## _cr0430 ## Source details **Canonical URL:** [_cr0430](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr0430.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr0430.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr0430.pdf.json) --- ### INTRODUCTION, OBJECTIVES AND ORIENTATION - Purpose: - Report progress of the Honduran Poverty Reduction Strategy’s (PRSP) programs, projects and policy measures and progress toward achieving the PRSP goal during its first year of implementation (2002). - Propose updates to aspects of the Strategy based on implementation experience and extensive consultations during the first half of 2003. - Document approved by the PRSP Consultative Council and by the Social Cabinet in December 2003. - Fundamental objective: - Reduce proportion of population living below the poverty line from 66% in 2000 to 42% in 2015. - Required elements to achieve objective: - Accelerated and equitable economic growth; strengthened macroeconomic framework; structural reforms to increase competitiveness; improved human capital (education and health); strengthened social protection; reinforced gender equity; guaranteed sustainable development. - Strategic reorientation from consultations: - Revised macroeconomic framework with more realistic growth projections (real annual GDP growth adjusted to 4.6% from 5.1%). - Strengthened statistics and indicators; recalibration of some goals. - Expanded budgetary framework to include national poverty spending. - Greater emphasis on participatory, decentralized implementation and transparent monitoring. ### MACROECONOMIC CONTEXT, PROJECTIONS AND POLICY MEASURES - 2001–2003 context and fiscal situation: - 2002 real GDP growth: 2.7% (2002 goal: 4%). - Central Government deficit in 2002: 5.3% of the GDP (2001: 5.9%). - Non-financial public sector deficit: 3.3% in 2002 (3.5% in 2001). - Available concessionary external financing estimated at 1.8% of the GDP in 2002. - Tax administration improvements in 2002 increased tax revenues by around 0.8% of the GDP. - Delays in PRGF negotiations held up almost 1.3% of the GDP in budgetary support loans until 2004. - Key macro projections (selected series as reported): - GDP at market prices (real growth, %): 2000 5.0 2.6 2.7 3.0 3.5 4.0 4.5 - Consumer prices (% increase at end of period): 10.1 8.8 8.1 7.2 6.7 6.0 5.0 - Per capita GDP (US$): 946 981 983 997 1026 1060 1104 - Poverty rate (% of population): n.a. 64.4 63.9 62.1 60.2 58.4 57.3 - Current account (% of GDP): -4.1 -4.9 -2.7 -5.2 -6.7 -4.2 -3.6 - Exports (% of GDP): 23.8 21.5 20.7 20.3 21.1 21.7 22.0 - Gross fixed capital formation (% of GDP): 26.1 23.6 22.1 23.5 26.0 25.0 25.4 - Nominal GDP at market prices (US$): 6,024 6,403 6,584 6,834 7,200 7,617 8,123 - Average Exchange Rate, Lempiras/US$: 14.8 15.5 16.4 17.34 18.34 19.36 20.11 - 2003–2006 projections and policy measures: - Real GDP growth projected: 2003 3.0; 2004 3.5; 2005 4.0; 2006 4.5; thereafter ~4.5%. - Inflation projected to fall to around 5% by medium term. - Central Government deficit projected: 5.7% of the GDP in 2003; 3.5% in 2004; 2.9% in 2005; 2.5% in 2006. - Non-financial public sector deficit projected: 4.9% in 2003; 3.0% in 2004; 2.5% in 2005; 1.7% in 2006. - Non-financial public sector savings projected to rise from 2.8% of the GDP in 2002 and 1.4% in 2003 to 4.0% in 2004, 4.9% in 2005 and 5.9% in 2006. - Measures to expand tax base expected to increase revenues by more than 1.5% of GDP in 2004 (elimination of non-justifiable exemptions and reduced evasion while protecting poor households). ### POVERTY INDICATORS, ELASTICITY BETWEEN GROWTH AND POVERTY, AND 2002 RESULTS - 2001–2002 poverty progression and targets: - Proportion of households below poverty line: 64.5% in 2001; 63.9% in 2002 (relative reduction from 2001 to 2002: 1%). - At 2002 rhythm, projected 56% of households would still be below poverty line in 2015. - Target requires a sustained relative 3% annual reduction in percent poor to reach 42% by 2015. - Elasticity definition and requirements: - Elasticity = percent reduction in poor when real per capita GDP increases by 1%. - Historical elasticity in 1990s: 0.65 (each 1% per capita GDP growth reduced poverty by 0.65%). - To hit target (reduce poor from 64.5% in 2001 to 42% in 2015), if per capita GDP growth is 2% (from real GDP 4.6% and population growth 2.6%), elasticity must increase to 1.5 (more than double historical). - PRSP indicator fulfillment (2002): - Of 20 impact indicators with 2002 information, five fulfilled projected goal in 2002; two additional goals likely met earlier (infant malnutrition and maternal mortality), for a total of seven met and 13 not met in 2002. - Selected indicator series and 2002 results (preserved format): - Poverty rate (1999 base and targets/results): 66 63 61.5 64.4 63.9 — Goal met in 2002? No - Extreme poverty rate: 49 47 45 47.4 45.0 — Yes - Real GDP Growth (series): 5.7 3.5 4 2.6 2.7 — No - Per Capita GDP Growth (series): 2.6 1.5 1.6 0.2 0.3 — No - Pre-basic school coverage rate: 32.9 33.5 36.0 31.9 32.5 — No - % population with access to potable water (1999): 81 82 84 n.a. 81.3 — No - % population with access to excreta elimination systems: 70.2 71 72 69.4 67.6 — No - HDI relative to gender: 0.64 0.65 0.65 0.62 0.63 — No - Gender empowerment index: 0.45 0.46 0.47 0.45 0.45 — No - Income distribution (2002 snapshot): - 80% of households receive 45.7% of national income; top 20% receive 54.3%. - Fifths per capita income (Lempiras / month): - 1st fifth: 134 3.2% - 2nd fifth: 387 7.8% - 3rd fifth: 765 13.2% - 4th fifth: 1,398 21.4% - 5th fifth: 4,466 54.3% ### PRSP PROGRAMMATIC STRUCTURE, INVESTMENT NEEDS AND FINANCING - Six programmatic areas: - Promotion of sustained and equitable growth; actions to attack rural poverty; actions to attack urban poverty; greater investment in human capital; strengthening social protection; measures to assure Strategy’s sustainability. - Original investment total (2001–2015): US$2.665 billion. - Allocation of US$2.665 billion: - 40% human capital - 21% reducing rural poverty - 17% urban poverty - 10% social protection - 8% strategy’s social and environmental sustainability - 1% promoting economic growth (policy-oriented) - Projected financing mix at approval: - External credits and transfers; HIPC debt relief; national counterpart funds. - External financing identified at approval: approximately 29% of total PRSP program. - Projections: 35% from Debt Relief; 36% of total had no identified source (financing gap); expectation that 85% of gap covered by fresh foreign resources and remainder via national counterpart. - Recalibrated PRSP budget (expanded definition) — totals (Millions of Lempiras): - Total PRSP by year: 2001 8,752.2; 2002 8,155.6; 2003 8,929.4; 2004 10,724.0; 2005 12,823.3; 2006 15,365.2; 2007 17,337.5 - TOTAL % of GDP: 2001 8.8; 2002 7.5; 2003 7.5; 2004 8.1; 2005 8.7; 2006 9.4; 2007 9.7 - PRSP economic classification (selected shares % of PRSP, 2001–2007): - Salaries: 3.3 3.4 3.4 3.4 3.4 3.4 3.4 - Capital Transfers: 3.3 2.3 2.3 2.1 2.7 2.7 2.7 - Investment: 0.6 0.4 0.4 0.4 0.4 0.7 1.2 - Financing source shares (% of PRSP): - National Funds: 58.7 68.6 64.8 60.7 59.6 55.4 55.1 - Loans: 28.9 20.6 23.8 20.5 20.0 20.4 19.0 - Donations: 8.9 5.0 5.7 13.8 8.0 6.7 7.3 - HIPC: 3.6 5.7 5.7 5.0 11.8 9.7 7.4 - Projected financing gaps: - None for 2003–2004; gap of 0.1% of GDP in 2005; 0.7% in 2006; 1.1% in 2007. - HIPC resources to be considered from 2005 onwards (Culmination Point expected for 2005). ### IMPLEMENTATION PERFORMANCE (2001–2002) — EXECUTION AND SHORTFALLS - Programmed spending and execution: - Proposed investment: US$346.9 million for 2001; US$387.9 million for 2002. - Overall implementation of programmed spending: - 2001: 54.5% implemented. - 2002: 42.2% implemented. - Financing implemented: 187.3 (2001) and 164.7 (2002) representing 54.0% and 42.5% respectively of programmed financing. - Execution by program area (implementation as percent of programmed, selected): - Reducing Poverty in Rural Zones: 77.6% (2001) and 110.1% (2002). - Social Protection: 67.8% (2001) and 29.75% (2002). - Strategy Sustainability: 7.5% (2001) and 26.54% (2002). - Economic Growth: 0.0% (2001) and 11.8% (2002). - Reducing Urban Poverty: 19.7% (2001) and 14.7% (2002). - Investing in Human Capital: 76.5% (2001) and 33.8% (2002). - Causes of under-implementation: - Delays in HIPC approval and donor hesitancy absent SWAp arrangements. - Programs and projects lacked detailed ready-to-implement specifications; original budget assignments were indicative. - Optimistic original programming and late approval of original PRSP document (late 2001) combined with government transition in 2002. ### HIPC FLOWS, POVERTY REDUCTION FUND AND APPLICATIONS - HIPC debt relief received 2000–2003 totaled US$201.9 million (Table IV.4). - HIPC spending (interim) totaled US$95.8 million (education, health, housing, rural development, social protection, others). - Education: US$49.4 million (51.6% of HIPC spending). - Health: US$26.5 million (27.7%). - Social Protection: US$11.9 million (12.5%). - Housing program (Urban Development): US$6.5 million (6.8%). - Projected balance of the Poverty Reduction Fund at end-2003: L.1.753 billion, equal to US$101.0 million. - Note: BCIE relief valuation and exchange operations complicate annual valuation and spending. ### CONSULTATIVE PROCESS, CIVIL SOCIETY PARTICIPATION AND PRIORITIES (MARCH–MAY 2003) - Consultations: - Seven Sector Commission workshops; nine civil society sector workshops. - Total participants: 455 (274 men = 60%; 181 women = 40%). - Representation: 320 civil society organizations; 80 government representatives; 55 international donors. - Main civil society demands and priorities: - Greater national-level participation in macroeconomic policy, CAFTA stance, and priority program selection. - Tripartite Government-Civil Society-Donor decision-making conception. - Concerns about delays in PRSP implementation and HIPC Culmination Point holdups. - Calls to reorient national and external resources beyond HIPC-financed programs. - Requests for improved indicators, expanded quantitative and qualitative policy indicators, municipal-level disaggregation, and participatory bottom-up methodologies. - Priority program support: employment generation; competitiveness and production; strengthen tourism, forestry, agriculture, maquila; land access and property registries; MIPYME support; improved health, education, water services; children/youth/elderly programs; gender equity; indigenous rights; transparency and anti-corruption; environmental management. - Incorporation of consultative results: - Changes approved by PRSP Consultative Council on October 28, 2003 and Social Cabinet on October 29, 2003; final version distributed December 4, 2003. - Major changes: revised macroeconomic framework; strengthened statistics and indicators; new goals and recalibration; expanded budgetary conception including national efforts; emphasis on participatory, decentralized implementation and transparent monitoring; alignment with sector programs. ### SECTOR OUTCOMES, PROGRAMS AND KEY IMPLEMENTATION RESULTS - Education: - PROHECO schools in operation: 1,025 (56 created in 2001). - Creation of 1,384 jobs at different educational levels. - Conversion and construction: 100 new schools; expansion of alternative delivery systems serving ~150,000 youth and adults excluded from formal system. - Education for All Plan 2003–2015 resources: approximately US$86.0 million aimed at universal sixth-grade graduation by 2015. - Costing 2003–2005: total L.1.429 billion (US$86.0 million); average annual L.475.0 million (US$28.6 million). - Teacher salaries (selected series): 2,531.5; 2,878.5; 3,107.1; 3,512.4; 3,824.2; 4,240.0; 4,646.0 (Millions of Lempiras, by year in table). - Health: - PRIESS financed by IDB loan US$36.0 million; basic package delivered to more than 181,000 people in 749 extremely poor rural communities (average investment US$15 per person per year); coverage expected to extend to 500,000 in 2003. - World Bank loan for Health Sector Reform: US$27.0 million. - Anti-retroviral therapy begun benefiting 1,223 people (as of September 2003) using national funds of 25 million. - Global Fund approved: US$41.0 million ($7.0 million for tuberculosis; $7.0 million for malaria; remainder for HIV/AIDS). - Rural sector and land: - PRONADERS coordinated 18 projects benefitting 94,872 families in 2002 (569,232 people). - Agricultural output increases 2001→2002: maize 8.4 to 10.3 million quintals; beans 0.9 to 1.0 million quintals; rice 0.2 to 0.5 million quintals. - Credit to farm producers increased by L.1.424 billion in 2002 (67% more than previous year). - Irrigation micro-projects expanded to ~9,000 hectares in 2002; target 10,000 hectares per year. - Land titling actions (Box 3): - 3,236 hectares awarded to 54 peasant enterprises (benefiting 1,153 associates). - 10,237 property titles awarded totaling 52,680 hectares. - 115,323 hectares registered in Francisco Morazán, Colón and Intibucá. - Water and sanitation (APPENDIX F planning and costs): - PRSP coverage targets by 2015: Water coverage Rural 95.0, Urban 95.0, Total 95.0 (percent); Sanitation coverage Rural 95.0, Urban 95.0, Total 95.0 (percent); Urban wastewater treatment Total 57.3 (percent). - Population projections 2001→2015: Total 6,530,331 → 8,894,975. - Investment cost estimates 2002–2015 (2002 prices): - Water total cost US$195,662 thousand; Annual Average US$13,976 thousand; Total in Lempiras 3,249,946 (thous). - Sanitation total cost US$373,092 thousand; Annual Average US$17,227 thousand; Total in Lempiras 4,005,866 (thous). - Wastewater treatment total cost US$131,920 thousand; Annual Average US$9,423 thousand; Total in Lempiras 2,191,193 (thous). - Consolidated total capital costs: US$568,754 thousand; L.9,447,004 thousand. - Unit cost assumptions preserved from source (examples): - Rural water: US$37 per person; Urban water: US$400 per connection (4.96 inhabitants per dwelling). - Rural latrine: US$60 per latrine; Urban sanitation connection: US$600 per connection. - Wastewater treatment unit costs per lps: 2,000–10,000 inhabitants US$10,000 per lps; 10,000–100,000 US$22,000 per lps; >100,000 US$100,000 per lps. - Public security, governance and institutional reforms: - Administrative Simplification Law approved (Decree No. 255-2002). - National Anti-Corruption Council reinstalled; Efficiency and Transparency Unit began inspections (120 inspections; 76 final reports). - Supreme Accounts Tribunal created (Legislative Decree No. 268-2002). - Judicial reforms implemented: Constitutional Reform ratified January 2002; New Penal Procedures Code entered force February 2002; Constitutional Court in operation. - Decentralization: PRODDEL approved; training to 141 mayors and 210 civil society representatives in 2002; decentralization programmed to begin first half 2003 for health and education. ### MONITORING, EVALUATION, INSTITUTIONAL FRAMEWORK AND PSIA - Institutional milestones: - Law creating the Poverty Reduction Fund (FRP) and PRSP’s Consultative Council passed by National Congress. - Development of SIERP (System of Indicators for the PRSP) began in 2002; expected to be operating in 2004. - SIERP main components: - Poverty Indicators System (SIP) and Management Evaluation System (SEG). - Data sources: INE, Central Bank, SEFIN/SISPU/SIAFI/SINACOIN, line ministries, SINIMUN. - Achievements: definition of impact and intermediate indicator tables; Monitoring Plan for Indicators designed; prototype application integrating SIP and SEG developed. - PSIA: - Poverty and Social Impact Analysis studies identified as fundamental for monitoring policy impacts. - A PSIA underway to evaluate impact of fiscal adjustment measures approved in 2002 on poverty. ### RE-CALIBRATION OF GOALS, PROGRAMMING AND COSTING (TABLE V.1 & V.2 HIGHLIGHTS) - Revised impact indicator trajectories (selected): - Real GDP growth: 2002 2.7; 2003 3.0; 2004 3.5; 2005 4.0; 2006 4.5; 2010 4.5; 2015 4.5. - Per capita GDP growth: 2002 0.3; 2003 0.6; 2004 1.1; 2005 1.6; 2006 2.2; 2010 2.3; 2015 2.4. - Social spending (% of total Central Government spending): 2002 33.3; 2003 33.8; 2004 36.2; 2005 39.5; 2006 43.7; 2010 44.0; 2015 44.0. - Poverty rate: 2002 63.9; 2003 62.1; 2004 60.2; 2005 58.4; 2006 57.3; 2010 50.0; 2015 42.0. - Electricity coverage rate: 2002 64.2; 2003 66.0; 2004 67.2; 2005 69.0; 2006 70.1; 2010 75; 2015 80. - Pre-basic education coverage: 2002 32.5; 2003 34.9; 2004 35.7; 2005 36.5; 2006 38.6; 2010 42.0; 2015 60.0. - Education costing (Third Cycle / Secondary expansion examples): - Baseline third cycle coverage in 2000: 24% (excl. over-age); to reach 56% in 2010 total enrollment 7-9 must rise from 231,000 to 380,000; current public cost per student: $420 per year. - If expanded at current cost, public spending for third cycle education would need to increase from 0.63% of GDP in 2003 to 0.98% in 2010 and 1.23% in 2015; alternative efficiency strategies could limit spending to 0.93% of GDP in 2015. - Programming and negotiation of additional resources: - Education for All (EFA): US$86 million (2003–2005). - Global Fund: US$40–41 million for HIV-AIDS, TB, malaria. - Consultative Group to be organized; Millennium Challenge Account potential; conclusion of PRGF with IMF to unlock World Bank and IDB credit. ### CONCLUSIONS, LESSONS LEARNED AND POLICY PRIORITIES - Performance summary and lessons: - Performance of PRSP main indicators in first implementation year (2002) was disappointing. - Two key lessons: i) implement decisive plan focused on measurable goals (education, health, water and sanitation, rural infrastructure); ii) pursue economic reforms to stimulate private investment and growth through coherent macroeconomic and competitiveness programs. - Prioritized government actions for 2003–2005: - Link sector program design with PRSP goals; improve transparency of PRSP information; decentralize PRSP implementation; strengthen civil society participation. - Short/medium-term priorities: economic reactivation and job creation; development of human capital; justice and citizen security. - Crosscutting themes: environmental preservation and risk prevention; gender equity; decentralization. - Operational recommendations and institutional measures: - Finalize and operate SIERP and participatory monitoring mechanisms. - Adopt sector-wide approaches (SWAp) in Health, Education, Citizen Security, Water & Sanitation and Agro-Forestry. - Implement Annual Operation Plans coordinated with General Budget and Consultative Council. - Prioritize targeting: initial focus on 80 rural municipalities with malnutrition >52% and seven urban municipalities with highest absolute poor populations. - Continue PSIA to measure distributive impacts of macro and fiscal measures. - Secure timely PRGF agreement with IMF to facilitate budgetary support and HIPC Culmination Point progress. *Source: PROGRESS REPORT, 2002 — Excerpts from the PRSP Progress Report and Update (document _cr0430).* ### INTRODUCTION............................................................................................................ ### INTRODUCTION ### Overview and purpose - Reports progress of the Honduran Poverty Reduction Strategy’s (PRSP) programs, projects and policy measures and progress toward achieving the PRSP goal during its first year of implementation (2002), following approval by the Government of Honduras and the Directorates of the International Monetary Fund (IMF) and the World Bank (WB) in late 2001. - Proposes updates to aspects of the Strategy based on implementation experience and an extensive consultative process organized during the first half of 2003. - Document was approved by the PRSP Consultative Council and by the Social Cabinet of the Government of Honduras in December 2003. ### Fundamental objectives and orientation - Maintains the PRSP’s long-range vision through 2015 and its strategic orientation and poverty reduction goals. - Fundamental objective: reduce the proportion of the population living below the poverty line from 66% in 2000 to 42% in 2015. - Achieving this objective requires more accelerated and equitable economic growth, strengthened macroeconomic framework, structural reforms to increase competitiveness, improved human capital (education and health), strengthened social protection networks, reinforced gender equity, and guaranteed sustainable development. ### Consultative process and major adjustments - Technical consultations led by Sector Commissions (Mesas Sectoriales) with tripartite dialogue between Government, Civil Society and Donors; policy oversight by PRSP Consultative Council representing eleven civil society sectors. - Consultations produced important adjustments including: - Incorporation of a macro-economic framework with more realistic growth rate projections. - Strengthened statistics and indicators of PRSP results and impact; incorporation of new goals and recalibration of some original goals. - Amplified budgetary framework to transparently observe national poverty reduction efforts (not just external resources). - Greater emphasis on participatory and decentralized implementation and creation of transparent mechanisms to monitor the PRSP. - Beginning alignment of PRSP interventions and goals with sector programs in education, health, water and sanitation, agro-forestry and citizen security. - Chapter I of the report (not reproduced here) provides details on organization and results of the consultation process. ### Macroeconomic context and updates - Chapter II analyzes macroeconomic framework: slowing economic growth and the fiscal crisis that arose in 2001; measures taken to correct the situation. - Failure to fulfill some goals of the previous Poverty Reduction and Growth Facility (PRGF) led to systematic review of macroeconomic management and structural reforms. - Negotiation of a new agreement with the IMF caused delays in delivery of HIPC funds and budgetary support programs (these are conditioned upon a PRGF agreement being in place), causing some delays in PRSP implementation. - Macroeconomic framework updated to reflect circumstances: - Projection for real annual GDP growth adjusted to 4.6%, since the original goal of 5.1% was seen as unrealistic. - Despite the lower growth projection, poverty reduction goals remain unchanged, implying intensified effort to increase the “elasticicity” between economic growth and poverty reduction through policy reforms and social spending programs that favor the poorest Hondurans. ### Poverty indicators, measurement and results to 2002 - Chapter III presents the poverty situation overview and main poverty-related economic and social indicators in 2001 and 2002. - In response to consultative suggestions, indicators were expanded and refined; changes in definitions proposed to enable more regular and reliable reporting. Appendix A provides more details about impact indicators and PRSP results in 2001-2002. - Review of results in 2001 and 2002 shows poverty reduction has not yet accelerated decisively because of: - International recession and the fiscal crisis reducing economic growth to much lower than expected levels. - Delays in PRSP program implementation. - Key statistics on poverty progression: - Proportion of households living below the poverty line: 64.5% in 2001 and 63.9% in 2002. - Relative reduction from 2001 to 2002: 1%. - At this rhythm, 56% of Honduran households will still be living below the poverty line in 2015. - To achieve the 42% goal for 2015, a relative 3% annual reduction will be needed. ### Implementation strategy and commitments - The Report defines an implementation strategy based on clear commitments to produce concrete results during 2003-2005. - Commitments include developing a sector-wide approach to PRSP implementation and focusing programs on the most vulnerable sectors of society. - Enhancements to monitoring, measurement and institutional arrangements (summarized in later chapters) aim to support implementation, decentralization, targeting, and accountability. *Source: PROGRESS REPORT, 2002 — INTRODUCTION (pages 1–3 of the supplied content).* ### 9. These results suggest that the implementation of programs and policies outlined in the Strategy ### _cr0430 - 9. These results suggest that the implementation of programs and policies outlined in the Strategy ### Need to accelerate implementation and core objectives - The Report concludes that the implementation of programs and policies outlined in the Strategy should be accelerated to assure fulfillment of the 2003-2015 goals. - Emphasis on increasing the economic growth rate, with measures to: - strengthen competitiveness, - improve income redistribution, - increase investments in human capital, - all within a framework of macroeconomic and fiscal stability. - Proposal to increase the “elasticity” between growth and poverty via political reforms and investment programs to improve poor populations’ access to economic opportunities. ### Programmatic structure of the PRSP - The PRSP proposes policy reforms and social and economic investments in six programmatic areas: - promotion of sustained and equitable growth of the economy; - actions to attack rural poverty; - actions to attack urban poverty; - greater investment in human capital; - actions to strengthen social protection for vulnerable groups; - measures to assure the Strategy’s sustainability. - Investment programs originally proposed total: US$2.665 billion (2001–2015). - Allocation of the US$2.665 billion: - 40% for investments in human capital - 21% for reducing rural poverty - 17% for urban poverty - 10% for social protection - 8% for the strategy’s social and environmental sustainability - 1% for promoting economic growth - Note: the economic growth pillar relies mainly on legislative and policy measures and does not require much public investment. ### Financing plan and identified gaps - Projected financing mix for the PRSP: - external credits and transfers from bilateral and multilateral agencies, - debt relief associated with Honduras’s inclusion in the HIPC initiative, - national counterpart funds for externally financed programs. - External financing identified at approval: approximately 29% of the total PRSP program. - Many pre-identified resources were part of international aid negotiated under the Master Plan for National Reconstruction and Transformation (PMRTN) after Hurricane Mitch (October 1998). - Projected additional breakdown: - 35% of the PRSP’s resources projected to come from Debt Relief - 36% of the total required resources had no identified source of funding (financing gap) when the PRSP was approved - It was hoped that 85% of the financing gap would be covered by fresh resources negotiated with foreign sources, and the remainder from national counterpart funds. ### Budgetary implementation performance (2001–2002) - Implementation shortfalls: - Only 58.9% of the amount originally programmed for 2001 was implemented. - Implementation dropped to 43.5% in 2002. - Causes of low implementation: - Programs and projects in the PRSP lacked sufficiently detailed specifications. - Budget assignments in the original document were indicative rather than exact and were not based on ready-to-implement program/project estimates. - Project profiles prepared by the Social Cabinet in 2002 remained unfunded due to delays in HIPC approval and donor hesitancy absent Sector Wide Approaches (SWAp). ### Policy measures and non-capital reforms - The Strategy includes policy measures to: - promote equitable economic growth, - correct institutional, legal, and administrative barriers to poverty reduction, - strengthen the legal system and reduce corruption, - improve efficiency and effectiveness of social investments, - make sector and public administration processes more agile. - Although these measures do not require significant financing, their contribution to poverty reduction is viewed as arguably as important as financed investments. - Reported reforms in 2002-2003 included accountability and good governance, tax administration, administration of justice, reform of laws governing the political process, abolition of immunities, increased citizen security, and modernization of the water and telecommunications sectors. - Appendix B (in source) details the current status of each proposed policy measure. ### Operational and institutional framework developments - Actions to “instrumentalize” the operational and institutional framework aim to increase efficiency and accountability of Strategy implementation by the Social Cabinet and support structures. - Institutional milestones: - National Congress passed the law creating the Poverty Reduction Fund (FRP) and the PRSP’s Consultative Council. - Development of a System of Indicators for the PRSP (SIERP) took place in 2002; SIERP was still being constructed and was expected to be operating in 2004. - Chapter V: updated PRSP Program for 2003-2007 with proposals to adjust some PRSP goals and redefine the PRSP budget to align with IMF and World Bank tracking requirements for total poverty spending. - New programming of poverty spending underway with studies to quantify costs of meeting each main goal. - Additional resources being negotiated to guarantee fulfillment of key goals in basic education, primary health care, water and sanitation, and infrastructure services. - Decentralization and monitoring plans: - Further decentralize the PRSP during the 2003-2005 period to improve targeting and organize public interventions benefiting the poorest groups. - Modern monitoring and evaluation systems to assure transparency and accountability. ### Consultative process and participation (March–May 2003) - A first draft of the PRSP Progress Report and Update was submitted to consultations with Civil Society organizations and International Donors between March and May 2003. - Consultation methodology used qualitative analytical matrixes and an independent team of facilitators produced a detailed report. - Participating workshops: - Seven Sector Commission workshops were proposed (Macroeconomics and Competitiveness; Agro-Food Development and the Rural Environment; Human Development; Road Infrastructure; Good Governance and Human Rights; The Environment and Risk Management; Social Protection Networks). - Nine workshops with civil society sectors (Children and Youth; Women; NGOs; Local Governments; Peasants; Workers; COHEP and the Economy’s Social Sector; Indigenous Peoples; Community Members). - Participation statistics: - Total participants: 455 - 274 (60%) men - 181 (40%) women - Representation breakdown: - 320 represented civil society organizations - 80 were government representatives - 55 represented international donors - Outcomes of the consultative process: - Short-term: reactivated interest, raised awareness, greater civil society receptiveness to the PRSP. - Medium-term: stimulated expectations and interest in Strategy implementation, monitoring and evaluation; led to improved participation mechanisms. - Common consultation criticisms and recommendations: - Concern about delays in PRSP implementation and poverty reduction progress; many attributed delays to holdups in the HIPC Initiative’s Culmination Point. - Need to improve prioritization of programs to be financed under the PRSP and strengthen links between actions and Strategy goals. - Recommendation that the PRSP should reorient both national and external resources, not be limited to HIPC-financed programs. - Calls for a more coherent macroeconomic framework from donors and discussion of perceived contradictions between IMF-negotiated macro framework and PRSP policies by some civil society representatives. - Requests for improved indicators (implementation, results, impact), expanded quantitative and qualitative policy indicators, and modern reporting systems at regional and local levels. - Demand for more detailed program/project information: implementing institution, geographic scope, spending distribution by funding source and economic object, physical and budgetary goals, progress, number of beneficiaries, and municipal-level disaggregation. - Strong advocacy for participatory, bottom-up methodologies in identifying and implementing PRSP actions. - Acceleration of the Local Development and Decentralization Program (PRODEL) to strengthen municipalities, consortiums (“mancomunidades”), NGOs, community structures, and other regional/local bodies in planning and implementing the PRSP. *Source: PROGRESS REPORT, 2002 — PRSP Progress Report and Update (selected excerpts)* ### 41. In addition, civil society representatives who were consulted demanded greater participation at the ### _cr0430 - 41. In addition, civil society representatives who were consulted demanded greater participation at the ### Civil society participation and priorities - Civil society demanded greater participation at the national level in determining strategic aspects of the PRSP, including: - defining macroeconomic policies and adjustment programs; - defining the nation’s strategy vis-à-vis CAFTA; - making national-level decisions about priority programs and projects to be financed under the PRSP. - A “tripartite” Government-Civil Society-Donor conception was proposed to determine the Strategy’s main criteria and produce unified definitions to which political authorities would adhere during implementation. - Recommendations for consultative processes: - national level consultative processes should be more continuous; - consultative processes should have real impact on orienting and implementing the Strategy. - Civil society prioritized PRSP programs and policies with generalized support, including: - generating employment; - increasing competitiveness and production; - strengthening key sectors: tourism, forestry, agriculture, maquila industries; - improving access to land and property registries; - supporting micro- and small-scale enterprises and the social sector; - increasing coverage and improving quality of health care, education, and water services; - programs for children, youth, and the elderly; - equal opportunities for women; - strengthening rights of indigenous groups; - transparency and anti-corruption; - political reforms and decentralization of the PRSP; - improving environmental management with a participatory approach. - Themes proposed for incorporation into the PRSP that were perceived as absent: - human rights; - gender; - comprehensive agrarian reform; - social security; - the sexual exploitation of women and children; - rehabilitating gang members (“maras”). ### Comments about the PRSP’s programmatic areas - Equitable and sustainable economic growth: - concerns about reasonableness of macroeconomic projections, specifically that the proposed 5.1% growth rate was too high; - need to more explicitly link growth and poverty reduction through measures aimed at improving equity; - consensus on need for a stable macroeconomic framework and an efficient, equitable and well-administered tax scheme, with diverse opinions on concrete configuration. - Views on the macroeconomic framework: - some civil society argued the framework applied to date worsened poverty and impacted weakest sectors differentially; - private sector criticized fiscal measures that increase pressure on the formal sector; - others emphasized using income and savings from fighting corruption to finance the Poverty Reduction Strategy. - Public spending and taxation: - criticisms of excessive Government size and argument that public spending on salaries should be defined according to the nation’s real macroeconomic possibilities; - calls to abolish tax exemptions to make current public spending levels more viable. - Production and competitiveness: - concerns that PRSP emphasized social sectors while ignoring private investment and production; - calls to strengthen the National Competitiveness Program and develop micro- and small-scale enterprises; - divergent views on CAFTA: some opposed trade liberalization fearing negative impact on agriculture; others stressed strengthening Honduras’s competitiveness. - Rural poverty reduction: - need to define a clear national rural development policy and consolidate rural development programs; - calls to rationalize services provided through DINADERS and PRONADERS and design policy for small-scale farmers with comprehensive strategies; - need to improve financing schemes for small-scale peasant economies and recognize role of forestry and agro-industrial micro-enterprises; - disagreement with agricultural debt reprogramming measures perceived to favor large-scale producers. - Land policy and rural infrastructure: - unanimous agreement on need for an effective land access policy and land organization scheme promoting rational use; - peasant organizations demanded land redistribution in an extensive agrarian reform with assigned budgetary resources; - emphasis on improving irrigation and access to basic infrastructure: water and sanitation, electricity, telecommunications, and roads in rural areas. - Urban poverty: - calls to develop social and economic infrastructure in marginal neighborhoods and improve informal housing; - request for greater disaggregation of indicators for access to basic services and more participation by community members and associations (Patronatos); - skepticism about whether the “Housing for People” program can really serve the poor and about reported urban water coverage and service quality. - Education and health: - need to develop a better monitoring system for goals; - stronger relationship between public policies and local actors; - more accountable use of resources and attention to quality of services; - concern about failure to meet goals including net primary and secondary education coverage. - Specific groups and cross-cutting themes: - demand for a comprehensive approach to reducing poverty among specific groups rather than temporary social compensation (“assistentialist”) projects; - more emphasis on gender, children, the elderly, ethnic groups and disabilities and their cross-cutting nature in the PRSP; - proposal to treat these groups’ right to equitable treatment; - specific demand for implementation of a National Policy on Women and linkage to other State policies. - Sustainability, security, and environment: - requests to fortify citizen security actions, democratic participation, and governmental accountability; - need to improve how PRSP implementation addresses environmental themes and risk management; - concern about apparent reduction in importance of environmental protection and risk management in recent years; - proposal for a clear State environmental and risk management policy; - requests for improvements to PRSP monitoring systems and more citizen participation in monitoring. ### Incorporation of consultative results into the Progress Report - The revised PRSP Progress Report and Update incorporates many comments and suggestions from consultations. - Approval timeline: - changes approved by the PRSP Consultative Council on October 28th, 2003; - changes approved by the Social Cabinet on October 29th, 2003; - final version distributed to members of both structures at the joint planning session on PRSP implementation on December 4th, 2003. - Major changes included: - inclusion of a revised macroeconomic framework; - strengthened sections on statistics and PRSP result and impact indicators; - incorporation of new goals and re-calibration of some of the PRSP’s original goals; - proposal of a new, more global budgetary conception that includes national efforts as well as donor-financed programs to better observe national poverty reduction efforts; - greater emphasis on PRSP work program to strengthen participatory and decentralized implementation and creation of more transparent monitoring mechanisms; - alignment of PRSP interventions and goals with sector programs in education, health, water and sanitation, agro-forestry and citizen security. - Government actions underway (PRSP Implementation Plan for 2003-2005): - link design of sector programs with PRSP goals; - improve transparency of PRSP information; - decentralize PRSP implementation; - strengthen civil society participation in development and implementation. - A matrix of actions to strengthen specific PRSP areas in response to consultative concerns is contained in Chapter IV of the report. ### Macroeconomic framework: key findings, projections and policy measures - General objectives: - Accelerated, equitable and sustained economic growth is essential to reducing poverty. - Requires maintaining a stable fiscal, monetary and exchange framework and strengthening competitiveness to attract investment and improve productivity. - Selected macroeconomic indicators and projections (Table II.1 highlights): - GDP at market prices (real growth, %): 2000 5.0 2.6 2.7 3.0 3.5 4.0 4.5 - GDP Deflator: 9.7 8.0 6.3 6.4 7.7 7.3 6.0 - Consumer prices (% increase at end of period): 10.1 8.8 8.1 7.2 6.7 6.0 5.0 - Per capita GDP (US$): 946 981 983 997 1026 1060 1104 - Poverty rate (% of population): n.a. 64.4 63.9 62.1 60.2 58.4 57.3 - Current account (% of GDP): -4.1 -4.9 -2.7 -5.2 -6.7 -4.2 -3.6 - Trade balance (% of GDP): -20.5 -22.3 -21.9 -24.7 -26.3 -25.1 -24.7 - Exports (% of GDP): 23.8 21.5 20.7 20.3 21.1 21.7 22.0 - Imports (% of GDP): -44.3 -43.8 -42.6 -45.0 -47.4 -46.7 -46.7 - Non-factor services (net, % of GDP): 6.4 5.1 6.7 7.3 7.6 7.9 8.2 - Factor services (net, % of GDP): -2.4 -2.2 -2.4 -2.9 -2.8 -2.5 -2.4 - Transfers (net, % of GDP): 12.4 14.5 15.0 15.1 14.9 15.4 15.2 - Gross fixed capital formation (% of GDP): 26.1 23.6 22.1 23.5 26.0 25.0 25.4 - Non-Financial Public Sector investment (% of GDP): 5.9 6.8 5.2 5.5 6.2 6.5 6.0 - Private Sector investment (% of GDP): 20.3 16.9 16.9 18.0 19.8 18.5 19.4 - National Savings (% of GDP): 22.1 18.7 19.5 18.3 19.3 20.8 21.8 - Public Sector savings (% of GDP): 6.1 4.5 2.8 1.4 4.0 4.9 5.9 - Private Sector savings (% of GDP): 16.0 14.2 16.6 16.9 15.3 15.9 15.9 - Surplus of the Combined Non Financial Public Sector (% of GDP): -0.7 -3.5 -3.3 -4.9 -3.0 -2.5 -1.7 - Surplus of Central Government (% of GDP): -5.6 -5.9 -5.3 -5.7 -3.5 -2.9 -2.5 - Total Revenues Including Donations (% of GDP): 18.7 19.9 19.4 19.8 20.6 21.0 21.7 - Total Spending (% of GDP): 24.4 26.0 24.8 25.5 24.1 23.9 24.2 - PRSP Spending (% of GDP): n.a. 8.8 7.5 8.1 8.7 9.4 9.7 - Nominal GDP at market prices (Lempiras): 89,401 99,092 108,175 118,544 132,080 147,445 163,370 - Nominal GDP at market prices (US$): 6,024 6,403 6,584 6,834 7,200 7,617 8,123 - Average Exchange Rate, Lempiras/US$: 14.8 15.5 16.4 17.34 18.34 19.36 20.11 - 2002 macroeconomic situation and 2003 actions: - 2002 real GDP grew by only 2.7%, compared to the PRSP goal of 4%; - poverty rate fell from 64.4% in 2001 to 63.9% in 2002; - Central Government deficit in 2002 reached 5.3% of the GDP (2001: 5.9%); - overall non-financial public sector deficit: 3.5% in 2001 and 3.3% in 2002; - available concessionary external financing estimated at 1.8% of the GDP in 2002; - to finance the gap, Honduras resorted to internal indebtedness and transfer of HONDUTEL resources. - Fiscal and administrative measures taken: - 2002 tax administration improvements increased tax revenues by around 0.8% of the GDP through measures including temporary closure of businesses for Sales Tax non-compliance; - measures to stop increases in public salaries and negotiated a lower-than-expected salary increase for teachers, sanctioned by National Congress. - 2003 measures and fiscal outlook: - measures to expand the tax base expected to increase tax revenues by more than 1.5% of GDP in 2004, focusing on elimination of non-justifiable exemptions and tax evasion while protecting incomes of poor households; - control of recurrent expenses including freezing Central Government salaries during 2003; - Central Government salaries fell from 10.7% of the GDP in 2002 to 10.6% in 2003; - fiscal deficit expected to remain at 5.7% of the GDP for the Central Government and 4.9% of the GDP for the non-financial public sector in 2003; - delays in negotiating a new PRGF with the IMF will hold up delivery of budgetary support loans valued at almost 1.3% of the GDP until 2004, increasing need for internal indebtedness in 2003. - Deficit reduction path and financing capacity (projections): - Central Government’s deficit: 3.5% of the GDP in 2004, 2.9% in 2005, and 2.5% in 2006; - Non-financial public sector deficit: 3.0% in 2004, 2.5% in 2005 and 1.7% in 2006. - Impact on financing poverty reduction: - Non-financial public sector savings projected to rise from 2.8% of the GDP in 2002 and 1.4% in 2003 to 4.0% in 2004, 4.9% in 2005 and 5.9% in 2006. - Additional measures to stimulate private investment (National Competitiveness Program): - investments in irrigation to increase productivity and stimulate agricultural employment; - an ambitious housing program for low-income families; - increase in public investments stimulated by measures such as liberalizing the telephone sector, a new cell phone concession, and purchasing 400 MW of energy from private generators. *Source: PRSP Progress Report and Update content provided in the supplied document.* ### 65. The result will be an increase in the share of total investment (gross formation of fixed capital) in ### 65. The result will be an increase in the share of total investment (gross formation of fixed capital) in ### Investment and Financial Sector - Projected gross investments: "In 2004, gross investments of 26% are projected, while projections for 2005 are 25% and for 2006 25.4% of the GDP." - Historical comparators: "compared to 22.1% and 23.5% registered in 2002 and 2003, respectively." - Policy action: "the program to reform and strengthen the finance sector will continue, supported by the Financial Sector Adjustment Program with the World Bank and the IDB." - Regulatory goal: "This program will continue strengthening the legislative and regulatory framework of the financial sector." ### External Balance, Exports, Remittances, and Reserves - Export projections: "Exports will grow from 20.3% of the GDP in 2003 to 22.0% in 2006." - Remittances: "income from family remittances is estimated at around 15% of the GDP." - Current account deficit trajectory: "the deficit on current account will remain at a level consistent with available financing, dropping from 5.2% of the GDP in 2003 to 3.6% in 2006." - Reserves: "Net International Reserves will remain at a relatively high and stable level, approximately 4 months of imports." ### Growth, Inflation, and Exchange Rate Projections - 2003 projections and outcomes: "Real GDP growth of 3.0% is projected for 2003, consistent with a real per capita GDP increase of 0.6%." - Inflation and exchange rate: "inflation should drop to 7.2% (IPC) and the rate of exchange will remain stable in real terms, adjusting based on the difference between the inflation of costs in Honduras versus that of its trade partners." - Medium-term growth path: "It is expected that real GDP growth will increase from 3.5% in 2004 to 4% in 2005, and that from 2006 onward, it will remain around 4.5%." - Inflation outlook: "Inflation is expected to gradually fall to around 5%." ### Elasticity between Growth and Poverty (Box 2) - Definition: "“Elasticity” measures the degree to which the proportion of the population living below the poverty line is reduced when the real per capita GDP increases by 1%." - Historical elasticity: "In the 1990s, Honduras had an elasticity of 0.65: each 1% of per capita GDP growth only reduced the percentage of poor by 0.65%." - Poverty reduction target: "To lower the proportion of poor from 64.5% in 2001 to 42% in 2015, a sustained 3% (relative) reduction in the percentage of poor is needed per year. In absolute terms, this implies an approximate reduction of two points annually in the poverty rate." - Required elasticity for target: "Thus, if per capita GDP growth is 2% (consistent with a 4.6% increase of the real GDP and a 2.6% population increase), the elasticity between growth and poverty will have to increase to 1.5, or double the rate that has been historically observed." - Main challenge: "The main challenge facing the PRSP is achieving this change." ### PRSP Indicators and Goals — Overview and 2002 Performance - Overall design: "The PRSP’s overall goals, as well as its intermediate indicators and results, were designed to be consistent with the poverty diagnostic" and international 2015 targets (UN, OECD, World Bank). - 2002 indicator fulfillment summary: "Of the indicators included in Table III.1 for which information in 2002 is available, only five fulfilled the projected goal... In addition, it is likely that the goals for infant malnutrition and maternal mortality were met... This would mean that a total of seven out of 20 indicators were met." - Indicators not met in 2002: "GDP growth, per capita GDP growth, pre-basic education coverage, water coverage, sanitation coverage, the two gender indices, and the three environment goals (forestry coverage, the proportion of protected areas being managed, and air contamination in urban centers)." - Net result: "Overall, 13 of the PRSP’s 20 impact indicators were not met in 2002." ### Selected Key Statistics and Goals (as reported in Table III.1 and text) - Real GDP Growth (2001 goal, 2002 goal, 2001 result, 2002 result): "5.7 3.5 4 2.6 2.7" — Goal met in 2002? "No" - Per Capita GDP Growth (base and targets/results): "2.6 1.5 1.6 0.2 0.3" — Goal met in 2002? "No" - Social spending % of total spending (2000 base and targets/results): "44 45 46 47 49" — Goal met in 2002? "Yes" - Poverty rate (1999 base and targets/results): "66 63 61.5 64.4 63.9" — Goal met in 2002? "No" - Extreme poverty rate (1999 base and targets/results): "49 47 45 47.4 45.0" — Goal met in 2002? "Yes" - Pre-basic school coverage rate (1999): "32.9 33.5 36.0 31.9 32.5" — Goal met in 2002? "No" - Net enrollment 1st and 2nd cycle (2000): "89.8 87 88 91.7 88.9" — Goal met in 2002? "Yes" - Net enrollment in 3rd basic cycle (1999): "24.2 26.0 27.9 31.0 30.9" — Goal met in 2002? "Yes" - Net enrollment Diversified Cycle (1999): "12.4 13.6. 14.9 12.0 17.5" — Goal met in 2002? "Yes" - Infant mortality rate /1,000 live births (1996): "36 32 31 34 .0 n.a." — Goal met in 2002? "No (2001)" - Under 5 mortality rate (per 1,000) (1996): "48 44 43 45 .0 n.a." — Goal met in 2002? "No (2001)" - Child malnutrition rate (1996): "37.8 38 36 32.9 n.a." — Goal met in 2002? "Yes (2001)" - Maternal mortality rate per 100,000 live births (1996): "147 143 138 108 .0 n.a." — Goal met in 2002? "Yes (2001)" - % population with access to potable water (1999): "81 82 84 n.a. 81.3" — Goal met in 2002? "No" - % population with access to excreta elimination systems (1999): "70.2 71 72 69.4 67.6" — Goal met in 2002? "No" - HDI relative to gender (1999): "0.64 0.65 0.65 0.62 0.63" — Goal met in 2002? "No" - Gender empowerment index (1999): "0.45 0.46 0.47 0.45 0.45" — Goal met in 2002? "No" - % area with forest coverage (1996): "50.7 54 55 n.a. 53.0" — Goal met in 2002? "No" - % prioritized protected areas with management plans (2000): "13 30 40 21 31" — Goal met in 2002? "No" - Air pollution in urban centers (ug/m3 of PTS) (2000): "620.0 618.8 583.9 n.a. 653.7" — Goal met in 2002? "No" ### Growth and Poverty — 2001–2002 Outcomes and Interpretation - Actual growth outcomes: "real GDP growth in 2001 and 2002 was lower than expected, achieving 2.6% and 2.7% growth respectively, compared to the goals of 3.5% and 4.0%." - Per capita GDP outcomes: "the per capita GDP barely rose at all (0.2% and 0.3%, rather than the projected 1.5% and 1.6%)." - Poverty rate movement: "The percentage of households living below the poverty line dropped by 0.5 points in 2002... In 2002, there was already a 2.4 percentage point delay... (registered at 63.9%)." - Extreme poverty: "The extreme poverty rate fell from 47.4% in 2001 to 45.0% in 2002, compared with 49% in 2000." - Rural poverty: "rural poverty dropped by 2.3 points in 2002." - Fiscal adjustment impact: "we may infer that the fiscal adjustment measures undertaken in 2002 probably did not negatively affect the poorest households, which are concentrated mostly in the rural sector." - Ongoing analysis: "A detailed analysis of the impact of these measures on poverty, using the PSIA methodology, is currently underway." ### Income Distribution - Gini trends: "Income distribution in Honduras remained relatively stable during the 1990s. There was only a small improvement in the Gini Index." - Regional comparisons (World Bank): "the Gini (calculated for individuals, rather than for households) is 0.46 in Costa Rica, 0.51 in El Salvador, 0.55 in Guatemala and 0.60 in Nicaragua." - Current distribution (Table III.3): "80% of Honduran households receive only 45.7% of the nation’s total income, while the wealthiest 20% of households receive 54.3% of the national income." - Fifths per capita income (Lempiras / month) and % of total income: - 1st fifth: "134 3.2%" - 2nd fifth: "387 7.8%" - 3rd fifth: "765 13.2%" - 4th fifth: "1,398 21.4%" - 5th fifth: "4,466 54.3%" ### Social Spending, Education, Health, Water & Sanitation, Gender, and Environment — Key Findings and Recommendations - Social spending: "A greater increase in social spending in relation to total public spending was registered... from 47% of total public spending in 2001 to 49% in 2002 (compared to 44% in 2000)." Note: "this increase was partly the result of salary adjustments, and did not necessarily reflect real increases in the amount of resources assigned to these sectors." - Education: net enrollment goals met for first/second cycles and third/fourth cycles; pre-basic education coverage not met: "27.8% versus the goal of 36%." - Health data frequency: "The available health information is from 2001... It is recommended that the ENESF be conducted more frequently (at least every other year)." - Water and sanitation coverage: "INE survey of September 2002 reported 81.3% water coverage... and 67.6% sanitation coverage (compared to 70.2% in 1999)." Recommendation: "organize a national campaign to assign the resources and responsibilities needed to meet these goals" under CONASA. - Gender indicators: "The Human Development Index relative to Gender remained at 0.63 in 2002, compared to 0.64 in 1999 and the goal of 0.65 for 2002. The Gender Empowerment Index stayed at 0.45, versus the base value of 0.45 and the goal of 0.47." - Environment and protected areas: - Forestry coverage: "increase... from 50.7% in 1990 to 53% in 2002" — goal was "55%." - Prioritized protected areas with management plans: "from five in 2000 (13% of the total) to 12 (31% of the total) in 2002." Goal: "16 PAs (40% of the total)." Note: "15 management plans had been completed in 2003, covering 60% of the total surface area of the 39 prioritized PAs." - Urban air pollution: "indicator has increased from 620 ug/m3 particles in 2000 to 653.7 ug/m3 in 2002." Recommendation: "the Strategy’s environmental indicators be reconsidered and redefined." *Source: IMF staff report excerpt (Progress Report, 2002).* ### 84. To summarize, we may conclude that the performance of the PRSP’s main indicators during the ### _cr0430 - 84. To summarize, we may conclude that the performance of the PRSP’s main indicators during the ### Executive summary and conclusions - The performance of the PRSP’s main indicators during the first year of implementation was disappointing. - Two key lessons: - Implement a decisive plan focused on goals suited to this methodology (coverage in education, health, water and sanitation, and rural infrastructure). - Pursue economic reforms to stimulate private investment and growth through macroeconomic and competitiveness programs. - Chapter V presents revised indicators and goals for 2003-2015 to better align targets with the PRSP’s goals and available data. ### Progress in PRSP implementation in 2002 (overview) - Implementation began in 2002; Honduras underwent a learning process while experimenting with innovative modalities and procedures. - Positive developments: improvement in macroeconomic policies, instrumentalization of the PRSP, and mobilization of additional resources. - Shortcoming: level of poverty investment fell short of expectations, partly due to ambitious original programming and delays in reaching the HIPC culmination point. ### Original programming and financing (key figures) - Proposed investment: US$346.9 million for 2001, and US$387.9 for 2002. - Financing composition (selected figures): - Loans and donations already negotiated in 2001: US$266.7 million (77% of total in 2001). - Loans and donations already negotiated in 2002: US$214.4 million (55% of total in 2002). - Expected additional debt relief: US$46.3 million in 2001 and US$91 million in 2002. - New loans and donations (including national counterpart): US$33.9 million in 2001 and US$82.5 million in 2002. - TOTAL SPENDING (as in Table IV.1): 346.9 387.9 332.0 327.2 322.9 948.6 2,665.5 100.0 - TOTAL FINANCING (as in Table IV.1): 346.9 387.9 332.0 327.2 322.9 948.6 2,665.5 100.0 ### Implementation performance, 2001-2002 - Overall implementation of programmed spending: - 2001: 54.5% implemented. - 2002: 42.2% implemented. - Program- and sub-program-level performance highlights (implementation as percent of programmed): - Reducing Poverty in Rural Zones: 77.6% (2001) and 110.1% (2002). - Social Protection: 67.8% (2001) and 29.75% (2002). - Strategy Sustainability: 7.5% (2001) and 26.54% (2002). - Economic Growth: 0.0% (2001) and 11.8% (2002). - Reducing Urban Poverty: 19.7% (2001) and 14.7% (2002). - Investing in Human Capital: 76.5% (2001) and 33.8% (2002). - Identified causes of under-implementation: - Delays in implementing pre-existing programs incorporated into the PRSP (including PMRTN-associated projects). - Difficulties negotiating financing for new projects due in large part to delays in reaching the HIPC culmination point (originally expected 2002; then programmed for 2004). - Original PRSP programming was optimistic (projected execution rates assumed 100% for pre-existing projects; usual practice projects ~80% for capital programs). - Late approval of the original PRSP document (late 2001) and transition to a new government administration in 2002. ### PRSP financing execution (2001-2002) - Table IV.3 summarized financing execution: - National Funds: programmed 5.1 12.4 ; implemented 28.9 24.4 ; implementation as % of programming 378.4 196.7 (table formatting preserved as in source). - Loans and Donations: programmed 295.5 284.5 ; implemented 131.3 112.1 ; implementation as % of programming 44.4 39.4. - HIPC Debt Relief: programmed 46.3 91.0 ; implemented 27.1 28.2 ; implementation as % of programming 58.5 34.0. - Overall financing implemented: 187.3 (2001) and 164.7 (2002) representing 54.0% and 42.5% respectively of programmed financing (as reported). ### Interim HIPC debt relief and application to PRSP programs - HIPC debt relief received 2000-2003 totaled US$201.9 million (Table IV.4). - Multilateral flows (selected): IMF 0.0 1.3 4.5 0.0 5.8; IBRD-BIRF 5.6 18.8 12.3 0.0 36.7; IDB-FOE 0.0 22.7 18.5 5.8 47.1; BCIE 1.9 13.6 14.8 16.8 47.1. - Bilateral incl. Paris Club: 0.0 0.1 16.3 48.9 65.3. - HIPC flows: Total received 7.5 56.5 66.4 71.6 201.9. - HIPC spending (interim) totaled US$95.8 million (Table IV.4 and IV.5). - Distribution of US$95.8 million (2000-2002 executed plus 2003 projected): - Education: US$49.4 million (51.6% of HIPC spending). - 1,000 teachers hired: total 15.5 (breakdown by year: 1.8 3.8 4.5 5.4; total 15.5) — numbers preserved exactly as in Table IV.5. - Teachers for Basic Education schools: 2.3 2.7 3.2 total 8.2. - School breakfast: 1.2 2.9 total 4.1. - PROHECO and AECO: 0.8 5.3 4.9 8.4 total 19.4. - Expanding Horizons: 1 0.1 1.2 total 2.2. - Health: US$26.5 million (27.7%). - Medicine and med. equip. 3.5 7 8.1 7.9 total 26.4. - Housing program (Urban Development): US$6.5 million (6.8%). - Rural Development: 0.3 total (0.3%). - Social Protection: US$11.9 million (12.5%). - FHIS: 3.4 ; PRAF: 0.2 6.3 2.0 total 8.5. - Others: 1.1 (1.1%). - The projected balance of the Poverty Reduction Fund at the end of 2003: L.1.753 billion, equal to US$101.0 million. - Note on BCIE relief: part of the US$201.9 million includes the value of BCIE relief only technically defined in 2003; the BCIE operation depends on exchanging debt for US Treasury Bonds, complicating annual valuation and contributing to unspent portions. ### Policy measures, structural reforms and next steps - The PRSP proposed an ambitious agenda of policy reforms, legislation, and administrative changes (judicial reform, anti-corruption, political system modernization, investment climate improvement). - In 2002, the Government and Congress pursued this agenda aggressively; Appendix A of the report contains a comprehensive summary (appendix not reproduced here). - PRGF/IMF context: - Honduras fulfilled monetary and balance of payments goals but encountered fiscal management difficulties leading to suspension of the PRGF agreement in 2001. - Corrective measures led to signing a Letter of Intent for a new PRGF program for 2004-2006. - Under the new framework Honduras will aim to: strengthen fiscal income, rationalize public spending (priority to PRSP programs), obtain external financing on concessionary terms, and maintain low inflation. *Source: _cr0430 - 84. To summarize, we may conclude that the performance of the PRSP’s main indicators during the* ### 102. Other policy measures contained in the PRSP were already fulfilled. These include actions to ### _cr0430 - 102. Other policy measures contained in the PRSP were already fulfilled. These include actions to ### Policy measures already fulfilled and pending - Fulfilled actions include strengthening the judicial system and combatting corruption (see Box), approval of the Administrative Simplification Law, creation of the National Council on Competitiveness, and initiation of negotiations for a Central America Free Trade Agreement (CAFTA). - Pending or withdrawn reform proposals from the original 2001 PRSP: the electricity framework law (withdrawn from Congress to be reformulated and a new version to be submitted in 2003). - Other pending measures: the Forestry Law, Reforms to the Labor Code, Reforms to the Commerce Code, the Jurisdictional Promotion and Protection Law, the Securities Law, the IHSS Law, the Housing Sector Modernization Law, the Education Framework Law, and the Water Law. - Legal projects submitted to the National Congress: simplification and modernization of Income Tax and the National Unified Property Registration Law. - The Water and Sanitation Framework Law was approved. ### 1. Accelerating equitable and sustainable economic growth — accomplishments and constraints - Government actions in 2002 aimed to recover medium and long-range fiscal sustainability and implement measures in the financial sector and public administration. - Economic growth outcomes: growth rates in 2002 were lower than proposed goals due to an unfavorable international climate, slowdown among main trade partners, deterioration of terms of exchange from lower export prices and higher cost of key imports. - Measures to promote productive investment and job generation in 2002: - Approval of the Administrative Simplification Law through Decree No. 255-2002. - Approval of the Farmer Solidarity Law, which, in coordination with the Central Bank of Honduras, makes bonds available with market terms and conditions, totaling a maximum amount of around 1.8% of the GDP. - Creation of the “Housing for People” program to generate jobs in construction and facilitate access to housing for low-income families. - Infrastructure and sectoral progress: - Road network investment in 2002: a total of L.4.896 billion invested, corresponding to construction of 485.3 kilometers of highways and 19 concrete bridges, and maintenance of some 4,630.51 kilometers of paved roadways. Projects included building, rehabilitating, paving, maintaining paved and unpaved roads, building bridges and flood-protection works; studies/designs and financing negotiations for paving the CA-5 highway underway. - Energy sector in 2002: electricity coverage was 60.13%, increasing by 2.6 percentage points compared to 2001. 263 social electrification works completed nationwide with total investment of approximately US$6.2 million, adding 16,654 households with access to electricity. 18 contracts for renewable energy generation approved (hydroelectric and biomass), and another six being negotiated. - Telecommunications in 2002: about 15,000 lines installed in Tegucigalpa, San Pedro Sula and Catacamas; another 20,000 lines acquired for different neighborhoods and settlements in the Central District; 8,000 lines for Tegucigalpa and San Pedro Sula through coupling multipliers; 504 rural lines expanded nationwide. Transit centers and 192, 191 and 110 operator services extended. National Fiber-Optic Network (Puerto Cortés-San Pedro Sula-Tegucigalpa-Choluteca and the El Salvador border) put into operation. Domestic Satellite Network modernized. 3,600 public telephones installed nationwide. Value-added services (voice mail, virtual telephones and prepaid cards) set up. New Internet network established to attend to 60,000 users. National Microwave Network modernized with 70 new connections. Entire network digitalized, changing 22 analogic stations. Innovative tariff plans introduced and a per-minute Internet service launched. A second mobile telephone concession awarded through international public bidding (expected to significantly reduce cost). - Institutional supports for productive sectors created: - Comprehensive Registry and Land Title System (SINCREC) consolidating Registries of Real Estate and Commercial Properties, the Copyright Division, the National Land Registry and the National Geographic Institute. - National Commission on Competitiveness to develop a National Competitiveness Program. - Tourism Cabinet and Tourism Police. - Additional support for maquila industries, agro-industry, forestry and mining industries. - CAFTA negotiations and regional integration objectives: - Negotiation areas include Phyto-Sanitary Measures (MFS); Investments; and Employment Generation. - Goal to completely harmonize (100%) the Central American tariff structure by December 2003 and concretize the Central American Customs Union. ### 2. Reducing poverty in rural zones — land tenure, production, finance and irrigation - Land tenure and rural property measures: - Actions to guarantee secure access to land tenure for organized and independent peasants and members of ethnic groups; modernization of rural property registry and promotion of access-to-land scenarios. - PRONADERS (Nationwide Sustainable Rural Development Program) in 2002: - Coordinates and monitors 18 projects and benefited a total of 94,872 families in 2002 (a total of 569,232 people). - Rural development projects focus on natural resource management, human resource capacity strengthening, crop diversification, and improving productivity, quality, and competitiveness via access to productive support services. - Agricultural production outcomes in 2002 after the Farm Sector Solidarity Law: - Maize production increased from 8.4 million quintals in 2001 to 10.3 million in 2002. - Beans increased from 0.9 to 1.0 million quintals. - Rice increased from 0.2 to 0.5 million quintals. - Credit to farm producers in 2002: - Increased by L.1.424 billion in 2002, or 67% more than the previous year, through FONAPROVI and BANADESA; resources targeted mostly for debt recovery operations and reactivation of productive units. - Irrigation and export-crop promotion: - Access to irrigation expanded through micro-projects for approximately 9,000 hectares in 2002; proposed goal is 10,000 hectares per year. - Participation mechanism: - Adoption of the Agriculture Commission (Mesa Agrícola) to create a dialogue space among public and private sectors, rural and peasant business organizations; Mesa has worked on issues affecting development of twenty key crops. Box 3 — Actions related to guaranteeing secure access to land tenure (selected figures) - 3,236 hectares of land awarded to 54 peasant enterprises, benefiting 1,153 associates. 334 hectares purchased to deliver to land reform groups. - 10,237 property titles awarded to land reform groups and independent and ethnic groups, corresponding to a total surface area of 52,680 hectares. - 115,323 hectares in the Francisco Morazán, Colón and Intibucá provinces received land titles. - 30,587 hectares of rural lands delimited in the Francisco Morazán, Olancho and Colón provinces. - Through the PACTA project, eight peasant enterprises set up, benefiting some 145 families, with total investment of L.13.7 million (US$800,000), surpassing the goal for 2002 by 682%. - 434 rural savings and credit funds organized; 155 of these received loans from the Alternative Rural Financing Fund administered as a trust by BANADESA. - Area covered against losses expanded, allowing an increase of 37,500 manzanas in 2002 for some 12 products. - Sustainable Rural Development Project in Ecologically Fragile Zones of the Trifinio Region (PRODERT) implemented with investment of L.212.6 million (US$12.8 million), covering 11 municipalities of Ocotepeque and 6 in Copán, benefiting some 5,100 farmers and their families. ### 3. Reducing urban poverty — micro, small and medium enterprise (MIPYME) support and urban services - Support for growth and competitiveness of micro, small and medium urban enterprises through credit, training, and technical assistance; exploring strategic partnerships between MIPYMEs and Tourism, Maquila Industries and Infrastructure sectors. - Existing arrangements: agreements with micro-enterprises to maintain the road network under contract from the Road Fund. Negotiations to organize business setups that promote MYPE partnerships and scale economies. Eco-tourism projects in development with MIPYMEs. Greater NGO involvement in financing and training encouraged, especially where prudent regulation and supervision by area authorities is feasible. - Targeted funds and initiatives: - Creation of a micro-credit fund (US$200,000) for metal-mechanics and wood transformation industries, shoemaking, agro-industry and textiles. - Establishment of the Social-Economic Sector Development Fund (FODESSE), managed by FONAPROVI. - Creation of an Internet site for business management tools (www.infomipyme.com). - Technical assistance priorities: improve credit methodologies, simplify credit approval procedures and processes, analyze markets for geographic expansion, develop information management systems, internal oversight and human resources for sustainability of micro-finance institutions. - Urban projects in development: Stage II of the SANAA-CARE-COMMUNITY program; Water for Peripheral Neighborhoods, La Ceiba, Atlántida; Underground Water Technical Assistance Project. ### 4. Investing in human capital — education sector progress, goals and financing - Main purpose: improve quality and expand coverage of education in line with PRSP goals. - Quality-improvement measures (selected): - Official adoption of the national pre-basic education curriculum, implemented in 16 provinces. - Design of the National Curriculum for Basic Education integrating teacher training and participatory strategies involving parents and community. - Concerted definition and implementation of a 200 class-day school year (replacing 135 days). - Application of academic performance tests in Spanish, mathematics and natural sciences; results to be published. - Initiation of the Plan to Transform Teacher Training Schools into multi-purpose training centers. - Official adoption of the Curricular Program implemented beginning in 2003. - Development of norms for implementing an educational management model in Basic Education Schools (7th-9th grade) and Primary Schools. - Re-examination and systematization of projects including “EDUCATODOS,” “PRALEBAH,” “DECUMH” and “FEBLI.” - Initiation of development of efficient information and statistics systems for decision-making and management. - Coverage and access measures (selected): - Operation of 1,025 PROHECO schools, 56 of which were created in 2001 (parents responsible for financial and administrative management). - Creation of 1,384 jobs at different educational levels. - Conversion of primary schools into basic education schools for 7th-9th grades, including construction of 100 new schools. - Expansion of alternative service delivery systems serving around 150,000 young people and adults excluded from the formal education system. - Design and approval of the Honduras Education for All Plan, 2003-2015, with total resources of approximately US$86.0 million; objective to achieve universal sixth-grade graduation by school-age children by 2015. - Legal and institutional needs: - Education sector legal and institutional norms need updating and approval for radical transformation; a draft law expected to be presented to National Congress after review and concertation. - Costing for 2003-2005 period: - Total cost of programs in 2003-2005 is L.1.429 billion (US$86.0 million), with average annual spending of L.475.0 million (US$28.6 million). *PROGRESS REPORT, 2002* ### 125. The PRSP’s priorities in health are strengthening primary care, attention to women, and greater ### _cr0430 - 125. The PRSP’s priorities in health are strengthening primary care, attention to women, and greater ### Health sector strategic planning and priorities - The Health Secretariat formulated a Strategic Plan for the Health Sector to 2021; the Plan’s goal is engendering a new health “culture” among the most vulnerable population. - The new governmental administration defined eight priority programs: - healthy municipalities - mother-child health - control of vector-transmitted diseases - comprehensive care for school children and adolescents - comprehensive care for older adults - tuberculosis control - fighting sexually transmitted diseases and HIV/AIDS - health sector reform ### PRIESS (Institutional Reorganization Program and Extension of Basic Health Sector Services) - PRIESS implementation was accelerated, financed with resources from an IDB loan of US$36.0 million. - Main achievements: - A pilot program in the El Rodeo community (Francisco Morazán province) to define a working model for building healthy communities. - Delivery of a basic package of health services begun, covering more than 181,000 people in 749 extremely poor rural communities, with an average investment of US$15 per person per year. - Coverage is expected to extend to 500,000 people in 2003. - Organization of Community Committees to promote and monitor local health conditions and establishment of community funds prioritized for health emergencies and environmental health projects. ### Health Sector Reform Project and related financing - The Health Sector Reform Project was approved and received a World Bank loan of US$27.0 million; objective: improve efficacy, quality and equity of the health care system and develop mechanisms to promote the IHSS’s financial sustainability. - Expanded Program of Immunizations (EPI) was strengthened, maintaining high vaccination coverage among children, women of childbearing age and high-risk groups. - The Comprehensive Family Care Program serves mainly children 0-5 years and women of childbearing age via interventions including: - immunizations - comprehensive community-based care for children (AIN-C) - comprehensive care for childhood diseases (AIEPI) - promoting breastfeeding practices - provision of iron, folic acid and Vitamin A supplements ### HIV/AIDS, TB, Malaria and Global Fund - An investment of 25 million in national funds allowed anti-retroviral therapy to begin, benefiting 1,223 people (as of September 2003). - The Honduran proposal to the Global Fund was approved and will receive US$41.0 million: - $7.0 million for tuberculosis - $7.0 million for malaria - the remainder for preventing and treating HIV/AIDS - The Global Fund modality emphasizes extensive community participation. ### Programs for equitable access and decentralization - Program on Equitable Access to Health Services and Decentralized Health Care Administration (2003–2005) was awarded US$7.5 million in non-reimbursable resources; focus: decentralizing health services and local development efforts. - Healthy Municipalities strategy initiated via agreements with municipal consortiums (mancomunidades) of the Olancho, Valle de Sesecapa and Güalcinse municipalities. ### Housing, water, sanitation, and rural infrastructure - “Housing for People” Program initiated targeting families with monthly incomes up to four minimum wage salaries; program elements: - i) an up-front family contribution - ii) a family housing subsidy or bonus - iii) credit from private sources - Actions to decentralize water and sanitation services promoted; approval of the Water and Sanitation Law supported to enable municipalities to assume service provision. - Improvements carried out in sewage and waterworks systems, construction of rural roadways, and expansion of electricity and telecommunications coverage in rural areas. ### Strengthening special protection for specific groups - Social Cabinet mandated to develop a conceptual and operational framework for the nation’s Social Policy to guide PRSP implementation based on decentralization, focalization, organization of service supply and efficient program development. - Continued actions to improve living conditions of the poorest, especially in rural zones, via small social infrastructure projects through FHIS and income compensation bonds through PRAF; these institutions will improve community focalization and participation mechanisms. - IHNFA programs: - Family Welfare: preventive activities to strengthen families, attend to children and promote rights - Social Intervention: aimed at children and adolescents in high risk situations - Social Re-education and Reinsertion: aimed at educating adolescent lawbreakers - Disability policy and programs: - Health Secretariat coordinated a rehabilitation policy proposing creation and organization of a technical structure to regulate and implement a national plan to prevent, treat and comprehensively rehabilitate disabled people. - A National Action Plan on Disabilities is being developed; a module to measure disabilities has been inserted into the INE surveys. - Technical cooperation agreements for rehabilitation strategies in La Mosquitia communities. - Special programs for the disabled coordinated by FHIS/ FIDAS. - A budget line was created to subsidize 47 institutions providing non-profit services to the disabled. - Child labor and child protection: - Inter-Institutional Commission reactivated; Regulations on Child Labor in Honduras approved through Executive Accord No. STSS0211-01. - Permanent Commission to Protect the Physical and Moral Integrity of Children created to advise the Executive permanently. - Women’s rights: - National Policy on Women and Equal Opportunities Plan formulated and approved via nationwide consultative process. - Special Program on Women’s Rights of the National Human Rights Commissioner created, focusing on discrimination, sexual and reproductive health, violence, and health rights. - Work underway to incorporate a gender approach into public policies, action plans and institutional budgets. - Ethnic groups: - Government ratified the International Convention to Eliminate All Forms of Racial Discrimination (Decree No. 61-2002). - National Indigenous Council and Technical Unit on Communities of African Descent organized; Indigenous People’s Council (COPIN) legally incorporated. - Continued property titling and land awards to ethnic groups and implementation of the “Our Roots” Program through FHIS to fund cultural and economic projects. - Elderly: - Secretariat of Governance coordinating compliance with the Law on Special Treatment for the Elderly, Retirees and Pensioners due to Disabilities (Elderly Law). - Health Secretariat actions under the Comprehensive Care Program for Older Adults. ### Governance, accountability and institutional reform (guaranteeing sustainability) - Program on Efficiency and Transparency in State Purchases and Hiring began auditing and inspection of programs and projects: - 120 inspections have been made - 76 final reports have been written - Supreme Accounts Tribunal created through Legislative Decree No. 268-2002; constitutional reform approved on January 17, 2002, and ratified through Legislative Decree No. 2-2002. - Political and electoral reforms: - Manifesto of Political Parties signed in late 2001 proposing reforms to the National Elections Tribunal and National Registry of Persons and constitutional incorporation of plebiscites and referendums among other electoral reforms. - Constitutional amendments passed in November create the figure of the Vice-President to replace presidential designates and separate the National Registry of Persons (RNP) from the National Elections Tribunal (TNE). - Public administration reforms: - Proposed Law on the Administration of Public Functions includes creation of the Public Administration Superintendency (Superintendent with rank of Vice-Minister), substituting the Civil Service General Directorate, and creation of a body of professional and permanent public servants. - State re-engineering process of 72 public entities has begun. - Judicial reform and justice administration: - Constitutional Reform ratified in January 2002 to improve administration of justice and create a Nominating Board to elect a new Supreme Court. - New Penal Procedures Code entered force in February 2002. - Constitutional Court put into operation and Sentencing Judges named. - Inter-Institutional Commission on Penal Justice, the Public Ministry and the Public Defender’s Office strengthened. - Public security: - “War on Delinquency” declared; creation of Specialized Units (Anti-Kidnapping, Mobile Rural Unit, Tourism Police, Northwestern Sub-Division, Gang Prevention Unit) and initiation of a Safer Community Pilot Project. - Reported reductions in number of crimes in 2002, especially crimes against property (737), state security (385), freedom and security (258) and public safety (236). - Decentralization and local development: - National Decentralization and Local Development Program (PRODDEL) approved in March. - Training provided to 141 mayors and 210 civil society representatives and government functionaries in 2002. - Agreement signed initiating decentralization of small scale capital works with FHIS funds in 50 municipalities. - Decentralization programmed to begin in the health and education sectors during the first half of 2003. - Environmental and territorial framework: - Territorial Organization Law, Water Law and Forestry Law awaiting approval by National Congress; laws under review by Legislature-appointed Commissions. - Air Quality Regulations and Sonic Contamination Regulations developed and being discussed. - Regulations for controlling Sewage and Waste Water approved by National Congress; Regulations for Gas Contaminants and Vehicle Emissions being modified. - National Territorial Organization Program (PRONOT) being implemented with four components including a pilot project in Lejamaní, Ajuterique and Comayagua. - Secretariat for Natural Resources and the Environment developing guidelines for a National Strategy on the Comprehensive Management of Watersheds and an implementation plan. - Multi-Phase Management Program for Priority Watersheds began implementation in 2002 under PRONADERS, to receive US$76.2 million in financing from the IDB, targeting 14 sub-basins in the Ulúa, Chamelecón and Nacaome River watersheds. ### Anti-corruption measures (Box 4 highlights) - Reinstallation of the National Anti-Corruption Council in February 2002. - Measures to strengthen judicial independence and property registries: Constitutional Reform for justice administration, installation of a new Supreme Court (January 2002), New Penal Procedures Code (February 2002), Constitutional Court operation and Sentencing Judges named. - Measures to reduce corruption in public spending: new State Contracting Law passed, creation of the Supreme Accounts Tribunal (TSC), reactivation of the Efficiency and Transparency Unit for state purchases, external audits producing 76 final audit reports, expanded use of international agencies (e.g., UNDP) for public financed hiring processes. - Measures to reduce tax evasion: Financial Equilibrium and Social Protection Law passed authorizing closure of businesses that do not pay Sales Taxes; tax collection increased by approximately 900 million Lempiras. *Source: PROGRESS REPORT, 2002 (excerpt from _cr0430 PDF).* ### 149. To improve the environmental impact assessment system, the National Congress approved ### 149. To improve the environmental impact assessment system, the National Congress approved ### Environmental impact assessment system reforms - Modification of Article 78 of the General Environment Law: environmental licenses will fall into three different categories, depending upon the degree of impact they will have on the environment. - Environmental license retention policy: - The environmental license will only be maintained for projects with high environmental impact. - Other categories will only need to obtain registration and authorization. - Expected time reduction: time for issuing environmental licenses will be reduced from 2-3 years to six months. - Decentralization: agreements signed with the Tegucigalpa and San Pedro Sula municipalities to decentralize environmental licensing processes under their jurisdiction. - Streamlining mitigation measures through standardized contracts with: - gas stations, lumber mills, waste water treatment plants, infrastructure projects, chicken producing projects, maquila industries and sugar producers. ### Environmental information system (SINIA) implementation - Implementation activities begun include: - i) an evaluation of information generated by each institution that makes up the SINIA; - ii) the development of a design for SINIA; - iii) partial implementation of the designed system through developing, prioritizing and concerting a series of indicators related to the environment and sustainable development; - iv) implementation of a data, indicator, map and statistics module, through the Natural Disaster Mitigation Project. ### Citizen participation and community forestry - Teacher and public awareness activities: - Training for teachers about environmental themes has continued; didactic materials have been produced; clubs of student and teacher environmentalists have been organized nationwide. - Seminar-workshops nationwide on incorporating environmental variables and risk control into projects; continued training and environmental awareness activities via NGOs. - Community forestry agreements: - Agreements made with around 15,000 families to develop community forestry in a 400,000-hectare area of forestland. - Lands have been legally titled and people located in forest zones of the nation’s poorest provinces have received training. - Forest pest, fire, and resin strategies: - The National Strategy on Protection against Pests and Forest Fires, and the National Resin Extraction Strategy have been developed in 1,080,000 hectares of pine forest. - Strong citizen participation component included. - Resin extraction promotion aims to reduce rural unemployment by involving some 20,000 people living in 50,000 hectares of forest zones. ### Risk management: prevention, mitigation and response - Legislative framework and institutional strengthening: - Development of the first proposal for a Risk Reduction and Emergency Response Law, currently being discussed; this law will give life to the National Emergency and/or Disaster Prevention and Response System and includes strengthening COPECO to coordinate public and private planning, organizing, directing, implementing, and monitoring emergency management and risk management efforts. - Initiation of a Program to strengthen COPECO’s financial and human resource administration, and a plan to strengthen the system’s member organizations. - Initiation of decentralization of COPECO via establishing 7 regional offices located in the nation’s main cities, opening two new regional operations centers in the Bay Islands and Mosquitia, and one new provincial office in Yuscarán (El Paraíso). - Implementation of the MACOE Program to develop an operational plan for regional emergency operation centers. - Disaster Mitigation Program (World Bank funds): - Implementation of the Disaster Mitigation Program with World Bank funds (US$12 million), aimed at strengthening municipal capacity to reduce risks and vulnerability to natural disasters. - Project implemented by SERNA-COPECO-AMHON; includes provision of search and rescue equipment, development of information systems, raising awareness, training, support to the Building Code, and establishment of a seismic network to improve response capacities to the threat of earthquakes. - Communications, equipment, and monitoring networks: - Installation of a radio-communication network with 11 repeaters in a national network, covering 85% of the national territory including Mosquitia, and 12 repeaters in a regional system. - Provision of speedboats for aquatic search and rescue for municipalities most vulnerable to flooding, and nationwide training in use and maintenance of equipment. - Diagnostic conducted to determine operational and maintenance capabilities of hydro-climatological stations that allow main rivers’ conditions to be read in real time over internet to alert populations. - Maintenance and database updates for telemetric stations in the Choluteca and Aguan River watersheds to support contingency plans. - Training, manuals and awareness: - The National Disaster Training Plan was developed, along with a Manual on Organizing Municipal and Local Emergency Committees. - Nationwide awareness campaign organized through the disaster mitigation project; disaster prevention introduced in primary schools. ### Flood control and agricultural drought mitigation - Flood control works: - Considerable efforts to build flood control works in various municipalities in the Sula Valley, the Atlantic Zone, the Southern Zone, and the Central District. - Projects mostly built with national budget funds; the Sula Valley Executive Commission and the Secretariat for Public Works, Transportation and Housing participated in implementation. - Drought mitigation (COMUS): - Creation of the Multi-Sector Committee on Drought (COMUS) in April 2002, with national and international public and private institution members. - Implementation of a Strategic Drought Prevention and Mitigation Plan benefiting around 600,000 inhabitants of rural zones in provinces: Francisco Morazán, Yoro, Intibuca, La Paz, Olancho, El Paraíso, Valle and Choluteca. - Plan focuses on building institutional capacities, strengthening early warning systems, rescue actions, less vulnerable and more sustainable agricultural and livestock production, environmental education, credit for reducing risks, and international cooperation. - Promotion of alternative crops to maize: cassava, cashews, and sesame seeds. - Construction of water catchment systems and small dikes for multiple agricultural uses. ### Progress assessment and next steps - Conclusion: - Honduras made important progress in implementing the policy, legislative and administrative and procedural reforms outlined in the PRSP. - The process should continue in 2003-2005, with approval of pending measures. - Institutional and programmatic alignment (summary of subsequent sections): - Operational institutional framework for PRSP established jointly with civil society, including mechanisms for targeting the PRSP and interfacing with decentralization. - Systems for monitoring and evaluating the PRSP’s policy measures, projects and indicators are being designed and expected to be operating soon. - Prioritization work initiated to guide implementation during 2002-2005, with pre-feasibility profiles developed for prioritized programs and projects; financing delays occurred in 2002 due to HIPC Culmination Point delays and donor preferences for sector strategies (SWAp). - Most important resource mobilization achievements in 2002 resulted from SWAps in Education (Education for All) and Health (Global Fund for HIV-AIDS). - Programming of PRSP programs and projects continued in 2003 using sector analysis methodologies based on goals. *Progress Report, 2002 — content from the supplied PDF excerpt.* ### 176. As part of this exercise, a change in the PRSP’s budgetary approach was proposed, since the ### _cr0430 - 176. As part of this exercise, a change in the PRSP’s budgetary approach was proposed, since the ### A. Re-calibrating the PRSP’s goals - The original PRSP omitted national funds that represent more than 65% of total poverty spending in Honduras; the reformulated PRSP budget tables and commentary cover poverty spending trends, components in 2001-2002, and projections for 2003 and 2007. - Consultations revealed weaknesses in indicator selection and goal calibration for 2003-2015; emphasis placed on selecting indicators that: - have reliable information sources for monitoring, - are reasonably influenced by the Strategy’s actions, - expand beyond social indicators to include economic empowerment goals. - Revised framework of impact indicators with annual goals defined for 2003-2006 and for 2010 and 2015 (Table V.1 highlights selected goals and baselines): - Real GDP growth (% of real GDP growth): 2002 = 2.7; 2003 = 3.0; 2004 = 3.5; 2005 = 4.0; 2006 = 4.5; 2010 = 4.5; 2015 = 4.5. - Per capita GDP growth (% of per capita GDP growth): 2002 = 0.3; 2003 = 0.6; 2004 = 1.1; 2005 = 1.6; 2006 = 2.2; 2010 = 2.3; 2015 = 2.4. - Social spending (Spending on Poverty as % of total Central Government spending): 2002 = 33.3; 2003 = 33.8; 2004 = 36.2; 2005 = 39.5; 2006 = 43.7; 2010 = 44.0; 2015 = 44.0. - Poverty rate: 2002 = 63.9; 2003 = 62.1; 2004 = 60.2; 2005 = 58.4; 2006 = 57.3; 2010 = 50.0; 2015 = 42.0 (objective: Reduce poverty by 24 percentage points). - Extreme poverty rate: 2002 = 45.0; 2003 = 43.4; 2004 = 41.5; 2005 = 39.7; 2006 = 38.5; 2010 = 32.2; 2015 = 25.0. - Pre-basic education coverage (Rate of pre-basic education coverage): 2002 = 32.5; 2003 = 34.9; 2004 = 35.7; 2005 = 36.5; 2006 = 38.6; 2010 = 42.0; 2015 = 60.0 (objective: Double net coverage through 5 years). - Net coverage rate (1st and 2nd cycles, excluding over-age): 2002 = 88.9; 2003 = 90.7; 2004 = 91.2; 2005 = 91.7; 2006 = 92.5; 2010 = 93.2; 2015 = 95.0 (objective: 95% net coverage in the two first cycles). - Coverage rate (3rd cycle, excluding over-age): 2002 = 30.9; 2003 = 32.9; 2004 = 35.0; 2005 = 37.3; 2006 = 39.7; 2010 = 51.1; 2015 = 70.0 (objective: 70%). - Diversified cycle (10-12th grade) net coverage (excluding over-age): 2002 = 17.5; 2003 = 19.0; 2004 = 20.6; 2005 = 22.3; 2006 = 24.2; 2010 = 33.4; 2015 = 50.0 (objective: 50% of emerging population completes secondary). - Infant mortality rate/1,000 live births (ENESF, 2001 data): baseline entries include 34 and 11 and projected sequence 32 30 29 27 22 18 (Table format in source). - Under-5 mortality rate (per 1,000 live births): baseline entries include 45 and 11 and projected sequence 43 41 39 37 30 24. - Infant malnutrition rate: 2002 = 32.9 and projections 30.9 29.9 28.9 27.0 22.0 18.0 (objective: Reduce malnutrition among children under 5 by half). - Maternal mortality rate per 100,000 live births (Secretariat of Health, 1997 baseline): entries include 108 and 11 and projected sequence 102 98 95 93 82 70 (objective: Reduce maternal mortality by half). - Electricity coverage rate: 2002 = 64.2; 2003 = 66.0; 2004 = 67.2; 2005 = 69.0; 2006 = 70.1; 2010 = 75; 2015 = 80 (objective: Achieve 80% coverage by 2015). - Fixed line density per 100 inhabitants (1999 baseline): 1999 = 4.4; 2002 = 5.8; 2003 = 7.2; 2004 = 9.1; 2006 = 10.0; 2010 = 12.0; 2015 = 14.0 (objective: Triple telephone coverage and establish access in all population centers with > 500 inhabitants). - Number of population centers with > 500 inhabitants without telephone service: baseline sequence in table 3000 3000 2700 2400 2100 1000 0 (objective: reduce to 0 in 2015, implying 300 fewer each year). - % of population with access to potable water: 2001 = 81.3; 2002 = 82.1; 2003 = 82.6; 2004 = 83.4; 2005 = 85.0; 2010 = 90.0; 2015 = 95.0. - % of population with access to excreta elimination systems: 2002 = 67.6; 2003 = 70.7; 2004 = 71.9; 2005 = 73.0; 2010 = 76.0; 2015 = 85.0; longer-term 95.0 also listed in table. - HDI relative to gender (Human Development Report 2000 baseline 0.64): sequence 0.65 0.66 0.67 0.69 0.72 0.76 (objective: Raise women’s human development index by 20%). - Gender empowerment index (baseline 0.46): sequence 0.47 0.48 0.49 0.53 0.55 0.58. - Number of priority protected areas (PAs) with management plans: 2001 = 12; projections 15 23 31 39 39 39; % of total surface of priority PAs with management plans targeted to reach 100% by 2006. - Measurement issues: forestry coverage and urban air pollution indicators are pending re-calibration due to measurement/calibration problems. ### B. Programming to achieve the PRSP goals - Studies undertaken to quantify costs needed to fulfill PRSP main goals, with support from USAID, the World Bank and the IDB. - Education cost study (Third Cycle Basic Education and Secondary Graduation): - Baseline coverage in 2000: 24% (definition excluding over-age children); 41% when excluding only children repeating current school year. - To increase third cycle coverage to 56% in 2010, total enrollment in grades 7-9 must rise from 231,000 to 380,000. - Public school students would need to increase from 110,000 to 220,000. - Current average public cost: $420 per student per year. - If expanded at current cost, public spending for third cycle education would need to increase from 0.63% of GDP in 2003 to 0.98% in 2010 and to 1.23% in 2015. - Alternative expansion strategy (improved efficiency, non-traditional modalities) could limit spending to 0.93% of GDP in 2015. - Of the total additional cost for the strategy, approximately 90% will be recurrent expenditures and 10% capital outlays. - Government studies underway to cost and define modalities and financing sources for: - Primary and preschool education coverage goals, - Water and sanitation coverage goals, - Coverage goals for basic health programs. - These studies will determine service expansion modalities, administration, and both capital and recurrent financing sources. ### C. Negotiating additional resources - Government negotiations in 2002-2003 secured important financing complementarities to HIPC resources: - Education for All (EFA) initiative: total of US$86 million between 2003 and 2005 to improve efficiency and quality of basic education. - Global Fund sponsorship: Honduras will receive US$40 million for programs related to HIV-AIDS and similar diseases. - Additional financing opportunities: - A Consultative Group to be organized by the Honduran Government and donors. - United States’ Millennium Challenge Account (Honduras likely to qualify for first stage). - Conclusion of a PRGF Agreement with IMF to open access to World Bank and IDB credit supporting PRSP. - The PRSP should also highlight significant national resource efforts financing agriculture, social housing, and a program to strengthen citizen security. ### D. Reformulating the PRSP’s budgetary framework - New approach expands the PRSP budgetary definition to include: - Efforts financed with national resources that are part of spending on poverty reduction (previously only national counterpart funds from externally financed programs were included). - Necessary recurrent spending to provide services, not only capital outlays—particularly relevant for human development goals (education and health). - Methodology for admissible salaries to avoid distortions: average admissible salary in education = 3.5 times per capita GDP; in health = 5 times per capita GDP (benchmarked to Nicaragua and El Salvador). - Table V.2 (PRSP Budget 2001-2007, Expanded Definition) — totals and key programmatic and financing figures (expressed in Millions of Lempiras): - Total PRSP by year: - 2001 = 8,752.2 - 2002 = 8,155.6 - 2003 = 8,929.4 - 2004 = 10,724.0 - 2005 = 12,823.3 - 2006 = 15,365.2 - 2007 = 17,337.5 - Selected program lines (2001 through 2007, Millions of Lempiras): - 1. Accelerating equitable and sustainable economic growth: 70.3; 117.8; 34.6; 104.2; 164.7; 352.3; 375.1. - 2. Reducing poverty in rural zones: 1,528.7; 1,205.8; 1,131.8; 1,087.0; 1,346.4; 1,704.5; 1,744.3. - 3. Reducing poverty in urban zones: 484.3; 431.2; 632.3; 843.9; 885.2; 751.2; 562.8. - 4. Investing in human capital: 4,293.7; 4,754.5; 5,297.4; 6,520.4; 6,860.4; 7,639.3; 8,718.5. - 5. Strengthening social protection for specific groups: 515.5; 397.0; 398.3; 476.6; 450.4; 431.3; 393.7. - 6. Guaranteeing the Strategy’s sustainability: 1,859.8; 1,249.3; 1,396.0; 1,674.9; 2,156.0; 2,458.9; 2,759.7. - 7. To be designated: 0.0; 0.0; 39.0; 17.0; 960.3; 2,027.6; 2,783.5. - Financing sources (Millions of Lempiras): - National Funds: 2001 = 5,138.0; 2002 = 5,598.6; 2003 = 5,789.1; 2004 = 6,514.6; 2005 = 7,642.4; 2006 = 8,508.6; 2007 = 9,556.0. - Loans: 2,526.7; 1,682.4; 2,126.9; 2,193.8; 2,560.8; 3,129.5; 3,289.0. - Donations: 776.3; 406.6; 508.2; 1,476.8; 1,021.9; 1,028.7; 1,268.7. - HIPC: 311.2; 468.0; 505.3; 538.8; 1,510.0; 1,487.7; 1,288.7. - To be financed: 0.0; 0.0; 0.0; 0.0; 88.2; 1,210.7; 1,935.1. - Economic classification (Millions of Lempiras): - Salaries: 3,258.0; 3,680.7; 3,979.9; 4,489.2; 5,061.0; 5,584.2; 6,093.3. - Goods and Services: 695.0; 675.3; 717.1; 1,401.3; 1,392.9; 1,449.9; 1,796.9. - Recurrent Transfers: 855.5; 864.0; 937.9; 1,413.1; 1,635.1; 2,517.1; 2,413.1. - Capital Transfers: 3,293.6; 2,480.4; 2,700.0; 2,769.1; 3,991.0; 4,489.4; 4,845.4. - Investment: 582.1; 436.4; 517.2; 566.1; 657.2; 1,175.8; 2,075.2. - Concessionary Loans: 68.2; 18.9; 77.4; 85.2; 86.1; 148.8; 113.7. - Table V.2 source: Sefin-UPEG, financial programming. - Tables V.3 and V.4 (not reproduced here) present PRSP budget shares as % of GDP and structural percentages; Appendix 3 (not reproduced here) provides the detailed definition and list of all spending included grouped by PRSP program. *Source: PROGRESS REPORT, 2002 (excerpted passages and tables from the PRSP reformulation chapter).* ### 1. Accelerating equitable and ### 1. Accelerating equitable and sustainable economic growth ### PRSP programmatic budget allocations (absolute % of GDP, 2001–2007) - 1. Accelerating equitable and sustainable economic growth: 0.1 0.1 0.0 0.1 0.1 0.2 0.2 - 2. Reducing poverty in rural zones: 1.5 1.1 1.0 0.8 0.9 1.0 1.0 - 3. Reducing poverty in urban zones: 0.5 0.4 0.5 0.6 0.6 0.5 0.3 - 4. Investing in human capital: 4.3 4.4 4.5 4.9 4.7 4.7 4.9 - 5. Strengthening social protection for specific groups: 0.5 0.4 0.3 0.4 0.3 0.3 0.2 - 6. Guaranteeing the Strategy’s sustainability: 1.9 1.2 1.2 1.3 1.5 1.5 1.5 - 7. To be designated: 0.0 0.0 0.0 0.0 0.7 1.2 1.6 - Total PRSP: 8.8 7.5 7.5 8.1 8.7 9.4 9.7 ### PRSP financing sources (% of PRSP, 2001–2007) - National Funds: 5.2 5.2 4.9 4.9 5.2 5.2 5.3 - Loans: 2.6 1.6 1.8 1.7 1.7 1.9 1.8 - Donations: 0.8 0.4 0.4 1.1 0.7 0.6 0.7 - HIPC: 0.3 0.4 0.4 0.4 1.0 0.9 0.7 - To be financed: 0.0 0.0 0.0 0.0 0.1 0.7 1.1 - Total PRSP: 8.8 7.5 7.5 8.1 8.7 9.4 9.7 ### PRSP economic classification (% of PRSP, 2001–2007) - Salaries: 3.3 3.4 3.4 3.4 3.4 3.4 3.4 - Goods and Services: 0.7 0.6 0.6 1.1 0.9 0.9 1.0 - Recurrent Transfers: 0.9 0.8 0.8 1.1 1.1 1.5 1.3 - Capital Transfers: 3.3 2.3 2.3 2.1 2.7 2.7 2.7 - Investment: 0.6 0.4 0.4 0.4 0.4 0.7 1.2 - Concessionary Loans: 0.1 0.0 0.1 0.1 0.1 0.1 0.1 - Total PRSP: 8.8 7.5 7.5 8.1 8.7 9.4 9.7 ### PRSP budget shares by program (% of total PRSP, implemented through December and projected) - 1. Accelerating equitable and sustainable economic growth: 0.80 1.44 0.39 0.97 1.28 2.29 2.16 - 2. Reducing poverty in rural zones: 17.47 14.79 12.67 10.14 10.50 11.09 10.06 - 3. Reducing poverty in urban zones: 5.53 5.29 7.08 7.87 6.90 4.89 3.25 - 4. Investing in human capital: 49.06 58.30 59.33 60.80 53.50 49.72 50.29 - 5. Strengthening social protection for specific groups: 5.89 4.87 4.46 4.44 3.51 2.81 2.27 - 6. Guaranteeing the Strategy’s sustainability: 21.25 15.32 15.63 15.62 16.81 16.00 15.92 - 7. To be designated: 0.00 0.00 0.44 0.16 7.49 13.20 16.05 - Total PRSP: 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ### Financing source shares (% of PRSP), alternative presentation - National Funds: 58.7 68.6 64.8 60.7 59.6 55.4 55.1 - Loans: 28.9 20.6 23.8 20.5 20.0 20.4 19.0 - Donations: 8.9 5.0 5.7 13.8 8.0 6.7 7.3 - HIPC: 3.6 5.7 5.7 5.0 11.8 9.7 7.4 - To be financed: 0.0 0.0 0.0 0.0 0.7 7.9 11.2 - Total PRSP: 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ### Economic classification shares (% of PRSP), alternative presentation - Salaries: 37.2 45.1 44.6 41.9 39.5 36.3 35.1 - Goods and Services: 7.9 8.3 8.0 13.1 10.9 9.4 10.4 - Recurrent Transfers: 9.8 10.6 10.5 13.2 12.8 16.4 13.9 - Capital Transfers: 37.6 30.4 30.2 25.8 31.1 29.2 27.9 - Investment: 6.7 5.4 5.8 5.3 5.1 7.7 12.0 - Concessionary Loans: 0.8 0.2 0.9 0.8 0.7 1.0 0.7 - Total PRSP: 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ### Key analytical findings and projections (text excerpts) - Total spending on poverty (new definition) dropped from 8.8% of the GDP in 2001 to 7.5% in 2002; reduction mainly due to termination of programs from the Master Plan for National Reconstruction and Transformation incorporated into the PRSP. - Projected path: maintain 7.5% in 2003, then gradually increase from 2004 onwards to reach 9.7% of the GDP in 2007. - In programmatic terms: - Human Capital Investment program absorbed 58% of total spending in 2002; projected to reach 50% of total by 2007. - Rural Poverty Reduction program absorbed 15% of the total budget in 2002. - Strategy Sustainability program absorbed another 15% of the total in 2002. - The Accelerate Economic Growth program used a small proportion of PRSP resources in 2002 because it mainly concerns policy and legal reforms with negligible costs. - Financing composition in 2002: 69% national funds, 21% external loans, 5% donations, 5.7% HIPC funds. - Recurrent expenses accounted for 64% of total in 2002; capital outlays 36%. - National PRSP spending remained stable at 5.2% of GDP in 2002; reduction in total anti-poverty spending in 2002 was due to lower execution of external loans and donations (from 3.4% of GDP in 2001 to 2.0% of GDP in 2002). - Projections: external financing for the PRSP expected to increase from 2.4% of the GDP in 2002 to 4.3% in 2007. - Projected nationally funded PRSP spending: 4.9% of GDP in 2003 rising to 5.3% in 2007. - Projected financing gaps: none for 2003–2004; gap of 0.1% of GDP in 2005; 0.7% of GDP in 2006; 1.1% of GDP in 2007. - HIPC resources will be considered from 2005 onwards (Culmination Point expected for 2005). ### Updated commitments to policy measures, 2003–2005 (priorities and crosscutting themes) - Government priority areas: i) economic reactivation and the creation of jobs; ii) development of human capital; iii) justice and citizen security. - Crosscutting themes: environmental preservation and risk prevention; gender equity; decentralization. - Policy measures and medium-term activities include: - Economic Reactivation and Job Creation: - Sign the PRGF with the International Monetary Fund. - Apply the Administrative Simplification Law. - Apply the National Competitiveness Strategy. - Implement land registry programs and strengthen trade mechanisms. - Promote development of clusters in agro-industry, tourism, light assembly, forestry and mining. - Strengthen land-titling, agrarian and forest land registry, and PRONADERS coordination. - Developing Human Capital: - Expand education and health sector reforms (regulation, planning, administration, information). - Improve coverage and quality of education and primary health care. - Approve the Water and Sanitation Framework Law; Approve the Housing Sector Modernization Law. - Continue “Housing for People” program; expand School Snack Program; improve coordination and targeting of social protection. - Justice and Citizen Security: - Conclude judicial reform and modernize law enforcement institutions. - Approve and implement Legal Service and Judicial Council Laws; implement new Penal Procedures Code. - Increase police presence and intensify fight against organized crime. - Crosscutting commitments: - Environment and Risk Management: approve Territorial Organization Law, Forestry Law, Water Law, Water and Sanitation Law, and Law Creating a National Risk Management System; decentralize environmental management. - Gender Equity: implement National Policy for Women and Plan of Action for 2002–2007; reform Domestic Violence Law and Equal Opportunities Law. - Decentralization: implement Decentralization and Local Development Program; strengthen municipal administration in planning, tax systems, and civil service. - Institutional focus: Institutionally Restructuring and Re-Engineering Public Administration to improve efficiency and efficacy. ### Short and medium term actions - Define Macroeconomic Framework jointly with the IMF and Consultative Council in a transparent context. - Attain timely approval of the PRGF agreement and make progress toward the Culmination Point to obtain HIPC benefits. *Source: Sefin- UPEG, financial programming* ### 1. Macroeconomic ### 1. Macroeconomic ### Macroeconomic Framework - Review tax policies in order to avoid restrictions on productive activities and negative impact on the poorest sectors. ### Monitoring - Fine-tune the PRSP’s monitoring and impact indicators. - Improve the monitoring of indicators through SIERP, making the process more transparent and participatory. - Develop sector and regional indicators that can be monitored by organizations, tactical teams, Sector Tables and the Consultative Council. - Conclude the PRSP participatory monitoring proposal, and put it into operation in the framework of the SIERP. ### Joint Prioritizing of Programs and Projects - Put a citizen participation process into practice for prioritizing and implementing PRSP policies, programs and projects linked to municipal, associative, provincial, regional and national structures. Proposals: - a) Set up a commission within the Consultative Council and the National Congress’s Budget Commission to review the PRSP proposal for 2004 and the multi-year budget, and to define proposals for prioritizing policies, programs and projects. - b) Develop a methodology for identifying resources for financing regional projects that are defined in a participatory manner from the time they are designed and negotiated with cooperation agencies, in the framework of sector programming. - c) Review and expand processes through which the PRSP’s programs and projects correspond to demand. Consider existing proposals, including regional poverty reduction strategies. - Foster three-way involvement (Government, Civil Society and Donors) in determining the main criteria for implementing the Poverty Reduction Strategy. - Review the economic growth program area, to: - a) Link its objectives with those of the National Competitiveness Program. - b) More clearly highlight key productive actors, such as the private sector and poor farmers, as subjects of economic growth efforts. - c) Establish a link with the National Competitiveness Program and with improving living conditions in rural areas, identifying potential for economic reactivation at the municipal and regional levels. - d) Establish clear links between businesses from the reformed agricultural sector, rural micro-enterprises and indigenous groups and the National Competitiveness Program, to foster local level development. - e) Develop a plan to help consolidate rural development programs that involves the themes of natural resources, water, irrigation and environmental services. The plan should better adjust the provision of rural development services. ### Sector Programs (selected actions) - f) Operationalize the National Policy on Women through an equitable budget structure and the necessary budget allotments to implement the policy. - g) Conduct an exhaustive review of the environmental and risk management components of the PRSP. - h) Implement the National Anti-Corruption Strategy and its corresponding plan of action. Monitor cases of corruption that are denounced by the CNA to avoid impunity. ### Outreach and Appropriation - Publicize the PRSP’s progress on a quarterly basis, both in terms of policy measures and projects, and the use of resources. ### Implementation mechanisms - Operationalize the PRSP through Annual Operation Plans, with their respective budgets. Coordinate these with the General Budget of the Republic, and reach consensus within the Consultative Council. Dialogue with social sectors, regions, sector tables and international cooperation agencies. Begin this effort with the 2004 Operation Plan. - Distribute the final PRSP progress report and updates to all participants in the consultative process, along with the matrix that contains different contributions to the report. - Implement the Work Plan of the PRSP’s Consultative Council. - Define a mechanism that facilitates dialogue about aspects that were not included in the current PRSP policies and programs. ### PRSP Implementation Based on a Sector Programming Scheme - Efficient implementation requires a “sectorialized” vision aligned with donors’ coordination norms; programmatic implementation with a sector-wide approach (SWAp) has begun. - Five programs with a sector-wide approach have been defined in the areas of Health, Education, Citizen Security, Water and Sanitation and Agro-Forestry. - Defining characteristics: - Complete provision of funds related to the sector, to support a sole spending policy. - The Government heads up the program. - All SWAps apply the same implementation and management conception to their sector. - Over time, the programs move toward utilizing governmental channels for disbursing and accounting for funds. ### Progress in Health Sector (examples) - Government (via the Social Cabinet) leading formulation of a National Nutrition Policy and Plan consistent with PRSP goals, the Government Plan and the Millennium Goals. - Main focuses: - Reducing malnutrition among children under 5 years of age - Reducing infant mortality and under 5 mortality rates - Reducing the maternal mortality rate - Generating greater access to potable water and sanitation services - Multiple institutions, civil society and donors participating to obtain a concerted National Nutrition Policy and Plan integrating nutrition and food security actions (Health, PRAF, Healthy Schools, SAG, etc.). ### Social Security Networks strategy considerations - Gender and ethnicity will be incorporated as crosscutting themes across PRSP policies, programs and projects. - Continued support for interventions aimed at: a) assisting individuals, families and communities to better manage risks; and b) providing support to families living in extreme poverty. - Institutional framework mainly represented by PRAF, FHIS, INAM and INFA for vulnerable populations; new strategy emphasizes strengthening regulatory institutions, comprehensive and sustainable interventions, and service delivery models involving civil society. - Social Protection Network to provide comprehensive attention for extremely vulnerable or socially excluded groups (homeless children, sexually exploited children, children orphaned due to HIV-AIDS, juvenile delinquents, women victims of violence, the elderly and the disabled living in extreme poverty). - The new approach should also attend to groups such as small-scale coffee producers affected by processes such as CAFTA or other economic changes in the medium and long term. ### Decentralized Implementation of the PRSP - Decentralized and participatory implementation via participatory formulation of strategic local development plans using a sector-wide approach. - Local organizations and governments to identify, prioritize, and implement development actions and works, favoring community and municipal initiatives to build local capacities, increase appropriation, transparency, and participation. - Governance and Justice Secretariat coordinated a Protocol for Centralized and Participatory Implementation of the PRSP with objectives: - a) Provide a foundation and help guide formulation of municipal development plans compatible with Government plans and quality standards. - b) Strengthen role of local governmental and non-governmental organizations in local planning. - A Content Guide and a Procedural Guide have been developed consistent with the PRSP covering education, health and nutrition, productive capacities, housing, and social and productive infrastructure; procedural themes include inter-institutional coordination, participation of different local sectors, and complementarity among international cooperation actions. - A plan of action will begin implementation in 10 municipalities of the country in the second half of 2003, using FHIS resources and other resources. - Provincial Development Commissions reactivated (through Executive Decree); Commissions composed of Governors, Municipal Mayors and civil society representatives. Commissions sworn in in the provinces of Lempira, Copán, Intibucá and La Paz. - National fiscal funds assigned to municipalities and capital transfers from the Central Government to the municipalities, and support from agencies such as FHIS, are important financing components for local investment programs and are considered part of poverty spending. ### Targeting - Decentralized implementation and local development actions base targeting on specific population groups to increase impact and limit dispersion of resources. - Eighty rural municipalities with malnutrition rates higher than 52% have been identified, based on information obtained through the Measurement Census of first grade children. - Seven urban municipalities with the highest absolute numbers of poor people have been identified. At least 60,000 poor people live in each of these municipalities. - Sector indicators identified to determine municipalities with greatest needs in priority areas (education, health, basic needs) to guide programs and projects based on indicators for illiteracy, access to potable water and basic sanitation, housing, etc. - The nucleus of targeting is the 80 rural municipalities identified on the basis of their malnutrition indices; in these municipalities, basic needs will be addressed comprehensively without scaling down interventions in the remaining 298 municipalities. ### Organizing Interventions for the Poor - Aim to organize poverty reduction interventions at the local level to avoid duplication and transcendence of institutional functions. - Presidential Sub-Secretariat coordinating process to identify types of interventions, beneficiaries, and amounts invested at community, municipal and provincial levels. - Work begun in the 80 targeted rural municipalities (selected based on malnutrition rates), detailing investments and beneficiaries by Proheco, Educatodos, the school snack program, the basic health package, and bonds/stipends from PRAF, PRONADERS, and FHIS. - Activity to be carried out nationwide with more than 30 interventions in 2003. - All available information about poverty situation and interventions at municipal and community level shared with provincial and municipal authorities to strengthen accountability and transparency. ### Monitoring and Evaluation - Monitoring requires effective oversight of HIPC funds and public funds used to reduce poverty, periodic reviews of global and intermediate goals, and measurement of the impact of projects, programs and legal and administrative measures on poverty. - A Comprehensive System for the Poverty Reduction Strategy (SIERP) is being developed so social programs share common objectives and technical instruments to guarantee transparent and high-quality actions and evaluation of impact. - SIERP main components: - a) Poverty Indicators System (SIP) — collecting and monitoring data and indicators related to the PRSP to evaluate progress toward objectives and goals. - b) Management Evaluation System (SEG) — main instrument for monitoring PRSP policies, programs and projects. - The Presidential Secretariat’s Technical Support Unit (UNAT) will be responsible for final monitoring and evaluation, relying on coordination with: - a) National Statistics Bureau (INE) — coordinates National Statistics System and provides information on overall goals and social indicators. - b) Central Bank of Honduras (BCH) — provides macroeconomic indicators; complemented by fiscal behavior indicators from the Finance Secretariat. - c) Secretariats of Finance and International Cooperation — via SISPU, SIAFI, and SINACOIN, provide information about physical and financial progress of PRSP programs and projects. - d) Line ministries and deconcentrated and decentralized institutions — main sources for intermediate indicators and progress of programs and projects, and the National Municipal Monitoring System (SINIMUN) for municipal indicators, programs and projects. - SIERP implementation achievements to date: - Definition of impact indicator and intermediate indicator tables. - Design of a Monitoring Plan for Indicators. - Design of a mechanism for sharing and getting feedback to results (through a web page providing institutional and public access to information). - Development of an advanced computer application prototype integrating and harmonizing SIP and SEG modules for monitoring and evaluating poverty reduction management processes. - Baseline information and goals for priority areas related to poverty, education and health have been quantified and disaggregated at the provincial and municipal levels where possible, allowing focalized and coordinated PRSP actions and fostering transparency and accountability. *Source: _cr0430 - 1. Macroeconomic* ### 223. A fundamental aspect of monitoring the impact of policy measures to be implemented in the ### _cr0430 - 223. A fundamental aspect of monitoring the impact of policy measures to be implemented in the ### Poverty and Social Impact Analysis (PSIA) - PSIA studies are identified as a fundamental aspect of monitoring the impact of policy measures implemented under the PRSP. - Purpose: - Measure effects of policy measures and programs before, during and after application. - Current status reported: - "Currently, such an analysis is underway, which will evaluate the impact that fiscal adjustment measures approved in 2002 have had on poverty." ### Adapting cooperation to the PRSP’s priorities - Government emphasis: - Rely on a portfolio of long-term sector programs coherent with priority areas for poverty reduction and national transformation. - Improve formulation, negotiation, management and implementation processes for programs and projects financed with reimbursable and non-reimbursable external funds. - Require high degree of intra-governmental coordination and coordination with international donors and agencies. - Priority definition and alignment: - Defining priorities corresponds to the President of the Republic, through the Secretary of State, with assistance from the GTI and UNAT. - Objective: align actions with the Poverty Reduction Strategy and guarantee consistency with macroeconomic goals. - Program design and implementation principles: - Concentrate national priorities on long-term sector programs rather than small projects to: - Improve impact on beneficiary populations. - Ensure coherence with sector and national objectives. - Reduce high administrative costs from proliferation of small implementing units. - Achieve more agile and competent implementation and implement participatory and social auditing processes. - Guarantee maintenance, full utilization and sustainability of implemented actions. ### Program submission, approval and negotiation procedures - Program profile preparation and submission: - Sector institutions prepare program profiles meeting donor requirements. - Reimbursable cooperation: profiles submitted to the Finance Secretary (SEFIN). - Non-reimbursable cooperation: profiles submitted to the Technical Secretariat for International Cooperation (SETCO/UNAT pathway). - Profiles analyzed technically and financially according to internal procedures. - Approval and certification: - A Special Committee of the Inter-Institutional Technical Group (GTI), acting for the Government’s highest level structures, analyzes and approves programs. - The Committee coordinates and consults with UNAT and issues a note certifying that programs fulfill priority and eligibility criteria. - Promotion, negotiation and subscription responsibilities: - SEFIN responsible for promotion, management, negotiation and subscription of reimbursable cooperation agreements. - SETCO responsible for non-reimbursable cooperation agreements. - Sector structures may contact cooperation agencies during profile preparation but may not make commitments prior to program prioritization. - Donor expectations: - Donor approval should be based on certification of Governmental priority and then proceed through normal negotiation and subscription processes with SEFIN and SETCO. - Close work with the Donor Monitoring Group (G-15) will continue. - Seek signing of specific corresponding agreements at the next Consultative Group for Honduras meeting. ### Reporting and oversight - SEFIN and SETCO reporting: - Both SEFIN and SETCO should submit reports on negotiation and program management status to the Presidency of the Republic via the SDP. - Reports should indicate progress or obstacles and include recommendations for adjustments or decisions to guarantee success. ### PRSP quantitative indicators (selected highlights from APPENDIX A) - Years covered: 2000, 2001, 2002 - Macroeconomic indicators (Real GDP and related) - Real GDP (% of growth): 5.7, 2.6, 2.5 - Real per capita GDP (% growth): 3.1, 0.1, 0 - Investment as % of GDP: 26.1, 23.6, 22.2 - Fiscal - Central Gov’t Deficit as % of GDP: 5.6, 6, 5.4 - Current income as % of GDP: 17.7, 18.2, 18.3 - Tax income as % of GDP: 16.4, 16.2, 16 - Central Gov’t Salaries as % of GDP: 8.9, 10.1, 10.8 - Central Gov’t Spending as % of GDP: 24.3, 26, 24.8 - Monetary and external sector - Inflation (% 12 months through Dec): 10.1, 8.8, 8.1 - NIR $ millions: 1,002.5, 1,104.6, 1,235.1 - NIR months of imports: 4.4, 4.7, 4.7 - Real active interest rate: 14.5, 14.4, 14 - Nominal exchange rate L/US$, end of year: 15.31, 16.05, 17.07 - Deficit in current accounts, balance of payments, % of GDP: 4.2, 4.6, 3.9 - External debt and debt service - Service on the debt as % of exports: 8.5, 8.3, 9.7 - Debt as % of GDP: 72, 67.5, 69.7 - % of external indebtedness that is concessionary: 73.4, 76, 73 - Financial sector - Number of bank supervisions conducted: 19, 22, 22 - Trade and productive sectors - % of Honduras’s participation in regional commerce: 14.2, 13.4, 13.1 - Value of non-traditional exports (US$ millions): 467.9, 441.5, 486.9 - % of non-traditional agricultural exports/ total exports: 51.6, 52.9, 55.7 - % of the aggregate value of the maquila industry/ exports of goods and services: 22.12, 21.9, 22.23 - Number of maquila industry jobs (thousands): 125, 110, 110 - Amount of foreign exchange generated by tourists (US$ millions): 259.8, 256.3, 291.1 - Rural land and sanitation - Number of land titles awarded: 16,570, 15,511, 10,237 - Number of hectares awarded: 114,905, 126,129, 52,680 - Number of hectares registered: 372,447, 182,728, 115,323 - Number of homes constructed (rural): n.a., 1,222, 623 - % of rural population with access to Potable Water: n.a., n.a., 63.2 - % of rural homes with Basic Sanitation System coverage: n.a., n.a., 49.5 - Urban poverty and MSMEs - National and regional CODESSE functioning: 5, 5, 7 - Number of houses constructed (social interest housing): 3,087, 2,294, n.a. - Education (selected) - Number of grade repeaters (Basic Education): 84,312, 98,727, n.a. - Number of dropouts (Basic Education): 29,715, 31,940, n.a. - % of 5 year old children in pre-basic: 25.6, 30.11, n.a. - % of students graduating from ninth grade: 13.64, 13.63, n.a. - Number of students with scholarships: 59,358, 59,510, 55,021 - Number of AECOSs set up: 1,180, 1,288, 1,320 - Number of ADELs set up: n.a., n.a., 1,008 - Health (selected) - Infant mortality rate/ 1,000 live births: n.a., 34, n.a. - Under 5 mortality rate/ 1,000 live births: n.a., 45, n.a. - % of children under 5 years adequately vaccinated: n.a., 93, n.a. - % of infant malnutrition: n.a., 32.9, n.a. - Maternal mortality rate/ 100,000 live births: n.a., 108, n.a. - % of women in reproductive health programs: n.a., 61.8, n.a. - % of population with access to health services: n.a., n.a., 91.4 - Social protection and gender - % of households with UBNs: n.a., 46, 41 - Number of children assisted through IHNFA: 9,405, 48,982, 49,717 - % of working children out of total children: n.a., 14.9, 16 - Number of disabled attended: 16,322, 17,181, 18,613 - Income levels of women (average income in Lempiras): n.a., n.a., 2,629 - Male/Female ratio of % of average income, by occupation: n.a., n.a., 96 - Governance and environment - Index of perceptions of corruption: n.a., 2.7, 2.7 - Number of hectares under sustainable management with community participation: 160,600, 163,525, 181,782 - Note: "n.a." denotes Not Available. ### Progress in PRSP policy measures (selected highlights from APPENDIX B matrix) - Short-term macroeconomic policy actions (Original Date of Implementation: 2001) - i. Obtain medium term fiscal viability: "CG Deficit in 2001 of 6.1% of GDP lowered to 5.3% in 2002" - ii. Monetary and credit variables congruent with growth: "Real inflation rates have diminished by more than 2 points per year" - iii. Strengthen financial system: "General improvement in applying prudent norms" - iv. Improve external sector equilibrium and manage external debt: "Underway (in compliance with the Public Credit Law)" - v. Continue structural reforms: "Financial Equilibrium Law approved" - Medium-term policy outline (2002 – 2015) - i. Strengthen fiscal revenues: "Underway (FRP Law approved)" - ii. Rationalize public spending with priority to poverty reduction: "Financial Equilibrium Law and Tax Equity Law being applied" - iii. Obtain sustainable levels of external financing, limiting flows to donations and concessionary loans: "Obtained" - iv. Maintain inflation at international levels through monetary control and reforms: "2001-2002 Inflation of 8.8% and 8.1%, respectively" - v. Solid and competitive financial system: "Improvement in applying prudent norms" - vi. Motivate competition based on efficient and productive investments: "National Competitiveness Program being implemented" - Investment and employment generation measures (2002 – 2015) - i. Reduce costs of new investments: "The Administrative Simplification Law was approved." - ii. Raise quality of jobs and productivity: "National Competitiveness Plan being implemented." - iii. Promote private capital participation in public services: "Plan: Telephones for People" - iv. Correct insecurity of property and investments via law enforcement: "Underway" - v. Promote and protect market competition: "Awaiting approval of the Competitiveness Promoting and Protection Law" - Trade and market access (2001 – 2015) - Strengthen participation in Central American integration: "Process underway" - Implement Free Trade Treaty with Mexico and Dominican Republic and negotiate with Panama, Chile and Canada: "Underway" - CAFTA negotiations: "CAFTA negotiations began" - Developing high-potential productive sectors (2001 – 2015; specific items with 2002 actions marked Done) - i. Create the National Competitiveness Council: "2002 Done" - ii–v. Define productive chain strategies, support medium/long-term resources for clusters, fortify agro-businesses and promote forestry cluster: "Underway" *Source: PROGRESS REPORT, 2002 (excerpt).* ### APPENDIX B: MATRIX OF PROGRESS IN PRSP POLICY MEASURES ### APPENDIX B: MATRIX OF PROGRESS IN PRSP POLICY MEASURES ### Objectives and general structure - Matrix organizes objectives, policy measures, Original Date of Implementation, and STATUS. - Time horizons frequently cited: 2001 – 2015; specific shorter ranges also present (e.g., 2002-2006, 2002-2005, 2001-2002). ### 1. INDUSTRY AND TOURISM - vi. Define and implement a strategy to develop the light assembly industry. - Original Date of Implementation: 2001 - 2015 - STATUS: Delayed - vii. Fortify the development of the tourist industry cluster. - Original Date of Implementation: 2001 - 2015 - STATUS: Underway ### 2. REDUCE POVERTY IN RURAL ZONES - 2.1 IMPROVING EQUITABLE AND SECURE ACCESS TO LAND - Objective: Guarantee access to land tenure and secure land ownership for organized peasants, independent peasants and ethnic groups. - i. Effectively apply idleness or non-use as grounds for affected lands. - 2002 – 2015 - ii. Strengthen land judgment and titling programs, especially among the land reform sector, ethnic groups and independent peasants. - 2001 – 2015 - iii. Develop and implement mechanisms that facilitate clear demarcation of lands and the security of rural properties. - 2001 – 2015 - STATUS entries include: Under negotiation; Being implemented; Being implemented - 2.2 SUSTAINABLE DEVELOPMENT IN PRIORITY ZONES - Objective: Successfully integrate, coordinate and sustain actions aimed at reducing poverty in rural zones. - i. Consolidate and expand the National Sustainable Rural Development Program (PRONADERS). - 2001 – 2015 - STATUS: Being implemented - ii. Increase rural development actions in the nation’s border zones, and their linkage with the national economy. - 2001 – 2015 - STATUS: Being implemented - iii. Expand training programs for the poor who live in forest zones, in developing sustainable small-scale agro-forestry businesses. - 2001 – 2015 - STATUS: Pending implementation - iv. Increase actions that favor the development of small-scale craft activities. - 2001 – 2015 - STATUS: Pending implementation - 2.3 IMPROVING THE COMPETITIVENESS OF SMALL SCALE RURAL ECONOMIES - Objective: Increase production and improve the efficiency and competitiveness of small-scale rural producers. - i. Promote the productive conversion of the reformed agrarian sector, ethnic groups, and rural micro-enterprises, to make them competitive and sustainable entities. - 2001 – 2015 - STATUS: Underway - ii. Implement actions that help reduce transaction costs and thereby improve the competitiveness of the rural economy. - 2001 – 2015 - STATUS: Underway (partially) - iii. Improve access by small and medium scale farmers to basic support services for developing their economic activities. - 2001 – 2015 - STATUS: Being implemented - iv. Develop mechanisms for capitalizing small agricultural businesses dedicated to basic consumption products. - 2001 – 2015 - STATUS: Pending implementation - 2.4 IMPROVING SOCIAL CONDITIONS IN RURAL AREAS - Objective: Strengthen social infrastructure and expand poverty relief programs in the rural zones with the highest incidence of poverty. - i. Support rural housing projects with beneficiary participation and Government financial support, including Local Governments and NGOs in construction. - 2001 – 2015 - STATUS: Pending implementation - ii. Expand the coverage of potable water and basic sanitation services. - 2001 – 2015 - STATUS: Being implemented - iii. Incorporate promotion of yard production and food conservation activities by peasant women in the FHIS and PRAF programs. - 2001 – 2015 - STATUS: Pending implementation - iv. Improve coordination of donations of food and inputs for small-scale productive projects and community works. - 2001 – 2015 - STATUS: Pending implementation ### 3. REDUCING URBAN POVERTY - 3.1 Stimulating the Development of Micro, Small and Medium Scale Enterprises - Objective: Support the growth and competitiveness of micro, small and medium scale businesses, as a source of jobs and income for poor families. - i. Strengthen public and private institutions that provide assistance to micro, small and medium scale businesses. - Original Date of Implementation: 2001-2015 - STATUS: Pending implementation - ii. Support alternative savings and credit modalities, with the participation of beneficiaries. - Original Date of Implementation: 2001-2015 - STATUS: Pending implementation - iii. Promote young entrepreneurs, incorporate training in project design and administration, and award financing with favorable terms. - Original Date of Implementation: 2002-2015 - STATUS: Cooperation being negotiated - iv. Facilitate the creation of zonal markets and centers for mobile sellers as part of organizing informal commerce at municipal level. - Original Date of Implementation: 2002-2015 - STATUS: Pending implementation - Development of Intermediate Cities - Objective: Promote the development of intermediate cities, seeking their establishment as regional development areas. - i. Organize solidary markets at the regional level through associations of municipalities. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented - ii. Promote the organization of business setups considering the potential of intermediate cities. - Original Date of Implementation: 2002-2006 - STATUS: Advanced negotiations underway - iii. Promote industrial activity in intermediate cities. - Original Date of Implementation: 2002-2015 - STATUS: The Decentralized Investment Program being negotiated - 3.3 Support to Social Interest Housing - Objective: Stimulate the construction of low-cost housing through legal, financial and participatory mechanisms. - i. Approve the Law to Modernize the Housing Sector and increase efficiency of regulatory structure while avoiding direct involvement in implementing projects. - Original Date of Implementation: 2002 - STATUS: Delayed; Draft Law is being reviewed - ii. Facilitate construction of housing or housing improvements for the low-income population. - Original Date of Implementation: 2001-2015 - STATUS: Being implemented - iii. Legally guarantee land tenure and housing ownership, under titling modalities that especially protect women and children. - Original Date of Implementation: 2001-2015 - STATUS: Pending implementation - iv. Establish norms for organized development of human settlements with attention to risk prevention. - Original Date of Implementation: 2002 - STATUS: Pending implementation - 3.4 Access to Basic Services in Priority Areas - Objective: Improve access to basic services by the inhabitants of marginal urban zones. - i. Promote Municipal Develop Funds to provide efficient basic services in the main cities. - Original Date of Implementation: 2002 - 2005 - STATUS: Underway - ii. Promote the “municipalization” of water and sanitation systems. - Original Date of Implementation: 2001 - STATUS: Approval delayed - iii. Move ahead with decentralization to allow effective public service delivery at the local level. - Original Date of Implementation: 2001 2015 - STATUS: Decentralization Program underway ### 4. INVESTING IN HUMAN CAPITAL - 4.1 Better Quality and Coverage of Basic Education and Technical-Vocational Education - Objective: Improve educational levels through better quality, more efficient and more equitable education at different levels. - i. Conclude formulation and approval of the General Framework Law for Education. - Original Date of Implementation: 2001 - ii. Improve the quality of education at different levels. - Original Date of Implementation: 2002-2015 - STATUS: Working in the Education Sector - iii. Expand service provision with emphasis on pre-basic education, 7th-9th grade, and middle education for enrolled and non-enrolled populations. - Original Date of Implementation: 2001-2015 - STATUS: Being implemented - iv. Improve programs and mechanisms that increase demand for educational services. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented - v. Strengthen formal and non-formal vocational-technical education. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented - vi. Strengthen the management and efficiency of the educational system. - Original Date of Implementation: 2002-2003 - STATUS: Being implemented - vii. Improve the efficiency of higher education. - STATUS: Being implemented - 4.2 More and Better Access to Health Services - Objective: Guarantee the poor population’s access to quality and equitable health services, most importantly primary care and nutritional oversight. - i. Strengthen primary and preventive health care. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented - ii. Provide more attention to the health conditions of women. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented - iii. Achieve more efficient and higher quality health service provision. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented - 4.3 Cultural Wealth and National Identity - Objective: Assign strategic value to socio-cultural management to strengthen civic, ethnical, moral and democratic values. - i. Promote creation and publicizing of different artistic expressions nationwide. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented - ii. Define an action plan to promote ethnic-moral values to strengthen national identity. - Original Date of Implementation: 2002-2015 - STATUS: Pending implementation - iii. Establish agreements to better use cultural resources for tourist purposes and achieve self-sustainable maintenance and conservation. - Original Date of Implementation: 2002-2015 - STATUS: Being implemented ### 5. STRENGTHENING SOCIAL PROTECTION FOR SPECIFIC GROUPS - 5.1 Social Security Networks - Objective: Reduce the risk factors among more vulnerable groups. - i. Strengthen and improve impact of programs aimed at alleviating extreme poverty. - Original Date of Implementation: 2001-2015 - STATUS: Being implemented - ii. Support programs that protect children and young adolescents. - Original Date of Implementation: 2001-2015 - STATUS: Being implemented - iii. Provide comprehensive attention to disabled people living in poverty. - Original Date of Implementation: 2002-2015 - STATUS: Actions being implemented in the framework of SESAL/FHIS - iv. Improve attention to older adults. - Original Date of Implementation: 2002 - STATUS: Pending implementation - 5.2 Gender Equity and Equality - Objective: Support comprehensive development of women living in poverty through full and effective participation. - i. Guarantee conditions that provide women effective equal opportunities, especially those living in poverty. - Original Date of Implementation: 2002-2015 - STATUS: PNM approved - ii. Review and apply the Law on Domestic Violence to prevent and eliminate incidence affecting women. - Original Date of Implementation: 2002 - STATUS: Being implemented - iii. Incorporate sex-disaggregated information in censuses and surveys to highlight women’s economic contributions. - Original Date of Implementation: 2002-2005 - STATUS: Done - 5.3 Developing Ethnic Groups - Objective: Help build local capacities of ethnic and black population groups in Honduras. - i. Create the National Council on Ethnic Groups to define a national agenda and improve coordination. - Original Date of Implementation: 2002 - STATUS: Underway - ii. Incorporate “ethnic group to which you pertain” in census statistics or as a Household Survey module. - Original Date of Implementation: 2002-2003 - STATUS: Done - iii. Homologize national legislation with ILO’s Agreement 169 to guarantee application. - Original Date of Implementation: 2002-2005 - STATUS: Delayed ### 6. GUARANTEEING THE STRATEGY’S SUSTAINABILITY - 6.1 Strengthening Accountability and Participatory Democracy - Objective: Consolidate good governance, guaranteeing transparent and accountable public administration, and improving political representation. - i. Guarantee transparency and accountability in all public administration activities, especially implementation of social programs and projects. - Original Date of Implementation: 2001-2005 - STATUS: Underway; Pending approval in the National Congress - ii. Formulate and approve legal organization and prudent supervision of NGOs in coordination with involved sectors. - Original Date of Implementation: 2002 - iii. Improve the parliamentary process via technical assistance and automate oversight procedures and priorities. - Original Date of Implementation: 2002-2015 - iv. Concert and approve policy reforms to improve participatory democracy. - Original Date of Implementation: 2002 - STATUS: Underway - 6.2 Strengthening Justice and Citizen Security - Objective: Generate conditions for a surveillance system that guarantees rights, legal security for investments, and peaceful life. - i. Strengthen the independence of the justice system. - Original Date of Implementation: 2001-2002 - STATUS: Underway - ii. Improve application of justice and equitable access. - Original Date of Implementation: 2001-2002 - STATUS: Underway - iii. Prevent and sanction crime to guarantee social order and rights to life and property. - Original Date of Implementation: 2001 - STATUS: Underway - 6.3 Modernize Public Administration and Decentralization - Objective: Achieve effective decentralization and municipal development to reduce poverty within modern and efficient public administration. - i. Continue implementing the Public Administration Modernization Program. - Original Date of Implementation: 2001 - STATUS: Underway - ii. Approve the Administrative Simplification Law. - Original Date of Implementation: 2001 - STATUS: Approved - iii. Decentralize and deconcentrate Central Government functions to municipalities. - Original Date of Implementation: 2001-2015 - STATUS: Underway - iv. Strengthen the role of Local Governments in promoting development with community participation. - Original Date of Implementation: 2002 - STATUS: Underway - 6.4 Improving Environmental Protection and Risk Management - Objective: Reduce ecological risks and vulnerability by improving environmental and risk management at central and decentralized levels. - i. Adapt legal framework and improve institutional efficiency to reduce ecological vulnerability. - Original Date of Implementation: 2002 - STATUS: Pending implementation - ii. Improve environmental management and planning systems. - Original Date of Implementation: 2002 - 2003 - STATUS: Underway - iii. Promote financial sustainability of environmental management and protection actions. - Original Date of Implementation: 2002 – 2015 - STATUS: Initiated - iv. Promote citizen participation in environmental protection and risk management actions. - Original Date of Implementation: 2002 – 2015 - STATUS: Initial actions - v. Prepare and apply an emergency prevention, mitigation and response strategy based on a permanent decentralized structure. - Original Date of Implementation: 2002 – 2015 - STATUS: Establishing the basis ### Appendix C: Definition of Poverty Spending (summary of key elements) - The “expanded conception of poverty spending in Honduras” includes: - All elements in the original PRSP (2001) plus programs and projects identified during the consultative process (2003) relevant to achieving the PRSP goals. - Original PRSP (2001) definition: - Based on the portfolio of projects in public spending program (financed with donations and loans) related to the Strategy’s six “pillars.” - Emphasis on programs and projects financed with external resources and national counterpart funds; some projects financed only by national resources were included. - A financing gap was identified to be covered with additional external resources via the Consultative Group or similar mechanisms. - In the original PRSP, total spending for 2001-2015 was estimated at US$2.666 billion, approximately 2.6% of the GDP. - Financing composition: 60% financed with external resources and donations; 35% with debt relief; 5% with national funds. - Programmatic allocation: 1% for accelerating sustainable and equitable growth; 21% for reducing rural poverty; 17% for reducing urban poverty; 40% for human capital programs (education and health); 10% for social protection; 8% for the Strategy’s social, political and environmental promotion. - Adjustments during 2001-2002: - Included relevant projects originally excluded, incorporated new projects negotiated since 2001 (e.g., EFA and the Global Fund for HIV-AIDS), eliminated projects not related to PRSP goals, and corrected duplicate projects across databases. - New Definition: - Appendix presents the revised definition of the Poverty Reduction Strategy, adopted in 2003: Programs Financed with External Resources. *Source: APPENDIX B: MATRIX OF PROGRESS IN PRSP POLICY MEASURES; APPENDIX C: DEFINITION OF POVERTY SPENDING (from the provided document).* ### 1. The PRSP includes programs and projects financed with external resources for achieving the ### _cr0430 - 1. The PRSP includes programs and projects financed with external resources for achieving the ### Externally financed programs and selection process - The PRSP includes programs and projects financed with external resources aligned to the programmatic areas of the original PRSP document (six programmatic areas and 21 sub-areas), including investment projects and projects financing recurrent expenses. - Most external financing is earmarked for direct investment; some externally financed programs consist mainly of recurrent expenses, including: - Family Assignment Program. - Technical assistance programs for small-scale farmers administered by PRONADERS through SAG. - PRIESS, dedicated to providing basic medical care in remote rural communities. - Decisions on which externally financed projects to include in the PRSP are made by a technical committee with representatives from UNAT and SEFIN. - The resulting project list was shared among interested parties, including civil society representatives, during the 2003 consultative process; adjustments were made to assure consistency. ### Programs financed with national funds — inclusion and categories - National counterparts of all PRSP projects financed with external resources were automatically included in the PRSP budget. - Two main categories defined for national-funded PRSP components: - Capital Outlays financed with National Funds. - Recurrent Expenses financed with National Funds (expanded definition includes recurrent expenses relevant to PRSP programmatic areas and goals). ### Capital outlays financed with national funds — main components included - All investments of the Education and Health Secretariats. - SOPTRAVI: investments in low-income housing, construction and repair of secondary highways and rural roads, and rural bridges. - All of the Agriculture Secretariat’s capital investments. - All FHIS capital investments. - Capital transfers to Municipalities to finance their investment programs. - All transfers to SANAA and other agencies for building potable water and sanitary sewage systems. - Capital transfers for expanding electricity and telecommunications coverage in rural and marginal-urban communities. ### Recurrent expenses financed with national funds — expanded inclusions - Recurrent expenses relevant to PRSP programmatic areas and goals, financed with national resources, are included under the expanded definition. ### Education Secretariat (expanded inclusions) - Salaries for teachers (excluding Secretariat central administration personnel hired under the Civil Service regime). - Number of teachers calculated using the Education Secretariat’s teacher information system (SIARDH) for non-administrative posts; data on teachers in administrative posts outside central administration obtained from SEFIN’s budget system. - Consolidation of all this information into SIARDH is hoped for by 2005. - The salary per teacher admissible as poverty spending is calculated at 3.5 times the per capita GDP. This amount was decided jointly with the World Bank’s technical staff, based on benchmarks from El Salvador and Nicaragua. - Per capita GDP uses official INE projections; GDP information obtained from the Central Bank. - Once the admissible salary rate is computed, remaining portions of total salaries are registered as non-PRSP salary spending. - Total amounts of salaries for personnel hired to improve coverage and quality, financed by HIPC debt relief, are included. - Recurrent transfers and other costs related to community education (PROHECO, AECO and others). (Transfers to universities are not included). - Programs to develop alternative delivery systems (Basic Education Centers, Educatodos, Telebásico, and programs for specific groups). - Economic support programs to promote academic excellence and cover transportation costs to improve access to education. ### Health Secretariat (SS) (expanded inclusions) - Salaries of medical personnel providing outpatient care, environmental health and treatment of infectious-contagious diseases, and hospital care programs (excluding central administration personnel of the SS; auxiliary staff of service delivery units are included). - Number of medical personnel calculated using information from SEFIN’s budgetary system. - Average admissible salary per person is calculated at five times the per capita GDP; formula defined jointly with World Bank technical personnel, based on benchmarks with El Salvador and Nicaragua. - Population data from official INE projections and GDP data from the Central Bank are used in calculations. - Once admissible salary is calculated, remaining SS salaries are registered as non-PRSP salary spending. - Total amount of salaries financed with HIPC debt relief to improve quality and coverage of services is included. - Cost of medicines for outpatient care, environmental health/infectious-contagious diseases and hospital care. - Cost of per diems related to implementing the basic health programs (outpatient care, environmental health/infectious-contagious diseases). - Transfers to finance community programs and other third-party mechanisms used to expand and improve basic health coverage. ### Secretariat of Agriculture (SAG) (expanded inclusions) - All costs related to rural development and poverty reduction, excluding the Secretariat’s central administration costs. - Transfers to COHDEFOR or other agencies to administer protected areas and watershed management programs. ### PRAF (expanded inclusions) - All recurrent transfers to finance programs directly targeting beneficiaries, excluding the program’s central administrative costs. ### FHIS (expanded inclusions) - All recurrent transfers to finance programs that directly reach beneficiaries, excluding the program’s central administrative costs. - Also listed elsewhere as capital investments under capital outlays. ### Presidential Secretariat (expanded inclusions) - The School Snack Program. - The Healthy School Program. - The Efficient and Transparent State Purchases Program. ### Public Security Secretariat (expanded inclusions) - Salaries financed with debt relief funds for additional personnel hired to improve security conditions in low-income communities. ### Annex material: data series and fiscal totals (selected exact values preserved) - A complete list details funding source and economic classification of revised PRSP programs and projects, including time series for projected and implemented spending for the 2001-2007 period. - Central government: spending for expanded PRSP projects (MILLIONS OF LEMPIRAS) — TOTAL row: - 2001: 8,752.2 - 2002: 8,155.6 - 2003: 8,929.4 - 2004: 10,724.0 - 2005: 12,823.3 - 2006: 15,365.2 - 2007: 17,337.5 - TOTAL % of GDP row: - 2001: 8.8 - 2002: 7.5 - 2003: 7.5 - 2004: 8.1 - 2005: 8.7 - 2006: 9.4 - 2007: 9.7 - Exchange Rate series: - 2001: 15.47 - 2002: 16.43 - 2003: 17.2 - 2004: 18.14 - 2005: 18.83 - 2006: 19.37 - 2007: 19.92 - GDP series: - 2001: 99,062.0 - 2002: 108,175.0 - 2003: 118,544.0 - 2004: 132,080.0 - 2005: 147,445.0 - 2006: 163,370.0 - 2007: 179,073.0 ### Summary of expanded base by programmatic area (selected program totals, MILLIONS OF LEMPIRAS) - 1. ACCELERATING EQUITABLE AND SUSTAINABLE ECONOMIC GROWTH: - 2001: 70.3 - 2002: 117.8 - 2003: 34.6 - 2004: 104.2 - 2005: 164.7 - 2006: 352.3 - 2007: 375.1 - 2. REDUCING POVERTY IN RURAL ZONES: - 2001: 1,528.7 - 2002: 1,205.8 - 2003: 1,131.8 - 2004: 1,086.9 - 2005: 1,346.4 - 2006: 1,704.3 - 2007: 1,743.5 - 3. REDUCING POVERTY IN URBAN ZONES: - 2001: 484.3 - 2002: 431.2 - 2003: 632.3 - 2004: 843.9 - 2005: 885.2 - 2006: 751.2 - 2007: 562.8 *Source: Excerpt from the PRSP Progress Report, 2002 (appendices and text as provided).* ### 3.4 Access to Basic Services in Priority ### _cr0430 - 3.4 Access to Basic Services in Priority Areas ### Access to Basic Services in Priority Areas (SANAA / Water and Sanitation) - SANAA totals by year (MILLIONS OF LEMPIRAS): 284.0, 345.5, 500.9, 706.1, 706.9, 534.7, 408.5 - SANAA (Water and Sanitation) by year (MILLIONS OF LEMPIRAS): 284.0, 345.5, 491.1, 698.2, 706.9, 534.7, 408.5 - Minor water/sanitation entry: 9.8 (2003), 7.9 (2004) ### 4. INVESTING IN HUMAN CAPITAL — aggregate - Totals by year (MILLIONS OF LEMPIRAS): 4,293.7, 4,754.5, 5,297.4, 6,388.3, 6,860.4, 7,639.1, 8,718.5 #### 4.1 Better Educational Quality and Coverage - Subtotal by year (MILLIONS OF LEMPIRAS): 3,011.7, 3,308.5, 3,747.4, 4,399.3, 4,795.4, 5,462.6, 5,967.9 - Academic Excellence Scholarship Program by year: 50.0, 41.1, 42.0, 44.2, 46.8, 49.1, 51.1 - Scholarships and Social Assistance items (selected): - Scholarships and Social Assistance: 31.1, 49.2, 35.0, 33.2, 35.2, 37.0, 38.4 - National Alternative Education Commission: 20.0, 20.0, 20.0, 21.0, 22.3, 23.4, 24.3 - Developing Education in marginal urban communities: 4.9, 6.9, 33.4, 9.9, 10.5, 11.0, 11.5 - SOUTH LEMPIRA DEVELOPMENT PROJECT: 0.7, 0.7, -, -, -, -, - - Basic Education Human Resources: 25.7, -, -, -, -, -, - - Basic Education (IDA 2694): 64.9, -, -, -, -, -, - - KFW Education: -, -, 12.9, 8.1, 4.5, 13.4, - - Middle Education: -, -, 18.4, 27.2, 28.8, 26.7, - - Strengthening Secondary Education: -, -, -, -, 8.5, 81.4, 111.8 - Transforming Education: -, 40.5, 44.3, 60.0, 63.1, 75.5, 78.5 - Transforming the Third Cycle of Basic Education: 3.4, 8.3, 17.7, 12.2, 12.6, 13.0, 13.7 - Educatodos: 4.0, -, -, 7.3, 7.5, 7.7, 8.0 - 1000 Teachers: 93.2, 125.0, 140.2, 163.3, 317.6, 339.6, 361.5 - Teacher salaries: 2,531.5, 2,878.5, 3,107.1, 3,512.4, 3,824.2, 4,240.0, 4,646.0 - PROHECO: 144.1, 118.3, 232.3, 292.7, 194.7, 316.3, 386.5 - ADEL (AECOS): -, -, 4.0, 4.0, 4.2, 4.5, 4.6 - EXPANDING HORIZONS: 18.6, -, 20.0, -, -, -, - - EDUCATION TRANSPORTATION BONUS: 14.3, 15.0, 15.0, 16.0, 16.9, 17.8, 18.5 - EFA: -, -, -, 182.9, 192.7, 200.7, 207.8 - TELEBASICO EDUCATIONAL SYSTEM: 5.3, 5.0, 5.0, 5.0, 5.3, 5.6, 5.8 #### 4.2 Better and More Access to Health Services - Subtotal by year (MILLIONS OF LEMPIRAS): 1,281.9, 1,446.1, 1,550.0, 1,989.0, 2,064.9, 2,176.5, 2,750.6 - Institutional Reorganization and Extension of Basic Health Sector Services Program (PRIESS): 50.2, 43.4, 74.6, 102.1, 97.5, 86.8, 157.6 - Access to Health Services: -, -, -, 13.4, 13.9, 14.3, 14.8 - Physician and Other Health Worker Salaries: 633.3, 677.2, 732.6, 792.2, 862.5, 944.6, 1,022.8 - GLOBAL FUND: -, -, -, 345.3, 160.3, 92.5, 52.0 - Hospital and equipment items (selected): - Hospital construction: 16.7, 107.7, 128.2, 46.7, 61.0, 60.8, 54.6 - Pharmaceutical Products and Medicines, minor medical equipment for surgery and laboratories: 540.8, 583.1, 547.5, 642.7, 803.3, 837.9, 873.9 - HEALTHY SCHOOLS PROJECT: 35.0, 34.7, 67.1, 46.5, 26.7, 28.0, 35.1 - HIPC Physicians: -, -, -, -, 39.6, 42.0, 44.1 - Equipment for Eight Hospitals: -, -, -, -, -, 69.5, 199.2 - Equipment for the Regional Atlántida Hospital: -, -, -, -, -, -, 296.6 ### 5. STRENGTHENING SOCIAL PROTECTION FOR SPECIFIC GROUPS — aggregate - Totals by year (MILLIONS OF LEMPIRAS): 515.5, 397.0, 398.3, 476.3, 449.8, 431.0, 393.7 #### 5.1 Social Security Networks - Subtotal by year (MILLIONS OF LEMPIRAS): 387.5, 333.1, 316.5, 400.5, 368.8, 353.9, 318.3 - Notable program figures: - Family Bonus: 2.6, 2.1, 9.9, 10.0, 10.6, 11.1, 11.6 - PRAF (Bonuses): 217.5, 201.3, 214.0, 276.8, 237.6, 216.2, 175.1 - VARIOUS SOCIAL ASSISTANCE: 66.0, 33.0, 19.6, 19.5, 20.7, 21.7, 22.6 - IHADFA: 5.0, 7.5, 7.0, 7.5, 8.0, 8.3, 8.7 - INFA: 96.4, 89.2, 66.1, 86.7, 91.9, 96.5, 100.4 #### 5.2 Gender Equity and Equality - Subtotal by year (MILLIONS OF LEMPIRAS): 18.9, 17.5, 15.6, 24.1, 20.7, 18.8, 15.2 - Comprehensive Development of Women: 18.9, 17.5, 15.6, 24.1, 20.7, 18.8, 15.2 #### 5.3 Development of Ethnic Groups - Subtotal by year (MILLIONS OF LEMPIRAS): 109.1, 46.4, 66.2, 51.8, 60.4, 58.3, 60.2 - “Our Roots” and FIDAS: 109.1, 46.4, 49.2, 51.5, 60.3, 58.3, 60.2 - Support Program for Indigenous and Black populations (PAPIN): -, -, 17.0, 0.2, -, -, - ### 6. GUARANTEEING THE STRATEGY’S SUSTAINABILITY — aggregate - Totals by year (MILLIONS OF LEMPIRAS): 1,859.8, 1,249.3, 1,396.0, 1,674.7, 2,156.1, 2,459.0, 2,759.9 #### 6.1 Strengthening Accountability and Participatory Democracy - Subtotal by year: -, 6.3, 74.4, 42.1, 47.9, 49.4, 99.0 - Efficiency and Transparency in State Purchases Program: -, 6.3, 74.4, 42.1, 47.9, 49.4, 99.0 #### 6.2 Strengthening Justice and Citizen Security - Subtotal by year: -, -, -, 21.3, 17.1, 18.0, 18.9 - Security for Low-Income Sector: -, -, -, 21.3, 17.1, 18.0, 18.9 #### 6.3 Modernizing Public Administration and Decentralization - Subtotal by year (MILLIONS OF LEMPIRAS): 1,686.7, 979.1, 1,118.3, 1,076.0, 1,503.2, 1,754.5, 2,010.0 - Investments in Municipalities (Concessions): 68.2, 18.9, 77.4, 85.2, 86.1, 148.8, 113.7 - Support to Municipalities: 350.0, 400.0, 450.0, 433.0, 809.3, 1,014.9, 1,284.8 - COMMUNITY DEVELOPMENT PROGRAM: 102.4, 62.3, 113.6, 17.0, 18.1, 19.0, 19.9 - Municipal Decentralization (Education): -, -, -, 37.2, -, -, - - SUPPORT TO VARIOUS MUNICIPALITIES: 39.6, 46.5, 0.0, 3.4, 4.6, 5.8, 7.1 - PATRONAGES, TOWNS AND MUNICIPALITIES: 67.6, 1.3, -, -, -, -, - - Municipal Social Investment Plans (FHIS): 1,058.9, 450.1, 477.4, 500.2, 585.2, 566.1, 584.6 #### 6.4 Improving Environmental Protection and Risk Management - Subtotal by year (MILLIONS OF LEMPIRAS): 173.1, 263.9, 203.3, 535.3, 587.9, 637.1, 631.9 - Protection of Natural Resources: -, -, -, 156.5, 92.6, 161.3, 159.8 - Priority Works (MITCH): -, 4.9, 24.7, 29.9, 24.9, 63.9, 56.2 - UPPER WATERSHED MANAGEMENT PROGRAM FOR THE LEMPA, OCOTEPEQUE RIVERS: -, -, 1.7, 26.9, 42.8, 28.5, 10.8 - Investment by Sula Valley Executive Commission: 55.2, 87.6, 126.7, 52.2, 65.3, 68.6, 72.0 - Disaster Mitigation Project: -, 23.8, 5.5, 44.4, 54.8, 55.9, 57.0 - Multi-Phase Natural Resource Management Program for High Priority Watersheds (MARENA): -, 23.2, 34.5, 179.3, 252.5, 112.6, 97.9 - Comayagua Valley Watersheds: -, 3.6, 10.2, -, -, 62.0, 89.6 - COHDEFOR (WATERSHEDS): 117.9, 103.9, 0.0, 46.2, 55.0, 84.3, 88.6 - Conservation of the Plátano River Biosphere Reserve: -, 16.9, -, -, -, -, - ### 7. Others Pending Classification - Totals by year (MILLIONS OF LEMPIRAS): -, -, 39.0, 17.0, 960.3, 2,027.6, 2,783.6 - Breakdown of pending items (selected): - OTHER: -, -, -, -, -, -, 100.0 - HIPC to be Assigned: -, -, 36.4, -, 697.7, 653.5, 524.1 - HIPC INVESTMENT: -, -, 1.0, 17.0, 174.4, 163.4, 61.3 - NON-FINANCED PRSP INVESTMENT: -, -, -, -, -, -, 374.1 - INVESTMENT WITH DONATIONS: -, -, -, -, -, -, 163.1 - PRSP to be Financed: -, -, -, -, 88.2, 1,210.7, 1,561.0 - PRSP Support: -, -, 1.6, -, -, -, - ### Total Programs and Projects (aggregate) - TOTAL PROGRAMS AND PROJECTS (MILLIONS OF LEMPIRAS): 8,752.2, 8,155.6, 8,929.4, 10,591.3, 12,822.8, 15,364.6, 17,337.0 *Source: _cr0430 - 3.4 Access to Basic Services in Priority (PDF).* ### APPENDIX F ### APPENDIX F ### Poverty Reduction Strategy goals for potable water and sanitation (2015) - Target coverage areas: Water installation coverage; Sanitation coverage; Urban wastewater treatment. - Proposed solutions: - Water: domestic connections in concentrated urban and rural localities; non-conventional solutions (wells with manual pumps) in dispersed rural locations. - Sanitation: domestic connections to sewage systems in urban locations; latrine construction in rural areas and marginal urban neighborhoods where environmental conditions permit. - Urban wastewater treatment by location size: - 2,000–10,000 inhabitants: Imhoff Tanks. - 10,000–100,000 inhabitants: stabilization pools. - >100,000 inhabitants: activated mud treatment plants. - Coverage goals (2001 baseline; 2015 targets): - Current – 2001: - Water coverage: Rural 71.9, Urban 91.3, Total 79.5 (percent) - Sanitation coverage: Rural 62.9, Urban 96.8, Total 78.0 (percent) - Urban wastewater treatment: Total 21.4 (percent) - Future – 2015: - Water coverage: Rural 95.0, Urban 95.0, Total 95.0 (percent) - Sanitation coverage: Rural 95.0, Urban 95.0, Total 95.0 (percent) - Urban wastewater treatment: Total 57.3 (percent) - Note: 2001 sanitation coverage includes all system types (network, septic tanks, discharge into rivers/gullies, well latrines). *Source: INE, 2001 Census; PAHO/WHO, PWS Sector Analysis 2003.* ### Current population and projections (2001 and projections through 2015) - 2001 census totals: - National population: 6,535,000 inhabitants; dwellings: 1,282,000; average 5.10 inhabitants per dwelling. - Rural population: 53.7% (3.5 million inhabitants). - Urban population: 46.3% (3.0 million inhabitants). - Population projections (Table 3) — Population projections 2001 - 2015 (numbers in individuals): - Rural: 2001 3,508,181; 2005 3,692,573; 2010 3,917,338; 2015 4,135,005 - Urban: 2001 3,022,150; 2005 3,504,729; 2010 4,128,652; 2015 4,759,970 - Total: 2001 6,530,331; 2005 7,197,302; 2010 8,045,990; 2015 8,894,975 ### Investments required to meet PRSP goals (overview) - Investments estimated annually by component: increasing water coverage, increasing sanitation coverage, increasing urban wastewater treatment. - Cost estimates presented in 2002 prices; average 2002 exchange rate used: L.16.61 x US$ 1.00. ### Increase in water coverage (2002–2015) - Goal: 95% water coverage by 2015 (rural and urban). - Unit cost assumptions: - Rural: US$37 per person (community wells/manual pumps). - Urban: US$400 per connection; 4.96 inhabitants per dwelling. - Population to receive water service (Table 4; values in thousands): - Rural: 2001 Population 3,508; 2015 Population 4,135; Population with PW in 2001 2,487; 95% Target Population in 2015 3,928; Population to be attended by 2015 1,441 - Urban: 2001 Population 3,022; 2015 Population 4,760; Population with PW in 2001 2,759; 95% Target Population in 2015 4,522; Population to be attended by 2015 1,763 - Total: 2001 6,530; 2015 8,895; Population with PW in 2001 5,246; 95% Target 8,450; Population to be attended 3,204 - Water investment costs 2002–2015 (Table 5; IN THOUSANDS OF 2002 US DOLLARS): - Rural: Connections to be made by 2015 267.4; Cost per Connection US$ 200.0; Total Cost US$ 53,472; Annual Average US$ 3,819; Total Cost in Lempiras 888,170 - Urban: Connections to be made by 2015 355.5; Cost per Connection US$ 400.0; Total Cost US$ 142,190; Annual Average US$ 10,156; Total Cost in Lempiras 2,361,776 - Total Connections 622.9; Total Cost US$ 195,662; Annual Average US$ 13,976; Total Cost in Lempiras 3,249,946 ### Increase in sanitation coverage (2002–2015) - PRSP sanitation goal: 95% rural, 100% urban by 2015. - Unit cost assumptions: - Rural latrine: US$60 per latrine. - Urban domestic connections to sewage networks: US$600 per connection; 4.96 inhabitants per dwelling. - Population to receive sanitation service (Table 6; values in thousands): - Rural: 2001 Population 3,508; 2015 Population 4,135; Population with Sanitation Service 2001 2,207; Target Population, 95% in 2015 3,928; Population to be attended by 2015 1,721 - Urban: 2001 Population 3,022; 2015 Population 4,760; Population with Sanitation Service 2001 2,925; Target Population, 100% in 2015 4,760; Population to be attended by 2015 1,835 - Total: 2001 6,530; 2015 8,895; Population with Sanitation Service 2001 5,132; Target 8,688; Population to be attended 3,556 - Sanitation investment costs 2002–2015 (Table 7; IN THOUSANDS OF 2002 US DOLLARS): - Rural: Connections to be made by 2015 319.5; Cost per Connection US$ 60.0; Total Cost US$ 19,168; Annual Average US$ 1,369; Total Cost in Lempiras 318,380 - Urban: Connections to be made by 2015 370.0; Cost per Connection US$ 600.0; Total Cost US$ 222,004; Annual Average US$ 15,857; Total Cost in Lempiras 3,687,486 - Total Connections 689.5; Total Cost US$ 241,172; Annual Average US$ 17,227; Total Cost in Lempiras 4,005,866 ### Urban wastewater treatment (2002–2015) - PRSP goal: achieve 50% of the deficit in liters per second (lps) accumulated by 2015, relative to current (2001) installed capacity. - 2001 installed capacity (38 cities >10,000 inhabitants): 1,032 lps; estimated demand 3,664 lps; deficit 2,632 lps (160 liters per person per day generation, multiplied by factor 80%). - Population to receive wastewater treatment (Table 8; values in thousands): - 2,000–10,000: 2001 Population 1,248; 2015 Population 1,966; Population with Treatment Service, 2001 0; 2015 Target Population 982.8; Population to be attended by 2015 982.8 - 10,000–100,000: 2001 Population 659; 2015 Population 1,038; Population with Treatment Service, 2001 382.1; 2015 Target Population 709.8; Population to be attended by 2015 327.7 - >100,000: 2001 Population 1,115; 2015 Population 1,756; Population with Treatment Service, 2001 314.6; 2015 Target Population 1,035.5; Population to be attended by 2015 720.9 - Total: 2001 Population 3,022; 2015 Population 4,780; Population with Treatment Service, 2001 696.7; 2015 Target Population 2,728.1; Population to be attended by 2015 2,031.4 - Unit lps cost assumptions (per capita lps cost): - 2,000–10,000 inhabitants (Imhoff Tanks): US$10,000 per lps. - 10,000–100,000 inhabitants (stabilization pools): US$22,000 per lps. - >100,000 inhabitants (activated mud treatment plants): US$100,000 per lps. - Wastewater treatment investment costs 2002–2015 (Table 9; IN THOUSANDS OF 2002 US DOLLARS): - 2,000–10,000: 2015 LPS Demand to be attended 1,456; Cost per LPS US$ 10.0; Total Cost US$ 14,560; Annual Average US$ 1,040; Total Cost in Lempiras 241,843 - 10,000–100,000: 2015 LPS Demand to be attended 480; Cost per LPS US$ 22.0; Total Cost US$ 10,560; Annual Average US$ 754; Total Cost in Lempiras 175,402 - >100,000: 2015 LPS Demand to be attended 1,068; Cost per LPS US$ 100.0; Total Cost US$ 106,800; Annual Average US$ 7,629; Total Cost in Lempiras 1,773,948 - Total 2015 LPS Demand to be attended 3,010; Total Cost US$ 131,920; Annual Average US$ 9,423; Total Cost in Lempiras 2,191,193 ### Cost summary (2002–2015 consolidated) - Total capital costs (2002 prices): US$568.7 million (US$568,754 thousand); equal to L.9.447 billion (L.9,447,004 thousand). - Proportional distribution of total costs: - Increase in rural coverage: US$72,640 thousand (13%) - Increase in urban coverage: US$364,194 thousand (64%) - Wastewater treatment: US$131,920 thousand (23%) - Summary table (Table 10; IN THOUSANDS OF 2002 US DOLLARS): - Water: US$195,662 - Sanitation: US$373,092 - Total: US$568,754 - Total in Lempiras: Water 3,249,946; Sanitation 6,197,058; Total 9,447,004 ### Per capita debt service for investments in urban areas - Urban investment debt service assumptions: - Payment period: 20 years, with a two year grace period. - Interest rate: 4% annual in dollars. - Rural investment costs assumed subsidized by the State. - Per capita debt service cost estimates (Table 11; 2002 US Dollars and Lempiras per connection per month): - Water coverage: Cost in US$ / connection / mon. 2.63; Cost in Lempiras / connection / mon. 43.74 - Sanitation coverage: Cost in US$ / connection / mon. 3.95; Cost in Lempiras / connection / mon. 65.60 - Waste water treatment: - 2,000–10,000: US$ 0.48; L. 8.03 - 10,000–100,000: US$ 1.08; L. 17.88 - >100,000: US$ 4.84; L. 80.34 ### Programming of spending and desired results (timeline excerpts) - PRSP coverage trajectories (selected years shown): - Total water coverage progression: 2001 79.5% → 2015 95.0% with intermediate annual values (e.g., 2005 85.6%, 2010 90.8%, 2014 93.9%). - Rural water coverage progression: 2001 70.9% → 2015 95.0% (e.g., 2005 78.7%, 2010 87.4%). - Urban water coverage progression: 2001 91.3% → 2015 95.0% (e.g., 2005 92.6%, 2010 93.9%). - Total sanitation coverage progression: 2001 78.0% → 2015 97.7% (table shows intermediate values leading to 97.7% in 2014). - Urban sanitation coverage progression: 2001 96.8% → 2015 100.0% (incremental increases to 100.0%). - Urban wastewater treatment annual increases: - Annual increase lps: 250 (per year for a sequence of years shown). - Accumulated increase example values: 250; 501; 751; 1,001; ... up to 3,004 (lps). - Population coverage percentages: 2001 baseline 21.4% → by 2015 target around 57.2% (table shows intermediate values 25.6%, 29.5%, 33.2%, 36.6%, 39.8%, 42.7%, 45.5%, 48.1%, 50.6%, 52.9%, 55.1%, 57.2%). - Capital costs annual profiles (Table 3 section): - Total capital costs (Thous. of 2002 US$) annual values include examples: 2002 28,404; 2003 28,923; 2004 40,426; 2005 40,922; 2006 41,384; continuing to 2015 values (series provided in table). - Exchange rate used: 16.61 (Average 2002). - Total (Thous. of 2002 L.) example values: 471,788; 480,405; 671,476; 679,722; 687,391; continuing series to 2015. - Total as % of GDP examples: 0.44; 0.43; 0.58; 0.56; 0.55; 0.53; continuing downward to 0.41 by 2015 (series provided). - Memorandum entries: - Nominal GDP (Millions) example values listed: 99,015; 108,363; 119,921; 132,201; 144,363; 157,645; 172,148; 187,986; 205,280; 224,166; 244,790; 267,310; 291,903; 318,758; 348,084 - Real growth annual factor used: 1.04 for most projection years. - GDP deflator series and cumulative GDP deflator provided through the projection horizon. - Real GDP L.2002 series provided (e.g., 2002 112,156; 2003 116,642; up to 2015 179,565). - Real spending/real GDP ratio series provided (examples: 0.44; 0.43; 0.58; 0.56; 0.54; 0.53; 0.51; 0.50; 0.48; 0.47; 0.45; 0.44; 0.43; 0.41). *APPENDIX F — PROGRAM IMPLEMENTATION IN RELATION TO PRSP GOALS FOR THE WATER AND SANITATION SECTOR (tables and figures as presented in source).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr0430.pdf_