Growth in Honduras is due to remittances and strong export performance. Nevertheless, over 59% remain below the poverty line and 36.2% in extreme poverty. Bank and government work together to reduce vulnerabilities and create opportunities for all. Read More »
Honduras is a lower-middle income country facing significant challenges, with more than two thirds of the country’s population living in poverty, and around 46% in extreme poverty (2012). In rural areas, 58% of households are in extreme poverty.
Since the 2008-2009 global economic crises, Honduras has experienced a moderate recovery, propelled by public investments, exports, and higher remittances. Economic recovery is reflected in GDP growth of 3.7% in 2010, 3.7% in 2011 and 3.3% in 2012. Despite global uncertainties, Honduras’ growth outlook remains positive and the economy is expected to grow 3.5% in 2013.
High levels of crime and violence are the preeminent development challenge for Honduras, as it is the country with the highest homicide rate in the world. Between 2005 and 2011, the homicide rate in Honduras more than doubled from 37 to 91.6 murders per 100,000 inhabitants. Most violence is concentrated in urban areas (65% of homicides occur in 5% of the municipalities) and most victims of homicides are males (94%), particularly those between 15 and 34 years of age (63%).
The annual economic costs of violent crime are estimated to be about 10 percent of Honduras’ GDP (nearly US$900 million). Crime and violence has also eroded citizens’ confidence in the rule of law. In Honduras, crime victims are 6.5% more likely to approve taking the law into their own hands and are 9% less likely to believe that the rule of law should always be respected when compared to non-crime victims.
The World Bank has worked with the government to design a support program to help Honduras deal with its development challenges. These challenges include the country’s vulnerability to external shocks, as the agricultural sector has lost about one third of its purchasing power in the past two decades, largely due to the decline in prices for export crops, particularly bananas and coffee.
Honduras is also susceptible to disasters such as hurricanes and droughts. Measures to mitigate the impact of these shocks are primarily geared to strengthening households' capacity to adapt, extending market-based risk management mechanisms, and developing effective safety nets.
World Bank studies have highlighted the importance of improvements in the quality of education. Progress will also need to be made in increasing rural productivity and diversifying the sources of rural incomes, since most of the country's poor live in rural areas and are dependent on agriculture for their livelihood.
On December 6, 2011, the World Bank Board of Executive Directors approved a Country Partnership Strategy for Honduras during 2012-2014. This Strategy focuses on three areas:
Improving citizen security.
Expanding opportunities through reducing vulnerabilities.
Enhancing good governance.
The World Bank’s current portfolio in Honduras includes 10 active projects for a total committed amount of US$374.4 million. These projects are designed to remove long-standing structural barriers to growth, by modernizing the public sector and improving the performance of economic and social services; improve rural productivity and generate employment; strengthen human development by improving educational opportunities and health care; and improve the protection of the environment, among other objectives.
The project's objectives are to expand pre-school coverage in disadvantaged communities; improve completion rates in Proyecto de Educacion Comunitaria (PROHECO) schools; improve teacher accountability; and improve accountability of schools to citizens.
The project aims to strengthen the management of public finances and to establish a more efficient, effective and transparent public procurement system. This project will help to upgrade the public financial management system; upgrade the e-procurement platform; enhance the internal control systems over personnel expenditures; and build capacity of the central administration.
Through the Natural Disaster Mitigation Project, Honduras substantially built disaster risk management capacity from the local to the central level through an innovative and participatory approach. The project supported the implementation of disaster risk management programs across 81 of the country's most vulnerable municipalities, benefiting approximately five million people.
The project provided support for advancing various reforms that improved the Honduras business climate and competitiveness and directly benefitted over 1,400 micro, small, and medium enterprises (MSMEs).
Through a range of activities –from training judicial and administrative staff to modernizing financial systems and refurbishing facilities– the project helped to open the judicial branch to more than 1.9 million Hondurans.
With the support of the World Bank and several international partners, Honduras introduced a web-based public financial management system that not only links all central government agencies but also provides real-time financial information accessible to its citizens.