Ho useho ld final co nsumptio n expenditure 69.4 66.8 70.8 83.5 2.6 3.0 6.1 General go v't final co nsumptio n expenditure 12.7 12.9 13.4 16.0 3.3 2.0 6.1 Gro ss capital fo rmatio n 24.8 23.0 28.3 33.5 3.0 6.9 7.2 Expo rts o f go o ds and services 37.2 37.2 54.0 48.6 1 .1 1.6 6.5 Impo rts o f go o ds and services 44.1 39.9 66.4 81 .6 1.2 3.8 7.9 Gro ss savings .. .. 21.2 18.1 30 Honduras B a la nc e o f P a ym e nt s a nd T ra de 2000 2008 Governance indicators, 2000 and 2008 (US$ millio ns) To tal merchandise expo rts (fo b) 1,306 6,100 To tal merchandise impo rts (cif) 2,980 9,742 Voice and accountability Net trade in go o ds and services -831 -4,647 Political stability Current acco unt balance -508 -1,977 Regulatory quality as a % o f GDP -7.2 -1 4.8 Rule of law Wo rkers' remittances and co mpensatio n o f emplo yees (receipts) 416 2,824 Control of corruption Reserves, including go ld ,31 1 9 2,723 0 25 50 75 100 2008 Country's percentile rank (0-100) C e nt ra l G o v e rnm e nt F ina nc e higher values imply better ratings 2000 (% o f GDP ) Current revenue (including grants) 1 5.1 19.3 Source: Kaufmann-Kraay-Mastruzzi, World Bank Tax revenue 13.8 15.7 Current expenditure 14.8 17.2 T e c hno lo gy a nd Inf ra s t ruc t ure 2000 2008 Overall surplus/deficit -5.2 -2.5 P aved ro ads (% o f to tal) 20.4 .. Highest marginal tax rate (%) Fixed line and mo bile pho ne Individual 25 25 00 subscribers (per 1 peo ple) 7 97 Co rpo rate 15 25 High techno lo gy expo rts (% o f manufactured expo rts) 0.3 1.2 E xt e rna l D e bt a nd R e s o urc e F lo ws E nv iro nm e nt (US$ millio ns) To tal debt o utstanding and disbursed 5,402 3,430 A gricultural land (% o f land area) 26 26 To tal debt service 392 367 Fo rest area (% o f land area) 48.5 41 .5 Debt relief (HIP C, M DRI) 776 1,543 Natio nally pro tected areas (% o f land area) .. 19.6 To tal debt (% o f GDP ) 76.0 25.7 Freshwater reso urces per capita (cu. meters) 14,882 13,504 To tal debt service (% o f expo rts) 8.8 3.7 Freshwater withdrawal (billio n cubic meters) 0.9 .. Fo reign direct investment (net inflo ws) 282 877 CO2 emissio ns per capita (mt) 0.81 1.1 P o rtfo lio equity (net inflo ws) 0 0 GDP per unit o f energy use (2005 P P P $ per kg o f o il equivalent) 6.0 5.5 Composition of total external debt, 2008 Energy use per capita (kg o f o il equivalent) 486 621 IBRD, 0 Short-term, 518 IDA, 449 Wo rld B a nk G ro up po rt f o lio 2000 2008 IMF, 31 (US$ millio ns) Private, 626 Other multi- lateral, 980 IB RD To tal debt o utstanding and disbursed 151 0 Disbursements 0 0 P rincipal repayments 27 0 Bilateral, 826 Interest payments 15 0 US$ millions IDA To tal debt o utstanding and disbursed 838 449 Disbursements 38 51 P riv a t e S e c t o r D e v e lo pm e nt 2000 2008 To tal debt service 8 3 Time required to start a business (days) ­ 20 IFC (fiscal year) Co st to start a business (% o f GNI per capita) ­ 52.6 To tal disbursed and o utstanding po rtfo lio 42 11 Time required to register pro perty (days) ­ 23 o f which IFC o wn acco unt 27 11 Disbursements fo r IFC o wn acco unt 9 2 Ranked as a majo r co nstraint to business 2000 2008 P o rtfo lio sales, prepayments and (% o f managers surveyed who agreed) repayments fo r IFC o wn acco unt 26 2 Co rruptio n .. 62.7 A ccess to /co st o f financing .. 62.4 M IGA Gro ss expo sure 16 6 Sto ck market capitalizatio n (% o f GDP ) 8.8 .. New guarantees 0 0 B ank capital to asset ratio (%) 8.8 8.4 31 Millennium Development Goals Honduras With selected targets to achieve b etween 1990 and 2015 (estimate clo sest to date sho wn, +/- 2 years) H o ndura s G o a l 1: ha lv e t he ra t e s f o r e xt re m e po v e rt y a nd m a lnut rit io n 19 9 0 19 9 5 2000 2008 .25 P o verty headco unt ratio at $ 1 a day (P P P , % o f po pulatio n) 43.5 15.6 14.4 18.2 P o verty headco unt ratio at natio nal po verty line (% o f po pulatio n) .. .. 52.5 50.7 Share o f inco me o r co nsumptio n to the po o rest qunitile (%) 2.8 3.1 3.3 2.5 P revalence o f malnutritio n (% o f children under 5) .. 19.2 12.5 8.6 G o a l 2 : e ns ure t ha t c hildre n a re a ble t o c o m ple t e prim a ry s c ho o ling P rimary scho o l enro llment (net, %) 88 .. 89 93 P rimary co mpletio n rate (% o f relevant age gro up) 64 71 .. 89 Seco ndary scho o l enro llment (gro ss, %) 33 33 .. 64 Yo uth literacy rate (% o f peo ple ages 1 5-24) .. .. 89 94 G o a l 3 : e lim ina t e ge nde r dis pa rit y in e duc a t io n a nd e m po we r wo m e n Ratio o f girls to bo ys in primary and seco ndary educatio n (%) 106 .. .. 106 Wo men emplo yed in the no nagricultural secto r (% o f no nagricultural emplo yment) 48 45 51 45 P ro po rtio n o f seats held by wo men in natio nal parliament (%) 10 8 9 23 G o a l 4 : re duc e unde r- 5 m o rt a lit y by t wo - t hirds Under-5 mo rtality rate (per 1 ,000) 58 49 39 24 Infant mo rtality rate (per 1,000 live births) 45 39 32 20 M easles immunizatio n (pro po rtio n o f o ne-year o lds immunized, %) 90 89 98 89 G o a l 5 : re duc e m a t e rna l m o rt a lit y by t hre e - f o urt hs M aternal mo rtality ratio (mo deled estimate, per 1 00,000 live births) .. .. .. 280 B irths attended by skilled health staff (% o f to tal) 45 55 56 67 Co ntraceptive prevalence (% o f wo men ages 1 5-49) 47 50 62 65 G o a l 6 : ha lt a nd be gin t o re v e rs e t he s pre a d o f H IV / A ID S a nd o t he r m a jo r dis e a s e s P revalence o f HIV (% o f po pulatio n ages 1 5-49) 1.3 1.3 0.9 0.7 Incidence o f tuberculo sis (per 100,000 peo ple) 98 84 73 59 Tuberculo sis cases detected under DOTS (%) .. .. 106 87 G o a l 7 : ha lv e t he pro po rt io n o f pe o ple wit ho ut s us t a ina ble a c c e s s t o ba s ic ne e ds A ccess to an impro ved water so urce (% o f po pulatio n) 72 77 80 84 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 45 51 58 66 Fo rest area (% o f to tal land area) 66.0 57.3 48.5 41.5 Natio nally pro tected areas (% o f to tal land area) .. .. .. 19.6 CO2 emissio ns (metric to ns per capita) 0.5 0.7 0.8 1.1 GDP per unit o f energy use (co nstant 2005 P P P $ per kg o f o il equivalent) 5.4 5.2 6.0 5.5 G o a l 8 : de v e lo p a glo ba l pa rt ne rs hip f o r de v e lo pm e nt 00 Telepho ne mainlines (per 1 peo ple) 1.8 2.9 4.8 1 1 .4 00 M o bile pho ne subscribers (per 1 peo ple) 0.0 0.0 2.5 85.8 00 Internet users (per 1 peo ple) 0.0 0.0 1.2 9.1 00 P erso nal co mputers (per 1 peo ple) .. 0.3 1.1 2.0 Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 100 120 100 75 90 75 50 50 60 25 25 30 0 2000 2002 2004 2006 2008 0 0 1990 1995 2000 2007 2000 2002 2004 2006 2008 Primary net enrollment ratio Fixed + mobile subscribers Ratio of girls to boys in primary & secondary Honduras Latin America & the Caribbean education Internet users 32 Annex 4 Selected Indicators of Portfolio Performance and Management (as of September 2, 2010) Indicator 2008 2009 2010 2011 Portfolio Assessment Number of Projects Under Implementation a 17 16 15 14 Average Implementation Period (years) b 3.6 4.3 4.8 4.8 Percent of Problem Projects by Number a, c 17.6 18.8 20.0 14.3 Percent of Problem Projects by Amount a, c 20.5 18.0 13.8 10.4 Percent of Projects at Risk by Number a, d 29.4 31.3 20.0 14.3 Percent of Projects at Risk by Amount a, d 29.5 26.7 13.8 10.4 Disbursement Ratio (%) e 22.2 16.1 12.0 1.4 Portfolio Management CPPR during the year (yes/no) Yes Yes Yes No Supervision Resources (total US$) 1753 2630 1894 1737 Average Supervision (US$/project) 110 125 95 91 Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 51 5 Proj Eval by OED by Amt (US$ millions) 1,884.6 173.5 % of OED Projects Rated U or HU by Number 21.6 20.0 % of OED Projects Rated U or HU by Amt 15.1 14.3 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 33 Annex 5 IDA Program Summary Proposed IBRD/IDA Base-Case Lending Program a Fiscal Strategic Rewards Implementation b Proj ID US$(M) year b (H/M/L) Risks (H/M/L) 2011 HN - Emergency Economic Recovery Credit 74.7 34 Annex 6 IDA and Grants Operations Portfolio Operations Portfolio (IBRD/IDA and Grants) As of Septem ber 2, 2010 Closed Projects 70 IBRD/IDA * Total Disbursed (Active) 115.27 of w hich has been repaid 0.00 Total Disbursed (Closed) 445.29 of w hich has been repaid 159.15 Total Disbursed (Active + Closed) 560.56 of w hich has been repaid 159.15 Total Undisbursed (Active) 268.85 Total Undisbursed (Closed) 1.25 Total Undisbursed (Active + Closed) 270.10 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Development Implementatio Project ID Project Name Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd Objectives n Progress P088319 HN (CRL) Barrio-Ciudad Project S MS 2006 15.00 8.94 6.40 3.58 P086775 HN (CRL1) Rural Infrastructure Project S MS 2006 47.00 29.48 28.36 2.32 P064913 HN EMERG DISASTER MGMT (TAL) S MS 2000 19.82 0.14 1.22 -8.32 -1.07 P101218 HN Education Quality, Governance & Insti MS MS 2008 15.37 12.49 2.68 P040177 HN Financial Sector Technical Assistance MU MS 2003 9.90 5.76 4.76 P090113 HN GEF Rural Electrification S MS 2006 2.35 1.60 1.60 0.12 P081516 HN JUDICIAL BRANCH MODERNIZATION S S 2006 15.00 4.50 4.12 P082242 HN Nutrition and Social Protection MS MS 2006 20.00 9.10 8.76 P083851 HN PRS TAC S S 2004 8.00 0.99 0.45 P104034 HN Power Sector Efficiency Enhancement MS MU 2009 30.00 29.48 6.17 P109058 HN Road Reconstruction & Improvement II S MS 2008 73.60 69.03 15.34 P101209 HN Rural Competitiveness Project S S 2008 30.00 28.22 8.92 P070038 HN Trade Facilitatio & Productivity Enha MS MS 2004 28.06 5.09 1.77 -0.62 P103881 HN WATER AND SANITATION PROGRAM S S 2007 30.00 24.20 2.99 P115592 HN- Social Protection # # 2010 40.00 40.35 Overall Result 381.75 2.35 0.14 270.45 83.99 4.34 35 Annex 7 Summary of Non-Lending Services Cost Product Completion FY Audience (a) Objective (b) (US$000) Analytical Work/Reports Recent completions: Environmental Assessment FY08 253 G, D, B, PD KG, PD, PS Institutional and Governance Review FY08 160 G, D, B, PD KG, PD, PS Regional Investment Climate Assessment FY08 160 G, D, B, PD KG, PS Regional Energy FY10 160 G, D, B, PD KG, PD, PS Regional Service Delivery Study FY10 300 G, D, B, PD KG, PD, PS Regional Crime and Violence FY10 300 G, D, B KG, PD, PS Public Expenditure Tracking FY10 90 G, D, B, PD KG, PD, PS Fiscal Emergency NLTA FY10 G KG, PS In Preparation / Planned: Regional Disaster Mitigation Study FY11 300 G, D, B, PD KG, PD, PS Country Economic Memorandum FY12 TBD G, D, B, PD KG, PD, PS Central America Competitiveness and Integration Study FY12 400 G,D,B,PD KG, PD, PS Amt Closing IDF & JSDF Ongoing Grants (US$000) FY Children and Youth Innovation Fund-JSDF FY10 2,000 Sustainable Community-based Tourism Devt. For Indigenous ... FY10 50 Transparency & Accountability Public Institutions - IDF FY10 339 Microenterprise Development for the Poor and Indigenous People FY12 1,470 Building Trust in Public Policies and Public Institutions TBD 829 Improving Transparency and Accountability for Property Rights TBD 400 Administration - IDF PHRD Ongoing Grants Adaptation to Climate Change-PHRD FY10 300 Other Ongoing Trust Funds Pico Bonito Sustainable Forests - Biocarbon Fund FY17 1,800 GPOBA Water Sector Grant FY10 4,440 La Esperanza Hydroelectric- Carbon FY15 1,395 Price Risk Management-FS-SP FY10 70 Improving Land Tenure for Women-GENTF FY10 134 Strengthening of Aid Coordination Capacities FY10 471 PRSTAC ­ SIDA co-financing FY10 328 PRSTAC Swedish co-financing ­ Bank executed FY10 400 PRSTAC Swedish co-financing ­ Bank recipient FY10 4,623 Highly Patheogenic Avian Influenza and Control ­ AHI FY11 300 Roadmap for Strengthened Accounting & Auditing FIRST FY10 478 Support for Non-Revenue Water Performance Based Contracting FY10 75 - PPIAF Graduating the Poorest into Microfinance ­ CGAP FY11 100 a. Government (G), donor (D), Bank (B), public dissemination (PD). b. Knowledge generation (KG), public debate (PD), problem-solving (PS). 36 Annex 8 Honduras: IFC Investment Operations Program 2007-2010 (as of June 30, 2010) 2007 2008 2009 2010* Commitments (US$m) Gross 0 38.0 163.3 100.9 Net** 0 38.0 163.3 100.9 Net Commitments by Sector (%) Agribusiness 0 0 21 0 Financial Markets 0 58 36 85 Global Manufacturing 0 42 0 15 Telecommunications 0 0 43 0 Total 0 100 100 100 Net Commitments by Investment Instrument (%) Equity 0 5 0 2 Loan 0 95 64 15 Guarantees 0 0 36 83 Total 0 100 100 100 *As of June 30, 2010 **IFC's own account only 37 Annex 9 IFC Operations Portfolio 38 89°W 88°W 87°W 86°W 85°W 17°N 17°N B ELI Z E Caribbean Sea HONDURAS Roatán A BAHI LA DE Gulf of S Honduras LA 16°N IS 16°N Trujillo Iriona Puerto Cortés za Barra Patuca Tela La Ceiba Balfate Corocito r an Brus C O L Ó N Es pe G U AT E M ALA A T L Á N T I D A bre de Dios La Laguna ya CORTES Tocoa La ula Nom Sonaguera a M Pa Lago de San Pedro ll e r a u an Ag rr o s Ahuas Izabal Sula Cordi Olanchito e q El Progreso Si GRACIAS u i t Quimistan Las Vegas El Carbón Puerto Sico Morazán YORO ia Lempira Higuerito A DIOS Ulú San Esteban a Nuevo Arcadia S A N TA Embalse General Francisco Morazán Dulce Nombre Sirsirtara Yoro BÁRBARA de Culmí Su ula 15°N n 15°N OLANCHO ló co c COPÁN Santa a Co uc Bárbara Lago de Catacamas Salamá de at CO Copán Ruinas Santa Rosa Yojoa P Hu San Luis Guaya l s ca pe tu Awasbila m de Copán de Pa ña uya Jaitique M M To a To Mon as nt Puerto AY Chiquimula Juticalpa de C taña añ Gracias o Cabezas o m a y Cedros t M on AG AG O C O T E - Cerro Comayagua agua Guaimaca M re Las Minas mb Nueva P E Q U E (2,870 m) La CÁ UA aa AZ SCO Ocotepeque Esperanza y La Paz A Gu LEMPIRA n BU AN á Valle de Jal To o San Salvador Angeles TI oc OR CI Marcala EL PARAÍSO C IN Mapulaca L A PA Z M AN 14°N Camasca TEGUCIGALPA Danlí 14°N Yuscarán H ONDURAS FR To Sabana Las Manos E L S ALVAD OR San Miguel Grande SELECTED CITIES AND TOWNS VALLE To NICA RAGUA Estelí DEPARTMENT CAPITALS To Nacaome San Marcos San Salvador de Colón NATIONAL CAPITAL San Lorenzo Choluteca ECA RIVERS LUT 0 20 40 60 80 100 Kilometers O nsec a CH PAN AMERICAN HIGHWAY e Fo Triunf El Triunfo 0 20 40 60 Miles 13°N o lfo d 13°N MAIN ROADS IBRD 33418R1 G This map was produced by the Map Design Unit of The World Bank. FEBRUARY 2008 To RAILROADS PAC IF IC OC EAN Managua The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any DEPARTMENT BOUNDARIES endorsement or acceptance of such boundaries. 89°W 88°W 87°W 86°W 85°W INTERNATIONAL BOUNDARIES