Republic of Honduras
                         Country Partnership Strategy (CPS) FY2012-2014
                                                                                      65963
                                               and
                      First Programmatic Reducing Vulnerabilities for Growth
                                 Development Policy Credit (DPC)

                                  Meeting of the Executive Directors

                                           December 6, 2011


                                         Chair’s Summing Up*

       The Executive Directors discussed the joint IDA/IFC Country Partnership Strategy for the
Republic of Honduras for FY2012-FY2014 (IDA/R2011-0309[IFC/R2011-0305]).

         Directors expressed broad support for the CPS, which they noted is aligned with the
Government’s national plan. They expressed support for the envisaged strategic directions of the CPS
and acknowledged the candid assessment of limitations and risks, as well as the engagement in relevant
areas that are still new to the Bank, especially citizen security. Directors noted that portfolio
implementation remains a key challenge, particularly given governance and capacity constraints, and
welcomed the emphasis placed in the CPS on selectivity with very few new lending operations, a
programmatic approach, and implementing the existing portfolio. In this regard, the need for a continued
effort to improve the performance of the overall portfolio was highlighted.

         Directors commended the Honduran authorities for the fiscal consolidation efforts being
undertaken to address critical issues for the long-term sustainability of public finances. They noted that
Honduras remains on track with the ongoing Stand-By Agreement with the IMF. Directors also noted the
Government’s policies on the comprehensive and integrated program to improve citizen security in light
of high crime and violence rates. However, Directors indicated that serious challenges remain, including
the high rates of crime and violence, the need to address deep-rooted and persistent poverty, inequality in
social indicators and incomes, as well as the effects of climate change. Attention to gender issues was
also encouraged.

        Directors noted that the CPS was prepared in coordination with all the other major donors and
emphasized the importance of continued close donor collaboration in the future. Directors also welcomed
IFC’s significant and growing role in Honduras and encouraged further joint Bank/IFC efforts going
forward. Finally, they look forward to reviewing implementation of the CPS in the Progress Report.


                                        Summary of Discussion

        With respect to the DPC, Executive Directors approved the First Programmatic Reducing
Vulnerabilities for Growth Development Policy Credit in the amount of SDR 55.1 million (US$86 million
equivalent) for the Republic of Honduras on the payment terms and conditions set out in the President’s
Memorandum (IDA/R2011-0311).

         They expressed support for overall design of the program, and noted its focus on tax
administration, pension reform, civil service reform, and citizen security. Directors stressed the
importance of policy continuity in all these areas and encouraged the Bank’s efforts to identify and
mitigate risks associated with the program, particularly with regard to implementation capacity. They
also stressed the importance of close ongoing donor collaboration.



 This summary is not an approved record.