The World Bank has approved a project aimed at enhancing tax transparency and economic sustainability in Honduras. The initiative, known as the First Fiscal and Climate Transparency and Sustainability Development Policy Financing, is valued at $145 million and forms part of a two-operation program. It focuses on improving domestic resource mobilization, preventing money laundering, and accessing international financial resources.
The project seeks to strengthen tax transparency through reforms that adopt international tax reporting standards and detect unreported income. Additionally, it includes establishing a regulatory framework for sustainable bonds issuance to enable Honduras to finance green and social investments aligned with its sustainable development goals.
A second focus area of the project involves promoting climate sustainability by encouraging deforestation-free exports, strengthening the stability of the financial system, and enhancing energy efficiency. This effort will help small farmers comply with the European Union's Deforestation-free Regulation (EUDR) while increasing the value of agriculture-based exports such as coffee. Furthermore, it aims to improve disaster risk measurement within the financial system.
Christian Duarte, Minister of Finance in Honduras, stated: "Honduras had no access to this type of programs since 2015, but the Government of President Xiomara Castro and the World Bank have managed...to reactivate access to instruments that allow the implementation of key reforms...We reaffirm the commitment of our government...to strengthen financial transparency...optimize tax collection and mobilize sustainable financing for strategic projects."
Kinnon Scott, Resident Representative in Honduras for the World Bank added: “Fiscal transparency and climate and financial sustainability are two key aspects of inclusive and equitable development in Honduras. Combining a more efficient taxation system...with access to private capital for priority development projects will help provide more opportunities for Hondurans.”