Document of
                 The World Bank


                                         Report No: 60212-HN




              RESTRUCTURING PAPER

                      ON A

             PROJECT RESTRUCTURING

                     OF THE

EDUCATION QUALITY, GOVERNANCE AND INSTITUTIONAL
            STRENGTHENING PROJECT

                 CREDIT 4381-HN

    APPROVED BY THE BOARD ON JANUARY 24, 2008

                     TO THE

             REPUBLIC OF HONDURAS


                  March 22, 2011
                    ABBREVIATIONS AND ACRONYMS


    CCPREB       Centro Comunitario de Educación Prebásica
    PIRLS        Progress in International Reading Literacy Survey
    PROHECO      Programa Hondureño de Educación Comunitaria
    SIARHD       Sistema Integrado de Administración de Recursos Humanos
                 Docentes
    TIMSS        Trends in International Mathematics and Science Study




       Regional Vice President:    Pamela Cox
              Country Director:    C. Felipe Jaramillo
Sector Director/Sector Manager:    Keith Hansen/Chingboon Lee
             Task Team Leader:     Cristian Aedo



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                                                   HONDURAS

         EDUCATION QUALITY, GOVERNANCE AND INSTITUTIONAL
                     STRENGTHENING PROJECT


                                                    CONTENTS

                                                                                                                       Page
A.   SUMMARY................................................................................................................ 1
B.   PROJECT STATUS.................................................................................................. 1
C.   PROPOSED CHANGES .......................................................................................... 1




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EDUCATION QUALITY, GOVERNANCE AND INSTITUTIONAL STRENGTHENING
                          PROJECT

                                 RESTRUCTURING PAPER



A. SUMMARY

1.    The Project has been restructured to provide a partial waiver of the withdrawal condition for
Subcomponent 3.1 which supports the Sistema Integrado de Administración de Recursos Humanos
Docentes (SIARHD).

B. PROJECT STATUS

2.       The Project is progressing towards the achievement of the Project Development Objectives
through the components currently under implementation. The Project's Component 1 has contributed
to: (i) increased preschool coverage through the opening of approximately 400 CCPREB (Centro
Comunitario de Educación Prebásica), including 65 Intercultural Bilingual CCPREB; and (ii)
increased support for the PROHECO schools (Programa Hondureño de Educación Comunitaria)
through the training of over 2,000 PROHECO teachers in the newly designed Multigrade Manual
approved by the Ministry of Education in 2010. The Project's Subcomponents 3.2 and
Subcomponents 3.3 have contributed to (i) improving Honduras's educational statistics; and (ii)
supporting the participation of Honduras in the 2010 TIMSS and PIRLS standardized international
student assessments.



3.      There have been no disbursements under Sub-component 3.1 pending the Government
meeting the SIARHD-related disbursement condition. This Sub-component finances activities
designed to improve information on education, including activities that are key to keep the wage bill
in the education sector under control. Component 2 of the Project is also pending fulfillment of the
PROHECO-related disbursement condition.

C.   PROPOSED CHANGES

Partial waiver of withdrawal Condition

4.    The following withdrawal condition 1(b), Schedule 2, Section IV.B. of the Financing
Agreement, signed on July 2, 2008, related to SIARHD has been partially waived.

         "Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made in
        respect of: payments made for expenditures covered by Category 3 in the table in paragraph
        1 above, unless the SIARHD has been updated on the basis of a teachers' census and post
        audit results, and the accuracy of the updated SIARHD has been tested by way of random
        audits, all in a manner satisfactory to the Association."

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5.      The partial waiver refers to the verification of the updated SIARHD by independent audit.
The rationale for this change is that the Government has partially fulfilled the above condition, and
has undertaken measures to fulfill the remaining elements in a manner satisfactory to the
Association. In particular, the teachers' census and post audit have both been completed, and the
SIARHD is in the process of being updated to reflect the census and post audit recommendations. In
addition, the Government has undertaken substantive steps to better get the teacher wage bill under
control that exceed the measures required under the withdrawal condition.




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