The Millennium Challenge Corporation and the Government of Honduras on Wednesday signed a Threshold Program Agreement designed to bring good governance practices to Honduras.
The three-year, $15.6 million program will focus on improving public financial management and create more effective and transparent public-private partnerships. The program will help the Government of Honduras save money in the provision of public services, improve delivery of public services and reduce opportunities for corruption.
MCC’s Threshold Program is designed to assist countries to implement key policy and institutional reforms that will help reduce the constraints to economic growth.
The Honduras Threshold Program follows the successful implementation of the country’s five-year, $205 million compact. That compact aimed to increase productivity in the agricultural sector by increasing the efficiency and business skills of small- and medium-sized farm employees and to reduce transportation costs between production centers and markets. The compact closed in September 2010.
The agreement with Honduras is the first next-generation Threshold Program that MCC has signed following a lengthy review to assess whether the program is achieving its policy and program objectives. Under the revised Threshold Program, MCC will help countries in their efforts to become compact-eligible by supporting targeted policy and institutional reforms, as well as providing partner countries an opportunity to demonstrate their capacity and political will to make difficult policy reforms.
Instead of seeking to directly assist a country in improving its performance on a specific eligibility indicator, the new Threshold Program will seek to indirectly affect the indicators by focusing on policy and institutional constraints to economic growth.
The Honduras Threshold Program includes two projects:
- Public Financial Management Project: The project aims to increase the efficiency and transparency of public financial management by supporting activities designed to improve budget formulation and execution, planning, payments, procurements, auditing, and civil society oversight.
- Public-Private Partnerships Project: The project aims to improve the efficiency and transparency of public-private partnership by supporting activities designed to increase the government’s capacity to identify, develop, tender, implement, and oversee partnerships with the private sector.
MCA-Honduras, a Honduran government organization that implemented the country’s MCC compact, will manage the program. The U.S. Treasury Office of Technical Assistance will implement a portion of the Public Financial Management Project, and MCC will oversee the implementation, monitoring and evaluation of the program.