Honduras

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Development Challenge Other Donors FY 2002 Program Activity Data Sheets Summary Tables Program Summary Strategic Objective Summary USAID Search: Honduras Previous Years' Activities 2001, 2000, 1999, 1998, 1997 10     Introduction U.S. assistance to Honduras is still heavily focused on helping the country recover from the devastation of Hurricane Mitch. However, even as the bulk of the U.S. Hurricane Reconstruction Program is expected to be completed December 31, 2001, more intense focus is being placed on critical transformation issues emerging from the reconstruction: economic growth, transparency, decentralization, and fundamental reforms in the judicial, health, and education sectors. Coordinated donor efforts in the aftermath of Hurricane Mitch emphasizes these issues, which continue to form part of the central dialogue on debt relief under the Heavily Indebted Poor Country (HIPC) initiative. USAID assistance will be oriented toward support of the Honduran Poverty Reduction Strategy, and will be focused on these long-term transformation issues. USAID's objective is to assist in the reduction of poverty and support Honduras' transformation. USAID-financed reconstruction and development assistance programs are laying the groundwork for such a transformation. The Development Challenge Hurricane Mitch's staggering levels of destruction and dislocation throughout the country represented the most pressing development challenge for Honduras in the fall of 1998. 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 its development efforts, making U.S. assistance to Honduras a priority. Two years after Hurricane Mitch and the subsequent economic recession that lasted until early 2000, the Honduran economy is stabilizing and slowly showing signs of recovery. Reconstruction activities have allowed thousands of displaced families to obtain permanent shelter. Basic infrastructure (water and sanitation, roads, and bridges) along with critical social infrastructure (schools and health clinics) lost or damaged during the storm are being rebuilt. Honduras continues to strengthen its institutions in charge of disaster preparedness and emergency response systems at the local and national levels. Despite these advances, Honduras continues to struggle with the overwhelming reconstruction effort and the serious development and transformation issues facing it. Economic growth over the last decade only slightly exceeded population growth and had little effect on poverty reduction. Approximately two-thirds of Honduran households still live in poverty. Honduras continues to suffer from insufficient employment generation, especially for the poor. Private investment is constrained by an unfavorable investment climate, including an overvalued currency, lack of credit, high commercial interest rates, deficient infrastructure (electricity, communications, and roads), weak legal institutions, a low level of education and workforce productivity, corruption, and burdensome bureaucratic obstacles. Progress in many of these areas has been stymied by the political dynamics associated with elections scheduled for November 2001. Poor water resources management continues to be a problem. Failure to manage water resources contributes to inadequate water supplies, low quality of drinking water, inefficient use of irrigation in high value agriculture, sub-optimal energy generation, sewage-related health problems, annual flood damage and losses, and damage to important marine and freshwater wildlife habitats. These problems negatively impact economic growth, undermine health, and lead to environmental degradation. Another factor impacting Honduras' transformation is the poor quality of primary education and the limited access to education beyond primary school, especially in rural areas. These factors keep education attainment low, thereby affecting access to productive employment, income, and full participation in democratic processes. Less than 50% of the adult workforce has completed primary school. Repetition rates in the primary system are high at 8.3% and only one-third of primary school graduates can find middle school (grades 7-9) placement. Healthcare is another critical component to transformation. The health systems in Honduras remain weak, with centralized decision-making and poor management and administration. The health challenges Honduras faces are serious, e.g. high fertility rates, rapid population growth (2.7%), a large number of high-risk births, high rates of malnutrition, substantial neonatal and child mortality, an elevated maternal mortality rate, and continuing high rates of infections with HIV (1.2%), malaria, dengue, and tuberculosis. Moreover, Honduras remains the epicenter of the HIV/AIDS epidemic in Central America. Honduran democratic institutions must be strengthened to assure protection of human rights and to allow for greater citizen participation in decision-making. Past decentralization efforts created some capable local governments that can play a major role in meeting the needs of their constituents and the reconstruction. In the aftermath of Hurricane Mitch, municipal governments demonstrated their abilities to respond to critical needs, to provide basic services, and to involve citizens in decision-making. Municipalities have taken on increased responsibilities but often lack the financial and human resources to implement critical actions effectively. The major challenge facing the criminal justice system at this juncture is the successful implementation of the new Criminal Procedures Code (CPC). Passage of the new CPC and a constitutional amendment to reduce politicization in appointments to the Supreme Court are significant steps forward in transforming the current archaic, corrupt, and inefficient system. The implementation of the CPC and the constitutional amendment will require significant financial resources, political will, and civil society support. These reforms have the potential to increase greatly the public's belief in democratic government, and will require intensive training for and technical assistance to the five justice sector institutions that play critical roles in implementing the CPC. Other Donors and Debt The major multilateral lenders in Honduras are the Inter-American Development Bank (IDB) (public infrastructure, government reform, and education); the World Bank (balance of payment support, public infrastructure, government reform, and education); the International Monetary Fund (IMF) (balance of payment support); the European Union; and the Central American Bank for Economic Integration (CABEI). The U.S. is the largest bilateral donor, ahead of the other major donors (Japan, Spain and Sweden), which are primarily financing infrastructure, health, education, municipal, and agriculture projects. USAID is coordinating closely with other donors (including the World Bank, IDB, Japan, and Sweden) on reconstruction efforts such as transportation infrastructure projects (highways, roads, and bridges) and social infrastructure (water, sewage, schools, and clinics). Through the G-12 follow-up effort, donors have been working together to ensure the implementation of the Stockholm principles: accountability/transparency, decentralization, civil society participation, environment, democracy, and poverty alleviation in each sector. In April 1999, nine Paris Club countries, holding the majority of Honduran bilateral debt, agreed to forgive approximately $150 million and restructure another $154 million. Honduras, which became eligible for HIPC debt relief in June 2000, expects to receive $556 million in additional debt relief, if it successfully meets all HIPC conditions by June 2002. The G-12 is active in the HIPC process. FY 2002 Program USAID programs will support the GOH Poverty Reduction Plan that was developed in consultation with civil society, communities, and other donors. USAID also will help spur economic reactivation of small and medium entrepreneurs and agricultural producers by improving access to financial and technical assistance and encouraging a healthy investment climate. Policymakers continue to receive expert advice on complex post-Mitch economic recovery and poverty reduction issues. USAID will focus on cross-cutting water management issues by working with local governments and water-user groups to identify pressing water resource needs. Technical assistance will support the creation of appropriate public policies and problem resolution. The activities will contain technology transfer and increased public and private awareness of the benefits of improved water resource management. USAID will support municipal development in Honduras that focuses on developing financial sources for infrastructure investments to expand basic services, build capacity to maintain existing infrastructure, and address community development and post-reconstruction disaster mitigation needs. USAID also will focus on the poorest areas of the country that have the greatest health needs. The activities are designed to improve the quality and efficiency of public sector primary healthcare services, increase equitable access to primary healthcare and family planning services, increase public and private sector resources for primary healthcare, and address critical reform in the sector. Additionally, USAID will focus on educational policy reforms to improve the quality of basic education, with special emphasis on reducing repetition rates and decentralizing education. USAID also will continue to support the expansion of alternative basic education programs. USAID will support the Honduran transition plan for the new Criminal Procedures Code that creates an oral, adversarial system that is more transparent and fair. This effort will focus on providing extensive training and assistance to the key parties in the judicial system including the courts, prosecutors, bar associations. USAID also will continue to work with the GOH to promote accountability and the transparent use of public-sector resources. Activity Data Sheets 522-001  Economic Reactivation Meeting the Needs of the Poor 522-002 Sustainable Management of Watersheds, Forests, and Protected Areas 522-003 Sustainable Improvements in Family Health 522-004 Strengthened Rule of Law, Accountability, and Respect for Human Rights 522-005 Critical Hurricane Reconstruction Needs Met 522-006 Improved Opportunity to Obtain Basic Education and Skills 522-007 More Responsive and Effective Municipal Government Country Background Information Resources   CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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