WASHINGTON, D.C., February 17th, 2025 - The World Bank's Board of Executive Directors approved a project today to help Honduras strengthen tax transparency and economic sustainability. This program will enhance resource mobilization to address the country's growth priorities and boost its productive capacity.
The $145 million First Fiscal and Climate Transparency and Sustainability Development Policy Financing is part of a programmatic series of two operations and supports the country's efforts in two key areas. The first is the strengthening of tax transparency and sustainable finance through initiatives to improve domestic resource mobilization, money laundering prevention, and access to international financial resources. The initiatives include reforms to adopt international tax reporting standards and detect unreported income.
These measures will help improve an enabling environment for attracting investment. In addition, the approval of a regulatory framework for the issuance of sustainable bonds will enable the Honduran Government to access funds in the international capital market to finance priority green and social investments aligned with the country's sustainable development goals.
The second area focuses on the promotion of climate sustainability in the country through measures that encourage deforestation-free exports, strengthen the financial system's stability, and enhance energy efficiency. Specifically, the operation will help small farmers comply with the European Union's Deforestation-free Regulation (EUDR) and increase the value added of agriculture-based exports such as coffee. It also promotes a more accurate measurement of disaster risks in the financial system, helping to improve its stability, as Honduras is one of the world's most climate-vulnerable countries. Lastly, the project supports the establishment of a regulatory framework to promote energy efficiency.
"Honduras had no access to this type of programs since 2015, but the Government of President Xiomara Castro and the World Bank have managed, through joint and sustained work, to reactivate access to instruments that allow the implementation of key reforms to address the structural challenges that limit development. 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. Measures will also be implemented to ensure that key agricultural exports meet sustainability criteria; energy efficiency is promoted; and climate risk management is strengthened in the national financial sector," said Christian Duarte, Minister of Finance.
Kinnon Scott, the World Bank's Resident Representative in Honduras, noted that "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."
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