HN PRSC

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This program document describes a single-tranche Poverty Reduction Support Credit (PRSC) to the Republic of Honduras for SDR 40.54 million, which includes an original amount of SDR 38.6 million (US$56 million equivalent) and a supplemental credit in the amount of SDR 1.94 million (US$2.8 million equivalent). The main objective of the PRS, which analyzes the causes of poverty and encompasses reforms and investment programs in a broad range of sectors, is to reduce poverty by 24 percentage points over the period 2001-2015. Overall, the Poverty Reduction Strategy Paper (PRSP) and the associated first Progress Report (PRSP-PR), which was discussed by the Board in February 2004, present a strategy to reduce poverty in Honduras. The strategy itself is structured around six pillars: (1) accelerating equitable and sustainable growth to levels consistent with the income poverty reduction targets; (2) reducing rural poverty; (3) reducing urban poverty; (4) enhancing investment in human capital; 5) strengthening social protection for specific vulnerable groups; and (6) ensuring the sustainability of the strategy through governance and institutional reforms and enhanced environmental sustainability. In line with these pillars, the PRSC aims to support Government's efforts to: accelerate pro-poor growth, via support for reforms aimed at increasing competitiveness and maximizing the potential for new investment and employment-creation for men and women in both urban and rural areas in the wake of new regional and international agreements, in particular, the Central America Free Trade Agreement (CAFTA); increase the impact and efficiency of resources devoted to human development and social protection, with a focus on deconcentration of responsibilities for service provision and increased empowerment of beneficiaries of key services; and increase the medium- and long-term sustainability of poverty reduction initiatives through policy and institutional reforms geared to strengthening governance and public sector management and improving management of the environment, particularly in Honduras' extensive protected areas. In addition, the PRSC will support the Government's initiatives to systematize consultation processes around the poverty reduction strategy and strengthen monitoring and evaluation at national and community levels.