WASHINGTON, December 15th, 2015 – The World Bank Group (WBG) Board of Executive Directors today endorsed a new partnership strategy with Honduras for the 2016-2020 period, whose cornerstones include promoting inclusion, strengthening conditions for growth, and reducing the country’s vulnerabilities. The strategy, called Country Partnership Framework, includes financial and technical assistance from the International Development Association (IDA), the International Finance Corporation (IFC) —for private sector development— and the Multilateral Investment Guarantee Agency (MIGA).
The strategy’s seven objectives include expanding the coverage of social programs, such as the Bono Vida Mejor conditional cash transfer program. Another essential goal is to improve key infrastructure, such as energy and road networks, in order to facilitate national and international trade. To this end, MIGA will continue to support, via guarantees, the concession of the Tourist Corridor toll road and the Cerro de Hula wind park. IFC will continue to provide financing and advisory services to support the infrastructure and financial sectors, public-private partnerships, good corporate governance and sustainable environmental practices, among others.
“The new World Bank Group strategy supports aspects as crucial as the eradication of violence, job creation, competitiveness, human development, social protection, and State transparency and modernization, in alignment with the cornerstones of the Plan de Todos para una Vida Mejor (Everyone’s Plan for a Better Life) of President Juan Orlando Hernandez,” said Wilfredo Cerrato, Finance Minister of Honduras.
The new WBG strategy also seeks to increase access to financing, both among companies as well as individuals. In Honduras, barely 31 percent of all companies have access to credit (below Latin America and the Caribbean’s average of 46 percent), while in the case of adults, only 32 percent have a bank account (compared to 51 percent for the regional average).
“The strategy, which provides continuity to the efforts undertaken so far by the World Bank Group in the country, is not only aligned with the objectives of the Government of Honduras, but also with the goals of our institution of eradicating extreme poverty and promoting shared prosperity,” said Giorgio Valentini, World Bank Representative in Honduras.
Other objectives of the new program include:
- Strengthening the regulatory framework and institutional capacity via the Land Administration Program, and technical assistance to improve fiscal management and capacities at State institutions.
- Improve rural production through the Rural Competitiveness Project, which seeks to improve the situation of those living under the poverty line and dependening mainly on agriculture.
- Increase resilience to natural disasters and climate change through the Disaster Risk Management Project and technical assistance to cope with the effects of climate change.
- Build capacity at local government level to prevent crime and violence with the Safer Municipalities project and a donation to improve public safety at the municipal level in Central America’s Northern Triangle.
“This new strategy aligns the IFC’s services with the needs of Honduras in such a way that, together, we can make a bigger impact,” said Luc Grillet, IFC Senior Manager for Central America and the Caribbean. “In Honduras we are committed to help companies create jobs, promote growth and improve the lives of people,” he added.
New Credit to Support Fiscal Sustainability and Competitiveness
The WBG Board of Executive Directors also approved a US$50 million credit today to support fiscal sustainability and improve Honduras’ competitiveness, two issues essential to the preservation of the social protection system and to create job opportunities.
The loan will support Government actions to enable it to increase, by around 60 percent between now and 2017, the share of children in extreme poverty receiving the Bono Vida Mejor and attending seventh, eighth and ninth grades, compared to 2015. It will also provide support to reduce the National Electricity Company’s (ENEE) fiscal deficit as well as the number of days needed to start a business.
The “First Fiscal Sustainability and Enhanced Competitiveness” development policy financing has a 25-year maturity period and a 5-year grace period.