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USAID Information:
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Honduras
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Ruling Justly |
522-021 |
5,640 |
4,662 |
5,284 |
| Economic Freedom |
522-022 |
11,357 |
10,469 |
10,641 |
| Investing in People |
522-023 |
18,577 |
19,773 |
14,853 |
| P.L. 480 Title II |
|
7,450 |
14,009 |
14,187 |
| Total (in thousands of dollars) |
43,024 |
48,913 |
44,965 |
|
The Development Challenge: As President Ricardo Maduro's government enters its last year and new national elections loom in November 2005, the Government of Honduras (GOH) continues to face difficult challenges in its efforts to reduce poverty, eliminate corruption, strengthen democracy and decentralization, improve education and health, lower crime rates, and promote broad-based sustainable economic growth and investment. The Maduro Administration faced significant difficulties during 2004 in moving the government's transformation agenda forward. The transformation process continues to be impeded by a narrow economic base, concentrated ownership of assets, limited foreign and domestic investment, corruption, high population growth, low levels of education, and high levels of infectious disease. In addition, a weak judiciary demonstrates limited capability to protect civil and commercial rights or to cope with high crime rates and human rights violations. Other problems facing Honduras include 4.5 million people (64% of the population) living in poverty; an annual population growth rate of 2.6%; an infant mortality rate of 34 per 1,000; a high prevalence of HIV/AIDS (1.9% of the population and 50% of the reported AIDS cases in Central America); chronic undernourishment (one third of children under 5 years old), an average educational level of 5.3 years; and a continuous deterioration of water and forestry resources.
The World Bank estimates that Honduras' per capita gross national income in 2003 was approximately $970 and its external debt is expected to be around $4.8 billion (approximately 76% of gross domestic product) at the end of 2004. In February 2004, the GOH signed a new three-year Poverty Reduction and Growth Facility (PRGF) program with the International Monetary Fund (IMF). The continuation of this program is conditioned primarily on the GOH's ability to restrain government expenditures (primarily public sector wages), increase tax revenues, improve the solvency of the financial system, and prosecute corrupt government officials and private sector financial managers. With the signing of the IMF program, the GOH received $250 million from the IMF, the World Bank, the Inter-American Development Bank (IDB), and a number of bilateral donors. In addition, the GOH received debt relief on its debt service payment arrears from the Paris Club countries (including the United States). Assuming the GOH stays on track with the IMF program for one year, Honduras is expected to reach the Heavily Indebted Poor Country completion point in spring 2005, which would provide debt relief of approximately $564 million in net present value terms from the international donor community.
The GOH is making a significant effort to open its borders to free trade, as shown by its signing of the Central American Free Trade Agreement (CAFTA) in May 2004, and its ongoing active participation in negotiations for the Free Trade Agreement for the Americas (FTAA) and the Free Trade Agreement with Canada. The GOH anticipates that its Congress will ratify CAFTA in 2005. In recent years Honduras has also signed a number of other free trade agreements with Mexico, Chile, and the Dominican Republic. The GOH realizes that the country must increase its exports and attract new private investment to continue to grow and generate tax revenue to provide quality social services such as schools, hospitals, health clinics, water systems, electricity, roads, personal security, and a fair judicial system. To encourage greater private investment and competitiveness, the GOH has implemented a number of programs this year to increase exports in the areas of agro-industry, forestry and wood products, tourism, light manufacturing, telecommunications, and energy.
U.S. national interests in Honduras support: 1) greater investment and economic growth in Honduras to increase the number of potential customers for U.S. businesses; 2) U.S. exports of goods and services to Honduras to generate more jobs in the United States; 3) reducing the flow of illegal immigrants into the United States; 4) decreasing pressure for greater U.S. government law enforcement resources; 5) increasing citizen support for democracy; 6) consolidating the GOH civilian-controlled military, police, and legal institutions to help protect U.S. investments; 7) reducing the impact of international crime, terrorism, and illicit narcotics activities on the United States; and 8) limiting the spread of infectious diseases, especially tuberculosis and HIV/AIDS.
The USAID Program: USAID's bilateral Country Plan for Honduras, approved in late FY 2003, is consistent with the three performance objectives of the Millennium Challenge Account and the Central America and Mexico (CAM) Regional Strategy: Ruling Justly, Economic Freedom, and Investing in People. USAID will support Ruling Justly by strengthening the rule of law and promoting greater transparency and accountability of governments. USAID will support Economic Freedom by focusing on improving trade policy analysis and improving the legal and regulatory framework for trade, investment, and competitiveness; creating more competitive, market oriented private enterprise and improving the management of critical watersheds. The program will enhance Honduras' ability to participate more effectively in the CAFTA, FTAA, the World Trade Organization, and to take full advantage of increased trade opportunities made available by more open global markets. To support Investing in People, the health program will focus on preventing HIV/AIDS and other infectious diseases, as well as improving reproductive health and family planning, child survival, and household food security. The education program will contribute to a better-educated population by providing training and technical assistance to school supervisors, principals, and teachers, developing standards and tests for primary school, offering radio instruction for out-of-school youth, and assisting civil society organizations to conduct policy dialogue with the Ministry of Education.
Other Program Elements: In addition to the bilateral program, USAID supports several regionally-managed programs in Honduras. The Central America Regional Program (G-CAP) implements activities that increase the potential for expanded trade. In the health sector, G-CAP focuses on the prevention of HIV/AIDS through programs targeted at reducing the infection rate among high-risk groups, the implementation of improved policies, and the effective and efficient delivery of comprehensive care for people living with HIV/AIDS. G-CAP's regional environmental program continues to focus on border areas and supports the implementation of biodiversity conservation and environmental legislation. The program reduces dependence on traditional exports while addressing structural problems that inhibit rural economic diversification (clean production activities). The farmer-to-farmer program managed by the Bureau for Economic Growth, Agriculture, and Trade maintains volunteer technical assistance support to promote horticulture, tree crop, and dairy production and marketing.
The USAID office in Honduras provides regional coordination for implementation of the Presidential Centers of Excellence for Teacher Training initiative to raise the quality of teacher training and address poor rates of literacy and school achievement. Honduras also participates in the Cooperative Association of States for Scholarships program, which is managed regionally by USAID's Latin America and Caribbean Bureau. This program awards scholarships to disadvantaged scholars, with a focus on women and other disadvantaged groups, to study at a university in the United States.
Other Donors: Development assistance disbursements to Honduras in 2004 totaled approximately $308 million ($65 million in grants and $243 million in loans). The United States, Japan, and Sweden provided the largest amounts of grant funding, while Spain provided a large amount of their assistance in loans. Non-U.S. bilateral donors and their principal areas of focus include Japan (public infrastructure, agriculture, education), Sweden (statistics, justice and human rights, social programs); Spain (judicial reform, municipality strengthening, tourism); Germany (microenterprise, housing, education); Canada (forestry, rural development, education); United Kingdom (poverty reduction); Italy (irrigation, food security); Holland (rural development, housing), and Switzerland (rural water, agricultural diversification). Multilateral donors include the IDB with a diversified portfolio of projects, the World Bank (education, road construction, land tenancy, health); the IMF (currently in the first year of a 3-year PRGF); the European Union (rural water infrastructure, decentralization, food security), and the United Nations agencies (e.g., the United Nations Development Program (UNDP), the Food and Agriculture Organization, the World Food Program, the United Nations Children's Fund, the World Health Organization, the United Nations Population Fund, the International Fund for Agricultural Development). The primary focus of UNDP has been in the areas of poverty reduction, anticorruption, and HIV/AIDS. The Donors' Support Group, now the G-17 (with the recent addition of France and Switzerland), continues to monitor the implementation of the Stockholm Principles adopted in May 1999 and the GOH's Poverty Reduction Strategy Plan. USAID participated actively with the G-17 through the Ambassadors and Representatives Group, the Technical Follow-up Group, and the Sector Groups throughout FY 2004.
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