The project is part of a programmatic series of two operations designed to enhance resource mobilization and address Honduras' growth priorities. The initiative focuses on two key areas:
- strengthening tax transparency
- promoting climate sustainability.
Christian Duarte, Honduras' Minister of Finance, emphasized the importance of this collaboration, stating, "We reaffirm the commitment of our government, through this initiative by which Honduras advances in the adoption of international standards to strengthen financial transparency, combat illicit capital flows, optimize tax collection, and mobilize sustainable financing for strategic projects."
Kinnon Scott, the World Bank’s Resident Representative in Honduras, noted, "Fiscal transparency and climate and financial sustainability are two key aspects of inclusive and equitable development in Honduras. Combining a more efficient taxation system in the country with access to private capital for priority development projects will help provide more opportunities for Hondurans."
Project Summary
Strengthening Tax Transparency and Sustainable Finance
The project aims to improve domestic resource mobilization by adopting international tax reporting standards and enhancing measures to detect unreported income. This includes implementing the Country-by-Country (CbC) Reporting Standard to combat tax evasion and illicit financial flows. Additionally, a regulatory framework for issuing sustainable bonds will be established, enabling Honduras to access international capital markets for financing green and social investments.
Promoting Climate Sustainability
The initiative supports deforestation-free exports and compliance with the European Union's Deforestation-free Regulation (EUDR), particularly for key agricultural exports like coffee. It also aims to enhance energy efficiency and strengthen the financial system's stability by improving the management of climate risks.
Expected Outcomes
The project is expected to significantly improve tax transparency and financial integrity by expanding the definition of money laundering to include tax fraud. This will enhance revenue collection and reduce opportunities for corruption. The issuance of sustainable bonds is anticipated to attract funding for projects with environmental and social benefits, contributing to poverty reduction and gender equality. Climate resilience will be bolstered through frameworks promoting energy efficiency and managing climate risks, contributing to a low-carbon development path and enhancing the resilience of vulnerable populations.
Strategic Alignment
This project aligns with Honduras' National Development Plan (NDP) and the World Bank Group's strategy to end extreme poverty and promote prosperity. It supports the country's transition to a low-carbon economy and aims to improve governance and institutional quality.
This initiative represents a significant step forward for Honduras in terms of financial transparency and climate sustainability. By addressing structural challenges and leveraging international standards, the project seeks to create a more equitable and sustainable economic environment, ultimately benefiting the Honduran population.
Honduras - First Fiscal and Climate Transparency and Sustainability Development Policy Financing
