Document of The World Bank FOR OFFICIAL USE ONLY Report No. 76352-HN INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL FINANCE CORPORATION COUNTRY PARTNERSHIP STRATEGY PROGRESS REPORT FOR THE REPUBLIC OF HONDURAS FOR THE PERIOD FY2012-2015 May 8, 2013 Central America Country Management Unit Latin America and Caribbean Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's Policy on Access to information. The date of the CPSfor Honduras was November 1, 2011 GOVERNMENT FISCAL YEAR January 1 -December 31 CURRENCY EQUIVALENTS (Exchange Rate as of April 2, 2013) Currency Unit Lempira US$1.00 20.3 ABBREVIATION AND ACRONYMS CABEI Central American Bank for Economic Integration CPS Country Partnership Strategy CCT Conditional Cash Transfer CEPREDENAC Center for the Prevention of Natural Disasters in Central America COALIANZA Commission for the Promotion of Public-Private Associations CSF Civil Society Fund CSO Civil Society Organization DfGG Demand for Good Governance DPC Development Policy Credit EITI Extractive Industries Transparency Initiative ENEE Empresa Nacional de Energia E16ctrica (National Electricity Company) EU European Union FY Fiscal Year GAC Governance and Anti-Corruption GDP Gross Domestic Product Instituto de Acceso a la Informaci6n Publica (Institute for Access to Public Information) ICT Information and Communications Technology IDA International Development Association IDB Inter American Development Bank IDF Institutional Development Fund IFC International Finance Corporation IMF International Monetary Fund INPREMA Teachers' Pension Institute JSDF Japanese Social Development Fund MIGA Multilateral Investment Guarantee Association OBSICA Regional Violence Observatory ONCAE Oficina Normativa de Compras y Adquisiciones del Estado (National Public Procurement Office) PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PROHECO Community Education Program PROMOSAS Water Supply and Sanitation Sector Modernization Project SAMI Sistema de Administraci6n Municipal Integrado (Integrated Municipal Administration System) SBA Standby Arrangement SIARHD Integrated Educators' Human Resources System SME Small and Medium-Sized Enterprise OGP Open Government Partnership CoST Construction Sector Transparency Initiative IBRD IFC Regional Vice President Hasan A. Tuluy Regional Vice President Jean Phillip Prosper Country Director Carlos Felipe Jaramillo Acting Regional Director Jean Phillip Prosper Task Managers Andrea Kucey Sub-Regional Manager Roberto Albisetti Giuseppe Zampaglione Task Managers Javier Posas Eduardo Wallentin ACKNOWLEDGEMENTS Contributions from the World Bank Honduras Country Team and Task Team Leaders were critical to the production of this document. Special thanks go to several colleagues including Oscar Calvo-Gonzalez, Nuria Tolsa Caballero, Kathy Lindert, Leonardo Lucchetti, Martin Ochoa, Aaron Ordower, Luciana Marchesini, Ezequiel Miranda, Sonia C. Molina, Luc Razafimandimby, and Ayat Soliman.  HONDURAS COUNTRY PARTNERSHIP STRATEGY PROGRESS REPORT TABLE OF CONTENTS I. INTRODUCTION 1 II. COUNTRY CONTEXT 1 Political Developments ......................................................2 Poverty Reduction and Shared Prosperity .............................................2 Key Macro and Debt Developments ..................2.......... ..............2 III. PROGRESS TOWARDS CPS OUTCOMES 5 Strategic Objective 1. Improving Citizen Security .......................................5 Strategic Objective 2. Expanding Opportunities through Reducing Vulnerabilities . ..........6 Strategic Objective 3. Enhancing Good Governance .................................8 IV. PORTFOLIO PERFORMANCE 9 Partnerships and Leveraging ........................................ ......... 10 V. ADJUSTMENTS TO THE CPS AND PROGRESS IN IMPLEMENTATION 10 VI. RISKS 12 Tables and Figures Table 1. Honduras: Key Macroeconomic Indicators (in percent of GDP) .....................4 Table 2. Indicative Lending Program and Knowledge and Convening Services for FY12-14 (US$ m) .............................................................1 1 Figure 1. Poverty rate (Percent) ........................................ ..........2 Figure 2. Real GDP growth (Annual percentage change).................................2 Figure 3. WBG CPS FY12-14 Results Areas for Honduras: Progress towards CPS Outcomes..........5 Box 1. Progress on Mainstreaming Gender in Bank Operations ..............................6 Box 2. Governance Mechanisms in Bank Projects ..............9........ .............9 Annexes Annex 1. Revised CPS Results Matrix and Progress Achieved to Date..................... 13 Annex 2. Active Trust Fund Portfolio .............................................25 Annex 3. Honduras at a Glance .................................................26 Annex 4. Selected Indicators of Portfolio Performance and Management ...................28 Annex 5. IDA and Grants Operations Portfolio......................................30 Annex 6. Honduras Statement of IFC's Committed and Outstanding Portfolio ...... .........31 MAP  HONDURAS COUNTRY PARTNERSHIP STRATEGY PROGRESS REPORT I. INTRODUCTION 1. This Progress Report assesses implementation of the joint Bank-IFC Honduras Country Partnership Strategy (CPS) at mid-term. The three-year CPS is well-aligned with the priorities of the current administration. At the time of the CPS Board discussion, the Government was facing daunting challenges related to political reconciliation, implementing structural fiscal reforms to improve macroeconomic performance and strengthening crime and violence prevention. These challenges remain key development constraints today. Growth has not caught up with the pre-crisis level and fell to 3.3 percent in 2012 following a modest recovery averaging 3.7 percent in 2010-11. Honduras has one of the highest levels of poverty in Latin America at 66 percent in 2010 and income inequality is also a concern with a Gini of 0.53 (2010). The combined impact of the global economic crisis and the political crisis in 2009 has severely limited the country's ability to close the income gap; and crime and violence remains a barrier to improving prospects and unleashing the country's economic potential. 2. A year and a half into the implementation of the CPS, the strategic objectives remain relevant. CPS objectives include to: (i) improve citizen security; (ii) expand opportunities and reduce vulnerabilities (social, economic and natural disasters); and (iii) enhance good governance. The investment lending program has materialized largely as expected, and reflects strong continuity with the existing portfolio. Portfolio implementation has improved, including a notable increase in disbursement rates. 3. Progress in addressing development challenges has been mixed. The Government is making some progress towards a comprehensive approach to citizen security and results have been achieved in the area of social protection and education. Continued weaknesses in public financial management, a fall in revenues, and an increase in public spending and transfers have led to much larger than anticipated budget deficits and increased public debt, and it remains uncertain whether the Government will be able to address fiscal challenges in a pre-electoral period. This deterioration in the macroeconomic environment resulted in the discontinuation of the Development Policy Credit series. 4. During the second half of the CPS the Bank proposes to continue a flexible approach given the uncertainties as the government transition takes place, and recommends only a few adjustments. In light of the upcoming political transition in November 2013, the CPS Progress Report proposes to extend the CPS by 12 months to allow more time to achieve CPS outcomes and work with the incoming administration on the next partnership strategy. The Progress Report proposes to use the remaining IDA 16 resources to focus on poverty reduction by scaling up existing projects that have shown positive results, including delivering services in poor communities and strengthening the Government's social protection program. In line with their regional strategy, the IFC program will continue its focus on the financial sector, agribusiness, infrastructure and public private partnerships. 1 II. COUNTRY CONTEXT Political Developments 5. The political situation is relatively stable and electoral processes are underway leading up to Presidential and general elections in November 2013. Almost half of the entire Honduran electorate participated in the primaries in November 2012, reversing a previous trend of high absenteeism. Voters selected candidates from 14 movements in three parties for the presidential, parliamentary and local elections. The electoral process was deemed to be fair and the results were accepted by the majority of candidates. The mechanisms in the political system for credible checks and balances remain weak. However, the current administration of national unity has preserved a basic level of social cohesion among various social forces such as trade unions and employers by facilitating various agreements on salaries, investments, and policies including the Gran Acuerdo Nacional of January 2012. Poverty Reduction and Shared Prosperity 6. Honduras remains a very poor and unequal country and recent progress towards poverty reduction has been disappointing. The situation of the poor did not change significantly from 2000 to 2005, until higher rates of economic growth helped improve welfare and lower poverty. There has also been no improvement in inequality during the same period. Remittances have played an important role in overall poverty reduction, especially in urban areas; government transfers have also had positive effects. The crises of 2008-09 (financial, food prices and political) slowed poverty reduction, and while economic growth is recovering, poverty has risen. Honduras is also facing weak labor demand in the more productive sectors such as manufacturing, while the agricultural sector, from where the poor derive a majority of their income, suffers from low productivity and stagnant wages. Figure 1. Poverty rate (Percent) Figure 2. Real GDP growth (Annual percentage change) 8 0 - - - - - - - - - - - - - - -8 - - - - - - - - - - - - - - - - - 70 6 60 50 40 2 3 0 - - - - - - - - - - - - - - - 0 2 0 - - - - - - - - - - - - - - - 10Poverty rate -2 - - Extreme poverty rate - Real GDP growth 0 1 -4 2001 2003 2005 2007 2009 2011 2001 2003 2005 2007 2009 2011 Source: World Bank (forth.), The Evolution of Poverty Source: World Development Indicators. and Inequality in Honduras, 2000-2011. 2 7. Shared prosperity is also proving to be a challenging development goal. From 2003 to 2011 the real incomes of the bottom 40 percent of the population grew at 4 percent per year. While this is higher than the Honduras average of 3 percent for the same period, it is still not fast enough to make significant progress in poverty reduction or shared prosperity. In addition, the reduction of poverty rates has been unequally distributed across the country. In the last ten years this has led to a rise in the share of the poor population living in rural areas and medium-sized cities: most poverty reduction occurred in the two largest cities. 8. Projected growth rates of 3.5 percent (1.5 percent per capita) will not be enough to make a dent in poverty. In 2005, higher rates of growth were having a positive impact on poverty reduction, with larger gains for the poorest quintile. However, the last time the economy grew above four percent was in 2008 (see Figure 2). In a country where the poor accounted for two thirds of the population in 2010, poverty reduction and related development goals depend on significantly higher rates of growth in order to reverse the current trend of increasing poverty rates, particularly in rural areas. Making progress will require a concerted effort and a renewed emphasis on poverty reduction. Key Macro and Debt Developments 9. The global economic crisis, persistent macroeconomic imbalances and a challenging political situation have all negatively affected the Honduran economy. Growth has not caught up with the pre-crisis level and fell to 3.3 percent in 2012, following a modest recovery averaging 3.7 percent in 2010-11. Overall, the recovery has been driven by the light manufacturing (maquila), agriculture (particularly export-oriented commodities) and communications sectors. 10. The fiscal situation has deteriorated, brought on by a failure to control expenditures and transfers. The overall fiscal deficit for 2012 is significantly higher than in the previous years at 4.3 percent of GDP. Despite some early reform efforts, weaknesses in budget management resulting in much higher-than-expected current expenditures- including transfers to state companies-and an increase in prices of production inputs have contributed to the deterioration of fiscal performance. Financing needs of the combined public sector are well above available resources in the local market. 11. Public debt has increased sharply since the 2009 global slowdown. Over the last four years, nominal public debt rose by 10 percentage points of GDP, reaching 34.5 percent of GDP at end-2012, about 5 percentage points higher than projected in the 2010 Debt Sustainability Analysis (DSA). Such an increase had been driven mainly by an increase in domestic debt from 5 percent of GDP in 2008 to 15.2 percent of GDP in 2012, much of which had been contracted at high interest rates (12-15 percent). External public debt, the bulk of which (about 3/4 of external debt in 2012) is owed to multilateral institutions, had increased at a moderate rate by approximately 3V2 percentage points of GDP between 2008 and 2012. Projections point to a significant increase of external public debt following the issuance of US$500 million international bonds in March 2013, from 20.4 percent of GDP in 2012 to 24.5 percent of GDP in 2013. 3 Table 1. Honduras: Key Macroeconomic Indicators (in percent of GDP) Output and Inflation 2008 2009 2010 2011 2012/a Real GDP Growth 4.2 (2.4) 3.7 3.7 3.3 CPI Inflation 10.8 3.0 6.5 5.6 5.4 Public Sector Public Sector Balance Components 2008 2009 2010 2011 2012 ta CombinedPublicSectorBalance (1.7) (4.5) (2.8) (2.8) (4.3) Central Government (2.4) (6.0) (4.7) (4.6) (6.0) Other Public Sector 0.7 1.5 1.8 1.8 1.6 Central Government 2008 2009 2010 2011 2012/a Central Government Total Revenues 19.9 17.1 16.9 17.0 16.8 Current Revenues 17.8 15.2 15.5 15.9 15.9 TaxRevenues 16.1 14.2 14.4 14.8 14.6 Non TaxRevenues 1.7 1.1 1.1 1.1 1.2 Other 2.1 1.8 1.4 1.1 0.9 Central Government Total Expenditures 22.4 23.1 21.5 21.6 22.8 Current Expenditures 17.5 18.6 17.9 17.0 18.1 o/w Wages and Salaries 9.3 10.9 10.7 9.6 9.7 o/w Interest Payments 0.7 0.7 1.0 1.4 1.8 Capital Expenditures 4.8 5.1 3.7 4.6 4.5 Central Government Balance (2.4) (6.0) (4.7) (4.6) (6.0) Total Public Sector Debt 22.9 24.6 29.7 32.1 34.7 External Sector 2008 2009 2010 2011 2012/a Current account balance (% of GDP) -15.4 -4.0 -5.3 -8.5 -9.9 Foreign Direct Investment (% of GDP) 7.3 3.7 6.2 5.7 5.5 Exports (annual percentage change) b/ 7.2 -22.1 26.6 27.6 2.4 Imports (annual percentage change) b/ 17.6 -29.4 20.7 23.4 2.5 Gross international reserves (US$ million) 2,692.0 2,331.0 2,931.0 3,043.0 2,778.0 In months of imports 4.7 3.6 3.6 3.5 3.0 Net International Reserves (US million) 2097.0 1493.2 2082.1 2032.4 1665.2 a/ Projections Source: IMF 12. To address growing financing needs the Government has issued recently the first of a planned series of international bonds. Given the financing risks due to the short maturity and high interest rate of domestic debt, and the increasing difficulty to sell domestic bonds, the Government issued US$500 million bonds in the international market on March 12, 2013, to finance 2013 expenditures and part of the remaining floating debt. 13. The macroeconomic outlook remains challenging and the risk of fiscal slippages is high. GDP growth in 2013 is likely to remain within the narrow range achieved since 2009 (3 to 4 percent). It is expected to continue to be driven by communications, transport, agriculture and industrial production, and the performance of the maquila exports which will be highly dependent on the growth in the US. Remittances are expected to remain on an upward trend and support consumption. While inflation is projected to remain stable around 5-6 percent, the fiscal deficit is expected to remain high at around 6 percent of GDP in 2013. 14. The current macroeconomic situation is compounded by the fact the country is in a political transition and raises issues related to short and medium-term sustainability. The Government has passed some measures to control public spending and address structural problems, but more is needed to ensure the country is put on a more sustainable trajectory and address the macro problems facing Honduras in a responsible and sustainable matter. An IMF precautionary SBA program lapsed in April 2012 without having had a completed review since July 2011. In addition to fiscal concerns the IMF had also raised the need for increased 4 exchange rate flexibility and higher interest rates to stem losses in reserves and competitiveness. This would entail coordinated action on the fiscal, monetary and exchange rate fronts. III.PROGRESS TOWARDS CPS OUTCOMES 15. Progress towards CPS outcomes is in line with expectations, with some disappointing results in terms of fiscal consolidation. The majority of CPS outcomes are expected to be achieved by the end of the revised CPS period. In terms of Expanding Opportunities through Reducing Vulnerabilities, advances have been made in most Results Areas (see Figure 3), including in the education sector and strengthening the social protection system. Sustained progress in improving fiscal consolidation has been disappointing and it remains unclear if further achievements will materialize during the CPS period. The Results Area 2.1 has been changed to "Pension, Energy Utility and Public Sector Wage Bill Discipline" to better reflect the nature of the CPS outcomes supported by the World Bank Group (WBG) program. Finally, progress under the third Strategic Objective, Enhancing Good Governance, is mixed and extending the CPS period will help gauge if progress can be sustained. The Results Matrix in Annex 1 summarizes detailed progress to date across the WBG Program. Figure 3. At A Glance-WBG CPS FY12-14 Results Areas for Honduras: Progress towards CPS Outcomes Strategic Objective 1: Strategic Objective 2: Strategic Objective 3: Improving Citizen Security Expanding Opportunities through Enhancing Good Governance Reducing Vulnerabilities RESULTS AREAS RESULTS AREAS RESULTS AREAS 1.1 Strengthened National 2.1 Pension, Energy Utility and 3.1 Improved Accountability in Capacity to Address Public Sector Wage Bill Public Expenditures - Citizen Security -on track Discipline- partially achieved partially achieved 1.2 Linking National 2.2 Improved Investment Climate 3.2 Stronger Decentralized Interventions to Regional and Competitiveness - on track Structures - on track Approaches on Citizen 2.3 Improved Quality of Education 3.3 Enhanced Social Security -on track - achieved Accountability as Part of 2.4 Consolidated and Strengthened Demand-Driven Governance - Social Protection System - on partially achieved track and to be scaled-up 2.5 More Effective Disaster Risk Management - on track Strategic Objective 1. Improving Citizen Security 1.1 Strengthened National Capacity to Address Citizen Security 16. The Government of Honduras (GoH) is making progress towards a comprehensive approach to citizen security. On the law enforcement side, the Government has implemented reforms to strengthen criminal justice institutions, address police corruption, and provide training to police forces combined with new equipment and technologies. Bank support for prevention is being provided through the recently approved Safer Municipalities Project (Report No. 72349- HN). This Project is also one of several Bank-financed operations that mainstreams gender, and includes gender disaggregated results indicators (see Box 2). Progress towards CPS outcomes is on track, but will be better gauged once project implementation accelerates. In addition, the impact evaluation of the Barrio Ciudad Project will be an important source of information in terms of the Bank's impact for improving citizen security in vulnerable municipalities. The Mi 5 Primer Empleo ("my first job") program has been delivering results which also contribute to this Results Area. Box 1. Progress on Mainstreaming Gender in Bank Operations The WBG has made progress in mainstreaming gender in country operations, through the inclusion of gender- informed strategies and indicators, projects oriented towards bridging gender gaps (both through investment lending and trust funds), and convening services offered to enhance engagement on specific priority problems. The Nutrition and Social Protection Project includes gender disaggregated indicators, as does the recently approved Safer Municipalities Project. A gender strategy is being implemented as part of the second phase of the Honduras Land Administration Program Credit, building upon a Social Assessment and a Gender Audit, oriented towards improving women's access to land, particularly in indigenous areas. The Bono 10 000 Project is supporting transfers directed towards mothers, with a positive impact on family decisions regarding health and education for children. In terms of Trust Funds and analytical work, a JSDF-financed project is promoting market-oriented micro-enterprise development among poor rural communities in remote indigenous areas-63 percent of the beneficiaries of institutional strengthening and capacity-building were micro-enterprises led by women. The Bank also facilitated a regional Hackathon Against Domestic Violence, bringing together sector specialists and programmers to develop prototypes of ICT applications and support development and implementation of the most promising ICT solutions. 1.2 Linking National Interventions to Regional Approaches on Citizen Security 17. The Bank is supporting two regional approaches on Citizen Security. It is expected that support for SICA's Regional Observatory of Violence (OBSICA) will improve the availability and quality of the citizen security data produced in Honduras and Nicaragua. At the same time, the Bank's Knowledge Partnership for Evidence Based Citizen Security will be piloted in line with CPS projections and its lessons incorporated into the implementation of the Bank program. Strategic Objective 2. Expanding Opportunities through Reducing Vulnerabilities 2.1 Pension, Energy Utility and Public Sector Wage Bill Discipline1 18. The CPS supported government efforts to reduce fiscal vulnerability and create additional space for social expenditures, but a rise in discretionary spending has created a difficult fiscal situation. While fiscal consolidation efforts of 2010 and 2011 were promising, the trend was reversed since December 2012. The DPC series helped address long standing structural issues related to the pension and public sector wage bill, but these reforms alone were not enough to ensure the macro remained on track. The deterioration was mainly a result of discretionary spending, and, as a result, the IMF program was unsuccessful and the country is facing increasing fiscal risks. In light of this situation, the Bank dropped the second DPC from the lending program pending the adoption of measures to ensure an adequate macroeconomic framework. It is unclear if earlier achievements under the DPC will be sustained during the remainder of the CPS period, or if further progress will be made in this area. The Progress Report proposes to retain the original CPS indicators, recognizing that sustaining these gains would be an achievement. 19. The Bank is supporting the sustainability of the energy sector in Honduras through improving efficiency and decreasing losses. The power sector industry in Honduras faces Title changed from "Improved Fiscal Consolidation" to better reflect nature of WBG support. 6 financial and energy supply difficulties that threaten sustainable development and economic growth in the medium and long term. This situation has become increasingly challenging during the first half of the CPS period. Technical and non-technical losses increased from 22.5 percent in 2010 to 29 percent in 2012 mainly as a result of an increase of non-technical losses. As a result, the CPS indicator for electricity losses per year in ENEE has been updated (see Annex 1). 2.2 Improved Investment Climate and Competitiveness 20. Bank support for improving rural productivity is on track. In infrastructure, the rehabilitation of rural roads is underway and is expected to achieve the CPS target of 445 km of rural roads rehabilitated by 2015. Support for land administration is also well underway with 14,500 families having received new titles as of December 2012. IFC Investment Climate Advisory Services and the FPD Investment Climate Practice Group are in the final implementation stage of an Agribusiness Trade Logistics project. 21. The WBG is supporting Government's efforts to create the legal foundation for private sector engagement in infrastructure. One effort is the recent implementation of the legal framework for Public Private Partnerships (PPPs) to bring private sector investments into infrastructure, particularly in sectors where important capital investments are required, such as toll roads, ports and renewable energy. In late 2010, the Government created COALIANZA (Commission for the Promotion of Public-Private Associations) to manage the process of identification, structuring and tendering of PPPs within priority sectors. The IFC is evaluating PPP projects that have been prioritized by Government and promote regional integration through the development of a critical road network and competitive port facilities. 22. The WBG is supporting the renewable energy agenda. This includes direct IFC financing of large projects such the La Vegona, the largest privately-owned hydroelectric plant in Honduras (39MW), and indirectly via facilitating funding to local banks to finance small scale renewable energy projects (<15MW), such as the Sustainable Energy Finance Loan granted to Banco Atlantida. A US$30 million investment plan for the Scaling Up Renewable Energy Program (SREP), a joint collaboration WB, IFC and IDB, is also under preparation. 23. IFC is contributing to strengthening the local banking system. IFC will deepen its ongoing engagement with local and regional financial institutions with suitable investments. IFC is currently evaluating equity and senior debt investments to support the capital structure and balance sheet of systemic and middle size banks targeting SMEs, Housing and Agribusiness Financing. IFC will also consider comprehensive advisory service programs to enhance performance in risk management, corporate governance, SMEs and Sustainable Energy Financing. 2.3 Improved Quality ofEducation 24. The CPS Outcomes are on track to be met with the completion of the first DPC and the Education Project. Achievements to date include strengthening the measurement of learning outcomes and improved human resource management through a clean-up of the teacher payroll and reduction in teacher absenteeism. The DPC supported a strengthening of the National Teachers' Pension Fund Institute (INPREMA). This included the incorporation of all teachers that are working or had ever worked in the Honduran Community-Based Education Program (PROHECO). The objective for the remainder of the CPS period is to sustain these achievements through policy dialogue. No further investment lending is foreseen in the sector. 7 2.4 Consolidated and Strengthened Social Protection System 25. Substantial progress has been made in strengthening the conditional cash transfer program as a core element of Honduras' social protection system with the support of the World Bank, IDB and CABEI. The conditional cash transfer "Bono 10 000" has doubled its coverage and currently reaches about 267,000 poor households (representing approximately 15 percent of the population). The program is well targeted to the extreme poor: a recent assessment shows that 74 percent of beneficiaries are extremely poor and only 17 percent of benefits go to the non-poor, putting the program's targeting accuracy on par with some of the top performers internationally. As a safety net program, the Bono 10 000 is intended to provide some income support to the poorest groups. Nonetheless, measured poverty has increased in recent years in Honduras and the longer-term sustainability of the program remains uncertain. Both of these aspects - overall poverty impacts and fiscal sustainability - need to be considered in the context of Honduras' wider social protection with a view to further strengthening the Bono 10 000 program and consolidating other benefits, programs and systems around that base. The World Bank and other partners are engaged in complementary technical assistance and AAA (e.g., the planned social protection forum and on-going Regional Social Sector Expenditure and Institutional Review) to complement the Project. In that context, and given the successful achievements to date, the CPS Progress Report is proposing Additional Financing for this Project. 2.5 More Effective Disaster Risk Management 26. Resilience to natural hazards remains an important development challenge for Honduras. The regional agency, CEPREDENAC, has been strengthened through a capacity building IDF grant, directly benefiting cross-border cooperation in this area. Building upon the success of the previous Disaster Risk Mitigation Project (closed 2010) the Bank approved a new Disaster Risk Management Project (Report No. 72349-HN) in December 2012 to support municipalities in the preparation of disaster emergency plans and strengthen national capacity for hydro-meteorological and geophysical monitoring. Two new indicators related to this Project have been added as a part of this Progress Report. Strategic Objective 3. Enhancing Good Governance 3.1 Improved Accountability in Public Expenditures 27. Progress has been slower than expected in this area; but there are some results that could be scaled-up over the remainder of the extended CPS period. The current fiscal crisis, combined with high-profile cases of direct contracting and limited openness in high-cost contracts and concessions, have contributed to negative public perceptions of the status of accountability in public administration. In terms of CPS results, the lack of progress in implementing the recommendations of a transactions-based payroll audit in the Ministries of Health and Public Works is disappointing. There has been some progress made in pilot projects with the potential for scaling-up. For example, the National Public Procurement Office piloted an E-procurement catalogue which resulted in a more efficient and transparent procurement processes and designed a web portal for bidding opportunities and contracting. 8 3.2 Stronger Decentralized Structures 28. Enhanced decentralization continues to grow in importance within the national development dialogue. The Government recently approved a Decentralization Policy based on a participatory process, and is engaging with local governments, civil society and development partners to advance implementation. The WBG is helping to strengthen the infrastructure base of municipalities through IDA credits and an IFC risk-sharing facility for Tegucigalpa. In addition, the PEFA study under preparation for Tegucigalpa highlights areas of municipal administration that need strengthening, and as a result, the Mayor's office is interested in adopting new practices and reforms. 29. There have been achievements in improving the efficiency of water utilities. A framework national financial policy is being designed with the support of the Water Supply and Sanitation Sector Modernization Project (Report No. 39570-HN). Additional Financing for this Project, as well as the Rural Infrastructure Project (Report No. 32463-HR), will further expand rural water and sanitation connectivity in Honduras' poorest municipalities, in line with the Progress Report's renewed focus on poverty reduction. 3.3 Enhanced Social Accountability as Part of Demand-Driven Governance 30. Strengthening CSO capacities in social accountability continues to be a priority. Social auditing has been supported in the education sector and social protection (CCTs) on a pilot basis, which will be improved and scaled up. The Bank is supporting citizen observatories in roads and education focused on procurement monitoring, and is promoting a policy dialogue on access to public information and participatory budgeting. Finally, the III Regional Transparency Forum took place in Tegucigalpa in October 2012 where countries shared experiences on improving transparency and fighting corruption across the LAC region. Box 2. Governance Mechanisms in Bank-financed Projects Public information systems, complaint handling mechanisms, and social auditing have been incorporated into the Bank's lending portfolio. A new complaints-handling mechanism with strong ICT elements is being developed for the roads sector, as part of the Roads Project. A similar system will be developed in the Safer Municipalities Project, oriented towards strengthening municipal capacities to respond to citizen feedback. The Bank is also supporting a new System for Information and Follow-up to Works and Contracts in the road sector. Support for social auditing has been included in several Bank- financed Projects. IV. PORTFOLIO PERFORMANCE 31. Portfolio performance has been steadily improving. The current IDA active portfolio consists of 13 projects totaling US$400 million (see Annex 5) with roughly 50 percent undisbursed. This is complemented by US$20 million of trust funds (see Annex 2). Disbursements rates have improved significantly from 15.1 percent in FY11 to 22.2 percent in FY12 and 28.1 percent as of March 2013. The portfolio quality is also improving. Currently 15 percent of the portfolio is in problem status versus 25 percent at end-FY12. Given the country's limited institutional capacity, the Bank will continue to provide additional support to address fiduciary, environmental and safeguard weaknesses and improve portfolio performance. On a separate note, the Compliance Advisor Ombudsman, an independent recourse and accountability mechanism for IFC, is conducting a compliance audit of IFC's environmental and social 9 performance with regard to its investment in a palm oil and food company in northern Honduras. IFC Management is committed to addressing the recommendations of this report. 32. As with the IDA portfolio, careful attention would be taken to ensure that the trust fund portfolio remains consolidated, manageable and directly linked with the CPS and lending program. In terms of strategic focus, the TF portfolio is well targeted to the poor, including for vulnerable youth and women. There are also several TFs aimed at improving governance and transparency in the public sector. Trust Fund resources complement the IDA lending program and, as much as possible, have been assigned to the same project teams in the sectors they are linked with. Partnerships and Leveraging 33. WBG interventions complement and are well coordinated with other development partners, and give a push to critical areas. The Bank is taking the lead in the G16 donor group to help donor harmonization around key issues including pro-poor growth, addressing citizen security and supporting fiscal and economic governance. The Bank's relatively limited IDA resources have been leveraged in key priority areas through working closely with development partners such as the Inter-American Development Bank (IDB), the Central American Bank for Economic Integration (BCIE), and the United States Agency for International Development (USAID). This includes taking a programmatic approach in the implementation of the Honduras' Conditional Cash Transfer Program Bono 10,000 with IDB and CABEI, supporting energy sector reforms with IDB, and coordinating closely on the citizen security agenda with IDB, USAID and the Swiss Agency for Development and Cooperation. The Bank also coordinates closely with the IMF on fiscal, institutional constraints and economic reforms. V. ADJUSTMENTS TO THE CPS AND PROGRESS IN IMPLEMENTATION 34. The overall objectives and principles of the FY2012-2014 CPS remain valid with only a few adjustments proposed as part of the CPS Progress Report. First, the duration of the CPS will be extended by one year to allow sufficient time for movement towards CPS outcomes and to provide additional time for the incoming administration to define its priorities and program of engagement with the WBG. In addition, the second Programmatic Reducing Vulnerabilities for Growth DPC has been dropped in light of poor macroeconomic performance, in particular on fiscal management, and in the absence of an IMF program. The Progress Report proposes a renewed focus on poverty reduction, and, to that end, the remainder of the IDA resources will be used to provide additional financing for well performing investment lending projects that target the poorest municipalities and most vulnerable segments of the population. 35. The Main Results Areas of the Results Matrix do not require major adjustment. The results framework is realistic and well aligned with the Bank program and projects. Results are on track and in some areas where progress currently is not on track, the additional year will allow time to make progress. Where CPS Outcomes have been substantially achieved the Progress Report proposes to revise targets for operations receiving additional resources and maintain indicators where projects have closed in order to track if they can be sustained over the 10 remainder of the CPS period. Proposed updates and revisions to the matrix are included as part of Annex 1. 36. This Progress Report acknowledges that the attributable contribution of the Bank program to higher development outcomes is limited, particularly in the short term. This is due in part to the limited size of the program and the difficult environment for policy decision making in Honduras. The goal of poverty reduction is an important line of sight for the Bank program and will be tackled with renewed emphasis in the second half of the CPS strategy. While little can be done to address this in the short term, the Progress Report takes a long term view that building on solid progress and consolidating efforts in key priority areas and targeting the most vulnerable population, will have the best likelihood of achieving results. Continuing to work with other development partners to maximize limited IDA resources and leverage impact will also be important. Table 2. Indicative Lending Program and Knowledge and Convening Services for FY12-14 CPS Program Progress Report FY12 FY13 FY14 FY15 First Programmatic Honduras Safer Bono 10,000 Additional Reducing Vulnerabilities Municipalities Financing (US$14m) for Growth DPC (US$15m) (US$86m) Improved Public Sector Disaster Risk Performance Project Management Project 5 (US$18m) (US$30m) PROMOSAS Additional Financing (US$10m) Rural Infrastructure Additional Financing (US$20m) Expenditure Analysis of Tegucigalpa PER for Decentralized Transition Notes and the Water Sector Municipality PEFA Governance in Honduras Seminars '0 Roadmap for Study (includes TA on Public Logistics and ] Strengthened Public Forum on Social Financial Management) Transport TA e Accounting and Auditing Protection Macro Monitoring Macro Monitoring Macro Monitoring Macro Monitoring 37. To prepare for the next CPS the Bank will focus on portfolio implementation, as well as use its knowledge services to help prepare future projects and play an advocacy role. Given upcoming elections in 2013, an important focus for the remainder of the CPS period will be to continue to improve portfolio implementation and prepare transition notes on key economic and fiscal issues to engage with all political parties and civil society. The investment lending program in Honduras is complemented with a strong program of knowledge services, and analytical work will be leveraged in a series of public forums. This includes discussions on the sustainability of the Social Protection system, as well as options to enhance long term growth prospects. 38. The investment lending program has been delivered as expected at the time of CPS preparation. The remaining IDA funds under IDA 16 are being re-allocated to well performing investment operations in the form of Additional Financing with a poverty reduction focus. This is in line with the strategy of improving portfolio performance and consolidating the existing 11 portfolio in sectors where Bank lending has demonstrated impact.2 Given the country's vulnerability to natural disasters, all new investment lending will include the Immediate Response Mechanism (IRM) to allow for a quick financing mechanism in the event of national emergencies.3 The CPS proposes a flexible approach for FY15 where new lending could be considered prior to a new CPS should the Government have urgent needs for additional financing that fit within the strategic objectives of the current CPS. Should the macroeconomic framework improve during the remainder of the CPS period, the Bank could also consider budget support with the incoming administration. VI.RISKS 39. The political transition in Honduras remains a risk in light of past experience where the transition created implementation delays; and the daunting development challenges the new administration will face. To mitigate the risk that the political transition will disrupt portfolio implementation, the Bank will continue to foster an open dialogue with authorities and monitor developments in close coordination with other development partners. Additionally, in coordination with the G16 donor group, the Bank will support dialogue surrounding the most crucial development issues facing Honduras, through the drafting of policy notes and open forums, to help build consensus around priorities and reforms, support the new administration in addressing fiscal, economic and social challenges and lay the groundwork for the next WBG strategy. 40. Fiscal risks remain a concern and the lack of fiscal space poses a challenge to addressing key development priorities. Managing fiscal risks has becoming increasingly important given the further deterioration in public financial management during the first two years of the CPS period. The incoming administration is likely to inherit a challenging fiscal situation which may affect the implementation and/or sustainability of some Bank Projects, particularly in terms of counterpart funding. To mitigate fiscal risks the Bank and the IMF are working to support the country's efforts to improve macroeconomic performance and set it on a sustainable trajectory for the medium term, as well as providing policy advice to improve the efficiency of public expenditures. 2 The current portfolio is being consolidated and will be reduced from 13 to 9 operations by the end of FY13. Several projects under implementation are expected to be restructured to incorporate the IRM component. 12 Annex 1. Revised CPS Results Matrix and Progress Achieved to Date Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) Strategic Objective 1: Improving Citizen Security Government Strategic Priority: Reduce the levels of criminality in Honduras to below international averages, adopt an integrated approach to citizen security through policies aimed at preventing crime and violence, by strengthening the justice sector and ensuring the protection of human rights. Results Area 1.1: Strengthened National Capacity to Address Citizen Security Outcome 1. Improved policy Establishment of a National Citizen Achieved. Executive Decree PCM- Programmatic Development Policy environment for implementation of Security Council 016-2012 created the National Credit an integrated national citizen security Citizen Security Council Barrio Ciudad strategy Targets (2015): Development of risk mitigation Partially achieved. The schools- i. A national policy on citizen measures and social safeguards based violence prevention toolkits security provides for social School-based violence prevention were launched in April, 2012. prevention activities is toolkits launched and rolled out in at Currently the Ministry of Education developed, financed, least 200 schools is planning to roll it out in at least operationalized, and monitored 200 schools. (on track) ii. Risk-based supervision by Introduction of a financial projection Partially achieved. CNBS Financial Sector TAC CNBS being carried out on the model as a tool for risk based developed a strong and modem basis of a financial projection supervision banking resolution framework, model (achieved)4 several prudential regulations an "on Anti-Money Laundering iii. New Financial Payments System site" inspection procedures for the Programmatic Technical Assistance in operation (partially insurance sector, and an early achieved)5 warning system to assure iv. Action Plan under surveillance of the system. implementation to reduce the risk of recycling of proceeds of Adoption of a new Financial Payments Achieved crime in the Honduran economy System (achieved)6 Conduct of a National Risk assessment on proceeds of crime and Adoption of a related action plan Financial supervision strengthened through the implementation of risk based supervision in conjunction with a system of early warning mechanisms and a financial projects model. New payments system to be operational on March 1, 2013 6 Anti-Money Laundering legislation has been issued 13 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) Financial supervision focus on risk management, internal controls and compliance functions. Outcome 2. Strengthened capacity of At least 10 municipalities have Partially achieved. At least1O Barrio Ciudad communities and local governments developed and started implementation of integrated municipal citizen security Safer Municipalities Project in social prevention of crime and integrated citizen security plans plans are being designed. These violence supported by the Safer Municipalities plans will be certified by the Targets (2015): Program Security Secretariat and start v. Average perception of implementation in 2013. insecurity in the municipalities 7 neighborhood upgrading plans Achieved. 9 neighborhood where the "Safer Municipalities" elaborated by municipalities and upgrading plans have been Program is being implemented approved by FHIS elaborated by municipalities and (Baseline 2010: 91 percent felt approved by FHIS insecure (UNDP 2010): Target (2015): 65 percent feel PPPs for municipal infrastructure Achieved. TFC is advising the IFC Advisory Services insecure)7 (on track) launched President's office of Honduras, the vi. Barrio Ciudad Project Municipality of La Ceiba (MoL) and beneficiaries polled and 65% of the Ministry of Transport households feel safe in their (SOPTRAVI) on a combined green home by project close' (on and brownfield highway project with track) toll collection, under a PPP scheme. New gender disaggregated targets: New indicators based on recently approved Safer Municipalities Project. Baseline to be determined as part of this Project. vii. National and municipal governments collected, analyzed, and used data on crime and violence perpetration and victimization (disaggregated by gender and 7 Baseline for the Project designed to measure changes in perception of insecurity will be done in 2013 and follow up will be done in 2015 (not 2014). 8 Barrio Ciudad Project is due to close by June 30, 2013, and the preparation of an Impact Evaluation is being mobilized. 14 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) age) for evidence-based policymaking and actions. viii. Percentage of people that are victims of school based violence in targeted schools, disaggregated by gender and age. Outcome 3. Improved employment Piloting of targeted training programs Partially Achieved Nutrition and Social Protection opportunities for youth for young, unemployed Hondurans (Mi Fourth round of training planned to Project Targets (2014)9: Primer Empleo) begin in March 2013, estimated JSDF for Employment Generation in ix. 6,600 direct beneficiaries of the beneficiaries is 6,600 - 4,800 of Poor Urban Neighborhoods Mi Primer Empleo initiative these getting full package of services reached'0 (on track) (4 months training, 2 months Targets (2015)" internship), the rest getting x. 1,500 men aged 15-24 worked condensed package (4 months total) on sub-projects financed by JSDF employment generation Labor-intensive public works organized Partially Achieved. A first initiative (on track) in poor urban neighborhoods workshop for selected NGOs and municipalities took place in November 2012. The NGOs are now submitting their proposals for a first round ofprojects that are due to start in mid-February. The second round ewill take place in April. Results Area 1.2: Linking National Interventions to Regional Approaches on Citizen Security Outcome 4. Strengthened regional Support SICA in elaborating a regional Achieved. SICA has developed a South-South Learning approaches to combat crime and strategy and strengthening regional regional security strategy; and Strengthening of SICA IDF violence in Central America and security coordination. Violence Prevention component Nordic Trust Fund on Human Rights, harmonized Honduran policies with being implemented. Regional Crime and Violence regional best practices Violence Observatory (OBSICA) is Targets _____________ (2015):______________ supporting harmonized approach to PProject closes on June 2013. 10 CPS target revised from 7,100 following implementation delays and project restructuring. JSDJSDF closes in March 2015. 15 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) xi. Active Honduras participation in data collection across countries Regional citizen security including Honduras. initiatives, especially related to prevention (on track) Support South-South learning in Achieved. South-South Knowledge conjunction with the World Bank exchange between the Governments Institute (e.g. Brazil, Colombia) on of Honduras and El Salvador on strategies to reduce urban violence. municipal approaches to citizen security organized in June 2012. Strategic Objective 2: Expanding Opportunities through Reducing Vulnerabilities Government Strategic Priority: Ensure sound fiscal management. Improve equitable economic growth and strengthen social protection while increasing access to health, education and housing for the most vulnerable portions of the population. Results Area 2.1: Pension, Energy Utility and Public Sector Wage Bill Discipline Outcome 5. Improved tax Approval and implementation of the Achieved. First Programmatic Development administration action plan for Large Taxpayers Unit Policy Credit Targets (201512): Approval and implementation of the The number of large taxpayers filing large taxpayer inclusion criteria. electronically increases by at least 20 Large taxpayers registry completed. percent (baseline 2010= 335 large taxpayers) (Achieved in 2011. 549 large taxpayers filed electronically) 12 To be sustained throughout CPS period 16 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) Outcome 6. Improved financial INPREMA and INJUPEMP pension Partially Achieved. INPREMA First Programmatic Development sustainability of major pensions reform laws approved and implemented Law was passed by the National Policy Credit systems (INMPREMA and Congress of Honduras in December INJUPEMP) 2011, and became effective in Targets (2014): February 2012. INJUPEMP Law xii. PROHECO teachers' pension was not reformed so far. contributions are flowing into INPREMA (Achieved)13 Congressional approval of law de- Achieved Outcome 7. Improved fiscal linking salary adjustments from private sustainability of the public wage bill sector minimum wage level for the next Targets (2014): four years xiii. Central Government's wage bill falls by at least 0.7 percent of Implementation of a single database Achieved GDP (baseline: 2010 = 11 which accounts for over 80 percent of percent of GDP) (Achieved) personnel using SIARH-SIAFI and includes all teachers Outcome 8. Strengthened Capacity-Building of ENEE in core Partially achieved. The project is in Power Sector Efficiency institutional capacity and reduced utility management functions process of implementation. Enhancement Project losses of the national energy utility Electricity losses will be reduced Targets (2015):14 once the distribution equipment and xiv. Reduce Electricity Losses per the Integrated Management System year in ENEE Project Area are fully in operation by the end of from 29% (2012) to 21.5% 2013. (2015) Results Area 2.2: Improved Investment Climate and Competitiveness Outcome 9. Enhanced capacity of At least US$9.5m co-invested in Rural Partially Achieved Rural Competitiveness Project 13 Starting in January 2012, PROHECO teachers' pension contributions are flowing into INPREMA with each monthly salary payment. A minor issue is that PROHECO teachers' salaries are paid every other month (2 salaries together) so pensions' contributions are reaching INPREMA every other month. The proposal is to move to monthly salary payments (and, as a result, monthly teachers' pension contributions) from year 2013 on. 14 There have been significant delays and implementation issues in the PROMEF Project, including related to local counterpart funding. In addition, technical and non-technical losses increased from 22.5% in 2010 to 29% in 2012 mainly as a result of an increase of non-technical losses. The baseline and CPS indicator have been updated to reflect this. 17 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) and investment opportunities for Business Plans by Private Sector. JSDF for Microenterprise SMEs and rural productive alliances Development for the Poor and Targets (2015): Indigenous People xv. 120 rural productive alliances supported with a 20% increase in net revenues for participating rural producers. (on track)1 xvi. At least US$1.5m in microfinance loans granted to rural beneficiaries of the Rural Infrastructure Project (on track)16 xvii. Operational capacity of microfinance institutions is strengthened in conjunction with Bank Group-financed projects (on track) Outcome 10. Reduced Logistics Contacts for roads maintenance carried Achieved. Under the Road Road Rehabilitation and Improvement constraints out by Fondo Vial and local Rehabilitation and Improvement 11 project Targets (2015)17 governments Project, three secondary road Rural Infrastructure Project xviii. 70% of unpaved road pavements contacts have been Power Sector Efficiency network under regular Contacts for infrastructure rehabilitation launch and expected to be finished Enhancement Project maintenance (2008 baseline carried out by SOPTRAVI by November 2013 (San Lorenzo 33%) (on track)18 Olanchito, El Porvenir Marale and xix. 152 km of primary roads to be La Esperanza Camasca), reconstructed, 4 bridges to be Construction of bridges have been reconstructed and 800 km of launched and expected to be rural roads to be put under finished by December 2013. regular routine maintenance (on track) 15 As of Dec 2012, 97 productive alliances have been formed, benefiting nearly 6,700 rural producers. 16 The Rural infrastructure Project has granted US$1.1 m in micro finance loans granted to rural beneficiaries to buy 1,664 Solar Photovoltaic Systems. 17 There have been some implementation delays and the revised target will allow more time to measure if CPS outcomes has been achieved. 18 Under the Rural Infrastructure project 591 Km of rural roads have been rehabilitated up to November 2012 (98 of project's target) 18 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) xx. 445km of rural roads rehabilitated (on track) Outcome 11. Improved land tenure Land titling activities under the PATH 11 Achieved. PATH II - Land Administration APL security project are implemented TF on Strengthening the Recognition Targets (2015)19: of Indigenous Land Rights in xxi. At least 30,000 families in rural Capacity-building activities for SINAP Achieved. Honduras and urban areas complete are being implemented GEF Trans-boundary Reserve process to obtain new land titles (of which at least 30% are held by women) - on track xxii. The average time to register a land transaction through the modernized registries is 20 days (baseline 2011: 23 days). - on track Results Area 2.3: Improved Quality of Education Outcome 12. Improved coverage, Opening of Community-Based Pre- Achieved. As of December 2012, Education Quality, Governance and governance, and accountability of the Primary Education Centers 789 CCEPREBs were opened. The Institutions basic education system, with a (CCEPREBs) remaining 11 CCEPREBs left to IFC Education College and Adult particular emphasis on the most achieve the goal are expected to be Education Component disadvantaged and rural communities opened by the end of the Project Programmatic DPC Targets (2014): Achieved (June 30, 2013). xxiii. 800 new pre-school institutions opened (baseline Development of new multigrade Achieved. As of December 2012, 2011: 400 pre-schools opened) teaching materials 3,711 PROHECO teachers received xxiv. 2,250 PROHECO (rural didactic teaching materials and were schools for basic education) trained in the use of new multigrade teachers provided with new techniques developed by the multigrade teaching materials National student learning assessments Ministry of Education. and training (baseline: 0) carried out xxv.National assessment of student Achieved. The National Assessment learning for the country in place System for Student Learning 19 There was an error made at the time of the CPS where CPS Outcome Targets were actually for end of Project in 2017. Targets have been revised for 2015. Progress is on track: 14,500 families have received new titles as of December 2012 (4,400 or one third, given to women solely or through joint title). 19 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) and country participating in (census-based annual assessment) international assessments of was launched, for the first time in the student learning (TIMSS and country, on November 28, 2012. PIRLS 2011) Also, Honduras participated in both xxvi. 25% of schools who involve TIMSS and PIRLS 2011, whose parents in social audits of the results were released on December schools using the 60-words-per- 11,2012. minute fluency test in 2nd grade in targeted areas (baseline: 0) - Parent-teachers associations activated Not achieved. This indicator was Dropped (see Milestone Status) eliminated in the restructured Project, due to the deficiencies involved in its measurement. Other instances of social audit were promoted (Transparency School Boards) for schools throughout 2012, however the degree of parent involvement has still been minimal. Parent-teacher associations (PTAs) have been activated in some schools, but have yet to claim a legal status or more relevance in school-based management issues. Results Area 2.4: Consolidated and Strengthened Social Protection System Outcome 13. Improved coverage and Household survey necessary for program Achieved Social Protection Project governance of the national CCT targeting completed Nutrition and Social Protection program (Bono 10k) Targets (2014): Household targeting mechanism in rural Achieved xxvii. 30,000 families receiving areas fine-tuned regular payments from Bono 10k - Achieved20 Household targeting mechanism for Achieved. Targeting mechanism for xxviii. New social protection urban areas developed and tested urban areas has been developed, targeting mechanism for urban approved by the Technical 20 As of today, 30,413 families receive regular payments from Bono 10k. These CPS Targets will be adjusted as part of the Bank's Additional Financing prior to Board presentation. 20 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) areas is validated and piloted - Committee of Bono 10k, and Achieved implemented xxix. 90% of schools and 50% of health centers report compliance in accordance with payment cycles - Achieved21 xxx.5,000 using the SLSS information service in project areas (700 as of 2011) - Dropped22 Results Area 2.5: More Effective Disaster Risk Management Outcome 14. Improved risk mapping Training delivered to key Honduran Not achieved. This is now projected Disaster Risk Management Project and planning capacity DRM institutions on use of probabilistic for the second half of 2013. IRM component in new IDA credits Targets (2015): risk assessment tool A technical assistance project (TAP) CAPRA xxxi. Honduras benefits from for risk assessment in the water CEPRENDENAC regional disaster risk sector (SANAA) is under IDB management initiatives and formulation CABEI harmonized disaster planning as coordinated by the regional Dialogue maintained with other partners Achieved. Procedures Manual in the institution, CEPRENDENAC (e.g. IDB, CABEI) on disaster event of a Disaster was updated in (on track) preparedness coordination with all Central xxxii. Central American American Countries Probabilistic Risk Assessment tools used to assess, understand and communicate disaster risk in Honduras (on track) 21 99% of schools and 85% of health centers report compliance with program co-responsibilities. 22 N/A (data on beneficiaries using SLSS (Secretary of Labor and Social Security). This indicator was dropped because is not aligned with the Bono 10,000 program which does not link beneficiaries and employment. 21 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) New indicators based on new Disaster Risk Management Project. xxxiii. 10 municipalities have adopted DRM plans within the framework of their land use planning xxxiv. 20 municipal and community disaster emergency committees established Strategic Objective 3: Enhancing Good Governance Create a state that is modem, transparent, efficient and competitive. Improve Honduras' ranking in global transparency and corruption indicators. Transition public services to electronic platforms. Results Area 3.1: Improved Accountability in Public Expenditures Outcome 15. Improved public New functionalities added to SIAFI Partially Achieved. Consultants Improved Public Sector Performance financial management, procurement, hired. Project and results monitoring and evaluation JSDF Improving Public capacity Honducompras e-procurement platform Achieved. Honducompras has new Accountability Targets (2015): capacity expanded capabilities: xxxv. 100% of Central * E-procurement catalogue for Government and 80% of more efficient and transparent decentralized institutions operate procurement of select items in with the updated SIAFI (on pilot institutions. track) * Web Portal for external xxxvi. 80% publication of bidding monitoring. opportunities and contract award information through the e- Implementation of transactions-based Not Achieved. No progress yet in procurement system (on track) payroll audit findings in Ministries of this regard. SEFIN will soon present xxxvii. Reduction of floating debt Health and Public Works action plan. related to personnel expenditures in Ministries of Health and New indicators and goals established by Partially Achieved. New results- Public Works (off track) M&E system based management system xxxviii. Results monitoring being developed, managed by Sec. of the carried out regularly in 6 sector Presidency, reports that the system is cabinets (on track) used for monitoring and follow-up in xxxix. Timely and relevant 5 sector cabinets plus 4 sub-sector 22 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) technical inputs on budget and cabinets.' The remaining sector policy analysis (on track) cabinet is "Defense, Security and Governance." Improved quality of information Not Achieved. IDF delayed with provision for members of Congress and implementation to begin in second specialized commissions half of 2013. Results Area 3.2: Stronger Decentralized Structures Outcome 16. Improved financing Data collection on decentralized Partially Achieved. Data has been AAA: PER with Special Focus on framework for decentralized service expenditures and revenue sources and collected. Public Expenditure Decentralization delivery analysis Review with a focus on IF on Strengthening Municipal Targets (2014): decentralization is programmed to be Territorial Planning Capacity xl. Assessment of municipal debt- discussed with Government mid- IFC financing potential completed 2013. PEFA for Municipality of the PEFA for Municipality of the Central (on track) Central District (Tegucigalpa) is District (Tegucigalpa) programmed to be discussed with Municipal authorities by end of FY2013. Outcome 17. Improved efficiency CONASA establishes the new financial Partially Achieved. CONASA has a Water and Sanitation Sector and accountability of autonomous policy draft of its new financial policy; Modernization Project and Additional municipal water and sanitation SANAA operates as a technical which is expected to be launched by Financing service providers assistance provider in at least one region late 2013 GPOBA Targets (2915): of the country Partially Achieved. SANAA is in SFLAC for Municipal Water xli. At least 50 of cities above the process of structuring a pilot area Decentralization in Tegucigalpa 40,000 inhabitants operate with to receive its TA. Pilot area is AAA: Expenditure analysis of the sustainable and efficient expected to become operative by late Water Sector autonomous municipal water and 2013. GAC Water Decentralization Trust sanitation service providers (on Fund track) 23 Sector cabinets using the Results Monitoring System: Social, Energy, Tourism, Housing, Telecommunications. Sub-Cabinets of the Social Cabinet: Education, Health, Social Protection, Food Security. 23 Expected outcomes in CPS period Milestones Milestone Status Bank Program *(bold indicates from original matrix) Results Area 3.3: Enhanced Social Accountability as Part ofDemand-Driven Governance Outcome 18. Improved capacity of Capacity-building activities undertaken Achieved CMU-administered Civil Society civil society organizations to use with CSOs on the use of demand-size * In education, networks of NGOs Fund Grants demand-side governance tools governance tools and new parents' associations Quality of Education Project Targets (2015): have been supported by a CSF JSDF on Piloting New Forms of xlii. Number of CSOs involved in grant, in one department Community-Administered Education social monitoring increases in (Comayagua), linked to a national for Socially Vulnerable Communities the education, roads and social coalition. JSDF Building Trust in Public protection sectors (on track) The JSDF grant is programmed to Policies and Public Institutions xliii. Number of formal requests significantly scale up this work Global Partnership for Social for public information doubles (education), and to support the Accountability (on track)21 social auditing in Roads, in early 2013. Several NGO networks are leading this initiative, and have Barrio Ciudad been actively engaging during the Rural Infrastructure Project CPS period. Road Rehabilitation and Improvement * In social protection, NGO s 1 (GAC component) networks have defined the Nutrition and Social Protection methodology for social auditing, (Social Auditing component) in consultation with government, and are programmed to start in 2013. Two CSF grants have already supported pilot initiatives. ( Support for CSO involvement in social monitoring will likely increase by end ofFY2 3, with Honduras' entrance into the Global Partnership for Social Accountability. 24 The number of formal request for public information has actually declined slightly; from 3,135 in 2011, to 2,836 in 2012, as reported by the IAIP. However, the IAIP, under new leadership for the next 5 years, has initiated a campaign to strengthen its work and foment a greater use of the API law on the part of citizens. 24 Annex 2. Active Trust Fund Portfolio (as of March 5, 2013) Fund Fund Project Excecuti Fund Grant Amt Disb to Date Available Sector Managing ID Fund TF Name Program on type Active Date Closing USD USD Balance USD Unit Date SDN LCSAR P 106680 TF013796 Adaptation-Based Mitigation in Degraded Landscapes Vulnerabl PROFOR BE 12/14/2012 9/30/2014 208,600 5,503 203,097 SDN LCSAR P106680 TF014270 Knowledge Exchange for Land Administration Agencies in LCR a SOUTH BE 2/22/2013 12/15/2013 48,500 - 48,500 SDN LCSAR P106680 TFO91179 MICROENTERPRISE DEVELOPMENT FOR THE POOR AND INDIGENOUS PEOP JSDF BE 9/23/2008 12/31/2012 50,000 49,863 137 SDN LCSAR P 130418 TF013298 HONDURAS - Environmentally Sustainable Cacao Production for JSDF BE 9/27/2012 5/14/2016 202,230 9,667 192,563 SDN LCSAR P064914 TF091178 JSDF-HONDURAS: MICROENTERPRISE DEVELOPMENT FOR THE POOR AND JSDF RE 9/22/2008 12/31/2012 1,470,000 1,470,000 - SDN LCSAR P130418 TFO 11699 ROUND 33: HONDURAS - Environmentally Sustainable Cacao Produ JSDF RE 9/26/2012 5/14/2016 2,247,050 150,000 2,097,050 SDN LCSDU P102474 TF099372 GPOBA (W3 Sup): Honduras OBA Fund GPOBA BE 3/29/2011 6/30/2013 17,552 8,377 6,110 SDN LCSDU P102474 TF099373 GPOBA (W3 Sup): Honduras OBA Fund GPOBA BE 3/29/2011 6/30/2013 54,279 35,052 19,227 SDN LCSDU P124157 TF097945 ROUND 1: HONDURAS-SUPERVISION-EMPLOYMENT GENERATION IN POOR JSDF BE 5/4/2011 3/15/2015 229,050 63,176 161,828 SDN LCSDU P 102474 TF058263 GPOBA W3 - HONDURAS: NATIONAL OBA FACILITY FOR WATER AND SAN GPOBA RE 1/22/2008 12/31/2012 1,530,000 1,328,942 201,058 SDN LCSDU P102474 TF058264 GPOBA W3 - HONDURAS: NATIONAL OBA FACILITY FOR WATER AND SAN GPOBA RE 1/22/2008 12/31/2012 1,530,000 1,328,942 201,058 SDN LCSDU P102474 TF058265 GPOBA W3 - HONDURAS: NATIONAL OBA FACILITY FOR WATER AND SAN GPOBA RE 1/22/2008 12/31/2012 1,530,000 1,328,942 201,058 SDN LCSDU P124157 TF097916 ROUND 1: HONDURAS - EMPLOYMENT GENERATION IN POOR URBAN NEIG JSDF RE 4/7/2012 3/15/2015 2,545,000 - 2,545,000 SDN LCSEG P131602 TF012601 Honduras - Sustainable Rural Energy Services CSCFIA BE 6/16/2012 11/30/2018 408,000 68,029 31,971 SDN LCSEG P090113 TF055968 GEE FSP-HONDURAS: RURAL ELECTRIFICATION PROJECT GEFIA RE 11/20/2006 6/30/2013 2,350,000 1,856,839 493,161 SDN LCSEG P131602 TF012866 HN SREP Sustainable Rural Energy Services (ERUS) CSCFIA RE 11/8/2012 6/30/2014 300,000 35,380 264,620 P124681 TF098173 PPIAF-HONDURAS: CENTRAL DISTRICT FINANCIAL MANAGEMENT DIAGNO PPIAF BE 10/28/2010 6/30/2013 145,950 68,789 70,366 HDN LCSHE P101218 TF094671 Piloting New Forms of Community-administered Education for S JSDF BE 4/25/2011 4/12/2014 85,715 73,541 10,517 HDN LCSHE P101218 TF094670 Piloting New Forms of Community-administered Education for S JSDF RE 3/30/2011 4/12/2014 1,714,300 596,126 1,118,174 HDN LCSHS P082242 TF011667 Honduras: Improving Nutrition Monitoring and Targeted Respon RSR RE 7/9/2012 6/30/2013 1,200,000 339,230 860,770 P131418 TF012235 Honduras #10236 Strengthening Credit Reporting FIRST BE 4/23/2012 6/30/2013 86,600 21,625 45,775 PREM LCSPS P125269 TF093442 Building Trust in Public Policies and Public Institutions (B JSDF BE 11/12/2010 5/11/2014 32,000 10,555 21,445 PREM LCSPS P125269 TF093440 Building Trust in Public Policies and Public Institutions JSDF RE 10/28/2010 5/11/2014 829,110 89,611 739,499 PREM LCSPS P125817 TF011581 Improving Performance Accountability in HN by Strengthening IDF RE 9/12/2012 2/7/2015 485,040 - 485,040 SDN LCSWS P125903 TF099504 Supervion for GFR 7783 - Sustainable Water for a Sustainable SFLAC BE 4/19/2011 8/31/2014 28,000 4,048 23,952 SDN LCSWS P125903 TF099354 Sustainable Water for a Sustainable City: Promoting Integrat SFLAC RE 1/4/2012 6/30/2014 400,000 102,969 297,031 Other TWILC P132282 TF013589 W&S - LAC/Analytical Tools & Plann. Inst. HN WSP BE 11/15/2012 12/31/2015 64,570 - 64,570 Other TWILC P132283 TF013587 W&S - LAC/Small Towns: Small City Service Development HN WSP BE 11/15/2012 12/31/2015 145,649 288 64,282 Total 19,937,194 9,045,495 10,467,857 25 Annex 3. Honduras at a Glance Honduras at a glance 3/15/13 Latin Lower Key Development Indicators America middle Honduras & Carib. income Age distribution, 2011 (2011) Male Fernale Population, mid-year (millions) 7.8 589 2,533 7579 Surface area (thousand sq. km) 112 20,394 20,842 uss Population growth (%) 2.0 1.1 1.6 Urban population (% of total population) 52 79 39 4549 3-34 GNI (Atlas method, US$ billions) 15.4 5,050 4,488 GNI per capita (Atlas method, US$) 1,980 8,574 1,772 GNI per capita (PPP, international $) 3,820 11,582 3,837 0-4 10 5 0 5 10 GDP growth (%) 3.6 4.7 5.5 percent of total population GDP per capita growth (%) 1.6 3.6 3.9 (most recent estimate, 2005-2011) Poverty headcount ratio at $1.25 a day (PPP, %) 18 6 30.2 Under-5 mortality rate (per 1,000) Poverty headcount ratio at $2.00 a day (PPP, %) 30 12 59.5 Life expectancy at birth (years) 73 74 66 Infant mortality (per 1,000 live births) 18 16 46 60 Child malnutrition (% of children under 5) 9 3 24 so 40 Adult literacy, male (% of ages 15 and older) 85 92 80 Adult literacy, female (% of ages 15 and older) 85 91 62 30 Gross primary enrollment, male (% of age group) 114 118 106 20 Gross primary enrollment, female (% of age group) 114 114 102 Access to an improved water source (% of population) 87 94 87 0 190 195 2000 201 Access to improved sanitation facilities (% of population) 77 79 47 aHond uras oLatin Amenca &the Caribbean Net Aid Flows 1980 1990 2000 2011 (US$ millions) Net ODA and official aid 102 448 448 574 Growth of GDP and GDP per capita (%) Top 3 donors (in 2010): United States 19 215 110 103 Spain 0 6 35 69 6 European Union Institutions 5 10 18 58 4 2 Aid (% of GNI) 4.2 16.0 6.4 3.9 o Aid per capita (US$) 28 92 72 76 -2 -4 Long-Term Economic Trends -6 95 o Consumer prices (annual % change) -- 23.3 11.0 2.9 GDP implicit deflator (annual % change) 13.2 21.2 30.8 9.3 -a-- GDP OOGP per aspita Exchange rate (annual average, local per US$) 2.0 4.1 15.0 18.9 Terms of trade index (2000 = 100) -- 129 100 85 1980-90 1990-2000 2000-11 (average annual growth %) Population, mid-year (millions) 3.6 4.9 6.2 7.8 3.0 2.4 2.0 GDP (US$ millions) 2,566 3,049 7,106 17,427 2.7 3.2 4.4 (% of GDP) Agriculture 23.7 22.4 15.9 14.5 2.7 2.2 3.1 Industry 24.3 26.4 32.5 27.3 3.3 3.6 3.4 Manufacturing 15.0 16.3 22.7 19.2 3.7 4.0 3.8 Services 52.0 51.2 51.7 58.1 2.5 3.8 5.6 Household final consumption expenditure 69.4 66.8 70.8 77.7 2.6 3.0 4.3 General gov't final consumption expenditure 12.7 12.9 13.4 16.5 3.3 2.0 5.6 Gross capital formation 24.8 23.0 28.3 27.0 3.0 7.8 3.0 Exports of goods and services 37.2 37.2 54.0 47.6 1.1 1.6 3.7 Imports of goods and services 44.1 39.9 66.4 68.8 1.2 3.8 3.4 Gross savings -- .. 21.2 17.9 Note: Figures in italics are for years other than those specifed. .. indicates data are not available. Development Economics, Development Data Group (DECDG). 26 Honduras Balance of Payments and Trade 2000 2011 Governance indicators, 2000 and 2011 (US$ millions) Total merchandise exports (fob) 1,297 3,897 Total merchandise imports (cif) 2,863 8,658 Voice and accountablity Net trade in goods and services -831 -3,606 Political stabilty Current account balance -508 -1,503 Regulatory quality as a % of GDP -7.2 -8.6 Rule of law Personal transfers and compensation of employees (receipts) 484 2,811 Control of corruption Reserves, including gold 1,319 2,821 0 25 50 75 10 Central Government Finance 02011 CoutrVs percentile rank (0-100 02000 higher val-n irrplybdtermbigs (% of GDP) Current revenue (including grants) 15.1 23.2 Source: Woddwide Govenance indicators (www.govindicators.og) Tax revenue 13.8 16.2 Current expenditure 14.8 21.0 Technology and Infrastructure 2000 2011 Overall surplus/deficit -5.2 -2.8 Paved roads (% of total) 20.4 Highest marginal tax rate (%) Fixed line and mobile phone Individual .. .. subscribers (per 100 people) 7 112 Corporate 25 30 High technology exports (% of manufactured exports) 0.4 1.3 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 5,478 4,642 Agricultural land (% of land area) 26 29 Total debt service 397 1,008 Forest area (% of land area) 57.1 45.3 Debt relief (HIPC, MDRI) 814 1,884 Terrestrial protected areas (% of land area) 18.2 18.2 Total debt (% of GDP) 77.1 26.6 Freshwater resources per capita (cu. meters) 14,810 12,371 Total debt service (% of exports) 9.9 12.2 Freshwater withdrawal (% of internal resources) 1.2 1.2 Foreign direct investment (net inflows) 382 1,043 C02 emissions per capita (mt) 0.81 1.0 Portfolio equity (net inflows) 0 0 GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) 6.0 5.9 Composition of total external debt, 2011 Energy use per capita (kg of oil equivalent) 481 601 IBRD, 0 Short4erm, 26B IDA, 732 World Bank Group portfolio 2000 2011 Pnvte, 1,061 IM, 215 (US$ millions) IBRD Total debt outstanding and disbursed 151 0 Disbursements 0 0 Bilaterl, 766 Cther muli- Principal repayments 27 0 lateml. 1.600 Interest payments 15 0 US$ nillions IDA Total debt outstanding and disbursed 838 732 Disbursements 38 135 Private Sector Development 2000 2011 Total debt service 8 7 Time required to start a business (days) - 14 FC (fiscal year) Cost to start a business (% of GNI per capita) - 46.7 Total disbursed and outstanding portfolio 42 192 Time required to register property (days) - 23 of which IFC own account 27 192 Disbursements for IFC own account 9 0 Ranked as a major constraint to business 2000 2011 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 26 19 Corruption Access to/cost of financing .. .. MIGA Gross exposure 16 6 Stock market capitalization (% of GDP) 8.8 .. New guarantees 0 0 Bank capital to asset ratio (%) 8.8 11.0 Note: Figures in italics are for years other than those specified. 3/15/13 .. indicates data are not available. - indicates observation is not applicable. Development Economics, Development Data Group (DECDG). 27 Millennium Development Goals Honduras With selected targets to achieve between 1990 and 2015 (estimate closest to date shown, +/- 2 years) Honduras Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2011 Poverty headcount ratio at $1.25 a day (PPP, % of population) 46.9 20.6 18.0 17.9 Poverty headcount ratio at national poverty line (% of population) 74.8 65.8 70.0 66.2 Share of income or consumption to the poorest qunitile (%) 2.8 3.1 2.7 2.0 Prevalence of malnutrition (% of children under 5) 15.8 19.2 12.5 8.6 Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) 89 90 89 97 Primary completion rate (% of relevant age group) 65 71 .. 101 Secondary school enrollment (gross, %) 33 33 .. 74 Youth literacy rate (% of people ages 15-24) 89 95 Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 104 .. .. 107 Women employed in the nonagricultural sector (% of nonagricultural employment) 41 43 42 42 Proportion of seats held by women in national parliament (%) 10 .. 9 20 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 55 44 35 21 Infant mortality rate (per 1,000 live births) 43 36 29 18 Measles immunization (proportion of one-year olds immunized, %) 90 89 98 99 Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) 220 180 160 100 Births attended by skilled health staff (% of total) 47 55 56 67 Contraceptive prevalence (% of women ages 15-49) 47 50 62 65 Goal 6: halt and begin to reverse the spread of HIVIAIDS and other major diseases Prevalence of HIV (% of population ages 15-49) Incidence of tuberculosis (per 100,000 people) 125 125 116 43 Tuberculosis case detection rate (%, all forms) 60 71 89 96 Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 76 79 82 87 Access to improved sanitation facilities (% of population) 50 57 64 77 Forest area (% of total land area) 72.7 .. 57.1 45.3 Terrestrial protected areas (% of land area) 13.6 15.0 18.2 18.2 C02 emissions (metric tons per capita) 0.5 0.7 0.8 1.0 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 5.5 5.5 6.0 5.9 Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 1.8 2.9 4.8 7.9 Mobile phone subscribers (per 100 people) 0.0 0.0 2.5 104.0 Internet users (per 100 people) 0.0 0.0 1.2 15.9 Households with a computer (%) 3.7 12.9 Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 - 10019 100 - 140 1975 -12 75 -100. 50 50 80 25 - 60 25 40 40 20Dl 2ID 201 20 0 0 2w0 2w5 201 0 ftfs1.11 1990 1995 20 2011 20 2w5 2010 -Primarynet enrollment ratio OFixed + moble subsoribers - Ratio ofgirs to boysin prinnary & secondary OHonduras OeLatin America & the Caribbean *lnternetsers edu cation I II Imnentsr Note: Figures in italics are for years other than those specified. .. indicates data are not available. 3/15/13 Development Economics, Development Data Group (DECDG). 28 Annex 4. Selected Indicators of Portfolio Performance and Management Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 15 11 12 13 Average Implementation Period (years) b 4.8 4.4 5.1 4.7 Percent of Problem Projects by Number a, 20.0 18.2 25.0 15.4 Percent of Problem Projects by Amount a, 13.8 25.4 31.2 23.3 Percent of Projects at Risk by Number a, d 20.0 18.2 25.0 15.4 Percent of Projects at Risk by Amount a,d 13.8 25.4 31.2 23.3 Disbursement Ratio (%) e 12.0 15.1 24.1 28.2 Portfolio Management CPPR during the year (yes/no) Yes Yes Yes Yes Supervision Resources (total US$) Average Supervision (US$/project) Last Five Memorandum Item Since FY 80 FYs Proj Eval by IEG by Number 59 9 Proj Eval by IEG by Amt (US$ millions) 2,112.1 252.5 % of IEG Projects Rated U or HU by Number 25.4 55.6 % of IEG Projects Rated U or HU by Amt 17.3 42.0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 29 Annex 5. IDA and Grants Operations Portfolio (as of April 2, 2013) Closed Projects 78 IBRD/IDA* Total Disbursed (Active) 193.85 of which has been repaid 0.00 Total Disbursed (Closed) 686.52 of which has been repaid 165.15 Total Disbursed (Active + Closed) 880.37 of which has been repaid 165.15 Total Undisbursed (Active) 191.51 Total Undisbursed (Closed) 0.56 Total Undisbursed (Active + Closed) 192.07 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Disbursementsa' Project ID Project Name Development Implementation Fiscal Year IDA GRANT Cancel. Undisb. Orig. Frm Rev'd Objectives Progress P106680 HN (APL2) Land Administration S S 2011 32.8 17.95 P088319 HN (CRL) Barrio-Ciudad Project S MS 2006 15 2.22 1.81 1.81 P086775 HN (CRL1) Rural Infrastructure Project S # 2006 47 2.33 -0.27 -0.27 P131094 HN Disaster Risk Management Project # # 2013 30 29.27 P101218 HN Education Quality, Governance & Insti MS MS 2008 15.37 2.50 2.79 0.79 P090113 HN GEF Rural Electrification S S 2006 2.35 0.49 0.49 0.49 P110050 HN Improving Public Sector Performance MU MU 2012 18.2 16.29 P082242 HN Nutrition and Social Protection S MS 2006 23.6 3.64 -0.44 1.76 P104034 HN Power Sector Efficiency Enhancement MS MS 2009 30 2.44 20.84 21.23 P109058 HN Road Rehabilitation & Improvement II MU MU 2008 73.6 40.17 16.49 P101209 HN Rural Competitiveness Project MS MS 2008 30 7.05 14.90 21.90 3.56 P130819 HN Safer Municipalities # # 2013 15 14.71 P103881 HN WATER AND SANITATION PROGRAM MS MS 2007 30 8.48 4.29 P115592 HN- Social Protection MS MS 2010 40 18.22 12.41 Overall Result 400.57 2.35 9.48 192.00 65.87 8.14 30 Annex 6. Honduras Statement of IFC's Committed and Outstanding Portfolio Amounts in US Dollars Millions Accounting Date as of 02/28/2013 ICommitment Institution LN ET QL+QE GT RM ALL ALL LN ET QL+QE GT RM ALL ALL Fiscal Year Short Name :mtd-lIFC-mtd -IF{Cmtd -IFC-'mtd -IFCntd -IF Cmtd -IFC mtd- Pa Out -IFCOut-lIFCOut -IFC Out -IFC Dut -IFC Out -IFC Out -Part 2008 2010 B. Poular- 1.9 - - - 1.9 - - 1.9 - - - 1.9 - 2010/ 201 11 20121 2013 BANPAISSA - - - 10.0 - 10.0 - - - - 10.0 - 10.0 - 200912010/2011/ 20121 2013 Ban co AtLantida 45.0 - - 9.6 - 54.6 - - - - 9.6 - 9.6 - 2011/2012/ 2013 Banco LAFLSE HN - - - 10.0 - 10.0 - - - - 10.0 - 10.0 - 2012 COHERSA 20.0 - 10.0 - - 30.0 45.0 14.7 - 7.3 - - 22.0 33.0 12&0 DINANT 30.0 - - - - 30.0 - 15.0 - - - - 15.0 - 2008/ 200912010/ 20111 20122013 Ficohsa (1) 6.7 - - 27.4 - 34.0 - 6.7 - - 27.4 - 34.0 - 2006I2008/2010 SCH 24.0 - - - - 24.0 - 24.0 - - - - 24.0 - r2009 LaGrecia 3.1 - - - - 3.1 - 3.1 - - - - 3.1 - 2011 Tequciialpa - - - 12.3 - 12.3 - - - - 12.3 - 12.3 - Total Portfoho 12 s S 100 69L3 - 210-0 45O 63-4 1S 73 6S3 - 142-0 3710 (1) IFC mobilized, throught the IFC Asset Managemenet Company (AMC), a $70m investment (532m Equity and S3m Quasi-Equity) in Banco Fichosa. This amount indudes IFC indirect exposure of $19.5m in Equity and 54.9m in Quasi-Equity through the IFC Capitalization Fund (ICF). 31 32 89°W 88°w 87°W 86°W 85°W 17°N - 17°N BELIZE Caribbean Sea HONDURA Roatán B AHIA Gulf ofS 16,N Honcdvras 16°N Truiiilo . Iriona Puerto Cortés 0 Tela La Ceiba Corocito 0Barra Patuca GUATEMALA /' OQRTES ATLÄÁfT= ToL o n LagdSan Pedro. Cordilera Nonch ,guan Sonaguera ToAhuas ouimabian Sula El Progresa Las Vegas Eera Oumsa ~Morazén9k a E CabönGR ACIA S ~"/Puerto iuerito -Y O RO Aý DIOS-Lernpira SSan EstebanDIOS Arcadia S'A N TAny Duice Nombre Sirsirtara 15NBARBARA de Culmi 15°N PN CSanta. 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