Identifier
Created
Classification
Origin
04TEGUCIGALPA1508
2004-07-07 12:57:00
UNCLASSIFIED
Embassy Tegucigalpa
Cable title:  

Review of the Consultative Group meeting in

Tags:  EAID ECON EINV SOCI PREL PGOV HO MCC NSC 
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UNCLAS SECTION 01 OF 05 TEGUCIGALPA 001508 

SIPDIS

STATE FOR WHA/CEN and WHA/EPSC
TREASURY FOR EIlzetzki
STATE PASS USTR
STATE PASS AID (LAC/SA)
STATE PASS OPIC, EXIM

E.O. 12958: N/A
TAGS: EAID ECON EINV SOCI PREL PGOV HO MCC NSC
SUBJECT: Review of the Consultative Group meeting in
Honduras, June 10-11, 2004

-------
SUMMARY
-------

UNCLAS SECTION 01 OF 05 TEGUCIGALPA 001508

SIPDIS

STATE FOR WHA/CEN and WHA/EPSC
TREASURY FOR EIlzetzki
STATE PASS USTR
STATE PASS AID (LAC/SA)
STATE PASS OPIC, EXIM

E.O. 12958: N/A
TAGS: EAID ECON EINV SOCI PREL PGOV HO MCC NSC
SUBJECT: Review of the Consultative Group meeting in
Honduras, June 10-11, 2004

--------------
SUMMARY
--------------


1. Summary: The Honduran Consultative Group (CG) meeting
was held on June 10-11 with more than 300 participants from
the GOH, civil society, and the international donor
community. President Maduro made a key-note presentation on
the importance of this meeting to report on the progress
made on achieving the Poverty Reduction Strategy (PRS) goals
and the actions left to be taken. His presentation was
followed by a number of presentations by Cabinet Ministers,
the President of Congress, the President of the Supreme
Court, and representatives of the Honduran civil society and
members of the international donor community. Primary
themes in these presentations included the importance of
achieving the goals of the PRS, strengthening transparency
and anti-corruption programs, decentralizing PRS
implementation to include municipalities and civil society,
and insuring equal rights for women and minority ethnic
groups.


2. The principal results of this meeting were the
announcement by the IDB President of the CG Meeting, Miguel
Martinez, that the donors pledged $1.8 billion over the next
three years in support of the Honduran PRS, and that the
Government of Honduras (GOH),civil society, and the
international donors would continue to work together to
achieve the PRS goals as expressed in the Declaration of
Tegucigalpa and the Follow-up Actions to be taken during the
coming year.

--------------
Overview of the Consultative Group Meeting
--------------


3. The Honduran Consultative Group (CG) meeting was
held on June 10-11 with more than 300 participants from the
GOH, civil society, and the international donor community.
The U.S. Government delegation was co-chaired by Ambassador
Palmer and USAID Country Director Paul Tuebner, and also
included EconCouns Robin Matthewman, U.S. Treasury/W Officer

Ethan Ilzetzki, USAID Chief Economist Duty Greene, USAID/W
Desk Officer for Honduras Laura Libanati, and visiting
Millennium Challenge Corporation (MCC) representatives John
Hewko, John Wingle, and Katharine Uhre.


4. The meeting was opened with a welcoming presentation by
Miguel Pastor, mayor of Tegucigalpa and a leading
presidential candidate for the 2005 elections. This
presentation was followed by those of Miguel Martinez (IDB
Manager of the Regional Operations Department for Mexico,
Central American Isthmus, Haiti, and the Dominican Republic)
and President Ricardo Maduro. President Maduro spoke on the
importance of this CG meeting to report on the progress
being made by his government to achieve the goals of the
national Poverty Reduction Strategy (PRS) and the work that
lies ahead. After the President's presentation, GOH
Ministers Luis Cosenza (Presidency),Arturo Alvarado
(Finance),Vicente Williams (First Vice-President and
Coordinator of the National Competitiveness Program and the
Plan Puebla Panama),and Thierry Pierrefeu (Tourism) spoke
on the government's national transformation program to
reduce poverty. They were followed by Porfirio Lobo
(President of the National Congress) and Vilma Morales
(President of the Supreme Court) who discussed the role of
Congress and the judicial system, respectively, in achieving
the transformation of Honduras.


5. After lunch, representatives of the G-15 and civil
society spoke on the roles that the G-15, civil society, and
the National Anti-corruption Council have played and should
play in this transformation process to reduce poverty.
These speeches were followed by a series of brief opening
interventions from the participating representatives from
the international donor community. They focused primarily
on the need to continue with the implementation of the PRGF
program, decentralization, transparency, and broad-based
economic growth. The first day ended with a reception for
all the CG participants in the Presidential Palace hosted by
President Maduro, the First Lady, and the Government.


6. The second day of the CG meeting focused on the
coordination and harmonization of international cooperation
to support the priorities of the gGovernment, and the
national capacity of host country institutions to implement
the Poverty Reduction Strategy (PRS). Addressing these
issues were Rocio Tabora (Vice-Minister of the Presidency),
Jorge Hernandez Alcerro (Minister of Internal Affairs),and
Arturo Alvarado. The Ministers for Education, Agriculture
and Forestry, Health, and Water and Sanitation spoke on the
work on sector-wide approach programs (SWAPs) that their
respective Ministries have been developing. During lunch,
President Maduro participated in a signing ceremony with a
donors' group willing to pool their funds in an Education
SWAP. (USAID is supporting this program separately by
financing activities that contribute directly to the EFA-
Fast Track Initiative goals.)


7. After lunch, representatives from various civil
society groups gave statements on their roles in supporting
the PRS and their skepticism of government programs
(especially decentralization, transformation, and food
security) to reduce poverty effectively. This session was
followed by the closing statements of the international
donor representatives, including that of Ambassador Palmer
who focused on the importance of implementing the PRSP and
strengthening the government's efforts in justice,
education, health, and economic growth with equity. These
statements were followed by the passing of the Presidency
Pro-tempore of the G-15 from the Government of Spain to the
Government of Sweden, the announcement that the donors' G-15
will become the G-17 with the addition of France and
Switzerland, and the closing remarks of Luis Cosenza and
Miguel Martinez.


8. Minister Cosenza focused on the government's plan to
implement the PRS and stressed the six pillars of the PRS:
economic growth with equity, poverty reduction in rural
areas, poverty reduction in urban areas, human capital
formation, strengthening protection to specific groups
living in poverty, and the programs needed for the
sustainability of the strategy. He encouraged the donor
community to provide direct budget support to the Government
whenever possible, and provide SWAP funding to the
government's six priority program areas of education,
health, agro-forestry, water and sanitation, justice and
personal security, and economic infrastructure.


9. In his closing remarks, Mr. Martinez congratulated
the Government of Honduras on the progress that it has made
in implementing the PRS and reiterated the importance of
continuing with the PRGF program, giving greater
transparency in government procurement procedures,
organizing donor cooperation in priority areas, and
implementing the PRS in a cost-effective participatory
manner. He also read the Declaration of Tegucigalpa that
was drafted by the Government, civil society, and the
donors.

--------------
The Tri-partite Declaration of Tegucigalpa
--------------


10. The tri-partite Declaration of Tegucigalpa reaffirmed
the commitment of the GOH, civil society, and the donor
community to the following:

a) To support the transformation of the country, the
consolidation of democracy, sustainable development, and
poverty reduction;

b) To strengthen their alliance in the future to achieve
poverty reduction through accelerated and sustained economic
growth with equity, with transparency in the management of
resources, and broad citizen participation and gender
equality in national and local decisions;

c) To support the Stockholm Principles that call for the
protection of social and environmental protection in
Honduras, as well as better governance, decentralization,
transparency, respect for human rights, foreign debt
reduction, and the harmonization of international
cooperation according to national priorities;

d) To support the agreements made in the National Agreement
of Transformation for Human Development in the Twenty-First
Century;

e) To support the PRS that constitutes the general plan that
will guide the development policy of the country in the
future and that is consistent with the Millennium
Development Objectives and Goals. This strategy will be
implemented with a programmatic vision based on the
harmonization of national efforts, complemented by
international assistance.


11. The Declaration goes on to say that the GOH is the
leader and facilitator of the transformation process of the
country, with broad and effective participation of civil
society. Therefore, it is important that the government:

a) Continue strengthening the rule of law, combating
corruption, and defending human rights;

b) Strengthen the processes of transparency and
accountability, the participative social auditing of the PRS
implementation, and faithfully comply with the Law of State
Contracting and related norms, the recommendations of the
Program for the Efficiency and Transparency in State
Purchases and Contracts, and the National Anti-Corruption
Council, and the technical capacity and independence of the
Superior Accounting Tribunal;

c) Continue preparing and implementing the Central
Government's budget for multiple years, based on regional
needs, and with medium-term expenditure goals to reflect
effectively the PRS goals, providing details of the
implementation of the PRS expenditures and the advances made
to reach these goals, and initiate the same budgeting
process for sector-wide approach programs (SWAPs);

d) Agree to participative mechanisms to incorporate
citizens' demands coming from territories and priority
sectors identified in the PRS and in the multi-year budget,
starting this process with the 2005 budget;

e) Achieve greater articulation of the PRS activities,
programs, and projects, including the proposals of the
different social sectors;

f) Strengthen the implementation of policies to make the
state efficient, modern, competitive, and agile, so that the
administration is at the service of its citizens and focused
on national development;

g) Implement the Macroeconomic Program for 2004-2006 to
reach in the first quarter of 2005 the HIPC completion
point, and implement public policies that permit the
development of a strategy that substantially improves
productive infrastructure and generates wealth with greater
equity;

h) Strengthen municipal governments and local development
through the decentralized management of the PRS with an
integrated regional vision, taking into account municipal
and regional realities with emphasis on the existing
resources in the different regions and local and regional
priorities;

i) Advance in the implementation of a transparent and
coherent policy with civil society that permits its
strengthening and broad participation in the PRS
implementation, complying with the commitments agreed to in
the different international forums;

j) Accelerate the efforts to achieve efficiency in the
management of international cooperation, orienting their
assistance to achieve the PRS goals.


12. The parties also consider that civil society should
have a greater participation in the transformation of
Honduras and support the democratic process and the
consolidation of the Rule of Law. In this respect, it is
important that civil society:

a) Deepen and broaden its base and social communication in
its institutions;

b) Strengthen its technical capacity and political
presentations, as well as its transparency and
accountability processes;

c) Participate actively and efficiently in the
implementation and monitoring of the PRS to strengthen the
ownership and sustainability of the activities.


13. The parties also agree that the international donors
are a strategic ally of the GOH and civil society in the
transformation process of the country. Therefore, it is
important that the donors:

a) Coordinate their activities in the framework of PRS
implementation, giving priority to achieving the goals of
poverty reduction and informing about the different support
instruments used;

b) Simplify and harmonize their procedures and
administrative requirements to contribute more effectively
and efficiently to achieving the PRS goals;

c) Harmonize their support, basing it on sector strategies,
programs, and budgets that have been defined and given
priority in the PRS;

d) Support the GOH to advance substantially in effective
compliance with the Poverty Reduction and Growth Facility
(PRGF) Agreement with the IMF and the PRS implementation;

e) Contribute to strengthening the national capacity
required by the GOH and civil society to overcome the
challenges stated above.


14. Also, the parties agreed to reaffirm:
a) Their interest in strengthening the work of the PRS
Consultative Council to allocate and monitor the PRS funds;

b) Their conviction that in order to achieve the common good
it is necessary to favor the interest of the nation over
those of individual interest groups and partisan politics;

c) Their commitment to strengthen the constructive and
transparent dialogue without prejudicing differences in
opinion that could exist in confronting the challenges of
the country. They reiterate that the objectives and goals
of the transformation should be independent of changes in
the government so as to guarantee the sustainability of the
reforms and the medium and long-term policies;

d) The importance of the work of the Follow-up Group, today
known as the G-17, as a monitoring mechanism of the donor
community in the transformation process of Honduras.
Likewise, they agree to continue developing and
strengthening the tri-partite mechanisms that allow them to
give continuity to the agreements reached in this
Consultative Group Meeting, which will constitute an
invaluable guide to reduce poverty and transform Honduras.


15. Martinez also announced that the donor community had
pledged a total of $1.8 billion to support the Poverty
Reduction Strategy of Honduras over the next three years,
with approximately $810 million coming in the form of
donations and the remaining billion coming in the form of
loans. This pledged amount has yet to be confirmed and has
not been broken down by donor or by sector. In hisIn his
closing remarks, Ambassador Palmer stated that the U.S.
Government is committed to continue its support to Honduras
for poverty reduction with USAID planning to give a total of
$235 million over the next five years and other U.S.
Government agencies, such as the Department of State,
Department of Agriculture, Department of Labor, Peace Corps,
and possibly the Millennium Challenge Corporation, adding to
that amount.

--------------
Follow-up Actions to the CG Meetings
--------------


16. In conclusion, Martinez also read the following
principal follow-up actions to this CG meeting:

a) Consolidation of the Economic Program
Continue implementing the macroeconomic program and
take all the necessary steps to be able to reach the
completion point of the HIPC initiative.

b) PRS Implementation
Prepare before the end of September a proposed budget
for the implementation of the PRS for the 2005-2006 period
that is integrated into the multi-year budget and is
consistent with the PRS implementation plan for 2004-2005.
This plan would be presented to the PRS Consultative Council
for future consideration by the Social Cabinet and its
incorporation into the national budget

Prepare before the end of September a plan of concrete
actions to consolidate and strengthen the advances in the
implementation of the PRS monitoring system (SIERP),
including the community social audits and the monitoring
systems for the PRS expenditures (SIAFI) and the financing
from external cooperation.

c) Legislative Agenda
- Reform of the Penal Code to Combat Financial Crimes
- Law of Financial Institutions
- Law of the Fund for Deposit Insurance
- Law of the Bank and Insurance Commission
- Organic Law of the National University
- Law of Public Servants
- Forestry Law
- Organic Law for the Judicial Power
- Law of the Judicial Council and of the Judicial Career
- New Civil Procedures Code
- Notary Code

d) Modernization of the Justice Sector
Implementation of the institutional reforms for the
modernization and systematization of the management models
of justice that allow for the increase in the independence
and efficiency of the judicial system. These include
progress in the selection process of judicial personnel
through opposition procedures with the participation of
civil society, and substantial progress in the finalization
of the processes initiated under the Penal Procedures Code
that allows its conclusion in 2006.

e) Transparency and Accountability
Prepare before the end of September an action plan
with steps to take before the end of 2005 that permits the
continuation of increasing the transparency of managing
public funds, especially in the area of State purchases and
contracts, and to strengthen the control process and
accountability.

f) Coordination of the International Cooperation
Achieve before the end of September agreement by
consensus on the strategies with sector focus for education,
health, potable water and sanitation, agro-forestry, and
justice, and continue the actions to define the sector
strategy for housing, all based on the working documents
prepared for the current Consultative Group Meeting.

Prepare before the end of September an action plan
with concrete steps to carry out through December 2005 a
program to strengthen the coordination process for each
sector table.

Achieve before the end of July a workshop to review
the lessons learned about the functioning of the sector
tables, as well as the relevant experiences in other
countries of the region, and prepare before the end of
August a proposal to improve the functioning of the sector
tables, particularly in relation to the active participation
of civil society.

PalmerALMER