Honduras First Fiscal Sustainability and Enhanced Competitiveness DPF

closed

The development objective of the First Fiscal Sustainability and Enhanced Competitiveness Development Policy Financing (DPF) Program Project for Honduras is to support the Government’s efforts in: (i) strengthening institutional arrangements to support fiscal sustainability; and (ii) enhancing the regulatory framework to promote competitiveness. Honduras has one of the highest poverty rates in the Western hemisphere. As identified in the systematic country diagnostic (SCD), the country’s high poverty rates are to a large extent the result of the low and volatile per capita income levels. The current administration is addressing existing challenges with following strategies: (i) the interrelation of crime and migration flows; (ii) the regional nature of a problem that affects the northern triangle of Central America formed by El Salvador, Guatemala, and Honduras; and (iii) the magnitude of the required interventions to address the challenge, Honduras has partnered with El Salvador and Guatemala to articulate a common strategy, which is contained in the plan of the alliance for prosperity in the northern triangle. The present operation supports the administration’s efforts to manage the fiscal situation, to help build the basis for sustainable fiscal policies, and accelerate growth. In order to strengthen institutional arrangements to support fiscal sustainability, the DPF focuses on policy measures aimed at improving: (i) fiscal and financial management; (ii) energy subsidies and quasi-fiscal deficits; and (iii) the targeting and transparency of social spending. The DPF also supports actions to enhance competitiveness by: (i) improving the regulatory framework to foster competition; and (ii) promoting trade facilitation.