Honduras The informal sector and markets

Honduras International Development Cooperation

Honduras is highly dependent on international development cooperation.

After Hurricane “Mitch”, the most important donor countries and institutions joined forces in the so-called GSDE (Grupo de Seguimiento a la Declaración de Estocolmo; also known as “G-16” because of its 16 founding members) to support their reconstruction and transformation activities to coordinate. The group is the central authority for donor coordination. Members are: Germany, Canada, the USA, Japan, Sweden (which ended its government development cooperation with Honduras in 2011), the Netherlands, Spain, Italy, Switzerland (will withdraw by 2024), France, the EU, theIMF, the World Bank, the BID (Banco Interamericano de Desarrollo), the BCIE (Banco Centroamericano de Integración Económica; based in Tegucigalpa) and UNDP. The group expands to include members with observer status, such as B. Korea.

According to extrareference, the UN supports Honduras in achieving the SDGs. Honduras has a National Agenda of SDGs and participates in the Voluntary National Review. The second report was submitted in 2020 and stated that the progress was not in line with the expected results.

The UN also supports Honduras in tourism with the “Ruta Lenca” program.

The Honduran government had received loans from the IMF through stand-by agreements in recent years. After its visit to Honduras in 2018, the IMF drew a positive assessment of the country’s economic development. A new two-year loan agreement for USD 331 million was signed in July 2019 and approved in December. The agreement to reduce costs in the public sector sparked violent protests from employees in the health and education sectors. In addition, according to the Honduran sociologist Suazo, corruption and drug trafficking undermined the policy of the IMF. In the wake of the 2020 pandemic, the IMF has its loan commitment increased by $ 222 million.

The EU is the largest bilateral donor to Central America. The Agreement on Political Dialogue and Cooperation (PDCA) between the EU and six Central American states (Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama) has been in force since May 2014. For the period 2014-2020, the EU expanded bilateral cooperation with Honduras. The thematic priorities include fighting poverty, security, youth and climate change. The EU promotes the judiciary through financial cooperation. The EU has made available EUR 80 million to contain the pandemic and EUR 900,000 to combat hurricane damage.

Other important donors in Honduras are the World Food Program and UNFPA. The FAO supports Honduras in the fight against desertification and droughts. The World Bank gives Honduras a USD 70 million loan to improve access to water in the dry corridor region.

Honduras is one of the countries supported by the USA as part of the Millennium Challenge Corporation (MCC). However, there will be no funds in 2021 either, as Honduras has not qualified since the National Party came to power due to deficits in various sectors (justice, corruption, etc.). Only half of the indicatorsof the MCA have been achieved. There is currently only one health care program running through the MCA. However, Honduras is financially supported by the USA in the context of development cooperation and in other areas, such as B. Supported military aid. The US development bank DFC has announced that it will support the economy in Honduras with USD 1 billion as part of the “Amércia crece” program.

The IMF, the Inter-American Development Bank and the Central American Bank CABEI are supporting Honduras financially in fighting the pandemic. But the aid money does not get to where it is needed. Honduras is rocking a corruption scandal over the use of these funds. There is a lack of transparency in the use of funds. The National Anti-Corruption Council has published reports on this.

German development cooperation

Honduras is one of the countries with which Germany maintains bilateral government development cooperation. Thematically, this focuses on the areas of education and environmental and resource protection. Other areas in which Honduras is supported within the framework of regional projects are sustainable economic development, renewable energies / energy efficiency, youth violence prevention and HIV / AIDS prevention. In 2018, the German government pledged an amount of 37 million euros for technical and financial cooperation. Honduras is also one of the partner countries participating in the Agenda 2030 initiative program. The program supports the government of the partner countries in implementing the 2030 Agenda at national level. A further EUR 3.5 million was committed by Germany to Honduras in 2017. KfW has pledged EUR 10 million to support nature conservation areas. KfW Honduras also supports small and medium-sized companies affected by the COVID-19 crisis. In the medium term, Germany will discontinue bilateral cooperation with Honduras. At the regional level, Germany will remain active, for example by supporting SICA. In 2020 financial support was promised for the next few years. From civil society Side, the withdrawal is not positively received.

The most important German development cooperation institutions represented in Honduras are GIZ, KfW, FES and CIM. The KAS office in Guatemala also organizes events in Honduras, as do the FNSt and the HBS in Honduras.

In addition to bilateral cooperation, Germany also makes a contribution within the framework of multilateral cooperation (World Bank, Inter-American Development Bank, EU).

Honduras The informal sector and markets