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IDB approves $30 million for Honduras' poverty reduction strategy

The Inter-American Development Bank today announced the approval of a $30 million soft loan to Honduras to assist the country in carrying out its Poverty Reduction Strategy.

The program will promote the use of a modern and innovative system of public administration, unprecedented for Honduras, in which the processes of decision-making, monitoring and evaluation of the Poverty Reduction Strategy will be based on coordinated efforts of civil society and all the participating institutions. The strategy will follow the lines of a Poverty Reduction Strategy Paper (PRSP) that has been prepared by the government.

Successful implementation of the PRSP will help Honduras qualify for debt reduction under the international initiative to assist Heavily Indebted Poor Countries (HIPC).

The loan supports the creation of new financial and budgetary mechanisms, including a Poverty Reduction Fund that will ensure transparency in raising and allocating the resources.

An Advisory Council will be created that will enable civil society and representatives of the donor community to participate in monitoring and implementing of the PRSP. The Social Cabinet, responsible for implementing the PRSP, will work closely with the Advisory Council and will receive assistance from the Technical Support Unit. The latter, backed by technical cooperation resources from the Japanese Fund, will be equipped to monitor and evaluate the PRSP implementation.

The program, to be carried out by a Program Coordination Unit of the Ministry of Finance*, will be undertaken in the context of the Master Plan for National Reconstruction and Transformation that the government adopted following the devastation of Hurricane Mitch in 1998.

The IDB loan from the Fund for Special Operations is for a 30-year term, with a 10-year grace period, at an annual interest rate of 1 percent during the grace period and 2 percent thereafter.

Previous loans by the IDB to Honduras this year have supported natural resources management in priority basins and the 2001 census.

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