Report No. PIN28
Report No. PIN28
Honduras CAS: Public Information Notice
World Bank Board Discusses
Honduras Country Assistance Strategy
On December 14, 1999, the World Bank's Board of Executive Directors discussed the
Bank Groups Country Assistance Strategy (CAS) for Honduras covering the period 1999-00 to
2001-02.
Country Context
The devastating effects of Hurricane Mitch, which struck Honduras in October 1998,
required the Bank to provide emergency support and refocus its assistance strategy to
support the Government's reconstruction and transformation program. Although Honduras'
social indicators have improved steadily over the past two decades, they remain among the
weakest in the region. Close to two-thirds of households were below the poverty line in
1998 and this likely increased as a result of Mitch. The effects of the disaster makes
Honduras' poverty reduction challenge even more formidable, but at the same time presents
a window of opportunity to rebuild with greater social equity. On December 14, 1999 the
Board also discussed Honduras' Preliminary HIPC Document and agreed that Honduras was
eligible for assistance under the Heavily Indebted Poor Countries (HIPC) Initiative.
Bank Strategy
Poverty reduction is the overriding challenge facing Honduras. The overall thrust
of the Bank Group's assistance strategy, developed jointly with IFC and following
consultations with civil society groups and the donor community, is to help Honduras
rebuild, while laying the basis for a stronger economy and a more equitable distribution
of the benefits from growth. Institutional strengthening is an important priority and
capacity building concerns will figure prominently in the Bank's lending and non-lending
services. The Bank will also seek to support consensus-building in Honduras that can
support reform efforts and improve development effectiveness.
Priorities for Bank Assistance
IDA's portfolio stood at $604 million as of end-November 1999, with an undisbursed
balance of $232 million. The Bank's strategy is framed within the following set of
priorities:
. adoption of a comprehensive poverty reduction strategy, with a strong emphasis on
improving the quality of human capital, the social safety net, supporting indigenous and
Afro-Honduran peoples development, mainstreaming gender, and stimulating sustainable rural
development;
. faster economic growth, as an essential complement to poverty reduction, through
infrastructure rehabilitation, strengthening the financial system, and private sector
development; and
. ensuring that progress can be sustained, through a stable macroeconomic environment and
external debt sustainability, institution building, improved governance, and strengthened
environmental management and disaster preparedness.
IDA credits to Honduras over the next three years are expected to average up to $106
million, assuming satisfactory macroeconomic management, progress in implementing the
Government's poverty reduction strategy, sustained commitment to improving governance, and
satisfactory performance in portfolio implementation. In line with the overall assistance
strategy, about two-thirds of the proposed lending would directly support human capital



(education and health), social safety nets, development of indigenous and Afro-Honduran
peoples, and rural development.
Partnerships
The CAS is an integrated strategy of the World Bank Group, which will be
implemented by IDA, IFC and MIGA. Implementation of the Bank's strategy also calls for
strong collaboration and dialogue with civil society, especially in forging a consensus on
key development priorities and longer-term reform strategies. The donor community is
responding generously to support Honduras' reconstruction. With increased donor efforts,
improved donor coordination will be essential to support the reconstruction and
transformation of Honduras. The Bank is working closely with the IMF to assist the
Government maintain good macroeconomic management and support Honduras in the HIPC
process. The Bank also coordinates closely with the Inter-American Development Bank (IDB)
and, in partnership with other donors, will actively support the Government in the
preparation of a participatory Poverty Reduction Strategy to underpin the HIPC process.
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