Digital transformation, rural and productive development programs in the Dry Corridor, and improvement of the climatic resilience of forests will be financed through loans and donations
Digital transformation for increased competitiveness
Honduras will increase its competitiveness through digital transformation, with the support of a $44.7 million loan approved by the Inter-American Development Bank (IDB). The program will expand the coverage and use of connectivity, and reduce transactional costs for citizens, businesses and public bodies, through the development of digital government. It will also boost the country's innovation activity through the development of the digital economy.
The project will connect more than 700 public educational and health sites, support the updating of the regulatory framework to favor connectivity and equip a broadband network operation center. A public-private co-financing model will be implemented for infrastructure development. The program will also contribute to improving the quality and efficiency of the provision of public services, through the simplification of digitalization and automation of procedures. Modernization of the State's financial management system aims to improve performance and efficiency.
In digital economy, the Comayagüela Ciudad Digital master plan will be prepared, and the Center for Technology Design and Innovation for Entrepreneurs of the National Autonomous University of Honduras will be equipped. This will be a space for the development of innovation, research and technological development initiatives. In San Pedro Sula, the design and construction of the Digital District will be financed, in which innovation and digital training centers will be consolidated under a public-private governance model.
The IDB loan in the amount of $44.7 million, of which $15,645,000 is charged to the regular ordinary capital of the IDB, with a repayment term of 25 years, a grace period of 5.5 years and an interest rate based on LIBOR. A total of $29,055,000 is charged to concessional ordinary capital, with a repayment term of 40 years, a grace period of 40 years and an interest rate of 0.25 percent. The operation has a local counterpart of $8 million contributed by the Mayor's Office of San Pedro Sula.
Rural development and productivity
The second approved operation will sustainably improve rural development and productivity in Honduras's Dry Corridor through the provision of technologies, productive technical assistance and access to financing for the beneficiary population, with a $55 million IDB loan.
The program will benefit 30,000 rural households located in 19 municipalities in the country, supporting agricultural producers. These will include micro, small and medium enterprises (MSMEs) led by women, in addition to youth-led enterprises, which will have access to technical assistance and service provision.
The program will implement a household monitoring system with indicators for tracking the program and the operations of other donors. This will allow to be better informed about poverty, well-being, productive activities and financing in this area of the country, contributing to integrated information about the effectiveness of interventions and public-policy approaches.
The loan is in the amount of $55 million, of which $19.25 million is charged to the regular ordinary capital of the IDB, with a repayment term of 25 years, a grace period of 5.5 years and an interest rate based on LIBOR. A total of $35.75 million is charged to concessional ordinary capital, with a repayment term of 40 years, a grace period of 40 years and an interest rate of 0.25 percent. The additional operation includes a joint financing proposal of $35 million from the Spanish Agency for International Development Cooperation´s FONPRODE.
Restoration of climate-resilient forests
The Bank will also support Honduras with $35 million to help improve the climate resilience of affected forests in areas critical for water supply. These resources consist of a donation (69%) and a concessional loan (31%) from the Green Climate Fund administered by the IDB.
Specifically, the program will support the restoration of pine forests affected by the weevil pest, the adoption of agroforestry systems in areas adjacent to forests, and the establishment of a long-term financial compensation mechanism for environmental services. This mechanism will establish public-private partnerships to finance forest management activities in priority watersheds.
As a result of this program, an increase in water availability during the dry season is expected, as well as carbon sequestration and emission reductions through adaptive management of 270,000 hectares of forest.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.