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HONDURAS
>> Regional Overview >> Honduras Overview 
Introduction
U.S. assistance to Honduras is now focused heavily on helping the country recover from the devastation of Hurricane Mitch and on the process of reconstruction and economic reactivation required to meet the needs of those most severely affected by the hurricane. U.S. interests in Honduras are driven by its proximity to the United States, strong links between the U.S. and Honduran people, trade and investment opportunities, high levels of illegal immigration, narcotics transit, global environmental and health threats and general foreign policy interests in building stable democracies that protect human rights. Rapid recovery and reconstruction after the hurricane will help reduce growing levels of immigration to the United States by restoring economic growth, expanding employment, and improving the overall quality of life. U.S. assistance also promotes U.S. global interests by protecting biodiversity and tropical rain forests, controlling the spread of HIV/AIDS, and reducing population growth. USAID programs in administration of justice, municipal development, and improved accountability and transparency in reconstruction help promote democratization.
The Development Challenge
Hurricane Mitch's staggering levels of destruction and dislocation throughout the country currently represent the most pressing development challenge facing Honduras. Before Hurricane Mitch, Honduras was making significant progress in addressing its daunting development challenges: severe poverty, protectionist economic tendencies, archaic judicial practices, inadequate education and health care systems, and widespread environmental degradation. Unfortunately, the damage and losses caused by the hurricane set the country back years in regard to its development efforts, making U.S. assistance to Honduras a priority for the foreseeable future. A year after the hurricane, thousands of dislocated families are still without permanent shelter, the transportation network is operating on the basis of temporary fixes, and the economy is only beginning to reactivate (1999 GDP growth was -3%). The critical agriculture sector (18% of GDP and 70% of Honduran exports) is beginning to recover, but additional credit resources and technical assistance are required to rebuild productive infrastructure, reclaim land, and invest in improved methods, seeds, and alternative crops. Basic infrastructure (e.g. water and sanitation, roads, bridges) along with critical social infrastructure (e.g. schools and health clinics) lost or damaged during the storm still must be reconstructed in many parts of the country. Environmental devastation in watersheds and along riverbeds will take years of careful management and reconstruction to address. Honduras also needs to establish systems and improve institutions to prepare for and deal effectively with future emergencies and disasters. The reconstruction process faces serious constraints related to the institutional capacity of Honduran institutions and the bureaucratic requirements of donors and implementing entities in effectively targeting resources to meet the most critical reconstruction needs. The scope of damage and the nature of reconstruction needs also requires that reconstruction efforts be phased over the next few years. Moreover, a major challenge for the Honduran government and the donor community is to develop mechanisms for transparency and accountability to prevent corruption associated with large flows of international financial assistance.
Honduras is the fourth poorest country in Latin America with per capita annual income below $750 and a poverty rate above 65%. Efforts to stimulate rapid economic growth must include attention to the needs of small entrepreneurs and farmers who lack adequate access to land, technology, financial services, and markets. The government faces policy challenges in the aftermath of the hurricane that will test its commitment to free-market solutions and poverty alleviation. Debt relief via a three-year moratorium on bilateral debt service (valued at $327 million) plus assistance in paying off multilateral debt, will help conserve government resources for hurricane reconstruction efforts and social investment. Micro-finance and rural credit institutions, whose portfolios were affected by client losses, have been initially recapitalized to meet their clients' reconstruction needs, recover their losses, and reach out to others in need; further expansion of these programs to hurricane-affected areas is required.
Poor management of protected areas and watersheds contributed to the level of damage and destruction caused by Hurricane Mitch as deforested hillsides became landslides or failed to hold water, thereby contributing to flash floods and heavy siltation of rivers. Experience with sustainable environmental management is limited and Honduras has few trained professionals in this field. Many hillside farmers and even some foresters operating in key watersheds are not familiar with soil and water conservation methods. Environmental groups are few and relatively weak, though growing in number and strength.
Many more Hondurans should have direct access to basic education and vocational training to allow them to develop the skills they need to gain employment, provide for their families and create an informed citizenry. While the national literacy rate is 74%, recent improvements in primary education have not yet had a major impact on the adult labor force, less than 50% of whom have completed primary school. Repetition rates in the primary system are relatively high, and rural children generally drop out of school when they reach adolescence. Only one-third of primary school graduates can find places in middle school (grades 7-9), with a complete lack of access in many rural municipalities. This situation--combined with the scarcity of vocational schools in the country--leaves students, particularly in rural areas, with few options for continuing education after primary school. The family dislocation caused by Hurricane Mitch, on top of the damage to classrooms and loss of supplies, has complicated efforts to meet Honduran educational needs and will likely increase drop-out rates.
Hurricane Mitch placed further demands on weak health care systems that attempt to meet the needs of a poor country with a population growing at 2.7% a year. Before Mitch, access to water and sanitation had reached over 60% of the populace in rural areas and a high percentage in municipal urban areas. Increased access to potable water and improved sanitation were major contributing factors to a 20% decline in infant and child mortality. The decline was achieved through reduced diarrheal diseases, coupled with increased treatment of diarrhea with oral rehydration therapy and through 95% vaccination rates. Pre-Mitch, diarrheal disease had dropped from the first to the third most important cause of infant mortality. Since Hurricane Mitch destroyed or damaged an estimated 42% of rural water/sanitation systems, only 35% of rural families now have access to safe sources. Most urban municipal water and sanitation systems were also damaged or destroyed. Consequently, diarrheal disease has again become a leading health problem. Infant mortality remains at 40 deaths per 1000 live births, and over 25% of the surviving infants are seriously malnourished during the second year. Sustainable improvements in family health will require reducing fertility, infant and maternal mortality, malnutrition, and the spread of disease by improving delivery and increasing use of health care services.
Honduran democratic institutions must be strengthened to assure protection of human rights and allow for greater citizen participation in decision making. Past decentralization efforts have created capable local governments that can play a major role in the reconstruction of the country and in meeting the needs of their constituents for basic services and productive infrastructure. However, these municipalities have been stretched in meeting the immediate needs of their citizens, cleaning up hurricane damage, and coordinating relief and reconstruction efforts. They require financing for repairing infrastructure and restoring basic services and will need assistance in planning reconstruction efforts. Rule of law in Honduras is undermined by an archaic, inefficient, unfair inquisitional court system (e.g., 90% of prisoners have not been tried or sentenced). In December, 1999, the Honduran Congress passed a new criminal procedures code that, over time, will bring increased transparency and efficiency to the system. Honduras will need major assistance to train personnel and prepare for implementation of the new code in early 2002. This effort must be accompanied by administrative reforms in the courts. The Public Ministry, the prosecutorial arm of the judicial system, will play an important role under the new Criminal Procedure Code and will need continued assistance to improve its effectiveness and prosecute corruption. Many fear that corruption will negatively affect the reconstruction effort as major contracts are awarded for infrastructure. The GOH has stated that it plans to take action to assure that reconstruction funds are used most effectively and appropriately. In this regard, USAID will support the strengthening of the Honduran Controller General's capability to audit international funding. Donors are also working with the government to establish a Project Inspector that will bring in an international firm to assure adequate inspection and monitoring of financial transactions and engineering oversight.
Other Donors
The major multilateral lenders in Honduras are the IDB (public infrastructure, government reform, education); World Bank (balance of payment support, public infrastructure, government reform, education); IMF (balance of payment support); European Union, led by Spain; and Central American Bank for Economic Integration (CABEI). The U.S. is now the largest bilateral donor, ahead of Japan which is financing infrastructure, health, education, and agriculture projects. USAID is coordinating closely with other donors on the reconstruction effort, with the World Bank, IDB, Japan and Sweden heavily involved in major transportation infrastructure projects (highways, bridges) and social infrastructure (schools, clinics). Donor coordination groups in each sector deal with reconstruction issues and ensure attention to the Stockholm principles of accountability/ transparency, decentralization, civil society participation, environment, democracy, and poverty alleviation.
Country Background Information Resources CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: January 18, 2001 |
