HONDURAS

	FY 1998 Actuals	FY 1999 Estimate	FY 2000 Request
Development Assistance	$10,085,000	$17,545,000	$13,918,000
Child Survival & Disease Fund	$7,517,000	$22,840,000	$7,250,000
P.L. 480 Title II	$5,114,000	$40,218,000*	$12,695,000
*includes emergency food aid in response to Hurricane Mitch

Introduction

U.S. assistance to Honduras is now focused 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. Since January, illegal Honduran immigrants to the United States at just one U.S. intake center are running at 45 per day, a major increase since the hurricane. Rapid recovery and reconstruction after the hurricane will help reduce growing levels of immigration to the United States by restoring previously positive economic growth rates, expanding employment, and improving the 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.

The Development Challenge

Hurricane Mitch caused staggering levels of destruction and dislocation throughout Honduras. The Government of Honduras (GOH) estimates that more than 5,000 people died due to the storm. Up to a third of Honduras' six million people were dislocated and over one million were at least temporarily uprooted from their homes or livelihood. U.S. humanitarian assistance helped rescue people and assure that survivors received food and essential relief supplies (e.g. water storage containers, plastic sheeting for shelters) to prevent more deaths in the immediate aftermath of the storm. USAID provided over $30 million in immediate relief and recovery assistance including P.L.-480 Title II assistance, disaster assistance, and funds to immediately repair damaged water and sanitation systems and support public health efforts to prevent disease.

The damage and losses caused by Hurricane Mitch in Honduras have set the country back years in its development efforts, making graduation from U.S. assistance impossible in the foreseeable future. The transportation and productive infrastructure that served as the foundation for development was severely damaged and an economy that was headed toward sustained vigorous growth suffered huge losses. Estimates of total economic losses range beyond $4 billion. Agricultural losses, which amount to eight percent of GDP and 70% of Honduran exports, are estimated at nearly $1 billion. Growth projections for 1999 have been revised downward to around zero from a projected figure of six percent to reflect the loss of production caused by hurricane damage. The transportation and productive infrastructure loss must be replaced and medium-term financial resources to finance reconstruction and spur economic growth will be required. Much of the nation's social infrastructure (water and sanitation systems, schools and health facilities) was also damaged and must be replaced to prevent the spread of disease and contribute to a healthy, well-educated workforce and citizenry. The process of reconstruction will test Hondurans' commitment to democracy in maintaining transparency and accountability to prevent corruption associated with major international assistance.

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. 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 need adequate access to land, technology, financial services, and markets. The government faces policy challenges in the aftermath of the hurricane that will test their commitment to free-market solutions and poverty alleviation. Debt relief via a three-year moratorium on bilateral debt service (valued at $327 million) will help conserve government resources for hurricane reconstruction efforts; balance of payments assistance will also be needed. Micro-finance and rural credit institutions, whose portfolios were affected by client losses, need to be recapitalized to meet their clients' reconstruction needs, recover their losses, and reach out to others in need. The country's natural resources, rich soils and extensive pine forests that serve as a foundation for economic development, must be sustainably managed and protected.

Basic education and vocational training must reach many more Hondurans to give them 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 big 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 created difficulties in preparing for the 1999 school year 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% in rural areas and a high percentage of municipal urban areas. This access to potable water and improved sanitation was a major contributor 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. Diarrheal disease is again a leading health problem, and shows an estimated 25% increase over the previous year. 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 will 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). A major reform of the criminal procedures code is needed to bring increased transparency and efficiency to the system and key institutions such as the Court Inspector General and Public Ministry need assistance to prosecute corruption. Corruption is a major problem that many fear will 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 adequate inspection and monitoring of financial transactions and engineering oversight.

Other Donors

The major multilateral lenders in Honduras are the: World Bank (balance of payment support, public infrastructure, government reform, education); IMF (balance of payment support); IDB (public infrastructure, government reform, education); European Union, especially Spain; and Central American Bank for Economic Integration (CABEI). USAID is the second largest bilateral donor behind Japan, which is primarily involved in health and agriculture. USAID is coordinating closely with other donors on the reconstruction effort, with the World Bank, IDB, Japan and Sweden likely to be heavily involved in expensive transportation infrastructure projects (highways, bridges) and social infrastructure (schools, clinics).

FY 2000 Program

The USAID strategy for Honduras is being revised to respond directly to hurricane reconstruction needs and will focus largely on public health, economic reactivation, education, shelter, environmental management, disaster mitigation, and accountability. The GOH is committed to using reconstruction as an opportunity to transform the country, not merely replace what was lost. Therefore the United States has an opportunity to help ensure that the reconstruction process deepens Honduras' commitment to free markets, democratic principles, and economic growth with equity.

Additional resources would allow USAID to play a major role in spurring economic reactivation of small and medium entrepreneurs and agricultural producers by providing the necessary access to financial and technical assistance. Expert assistance will be provided to policymakers who must deal with the complex issues of post-Mitch economic recovery and poverty reduction. USAID will also finance rapid rehabilitation of rural roads and bridges to spur rural economic recovery and provide employment. Assistance to promote sustainable management of pine forests will contribute to both economic growth and protection of key watersheds. Expanded support for NGO environmental programs will also help improve management of watersheds and protected areas and will help farmers use proven technologies for hillside agriculture that prevent the kind of erosion and landslides caused by Hurricane Mitch.

Expansion of alternative delivery systems for basic education will help meet the needs of dislocated populations and support for vocational education will provide skills for reconstruction.

Municipalities will be the focus of much of USAID's reconstruction efforts due to their proven responsiveness to citizen needs. Major funding for rehabilitation of municipal and rural water and sanitation systems, plus new systems for dislocated populations, will strengthen the ability of municipalities to meet the basic needs of their citizens and reduce the potential for the spread of disease. USAID will also support targeted efforts to meet the shelter needs of dislocated people. Rural road and bridge rehabilitation and other infrastructure work focused on economic reactivation will be coordinated with municipal governments.

In the health sector, water and sanitation will also be a major thrust of USAID's reconstruction effort with the primary focus on rural systems managed by local water boards. Water and sanitation work will therefore be a major element in achieving both municipal and health objectives. Support for control of infectious diseases will be expanded and child survival interventions, family planning and AIDS prevention efforts will continue. Food assistance will meet nutritional needs in the aftermath of Mitch and provide support for reconstruction efforts through food-for-work programs.

Efforts to assure accountability and transparency during reconstruction will be supported through mechanisms to assist the GOH in adequate monitoring and audit of reconstruction implementation. USAID will continue to support replacement of the current written, inquisitional justice system with a new oral, adversarial system that will be more transparent and fair and will complement USAID efforts to bring significant improvements in efficiency of the judicial system.

HONDURAS

FY 2000 PROGRAM SUMMARY
($000s)

USAID Mission Director: Elena L. Brineman

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Developmnt	Humanitarian Assistance	TOTALS
S.O. 1 Economic reactivation - DA - CSD	3,950 ---	--- ---	800 ---	--- ---	--- ---	--- ---	4,750 ---
S.O. 2 Environmental Management - DA	---	---	1,200	---	---	---	1,200
S.O. 3 Responsive Health Systems - DA - CSD - P.L. 480/II	--- --- ---	4,318 4,750 ---	--- --- ---	--- --- ---	--- --- ---	--- --- 12,695	4,318 4,750 12,695
S.O. 4 Rule of Law, Accountability, Human Rights - DA	---	---	---	1,100	---	---	1,100
S.O. 5 Responsive local governments - DA	---	---	---	2,550	---	---	2,550
S.O. 6 Improved opportunity for basic educa-tion and skills - CSD	---	---	---	---	2,500	---	2,500
Totals - DA - CSD - P.L. 480/II	3,950 --- ---	4,318 4,750 ---	2,000 --- ---	3,650 --- ---	--- 2,500 ---	--- --- 12,695	13,918 7,250 12,695

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ACTIVITY DATA SHEET

PROGRAM: HONDURAS
TITLE AND NUMBER: Economic reactivation meeting the needs of the poor, 522-SO01
STATUS: Continuing (revised to respond to needs created by Hurricane Mitch)
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $4,750,000 DA
INITIAL OBLIGATION: FY 1999 ESTIMATED COMPLETION DATE: FY 2003

Summary: Poverty, especially in rural areas, is the foremost long-term economic problem facing Honduras today. The economy grew slowly over the past decade (at a rate only slightly exceeding population growth), resulting in an overall poverty rate of 66% in 1997. Though the country was moving toward vigorous growth rates and making some progress in addressing poverty, Hurricane Mitch wreaked widespread devastation, dealing a significant setback to economic growth and poverty reduction efforts. Estimates of economic damages range beyond $4 billion. Those most severely affected were the poor majority already living a marginal existence. Flooding throughout the country caused whole towns, neighborhoods, businesses, crops and livestock to be washed away or covered with water and mud. Many businesses and agricultural producers of all sizes lost everything or sustained major damage. The financial sector was dealt a severe blow as many borrowers--both agricultural and micro and small enterprises--became insolvent overnight. Unemployment increased as small businesses collapsed and 70-80% of agricultural production was destroyed. Recent economic growth projections have been adjusted downward, and the decline in agricultural (and forestry) exports expected in 1999 and 2000 will likely increase the national poverty rate and unemployment. In this context, maintaining monetary and fiscal policies which are conducive to economic growth will be extremely difficult without balance of payments support to the GOH.

Key Results: Economic reactivation to meet the needs of the poor is a critical objective in the Mission's overall national reconstruction strategy. Program activities and balance of payments support will be targeted to achieve the following key results: (1) expanded business and financial services to micro and small businesses; (2) expanded extension services and credit to agricultural producers; (3) improved policy environment conducive to poverty reduction through economic recovery and growth, (4) enhanced monetary and fiscal stability through balance of payment support, and (5) generation of temporary employment through a public works program aimed at repairing rural roads and productive infrastructure. In addition, USAID will continue its support to the GOH forestry agency (COHDEFOR) to implement sustainable pine forest management practices.

Performance and Prospects: USAID partners will provide micro and small businesses--as well as small- and medium-sized agricultural producers--with the business, marketing, technical and financial services they need for economic recovery and greater market competitiveness. Implementation will be through the private sector, especially through experienced NGOs and institutions with the capacity and agility to quickly expand operations. Hurricane Mitch wiped out so many micro and small businesses, that mature microfinance NGOs will need to work with their former clientele while significantly expanding their business and financial services to meet the emergent needs of micro and small businesses in those secondary cities ravaged by Mitch. USAID will also help greatly expand agricultural extension and credit through leading private sector institutions with a proven track record of performance.

USAID will also help the GOH consolidate and improve its economic policies in order to facilitate recovery, compete more effectively in the growing global economy, promote growth and create new jobs, and maintain monetary and fiscal stability. This will entail timely provision of technical assistance to leading public and private sector institutions responsible for formulating policy, enhanced training and educational opportunities for decision makers, and public education/awareness activities. Balance of payments support will greatly enhance this policy reform effort, and better enable the GOH to avoid backsliding on sound monetary, trade and fiscal policies during reconstruction.

A major program to rehabilitate rural roads, bridges, and productive infrastructure destroyed by Hurricane Mitch will contribute significantly to economic reactivation where producers and suppliers are unable to reach key markets with their goods. This program will also generate temporary employment for those citizens whose livelihoods have been threatened.

Possible Adjustments to Plans: This economic reactivation effort has been redesigned to respond to the specific needs created by Hurricane Mitch and will be flexible to meet needs that emerge.

Other Donor Programs: USAID has worked closely with bilateral and multilateral donors, and with the GOH and private sector partners, in carrying out sectoral needs assessments in the aftermath of Mitch and in developing this new economic growth and recovery strategy. USAID's operational and technical support to UNAT (a highly competent and influential GOH advisory unit responsible for developing the national reconstruction plan that will be presented to donors at the April 1999 Consultative Group meeting in Sweden) has been instrumental in helping the GOH establish priorities and facilitating effective donor coordination. The World Bank and IMF together have committed $266 million for balance of payments support. The IDB has yet to provide new monies, but has agreed to the reprogramming of its current portfolio. It has approved $12 million for a Central American micro-finance recovery fund; USAID is providing an additional $5 million, of which $3 million will be used in Honduras. USAID continues to coordinate closely with other donors, including Spain, Japan and the EU, which are expected to announce substantial contributions to the economic recovery program at the Consultative Group meeting.

Principal Contractors, Grantees and Agencies: Microenterprise credit and business services will be provided by Honduran microenterprise NGOs and through the formal banking and credit union system. Similarly, private sector mechanisms (cooperatives, credit unions, NGOs and commercial banks) will provide agricultural credit, and leading agricultural institutions such as Honduran Foundation for Agriculture Investigation (FHIA) and the Pan-American Agricultural School, along with US PVOs, will receive grants to provide agricultural extension research services. A U.S. institutional contractor will work with key GOH and private sector partners on economic policy concerns. Mechanisms for implementing employment creation and public works programs will include the Honduran Social Investment Fund (FHIS), various NGOs, and the municipalities. Support for sustainable pine forest management will be through COHDEFOR, the GOH forestry agency. Local currency generated through USDA commodity programs (i.e. Section 416(b)) also contributes to this objective.

Selected Performance Measures

	Baseline	2000	2003
Recovery of small agricultural producers from Mitch damages as measured by a return to pre-Mitch levels of small farmer production of (a) corn and (b) bananas	(a) 950 m. pounds (b) 10% of normal prod.	(a) 1.3 billion pounds (b) 25% of normal prod.	(a) 1.3 billion pounds (b) 100% of normal prod.
Micro-finance institutions stabilize portfolios, reach pre-Mitch default levels	8 affected	4 recovered	8 recovered
Percentage of Honduran micro and small businesses with access to financial services.	33%	43%	50%
Restored employment levels in the agricultural, industrial and trade sectors	1.1 m. (1990)	1.2 m.	1.55 m.
Improvement in an Index of Economic Freedom	3.15 (1997)	3.0	2.85
Number of rural bridges repaired *
Km. of rehabilitated rural roads *
* Targets not yet developed

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ACTIVITY DATA SHEET

PROGRAM: HONDURAS
TITLE AND NUMBER: Sustainable management of watersheds and protected areas, 522-SO02
STATUS: Continuing (upgraded and revised to respond to needs created by Hurricane Mitch)
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $1,200,000 DA
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2003

Summary: This SO is focused on improving sustainable management of the natural environment and protection of biodiversity. 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. Experience with sustainable environmental management is limited and Honduras has few trained professionals in this field. Many hillside farmers and even some foresters are not familiar with soil and water conservation methods. Environmental groups are few and relatively weak, though growing in number and strength. While the GOH is taking some positive steps, e.g. declaring numerous "protected areas," the budget to actually "protect" them is lacking because environmental protection is still a low government priority. Primary beneficiaries are the next generation of Hondurans who must depend upon the country's natural resource base for their future economic well-being, as well as those who might be subject to future disasters.

Key Results: Activities in this area will focus on the following results: greater numbers of NGOs working directly in protected areas; greater number of improved management plans developed; and greater number of municipalities collaborating on watershed management.

Performance and Prospects: USAID provides support to strengthen Honduran institutions and finances sub-grants for environmental protection through the Honduran Environmental and Development Foundation ("Fundacion VIDA"), a Honduran environmental NGO. Many sub-grants link U.S. environmental NGOs, such as the Nature Conservancy and the World Wildlife Fund, with local organizations to improve protected area and watershed management. These organizations are developing improved management plans for selected areas within the Honduran National System of Protected Areas. Improved management of these areas includes definition of area limits, legal declaration of the park or reserve, demarcation of boundaries, assignment of institutional responsibilities, preparation of management plans, and infrastructure development. Sustained implementation involves mobilizing public and private resources and economic incentives for wise resource use. USAID is also working toward greater involvement of NGOs in managing protected areas. With USAID help, protected areas under improved environmental management have increased from one covering 5,000 hectares in 1993 to 15 areas covering 192,000 hectares in 1998.

Possible Adjustments to Plans: Additional resources, if available, will be used to fund activities that would mitigate the kind of damage caused by Hurricane Mitch in the future and improve watershed management. The flooding and mudslides devastation was amplified by deforested watersheds and unsound hillside agricultural practices. This was clearly demonstrated during Mitch at the site of a USAID-funded demonstration plot showing the effectiveness of environmentally sound hillside agriculture technologies. The steep slope microwatershed test plot treated with the "complete" soil/water conservation package (mulching, stabilizing grass barriers and agroforestry) underwent virtually no erosion, while the adjoining test plot with only mulching suffered massive mudslides.

Environmental restoration and sustainable land use must be integral to reconstruction efforts. Through Fundacion VIDA, the Mission will support: (1) critical watershed stabilization, including agroforestry, soil/water conservation, microwatershed management plans, and environmental education, utilizing the training materials and outreach experiences from the Land Use and Productivity Enhancement Project; and (2) restoration and protection of key ecosystems, such as fragile coastal wetlands, and other critical protected areas, to mitigate against impacts of future natural disasters and to contribute to economic recovery.

Other Donor Programs: Close technical cooperation between USAID, the United Nations Development Program (UNDP), GTZ, other donors, and environmental NGOs is helping the GOH to fulfill its proper role as a guardian of the Honduran environment.

Principal Contractors, Grantees, or Agencies: U.S. organizations: Biodiversity Support Program Consortium. Honduran organization: Fundacion VIDA, which also supports linkages between various U.S. environmental organizations and Honduran NGOs. The Mission also coordinates closely with USAID's Regional Environmental Program (PROARCA), Parks in Peril Project, and Partnership for Biodiversity Project.

Selected Performance Measures

	Baseline	2000	2003
Number of protected areas under effective environmental management	1 (1994)	21	25
Hectares of protected areas under effective environmental management	5,000 (1990)	227,000	286,429
Development and monitoring of comprehensive watershed management for key watersheds affected by Hurricane Mitch	TBD*	TBD*	TBD*
Farm families who experienced significant soil erosion or landslides during Hurricane Mitch and other major rains implementing environmentally-sound soil management technologies	TBD*	TBD*	TBD*
* Final figures are not yet available on the magnitude of Mitch impact on these indicators. Targets have been set up based on the number of participants in the Land Use and Productivity Enhancement Project and observations made during field visits to areas affected by Hurricane Mitch.

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ACTIVITY DATA SHEET

PROGRAM: HONDURAS
TITLE AND NUMBER: Health systems responsive to family health needs, 522-SO03
STATUS: Continuing (revised to respond to needs created by Hurricane Mitch)
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $4,318,000 DA; 4,750,000 CSD; $12,695,000 P.L. 480 Title II
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2003

Summary: Hurricane Mitch has created conditions that threaten the progress Honduras has made toward sustainable improvements in family health. Large bodies of stagnant water have created ideal mosquito breeding grounds and cases of malaria and dengue have increased. Water systems throughout the country were washed away or seriously damaged, depriving millions of people of access to potable water. Damage to sanitation systems caused sewage to flow in the streets or to discharge directly into rivers and streams. These conditions, combined with dislocated people crowded into shelters and forced into precarious living situations, contribute to the spread of disease and the potential for epidemics. Prior to Mitch, Honduras faced major challenges to family health that were associated with rapid population growth (2.7% per year), widespread poverty, and limited access to health information and care, especially in rural areas. Honduras also has the largest concentration of HIV/AIDS in Central America. Primary beneficiaries of this SO are the over two million women and children in low-income Honduran families who currently lack access to quality reproductive health, child survival, and family planning services, and those without a secure source of water and adequate sanitation. Approximately 128,000 children and adults receive nutrition supplements. Beneficiaries of the AIDS prevention program are the high-risk groups, including young adults in major cities.

USAID is a leader in the health sector, engaging in policy dialogue and providing technical assistance, training, and capital assistance that supports a variety of interventions, including vaccination programs, oral rehydration therapy, maternal health care, family planning, and targeted nutrition programs. Particular attention is given to achieving sustainable delivery of services. Activities include technical assistance, training and limited commodity support to the Ministry of Health (MOH), a rural water and sanitation program, assistance to private and public family planning programs, and a P.L. 480 Title II food security program.

Key Results: Efforts to improve the responsiveness of Honduran health systems to emerging needs in the aftermath of Hurricane Mitch and contribute to sustainable family health are focused on the following results: 1) Rehabilitation of hurricane-damaged rural water and sanitation systems and construction of new systems for resettled populations, 2) Increased use of malaria, dengue, and tuberculosis prevention and control services to reduce current infection levels and prevent epidemics, 3) Sustained use of child survival services via health reform and rehabilitation of facilities, 4) Increased use of reproductive health services, including family planning, 5) Improved rural access to reproductive health services through the Ministry of Health and non-governmental organizations, 6) Improved sustainability of the NGO family planning organization, ASHONPLAFA, 7) Increased use of STI/HIV prevention practices, and 8) improved household food security in Title II target areas.

Performance and Prospects: With vaccination rates for children under one year exceeding 94%, Honduras has the best record in Latin America. Infant mortality (measured by indirect method) has declined from 85 per 1,000 live births (1979) to 42 (1993). The proportion of children (age 12-23 months) who are seriously malnourished declined from 30% (1987) to 27% (1996). The P.L. 480 Title II program, implemented through CARE, focuses on improving nutritional status and food security in the neediest regions of the country. Related USAID activities, which increase incomes and education levels of the poor, contribute directly to improved family health. Recent data indicate that the spread of HIV/AIDS has started to slow. The national AIDS prevention program promotes preventive practices, including early detection and treatment of sexually transmitted diseases and condom use. USAID supports AIDS prevention activities of Honduran NGOs and the MOH.

The total fertility rate declined from 5.1 children per women (1991) to 4.9 (1993-95), while couple-years of contraception protection increased from 311,724 (1996) to 366,587 (1997). Total contraceptive prevalence in women increased from 47% (1991) to 50% (1996). The use of modern methods of contraception increased from 35% (1991-92) to 41% (1996). USAID's family planning activities with the MOH and Honduran Family Planning Association (ASHONPLAFA) are expanding access to quality services, with the goals of increased use of modern family planning methods and greater financial self-sufficiency of the family planning NGO. Family planning has been a major factor in reducing infant and maternal mortality; however, efforts are constrained by lack of an official GOH policy on reproductive health and by negative publicity and unfounded press statements by strong and vocal religious groups.

The GOH is committed to a series of quality and efficiency improvement measures in a decentralized health care system. The key challenge remaining is to greatly increase families' access to effective family planning methods in the rural areas where the average number of children per family is over six and modern contraceptive use is only 35%.

Possible Adjustments to Plans: Improved child survival--achieved in part by USAID's 10-year support for expansion of access to safe water supply and sanitation systems--has been undermined by Hurricane Mitch. Access to safe water/sanitation has declined by 42% in rural areas, presenting a threat already demonstrated by high levels of reported diarrheal disease in the post-Mitch period. Rural water and sanitation systems must therefore be rehabilitated quickly throughout the country. USAID's immediate support for this effort has helped get the work started, but restoring these services to most of the population will be a massive effort. Public health efforts focused on accelerating and expanding detection, treatment, and community education to control infectious diseases (e.g., malaria and dengue) are receiving additional support in the aftermath of the hurricane. This effort is complemented by plans to strengthen disease surveillance systems and expand rural access to reproductive health services.

Under a new health reform activity starting in 2000, USAID will assist the GOH to: a) improve the quality and efficiency of its public sector primary health services; b) improve health policy to increase equitable access to primary health care; and c) increase public and private sector resources for primary health care.

Other Donor Programs: USAID coordinates with the IDB on AIDS prevention assistance and interventions, and with the programs of Japan, Sweden, United Nations Children's Fund, Pan American Health Organization (PAHO), European Union, and Spanish Technical Cooperation on child survival interventions. USAID also coordinates closely with PAHO on health reconstruction plans. With regard to food aid, USAID participates in bi-weekly meetings of a coordinating committee with the World Food Programme, CARE and Catholic Relief Services.

Principal Contractors, Grantees, or Agencies: U.S.: CARE, Management Sciences for Health, Family Health International, Population Council, University Research Corporation and Center for Human Services, ABT Associates, John Snow Inc., Futures Group, Johns Hopkins University, Centers for Disease Control and Prevention (CDC), Partnership for Child Health, World Relief and Save the Children. Honduran: Honduran Family Planning Association (ASHONPLAFA), Health Promotion Foundation (FFS), the Program for the Development of Women and Children (PRODIM) and Preach and Heal (PREDISAN).

Selected Performance Measures

	Baseline	2000	End of Activity
Infant mortality per 1,000 live births	36 (1991-95)	33 (1996-00)	30 (2001-05)
Maternal mortality/100,000 live births	221 (1989)	175	125 (2003)
Severe malnutrition among children (12-23 months)	27.2% (1996)	22.6%	19% (2003)
Total fertility rate (average number of live births per women)	4.9 (1993-95)	4.5 (1997-99)	4.1 (2002-04)
Percentage of rural residents with access to potable water at "A" level returned to at least pre-Mitch levels	13% (1998 Pre-Mitch)	13%	40% (2001)
Reduced malaria cases	TBD (# of 1999 cases)	malaria down by 10%	TBD

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ACTIVITY DATA SHEET

PROGRAM: HONDURAS
TITLE AND NUMBER: Strengthened rule of law, accountability, and respect for human rights, 522-SO04
STATUS: Continuing (revised to respond to needs created by Hurricane Mitch)
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $1,100,000 DA
INITIAL OBLIGATION: FY 1997 ESTIMATED COMPLETED DATE: FY 2003

Summary: Corruption and inefficiency have been major problems for the nation's judicial system and reduce citizen confidence in the rule of law. An archaic judicial code and judicial bottlenecks also deprive Hondurans of their human rights -- over 90% of those in prison have never been sentenced and many serve more than their sentence before their case is processed. The justice sector as a whole remains weak, and justice is rarely delivered in a timely and equitable manner. Merit is now a factor in choosing judges, but the judiciary is still politicized and subject to outside influences. There is little career stability among judges, and nearly all judges, as well as support personnel, need additional training in order to be able to carry out their duties competently. A number of improvements in court administration are under consideration, but the court system is still woefully inefficient. The Attorney General's Office, under the strong leadership of the current Attorney General, has established itself as a positive influence on the justice system, challenging previously untouchable sectors of society and establishing its worth and necessity to the society at large. But as an institution it is still young, and needs support to consolidate its role. Of key importance, the new Criminal Procedures Code is expected to pass this year. The Code would create the legislative framework for the transition from a written, inquisitorial system to an oral, adversarial one, Both the court and the Attorney General's Office will need extensive support to make this transition.

Within this context of a relatively weak capacity to stem fraud and corruption through normal judicial channels, and a history of allegations of serious corruption at all levels, it has been paramount to address this issue in light of the large levels of foreign aid flows in support of Honduran reconstruction. From the first day USAID emergency resources began flowing, USAID has focused on accountability for these goods and funds. By Executive Decree No. 018-98, the President declared the country in a state of emergency and asked the Comptroller General of the Republic (CGR) to name Special Commissions to monitor the assistance received from the national and international communities. At the request of the CGR, the USAID controllers office worked hand-in-glove with its local counterpart to monitor all assistance. USAID also provided local currency to the CGR to allow it to contract with an internationally recognized accounting firm to supplement its own staff in order to continue this monitoring effort.

All Hondurans benefit from strengthened rule of law, respect for human rights and increased accountability, especially the politically, socially, and economically disadvantaged and those who historically have suffered from a corrupt and ineffectual justice system.

Key results: Efforts to strengthen rule of law, accountability, and respect for human rights are focused on 1) adequate monitoring and oversight of hurricane reconstruction funds, 2) increased transparency and efficiency in the judicial system, 3) increased prosecution of corruption cases, and 4) increased civil society, citizen, and elite support for judicial reform and government transparency and accountability.

Performance and Prospects: USAID has played a leadership role in supporting GOH efforts to put in place accountability and transparency mechanisms for reconstruction funds. In addition to support for the Controller General's audit activities, USAID is supporting a GOH and multidonor effort to establish an independent Inspector General that would monitor ongoing implementation to assure funds are used as intended.

The rule of law program supports the Public Ministry, justice sector reforms, strengthening of Supreme Court and lower courts, and public participation in the justice system. USAID support has helped move forward a major reform of the Criminal Procedure Code that will modernize the judicial system through an oral advocacy process. Once passed by the Congress and signed into law, USAID will help provide the training and technical assistance to put the new code into practice and implement it effectively. Principal constraints are resistance of some groups to judiciary reform. USAID is also supporting administrative reforms and case tracking systems to improve the speed and efficiency of judicial processes in both the Public Ministry and the courts.

The Public Ministry, established in 1993, is recognized as an effective force against corruption and impunity. Cases adjudicated by the courts involve, for the first time, accusations against high-level civilian and military officials, some of whom have been incarcerated. The number of cases prosecuted by the Public Ministry for corruption and crimes against women, minorities, and the environment has increased seven-fold since 1994, while adjudication of these cases has increased by eight-fold since 1995.

Possible Adjustments to Plan: If the Criminal Procedure Code is not passed during the upcoming legislative session, our strategy in this area will need to be re-visited.

Other Donor Programs: USAID coordinates administration of justice programs with international donors such as the IDB, Spanish cooperation, and UNDP, as well as with Honduran agencies such as the Judiciary and Public Ministry who provide in excess of 25% counterpart financing for most justice sector programs.

Principal Contractors, Grantees, or Agencies: U.S. organizations: National Center for State Courts, DPK Consulting, and one more U.S. institutional contractor to be determined. Honduran organizations: FOPRIDEH, National Autonomous University of Honduras, and University of San Pedro Sula.

Selected Performance Measures

	Baseline	2000	End of Activity
Reform of criminal procedures code to institute oral adversary system	Napoleonic code	Reform passed by legislature	Full implementation of reformed code
Criminal cases prosecuted by the Public Ministry	275 (1994)	6244
Criminal cases adjudicated by the courts	258 (1995)	2676
Court officials investigated by Court Inspector General and sanctioned by the Court: a) Investigated b) Sanctioned	401 (1995) 64 (1995)	603 70
Prevention of corruption associated with donor-financed reconstruction efforts	TBD	TBD

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ACTIVITY DATA SHEET

PROGRAM: HONDURAS
TITLE AND NUMBER: Increased role for local government in responding to citizen needs, 522-SO05
STATUS: Continuing (separated from SO04 and revised to respond to needs created by Hurricane Mitch)
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $2,550,000 DA
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETED DATE: FY 2003

Summary: Municipal government must play a central role in the Honduran reconstruction effort since decentralization efforts have created municipal governments that are the most direct governmental link to the people and therefore have the best knowledge of citizen needs in their locale. Citizens find their local governments more responsive to their needs and can exercise oversight of their municipal officials. In the immediate aftermath of Hurricane Mitch, municipalities played a critical role in providing shelter for dislocated people, delivering emergency supplies and food, undertaking clean-up activities, and developing plans for permanent relocation of people in shelters. At the same time, their financial situation has deteriorated as they have tried to meet the needs of constituents devastated by the hurricane while facing loss of income due to the effects of the hurricane and national legislation which deferred tax payments that local businesses pay to municipalities. Municipal infrastructure throughout the country was destroyed or damaged, especially water and sanitation systems and local road networks. Municipal officials often do not have the experience and background to deal effectively with the demands placed on them, especially in a disaster situation, and they often lack the managerial and financial resources they need to respond to citizen needs. A strong role for municipal governments also serves as a check on the growth of centralized power at the national level and reduces the potential for the kind of authoritarian governments seen in Honduras in the recent past. Intensive USAID assistance to 35-40 secondary cities benefits approximately 50% of all Hondurans (approx. three million); other efforts reach all 298 Honduran municipalities. The whole country will benefit from greater efficiency and reduced potential for corruption inherent in public investment for reconstruction at the municipal level, reduced risk to public health, and increased participation by citizens in decisions that affect their lives.

Key Results: Efforts to promote an increased role for local government in responding to citizen needs focus on the following results: 1) Improved capacity to respond to citizen needs; 2) Rehabilitation of hurricane-damaged municipal water and sanitation systems and construction of new systems for resettled populations; 3) Increased coverage of basic services (water, sewer, refuse collection) by municipalities; 4) Restored municipal financial health after Hurricane Mitch and increased income; 5) Improved citizen participation in local government decision-making; and 6) Disaster mitigation efforts undertaken.

Performance and Prospects: USAID's municipal development program works at the national level to promote decentralization and greater autonomy for municipalities, and at the municipal level to increase the responsiveness, transparency, and effectiveness of municipal governments with corresponding increases in citizen participation. The activity works through the Honduran Municipal Association to address national policy issues and develop priorities for project activities. Technical assistance to municipalities for planning, financial management, and financing options is provided through a local non-governmental association specialized in local government issues and other mechanisms. Training for local government officials is provided through a specialized program of study through a local university. Funds for water, sanitation, and solid waste infrastructure projects are provided in support of overall project objectives.

In the aftermath of Hurricane Mitch, policy reform, technical assistance, and training efforts will be oriented toward managing recovery efforts in areas such as: land use planning and disaster mitigation; improving municipal involvement in public health measures; financing clean-up and infrastructure repairs; developing appropriate municipal initiatives to spur economic recovery; and building new communities of resettled populations. USAID will provide support for transitional shelters and facilitate the movement of displaced people to more permanent housing solutions as quickly as possible. Expanded financing will be provided for repair and rehabilitation of water and sanitation infrastructure and for municipal involvement in employment generation focused on repair of rural roads and urban housing issues. Related USAID activities which improve the income, education and health of the poor also enable them to participate more effectively in democratic processes.

Average participation at open town meetings grew from zero in 1990 to 137 individuals per meeting by 1997. Local government is becoming more responsive to citizens' needs. For example, the proportion of municipal budgets going to capital projects increased from 15% in 1991 to 48% in 1997. As a result, municipal population simultaneously provided with water, sewerage and refuse collection increased from 17% in 1991 to 31% in 1997.

Possible Adjustments to Plans: USAID's strong relationships with municipal governments and its partnerships with the primary implementing organizations create a strong foundation for a major expansion of water and sanitation work to repair and rehabilitate damaged municipal systems in the aftermath of Hurricane Mitch. Municipalities will also be critical partners in USAID employment generation efforts and rural road rehabilitation programs, as well as in disaster mitigation efforts such as storm drainage systems. Technical assistance and training efforts will focus on land use planning, shelter needs for resettlement of dislocated families, and environment-focused disaster prevention/ mitigation planning.

Other Donor Programs: Other donor efforts will complement USAID's focus on secondary cities by focusing similar efforts on the two largest cities and smaller rural municipalities that are not part of USAID's primary target group. The IDB and World Bank have reprogrammed planned lending for the largest cities and smaller donors and NGOs are targeting rural municipalities. The GOH has supported the project through loan funds for infrastructure improvements obtained through the Central American Bank for Economic Integration (CABEI) and, in the past, through passage of major decentralization legislation.

Principal Contractors, Grantees, or Agencies: Honduran Association of Municipalities, Foundation for Municipal Development, Central American Technological University, Honduran Social Investment Fund, Central American Techological University. The U.S. Geological Survey and Army Corps of Engineers are providing technical assistance for land-use planning and infrastructure, and the Department of Housing and Urban Development is providing technical assistance on housing and shelter issues.

Selected Performance Measures

	Baseline	2000	2003
Recovery of financial health after Hurricane Mitch and real municipal income increase over 1997 levels - Larger municipalities - Smaller municipalities	15 (1997) 6	0 - 5% 0 - 3%	5% 3%
Rehab of hurricane-damaged water and sanitation services; increased municipal coverage of public services (water, sewerage, refuse collection) (% of urban residents receiving three services in participating municip.) - Larger municipalities - Smaller municipalities		33% 17%	37% 26%
Increased community attendance at town mtgs in participating municip. - Larger municipalities - Smaller municipalities	20 (1991) 97 (1996)	220 140	235 155

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ACTIVITY DATA SHEET

PROGRAM: HONDURAS
TITLE AND NUMBER: Improved opportunity to obtain basic education and skills, 522-SO06
STATUS: Continuing (separated from SO01 and revised to respond to needs created by Hurricane Mitch)
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $2,500,000 CS
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETED DATE: FY 2003

Summary: Improving the educational level of Hondurans contributes in critical ways to all USAID objectives in Honduras. A skilled and educated workforce helps spur economic development and can improve Honduras' competitive position in global markets. Education has proven to be a major factor in promoting improved health practices and family planning. And an educated citizenry is important to developing effective participation in decisionmaking, citizen oversight, and a functioning democracy.

The national literacy rate in Honduras is 74% (female/74.5%, male/73.5%), up from 68% in 1988. Overall rural literacy is 63%, compared to nearly 90% in the two major cities. Recent improvements in primary education have not yet had a big impact on the adult labor force, less than 50% of whom have completed primary school. The average level of schooling among adults is only 4.2 years, only 3.1 years in rural areas. A decade ago, less than 50% of the youth completed primary school (6th grade). Now the level is slightly more than 71% (female/72%, male/70%). The total number of primary school graduates increased by 80% between 1985 and 1996. Repetition rates in the primary education system are relatively high (10-15%). Furthermore, rural children generally drop out of school when they reach adolescence. Only a third of the primary school graduates can find places in middle school (grades 7-9), which have gross enrollment rates of only 37%. Urban areas enroll more than 90% of the students while there is a complete lack of access to middle schools 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.

Family dislocation caused by Hurricane Mitch, as well as damage to classrooms and loss of supplies, have created difficulties in preparing for the 1999 school year and will likely increase drop-out rates. In response, the Ministry of Education (MOE) has requested assistance in building classrooms, replacing lost supplies and expanding alternative delivery systems to reach students who have been displaced or lack adequate facilities. Should additional resources become available, USAID would assist the Ministry with re-supply of classrooms for the current school year. The MOE has taken several steps to address other areas of long-term need in the education sector. Basic education was extended to include grades 7-9. The MOE made the commitment to improve the coverage, quality and efficiency of middle schools and to decentralize the education system to respond to local needs. The MOE successfully sought additional donor assistance to improve the quality, equity and efficiency of education. USAID assistance in the education sector will benefit more than one million school children seeking to achieve their full economic potential as adults, and out-of-school youth and young adults needing alternative basic and vocational education in order to improve their productivity and income.

Key results: Efforts to improve opportunity to obtain basic education and skills include activities to achieve the following results: 1) Expansion of alternative basic education programs, 2) Policy changes and programs to improve quality of basic education, reduce repetition, and decentralize, and 3) Expansion of vocational education.

Performance and Prospects: Through the Basic Education and Skills Training (BEST) Project, USAID assists the MOE EDUCATODOS ("Education-For-All") program which allows out-of-school youth and adults to obtain access to grades 1-9 through alternative delivery systems. This program was awarded honorable mention for literacy and basic education programs by UNESCO last year. Currently, the program is developing educational materials to expand the program to grades 7-9 of the traditional school-based basic education system. Development and testing of experimental strategies and interventions for reducing repetition rates will also be supported. USAID will also continue to work on improving educational policy through the strategy period with initial focus on developing and testing of experimental strategies for reducing repetition rates in early grades and on developing curriculum and basic education materials for grades 7-9. Policy efforts will also focus on decentralization within the education system to improve the efficiency of the system and responsiveness to educational needs. Other policy issues that may receive USAID support include teacher training programs to encourage more progressive teaching strategies, and criterion referenced evaluation systems to assist teachers in making pass/fail decisions.

USAID will also support development of a total of 27 vocational training schools over the next few years that will graduate an estimated 3,000 students per year, compared to 1,085 in 1996. Vocational education has proven its capability of providing unemployed and underemployed youth with skills that improve their marketability in the labor market. EDUCATODOS materials are used in the vocational schools to help those students who dropped out of school before obtaining the level of basic education needed for their vocational program. Graduates from USAID-assisted vocational centers earn average income increases of approximately $1,000 per year.

Possible Adjustments to Plan: USAID's program is responding to the immediate needs of the MOE in the aftermath of Hurricane Mitch in coordination with other donors. Delays in full implementation of the World Bank's basic education project may require more significant USAID involvement in this area.

Other Donor Programs: A World Bank project, funded with Germany, addresses many key areas critical to the improvement of basic education in Honduras, including teacher training, textbook printing, school construction for primary grades (1-6) and local community participation in school management and operations. A new activity with the IDB works to expand access and improve middle schools (grades 7-9), both in the formal system and in the alternative systems, which includes EDUCATODOS. Current projects with the World Bank, IDB, and the German Development Agency provide more than $60 million in loans and grants.

Principal Contractor, Grantees, or Agencies: Ministry of Education, Advisory Council for Human Resource Development (CADERH), Maduro Foundation for Education (FEREMA).

Selected Performance Measures

	Baseline	2000	2003
1. Number of grade levels * passed by students in alternative basic education programs	Total: 900 Female: 400 (1993)	80,000 40,000	110,000 55,000
2. Percent of children completing primary school (to grade 6) through regular basic education program	61.7% (1986)	86%	89.5%
3. Graduates from PVO and municipal training centers employed	Total: 1,085 Female: 360 (1996)	3,000 1,050	3,000 1,050
4. Alternative education centers meeting needs of students dislocated by Hurricane Mitch	Determined during CY-99	TBD	TBD
* Under EDUCATODOS, a student can complete up to two full grade levels in one year.

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