National Plan for National Reconstruction and Transformation

Master Plan for National Reconstruction and Transformation

recback.jpg (5404 bytes) This is a condensed version of the Master Plan for National Reconstruction and Transformation elaborated by the Government of Honduras to confront, with the effort of the Honduran people and with international co-operation, the dramatic reality left behind by Hurricane Mitch which has been unmistakably catalogued as one of the greatest and most acute calamities in Honduras’ history.
Within this context, it must be noted that in the last eighteen years or so, Honduras had achieved profound changes in a climate of peace and participatory democracy. Also, the country had made significant advances in economic stabilization, structural adjustment, economic growth and much progress in the social sector.

Even when the social and economic horizons have been drastically modified, us Hondurans have recognized an unique opportunity in this disaster to reconstitute the economic heritage and to strengthen all the foundations for future growth and order.

According to the United Nations Organization, U.N., Hurricane Mitch was the worst natural disaster in Latin America in the last 200 years, leaving behind a death and destruction toll comparable to a devastating war. The last official figures register 5,657 deaths, 8,058 legally disappeared persons, 12,272 injured and 1.5 million harmed or displaced. According to the Economic Commission for Latin America and the Caribbean, (CEPAL), the total in damages in Honduras is US$3,794 which is equivalent to 70% of the Gross Domestic Product. The estimated cost of reposition is US$5,000, almost 100% of the GDP.
The Master Plan for National Reconstruction and Transformation or MPNRT includes specific objectives to:

Rehabilitate and vitalize the productive sector
Rebuild and improve the country’s infrastructure
Rehabilitate and reform the social sector
Strengthen the macro-economic stability
Institute a new plan to prevent and mitigate disasters
An efficient and transparent management of the resources destined for reconstruction

The MPNRT transcends the short term horizon due to the fact that the damages and the implementation of the development strategies go beyond the term of one presidency and government. With the Plan, the country expects that by the year 2001 most of the losses will have been recuperated and that the GDP and income per capita be similar to what was planned for 1998. By then, the social indicators should show the first positive signs after the implementation of the reforms.

EFFECTS OF THE HURRICANE ON SOCIETY AND THE ECONOMY

Beside the figures mentioned before, the most outstanding social consequences were:

Approximately 441,150 people lost or suffered severe damages to their homes. These people had to be displaced and take refuge with family or friends. Most had to be sheltered in the 1,375 shelters organized in schools, sports facilities, churches and other places.
The loss of the water supply for 4.2 million people (70% of the population)
Nearly 70% of the damages occurred in the agricultural sector, followed by the country’s infrastructure with 17% and the social sector with 11%. The damages suffered by the environment are estimated to be US$46.7 million, considering only the forestry area.

According to the Central Bank of Honduras (BCH), the country will not export goods with a value of US$158 million and US$501 million for 1998 and 1999 respectively. Besides, imports will increase by $224 million in these two years, creating a bigger commercial deficit in the order of $779 m. in 1999, equivalent to nearly 14% of the GDP for that year.

INITIAL GOVERNMENT RESPONSE

The government, with the support of civilian society organizations, the municipalities and the international co-operation, has taken several actions in the emergency, rehabilitation and reconstruction phases. In this process, it has taken administrative and legislative measures to establish control over many diverse situations. All have been planned to be quick and effective to safeguard lives and property, restore order, evaluate damages and advance in the reconstruction and transformation. Notwithstanding financial limitations, an intense and ample task has been undertaken to confront the crisis, using in most cases, national funds and also the help from the international community.

The work has been massive to control epidemics, re-establish all health centers, start the 1999 school year normally with 80% of the schools rebuilt and temporary solutions for the remaining 20%, rebuilding the electric supply and communications systems, refurbishing 80% of the potable water system in the capital and 320 municipal aqueducts and 1,600 rural water systems. Also, 1,095 kilometers of paved roads have been temporarily rehabilitated and 2,679 of unpaved roads.

STRATEGY FOR RAPID, SUSTAINABLE, PARTICIPATORY AND EQUAL DEVELOPMENT

The Plan has ample support from the different political sectors and fundamentally from the representatives of the civilian society on a local and central level. With the implementation of the proposed strategy, the country expects to recover most of the losses. On the economic aspect it is feasible to foresee that the GNP per capita in the year 2001 should be equal to the one that should have been observed in 1998. In human development, a reduction of five percentage points of poverty had been achieved. Profound reforms are expected to achieve goals in the areas of health, education and housing.
To mitigate adverse effects on the natural resources and the environment, the country should have by the year 2001 a decentralized National System of Protected Areas of Honduras and of territorial reorganization. Civilian society must participate in environmental protection activities for which an educational plan is incorporated.

Also, for the year 2001, important advances should be consolidated in all areas of democracy, including activities where the civilian society participates in social audits. A more efficient and trustworthy judicial system is proposed, which in turn would reduce significantly citizen disorder and unstableness. Other important points are:a decentralization of public services and a growing, constructive participation of women and ethnic groups in every social, political, economic and cultural aspect.
It is expected that by the year 2005:

There will be an annual growth surpassing 5%, facilitated by the Initiative of Very Indebted Poor Countries
There will be an additional reduction of 10 points of poverty
Solid qualitative and quantitative improvements in education, health, nutrition and housing
Consolidation of the processes of structural reform and state modernization
A substantial reduction of the deterioration of the environment
A democratic participation recognized worldwide as high level

KEY ISSUES: POVERTY, ENVIRONMENT AND PARTICIPATORY DEMOCRACY

Mitch accentuated the economic and social backwardness of the country, especially in the rural sector. Consequently a central element of the plan is the fight against the poverty. measures are to be implemented for an immediate relief and as sustained reduction for the medium and long term.
Regarding the environment, two things must be noted. First, the relation between global climatic changes and phenomena like hurricane Mitch must be recognized. Also, it must be understood that the vulnerability of the country was linked in great part with the inadequate style of development, the disorganized occupation of the territory and the design and location of public infrastructure. To reduce future risks, a better planning is being undertaken for the management of land, national resources and the protection of the environment. Through agreements between the State and the Civilian Society. In consequence with the concept of Democratic Participation, and recognizing the shared responsibility of the government and the people, to strengthen the democratic development started in 1981, this Plan proposes a better administration and application of justice. Also it stipulated a marked decentralization and more local participation, after establishing conditions that ensure equality of gender, age, religion, ethnic origin, political affiliation and any other social category. A major effort has been undertaken, even since before Mitch, to ensure a greater participation of women in all aspects of development.

PRIORITIES

The immediate priorities are to recuperate and better the social, economic and environmental conditions that existed before Mitch. As established in the damage estimate, such an objective is beyond the internal means of the country, especially in the financial resources.
Four areas are focused: 1) Economic reactivation with productive employment; 2) Fight against poverty and promotion of human development; 3)sustainable protection of natural resources; and 4) strengthening of democratic participation.

These correspond to a model of accelerated fair, sustainable and participatory development.
For all the productive sectors, re-establishing production levels is a priority, as well as to incentive investments. With an emphasis on rural development.

SPECIFIC OBJECTIVES

AGRICULTURE

To rehabilitate production units that are salvageable, especially those of small producers and family farms, by giving them seed, re-financing debts and giving them technical assistance.

To increment the level of employment and income to insure the food supply.
To increase productivity and competitiveness through investment incentives and strategic market alliances.
To improve the watershed management with emphasis on the major rivers.
To support institutional transformations in the areas of planning, investigation and technical assistance and others, to achieve more efficiency.

FORESTRY

To reform the legal structures to allow for a better and specialized management of a productive forests and of protected areas.
To increment the sustainable exploitation by a better system of auction, concessions and less bureaucracy.
To promote equal benefits, by redefining the social forestry system considering sustainable development and social equality.
To give better services in technical assistance, commercialization and financing.

MANUFACTURE

To widen the industrial base promoting industrial integration and the development of more industrial parks.
To create and even better climate for business, promoting entrepreneurial alliances between owners and workers within a more favorable legal framework.

MICRO - SMALL AND MEDIUM ENTERPRISE

To make viable a fast process of reconstruction with technical assistance and financial support.
To better qualify human resources with new technologies to ensure competitiveness.
To coordinate all support effort between the Government and local authorities, NGO’s and private enterprise through a National Council.
To better the insertion of national products in the international market.

MINING

To promote more investment in the exploration and exploitation.
To prevent negative effects on nature.

TOURISM

To restore the damage infrastructure and environment, especially on the island of Guanaja.
To promote and increase private investment .
To market tourism more aggressively.

FINANCIAL SECTOR

To foster the stability of the banking system.
To facilitate the financing of reconstruction providing resources, strengthening micro - finances and expanding the offer of low cost housing.
Modernizing the sector in general.

INFRASTRUCTURE

The Plan recognizes as a premise that the country does not have the financial capacity to go more deeply into debt to take on the task of investing to repair, reconstruct and argument the infrastructure. in this sense, the plan considers alternatives as privatization, capitalization, decentralization and concessions. These processes must be inserted within a framework of strong reform, to promote investment with transparent regulation and environmental specifications.

SPECIFIC OBJECTIVES

To re - establish the road network to levels similar to those existing before Mitch.
To improve regional transport through a consensus of the area’s country.
To prevent and mitigate destruction with better design and specifications.
To insure a better maintenance through the efficient management of the Road Conservation Fund and a decentralization towards the municipalities.

PORTS

To rehabilitate the damaged infrastructure.
To meet the needs of port services with the requirements of commercial and tourist increment.

AIRPORTS

To reestablish the infrastructure and communications and control equipment that were damaged.
To implement the concession of the four international airports in the country with the objective of offering better services.

WATER AND TREATMENT

To fully re-establish all damaged water works.
To enlarge and improve the coverage and quality of the services.
To establish a financial policy of cost recovery that allows for the self-sustainment of the system.

ENERGY

To expand private participation in the generation and distribution, and promoting alternative sources.
To implement an efficient and transparent tariff mechanism.
To convert Honduras into an international hydrocarbons distribution center, making the market more flexible and competitive.

TELECOMMUNICATIONS AND MAIL

To rehabilitate and modernize in the short term the telecommunications systems.
To conclude the process of capitalization of HONDUTEL and to promote competition of cellular telephone companies.
To improve and make more accessible other communication services, particularly, rural telephones and mail.

MACRO - ECONOMIC POLICIES AND STRUCTURAL REFORMS

It is important not only to counteract in the face of the negative impact, but to maintain and strengthen the achievements of this decade in the macro-economy.
Objectives and Policies

To achieve a recuperation of the growth index by the year 2001 which would be based on:
- A massive reconstruction activity which is in progress
- The re-establishment of agricultural production
- A boost to private investment
- Policies to strengthen the financial system and to augment internal savings.
- A better access to bigger markets through the Caribbean Basin Initiative and the FA with Mexico, and with the search of benefits through systems like the Preference System in Europe.
To diminish inflation to 12%, by December 1999 and to 8% by the end of the year 2001.
To maintain solid external accounts.
to manage public finances in such a way as to tend reasonably to the needs created by Mitch and to promote growth and consolidate economic stability.
To reduce the amount of external debt through:
- Obtaining a grace period and a restructuring and condonation in the most favorable terms of the Paris Club.
- To accord with the highly Indebted Poor Countries Incentive (HIPC)
- To obtain more resources for the Central American Emergency Trust Fund (CAETF) to menage the multi-lateral debt.
To accelerate the process of Structural reform mainly in the following:
- Conclusion of the process of capitalization of HONDUTEL and of privatization of the electricity sector
- To increase the participation of the private sector in the administration of ports, airports, roads and waterworks.
- To reduce of government and to make it more efficient.
- To strengthen the social security system modernizing the pension system.
- To strengthen the process of Central American integration complying with all the programs and regional projects.

FIGHT AGAINST POVERTY AND PROMOTION OF INTEGRAL HUMAN DEVELOPMENT

Before Mitch, two thirds of the Honduran population were impoverished. The hurricane had an impact on every aspect of life ranging from jobs, education, health and income to health services, transport, housing and other basic services. All of this presents the need for an integral human development strategy.
In the short term, priority will continue to be given to alleviate the effects of the storm on the poorest segment of the population through national and international programs.

For the long term solution, attention will center on the following:

The lack of access to production factors (land, credit, etc.)
Technical assistance
The deficiency in health and education
Poverty and it’s relations to the environmental damage the country is going through .
Poverty and democratic participation and their ties to capacity of society to solve problems.

SPECIFIC OBJECTIVES

To foster sustainable managements of forests in the hands of poor farmers
To give economic support with credit programs and technical assistance to those who lost the most
To promote Industrial parks to that by 2005 they double their job opportunities, specially for young women.
To promote for more tourism

SOCIAL SECTORS
Strategy

In regard to education, emphasis will be given to restore the system and to modernize it.

A culture of solidarity social conscience and more tolerance will be fostered.

The priorities in health and nutrition will be to integrate all services and programs, including water and environment, modeled on a decentralized system. The same applies for the housing sector. Intrinsically, the programs intend to reconstruct, expand, modernize and streamline the infrastructure of said sectors to benefit all of the population.

NATURAL RESOURCES AND RISK MANAGEMENT

Technological backwardness in the use of the resources, the non-application of laws and the apathy of decision workers, have favored a deterioration of the environment. This was exposed by the pass of Mitch which created massive erosion and sedimentation, among other disasters.

To counter this, the Plan includes the following objectives: 1) Protect the environment to develop it, and conserve it. 2) Develop eco-tourism. 3) Make effective the civilian society’s participation in the process of decision making.

This requires a tight relationship between the central government and the local municipal governments.
It is urgent to reduce the hydrological risks associated to the path of the storm, through immediate action to rectify drain basins.

The National Congress has under consideration the Law for Territorial Order: to confront environmental problems.

For reconstruction it is considered necessary to incorporate the premises and principles of environmental planning in accordance to the provisions of the General Environment Law, the Municipalities Law, the Health, and Engineering codes. It is also intended to consolidate and expand the National System of Protected Areas of Honduras (SINAPH). This will include co-administration and management with municipalities, NGO’s, community organizations, educational centers, etc. To achieve this, it has been also foreseen that the education system of the country participates actively and includes environmental issues to create a conservation conscience.

SPECIFIC OBJECTIVES

To incorporate the environmental issue in the design and execution of reconstruction; to insure it’s technical, social and economic viability.
To organize the use of land in an integral way on a municipal level taking into consideration all social aspects and also, any risk that can be prevented.
In the long-term, and through integral management , hydro-ecological systems will be recuperated and conserved.
Risk Management: prevention and Investigation of Disasters
The hurricane demonstrated the need for a National Emergency System, that would be in charge of establishing and developing the national capability to act in all areas in the prevention of disasters. This would include reduction of vulnerability, preparedness, response and rehabilitation. This requires modernization of the pertinent legal framework, the strengthening of the participatory and institutional structures, and a local, participatory focus.

SPECIFIC OBJECTIVES

To establish an organized, efficient system to prevent and mitigate disasters.
To promote the coordination of all institutions involved to reduce vulnerability.
To support the co-operation initiatives in Central America that allow the establishment of a regional system of prevention.

DEMOCRATIC PARTICIPATION IN THE PMRTN

Since 1981, Honduras maintains a process of democratic transition. The Hurricane came when this process was being consolidated, which is evidence in the constitutional reforms and the changes in the electoral system, along with the designs to include the participation of different sectors of the civilian society in the strategic decision-making. Decentralization, the fight against corruption, measures taken to increase transparency and a stronger administration of justice are evidence of advances in this field.
The crisis generated by the disaster has strengthened the will of Honduran Society to create and consolidate the mechanisms for coordination within a framework of ample citizen participation. Many communities responded to the crisis with an iron will for co-operation in a fast and efficient way.
Also, NGO’s and private development organizations OPD’s responded in a massive way. this has strengthened their structures and their role as promoters of citizen participation. The success of the plan in obtaining a fast and sustainable growth depends greatly on the efforts to consolidate democratic participation in Honduran Society. This is the operational link on which the state and society rely for administrative decentralization. Fundamental issues revolving around a consolidated state include the improvement of the democratic political system. The strengthening of the administration of justice, the guarantees for citizen safety, the de-centralization of government plans, support to civilian society forums, the incorporation of women in the process of social-economic development and the incorporation of ethnic groups.

SPECIFIC OBJECTIVES

To incorporate diverse mechanisms to insure citizen participation
To boost reform processes that tend to change for the better the political system
To put into action programs to prevent violence and crime considering international experience in these matters.
To promote legal changes that insure that women and minorities have equal access to the benefits of all programs of reconstruction and transformation

TRANSPARENCY, EFFICIENCY AND SUSTAINABILITY

Programs have been established to fortify national capacities through the Special national Reconstruction Cabinet. With these programs, higher levels of efficiency and agility are sought in all aspects of reconstruction and transformation.

Additionally, the Government is proceeding to build a �Project Control Center� whose purpose will be to guarantee the efficient and transparent execution and management of resources for reconstruction. To do this the control center will have a direct relationship with the establishing of priorities, the financial audits, the Technical Commission of Accountability, the General Project Inspectors, Monitoring and follow up. Citizen participation and accountability will also be promoted in forums and meetings. This will foster a social monitoring that will insure a greater responsibility.

This document lists different and complex aspects of the Master Plan for National Reconstruction and Transformation. It is the unavoidable purpose of President Flores’ government to transform the effects of the natural disaster into a turning point that allows reconstruction to transform, taking into account the effort of all of the Hondurans and honoring international solidarity.

There exist some fundamental values that preside this historic enterprise to project it integrally: public and private honesty; in the execution of the programs and projects, continuity in the work of the State; institutional responsibility and accountability; and the consensus that unifies criteria and ideals. On this path, a Honduras renovated in thought and action, shall come trough into the new millennium.