PROJECT INFORMATION DOCUMENT (PID) ADDITIONAL FINANCING Report No.: PIDA1011 Project Name Honduras Additional Financing Social Protection (P144928) Parent Project Name Social Protection (P115592) Region LATIN AMERICA AND CARIBBEAN Country Honduras Sector(s) Other social services (78%), Public administration- Other social services (22%) Theme(s) Social safety nets (100%) Lending Instrument Specific Investment Loan Project ID P144928 Parent Project ID P115592 Borrower(s) Republic of Honduras Implementing Agency Secretary of the Presidency, PRAF Environmental Category C-Not Required Date PID Prepared/Updated 29-May-2013 Date PID Approved/Disclosed 30-May-2013 Estimated Date of Appraisal 14-Jun-2013 Completion Estimated Date of Board 08-Aug-2013 Approval Decision I. Project Context Country Context Despite decent growth over the last decade (average of 4.2 percent, between 2000 and 2012), Honduras still experiences high levels of poverty. Both total poverty and extreme poverty remained did not decline during the decade, and even increase in 5 percentage points in the last two years, to reach respectively 46 and 71 percent of households. Rural households and indigenous communities are disproportionately affected by poverty: in 2012,58 percent of rural households were living in extreme poverty. Social indicators have also shown limited improvements. The gap between rural and urban school enrollment rate (at 15 percent) has not closed in the last decade, and more than 10 percent of children under five years old remain undernourished, the large majority living in rural areas. Sectoral and institutional Context Consistent with international best practice, the Government of Honduras (GoH) has developed a safety net program (Bono 10,000) to protect the poor, while at the same time, improving their Page 1 of 4 human capital. The main objective of the program is to provide income support to families in poverty while also promoting investments in human capital (education and health of children from 0 to 18 years old). The program is financially supported by the World Bank, the Inter-American Development Bank, and the Central American Bank for Economic Integration. The Bono 10,000 Program is now the largest cash transfer program in Honduras, benefiting 215,000 rural and 52,000 urban households, and approximately 1.2 million people. It has proved to be very effective in targeting the poor: a recent impact evaluation has shown that 84 percent of Bono's beneficiaries are poor, and 73.5 percent extreme poor. The Program also provides adequate benefits to these households, of up to $500 per year, representing about 20 percent of annual household food consumption. The Bono 10,000 program can serve as a catalytic for better targeting of other social assistance interventions. In that sense, the GoH has also recently approved a Social Protection Policy that gives Honduras a coherent framework for a coordinated and effective set of specific interventions in social protection, and in which the Bono 10,000 is the flagship intervention. As is common with safety net programs in lower-income countries, Bono 10,000 faces challenges both in ensuring coverage with limited financing, and in implementation. While program funding is high per international standards (estimated at 0.7 percent of GDP) from a combination of large coverage and relatively high benefits per international standards, the fiscal situation in Honduras has significantly deteriorated (with an estimated 6 percent fiscal deficit in 2012). The financing needs of the public sector are well above available resources in the local market, and while consolidation of other social protection programs and subsidies (estimated at an additional 1.3 percent of GDP) should be undertaken in the years to come, in the short run, the country needs additional support from international development institutions to continue investing in needed social interventions that aim at mitigating poverty. II. Project Development Objectives A. Original Project Development Objectives – Parent The proposed Project would support the Government's objective of building an improved social protection system mainly by improving institutional capacity for designing and implementing a Conditional Cash Transfer (CCT) program. Within this context, the Project#s development objectives are to: (i) strengthen institutional capacity of the Ministry of the Presidency and the PRAF agency to administer and manage a CCT program through the development of mechanisms and instruments for targeting of beneficiaries, monitoring compliance, making payments and transparency; and (ii) increase school attendance among students in grades 1 to 6 and the utilization of preventive health services among families participating in the CCT Program. B. Current Project Development Objectives – Parent C. Proposed Project Development Objectives – Additional Financing (AF) The proposed Project would support the Government's objective of building an improved social protection system mainly by strengthening institutional capacity to design and implement a Conditional Cash Transfer (CCT) program. Within this context, the Project’s development objectives are to: (a) strengthen the institutional capacity of government’s institutions to manage the Bono 10,000 Program, through the development of transparent mechanisms and instruments for targeting Program beneficiaries, monitoring compliance with Program co-responsibilities, and making payments to Program beneficiaries; (b) increase school attendance among students in grades 1 to 6, and the use of preventive health services among families participating in the Program in rural Page 2 of 4 areas; and (c) improve the Recipient’s capacity to respond promptly and effectively to an eligible emergency. III. Project Description Component Name Institutional strengthening of the Bono 10,000 Program Co-financing Conditional Cash Transfers Immediate Response Mechanism IV. Financing (in USD Million) Total Project Cost: 16.50 Total Bank Financing: 15.00 Total Cofinancing: Financing Gap: 0.00 For Loans/Credits/Others Amount BORROWER/RECIPIENT 1.50 International Development Association (IDA) 15.00 Total 16.50 V. Implementation The Project’s main implementing agency is PRAF, which is in charge of: (a) carrying out data collection activities to identify Program beneficiaries; (b) processing payments; (c) maintaining the management information system; (d) in coordination with the Ministry of Education (MoH) and the Ministry of Health (MoH), monitoring and verifying of the compliance with grant co- responsibilities; and e) fiscal sustainability. The Ministry of the Presidency (MoP) provides overall program coordination, and chairs the Program Intersectoral Committee that dictates the general rules and dispositions of the Bono 10,000 Program, such as the operational manual and targeting mechanisms, as well as the program impact evaluation. VI. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✖ Natural Habitats OP/BP 4.04 ✖ Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Physical Cultural Resources OP/BP 4.11 ✖ Indigenous Peoples OP/BP 4.10 ✖ Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Projects on International Waterways OP/BP 7.50 ✖ Projects in Disputed Areas OP/BP 7.60 ✖ VII. Contact point World Bank Contact: Pablo Ariel Acosta Title: Senior Economist Page 3 of 4 Tel: 473-1206 Email: pacosta@worldbank.org Borrower/Client/Recipient Name: Republic of Honduras Contact: Ministry of Finance Title: Minister of Finance Tel: 504-2237-4142 Email: Implementing Agencies Name: Secretary of the Presidency Contact: Presidency Title: Tel: 5042321611 Email: Name: PRAF Contact: Title: Tel: 504-220-5240 Email: info@praf.gov.hn VIII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Page 4 of 4