Honduras Fiscal Sustainability and Enhanced Social Protection DPC

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Achieving fiscal sustainability is critical for Honduras to escape from a cycle of low growth, high levels of public debt, high unemployment, and high extreme poverty. This program document proposes a Development Policy Credit (DPC) in the amount of US$55 million equivalent to support the Government of Honduras’ efforts to tackle an ongoing difficult fiscal situation paired with high levels of extreme poverty. The reforms supported by this operation are part of the Plan de Todos para una Vida Mejor, the strategy of the Government of Honduras, which sets development goals for improved governance, human development, and security. While building on lessons learned and progress achieved under previous World Bank Group operations, this operation benefits from strong political commitment of the current administration which has taken corrective actions in the past 12 months to address the weak fiscal stance. In particular, this operation supports measures to enhance fiscal management while protecting the most vulnerable. This operation is fully consistent with the World Bank Group’s Strategy and is part of a coordinated effort with other International Financial Institutions.