Announcement of Consultative Group Meeting for Honduras on March 25, 1992

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 92/LAC (S q-7) Contact: Ciro Gamarra (202) 473-8721 CONSULTATIVE GROUP MEETING FOR HONDURAS Washington, D.C. March 25, 1992 -- Representatives of 12 countries and 10 international organizations concluded today in Washington, D.C. the second Consultative Group meeting for Honduras. The donors welcomed the strong performance by the Government during 1991 in implementing the economic stabilization and adjustment program and supported its efforts to manage the difficult transition to sustained economic growth. The Government was also congratulated on its innovative poverty alleviation programs targetted to the most vulnerable members of the population. The meeting was chaired by Mr. Rainer B. Steckhan, World Bank Director for Mexico, Central America and Panama. The Honduran delegation was presided by the Minister of Finance, Mr. Benjamin Villanueva, accompanied by Dr. Cesar Castellanos, Minister of Health, Mr. Alonzo Valenzuela, Executive Director of the Honduran Social Investment Fund (FHIS), and Mr. Raul Cardona, Executive Director of the Family Assistance Program (PRAF). In their report to the Consultative Group, the Honduran delegation reviewed the major actions taken over the past two years under the economic stabilization and adjustment programs and summarized the achievements to date. 1991 economic performance was encouraging: real gross national product-GNP grew by about 2.2 per cent annually, inflation fell to about 1 percent per month during the last six months (a trend which has continued in 1992), and the public sector fiscal deficit declined from about 8.5 per cent (in 1990) to about 3.8 per cent of gross domestic product-GDP (in 1991). The Honduran delegation also presented detailed information on the poverty status and social indicators in the country and the Government's strategy for poverty alleviation and human resource development (focussing on health, water, nutrition, and education), requesting international support for two priority safety net programs (Fondo Hondurefio de Inversi6n Social-FHIS, Programa de Asignaci6n Familiar-PRAF). Donors were urged to provide continued concessional assistance and significant debt relief, in view of Honduras' low per capita income, external debt burden, and adherence to stringent economic criteria. The International Monetary Fund, World Bank and the Inter-American Development Bank delegations gave positive reports on adjustment and stabilization performance during the past year, and noted that the transition underway to sustained economic growth and equitable social development would require substantial assistance from the international donor community on highly concessional terms. The donor delegations applauded the achievements . -2- of the Government and reaffirmed their support for its efforts in the economic and social spheres. They expressed the view that the success of the reform effort would depend on the Government's ability to stay on track over the next two critical years. Strong support was expressed for the Government's establishment of programs to protect the poorest segments of the population during the adjustment process, and financial assistance amounting to about US$ 22 million equivalent was indicated in support of the two priority safety net programs. In his closing remarks the Chairman acknowledged the very constructive dialogue. He noted the significant progress over the last two years, not only in the economic realm but also in rapid implementation of emergency safety net operations and definition of a medium-term social sector development strategy. The immediate tasks of strengthening aid coordination and helping to build institutional capacity were critical, he said, to the resumption of sustained economic growth. The Consultative Group was attended by representatives of Canada, Colombia, France, Germany, Japan, the Netherlands, Spain, the United States of America, and Venezuela. In addition to the World Bank, the Central American Bank for Economic Integration, Commission of the European Communities, Inter- American Development Bank, International Fund for Agricultural Development, International Finance Corporation, International Monetary Fund, United Nations Development Programme, and the World Food Program also participated in the meeting. Finland, Mexico, Sweden, and the Pan-American Health Organization sent observers to the meeting. -0-