USA / HONDURAS – The Inter-American Development Bank (IDB) approved a $75.9 million loan to improve living conditions in households in the areas of Honduras with the highest rates of extreme poverty, and to cultivate human capital and self-management capacity in those households.
The project plans to use conditional cash transfers to boost the minimum income of participating households and protect that income against external climate, economic, and health shocks. The initiative will also strengthen the Social Protection System and services for improving the long-term conditions and capacities of the poorest households, prioritizing the geographical areas targeted by the Solidarity Network Program.
This operation is designed to benefit 50,000 households in extreme poverty through conditional cash transfers, as well as 165,000 children through nutrition and early child development programs. It also aims to benefit 6000 school-aged children through the stay-in-school program and 1,000 youth who will receive comprehensive support. The operation will indirectly benefit 350,000 households in extreme poverty by strengthening the Social Protection System’s service model.
In the area of health, the loan aims to improve the use and range of health and nutrition services for women (especially young pregnant women) and for children ages 0 to 6.
In terms of education, the goal of the operation is to strengthen elementary educational services by working to keep children in school until at least seventh grade. It also aims to bolster comprehensive support services for young people (ages 14 to 19).
In addition to the COVID-19 pandemic, Honduras was also recently hit by two category 4 hurricanes (Eda and Iota), which significantly dampened its economic activity.
The $75.9 million IDB loan will be disbursed over the course of four years.
Meanwhile, Honduras to strengthen customs management, the Inter-American Development Bank (IDB) approved a $50 million loan to increase customs collection and customs controls in Honduras. The operation will foster trade and boost the country’s economic growth and competitiveness.
The program’s goal is to improve the efficiency of Honduras’s Customs Administration (ADUANAS), which was set up in 2020, by strengthening management and institutional governance.
It will also support control processes, automation and the use of technologies to reduce fiscal fraud. It will increase the information technology resilience of customs operational management by modernizing its technological infrastructure and developing an information security strategy.
The project will benefit the country by equipping customs with innovative tools to improve its revenue collection capacity and contribute to financing public policies. Foreign trade operators will also benefit from gaining access to higher-quality customs services.
Foreign trade plays a key role in the country’s economy, accounting for about 88 percent of gross domestic product. In 2021, Honduran trade reached $25.25 billion, of which 40 percent were exports and 60 percent imports.
Honduras faces competitiveness and logistics performance challenges. According to cross-border trade data from the World Economic Forum, in 2020 it took 108 hours in the country to comply with export border procedures and 96 hours for import procedures, compared to an average in Latin America and the Caribbean of 55 and 56 hours, respectively. The number of inspections increases the time and costs of foreign trade.
The $50 million loan, from the IDB’s ordinary capital, has a for a 40-year term, with a 5.5-year grace period and interest based on SOFR.