Tuesday, November 18, 2014

Honduras's Millennium Challege Scorecard, 2015 Edition.

Honduras once again failed to resolve issues that prevent it from obtaining a Millennium Challenge Compact from the US Government.  Honduras failed to score a passing grade on 10 criteria, though not the same 10 criteria it failed to score a passing grade on last year.  These yearly scorecards determine a country's eligibility for a Millennium Challenge Compact.

The Millennium Challenge Corporation (MCC) uses what it describes as"objective and quantifiable policy in­dicators in three broad policy categories: Ruling Justly, Investing in People, and Encouraging Economic Freedom".  These broad areas are broken down into several measures in each area, each listed with the third party that developed and scored the countries.
Ruling Justly
     Civil Liberties (Freedom House)
     Political Rights (Freedom House)
     Control of Corruption (World Bank/Brookings Institution WGI)
     Government Effectiveness (World Bank/Brookings Institution WGI)
     Rule of Law (World Bank/Brookings Institution WGI)
     Freedom of Information (Freedom House / FRINGE Special/ Open Net Initiative)
Investing in People
     Immunization Rates (World Health Organization and UNICEF)
     Public Expenditure on Health (World Health Organization)
     Girls’ Education (UNESCO)
     Primary Education Completion (Scorecard LICs)
     Secondary Education Enrolment (Scorecards LMICs)
     Public Expenditure on Primary Education (UNESCO)
     Child Health (CIESIN and YCELP)
     Natural Resource Protection (CIESIN and YCELP)
Encouraging Economic Freedom
     Business Start-Up (IFC)
     Land Rights and Access (IFAD and IFC)
     Trade Policy (Heritage Foundation)
     Regulatory Quality (World Bank/Brookings Institution WGI)
     Inflation (IMF WEO)
     Fiscal Policy (IMF WEO)
     Access to Credit (IFC)
     Gender in the Economy (IFC)
This set of criteria was adopted in 2012. 

The Millennium Challenge Corporation board then selects five countries from those that receive passing scores on all indicators and allows them to develop a compact, based on available moneys allocated by the US Congress.  These compacts can be worth up to $250 million to a country.  In addition, a few countries each year get a 1-3 year grant called a Threshold grant designed to help them improve their score where they fall below the 50% threshold.  Threshold grants are $10-$30 million.

In August, 2013 Honduras received a 3 year, $15.6 million,  Threshold grant to "to improve public financial management and create more effective and transparent public-private partnerships."  This program had a number of concrete programs designed to improve Honduras's scores in several areas:
Public Financial Management
     1. Budget and Treasury Management
     2. Improve Procurement Capacity, Planning, and Controls
     3.  Improve the Capabilities of the Tribunal Superior de Cuentas
     4. Grants to Civil Society Organizations to Foster Accountability
Public - Private Partnerships
     1. Enhance COALIANZA's capabilities to Select, Finance, and Manage Risk.
     2. Fund Fundación para la Inversión y Desarrollo de Exportaciones to provide government solutions supported by user fees and manage exports through an eregulations.org government platform.
Depending on the statistic, the years 2012 and 2013 form the baseline for evaluating the effectiveness of the Threshold program. 

The 2013 scorecard forms the basis of assigning Honduras to the Threshold program, so lets look at the areas where Honduras was deficient (below average) on that scorecard and see what's happened since then. 

Under the rubric of scoring Economic Freedom, the MCC uses a number of indicators.  Honduras in 2013 had deficient scores (below the median score) in four of them:  Fiscal Policy, Gender in the Economy, Land Rights and Access, and Business Start-Ups.  In 2013 Honduras scored a 50% in Fiscal Policy.  That meant that 50% of the countries scored better, and 50% scored worse than Honduras.  Its ranking on this criterion worsened in 2014, to 46% and plunged on the 2015 scorecard to 26%.  That plunge can directly be attributed to the economic policies of the Porfirio Lobo Sosa government, whose last year in office forms the basis of the 2015 score.  The Threshold program has not yet had a chance to affect this indicator.

Honduras was deficient in 2013 in women's participation in the economy, called Gender in the Economy.  Here Honduras started with a score of 21% on the 2013 scorecard, improved its score in 2014 to 41% then saw its score decline again in 2015 to 37%.  No Threshold grant goals sought to address this criterion.

Land rights and Access was another criterion where Honduras was deficient.  Here Honduras began 2013 with a score of 32% and saw it decline on the 2014 scorecard to 23%.  On the 2015 scorecard it improved slightly to 25%.  No Threshold grant goals seek to address this criterion.

The final Economic Freedom indicator where Honduras was deficient was in Business Start-Ups.  In 2013 Honduras scored 28%.  That improved to 50% on the 2014 scorecard, but decreased to 43% on the 2015 scorecard.  No Threshold grant goals addressed this criterion.

Honduras was also judged deficient in Girls Secondary Education Enrollment Rate.  Here Honduras began with a score of 16% and actually managed to improve it in the 2014 and 2015 scorecards, so that in the latest scorecard its 31%, nearly double what it was two years ago.  Still there's a lot of room for improvement here.  No Threshold grant money had improving this indicator as a goal.

Under the rubric of Investing in People, Honduras had two areas of concern:  Girl's Secondary Education Enrollment Rate and Children's Health.  Honduras scored 16% on the 2013 scorecard in Girl's Secondary Education Enrollment Rate.  This continued to improve in 2014, where Honduras scored 22% and 2015 where Honduras scored 31%.  Children's Health scored 43% in 2013 but improved to good levels in 2014 and 2015 (56% in each) and is not currently an area of concern.  By comparison, another criterion, the Immunization Rate, became of concern in 2014 and continues to be of concern as Honduras's ranking plummets.  Honduras scored 87% on the 2013 scorecard.  It scored 44% on the 2014 scorecard, and 37% on the 2015 scorecard.  No Threshold grant goals address any of these three criteria.

Under the rubric of Ruling Justly, the MCC found Honduras deficient in four of the six criteria in 2013:  Freedom of Information, Government Effectiveness, Rule of Law, and Control of Corruption.  Honduras scored just 28% in Freedom of Information on the 2013 scorecard.  Its score has decreased on each subsequent scorecard to 27% in 2014 and 21% in 2015.  Government Effectiveness follows the same trajectory.  Honduras scored 44% on the 2013 scorecard, and its score declined in each subsequent scorecard, to 27% in 2014, and 25% in 2015.  The criterion Rule of Law scored 44% on the 2013 scorecard, but only 4% on the 2014 scorecard, and 7% on the 2015 scorecard.  Finally, in Control of Corruption, Honduras scored only 16% on the 2013 scorecard, 15% on the 2014 scorecard, and 21% on the 2015 scorecard.  The Threshold grant was designed to affect both the Government Effectiveness and Control of Corruption criteria, but because these measures only reflect the years of the Porfirio Lobo Sosa government, it has yet to show any results.

So Honduras is still deficient in 10 criteria though not the same 10 criteria that were deficient in 2013.  Child Health was eliminated as a concern, and Immunization Rates became a concern during the last two years.  The Threshold grant has yet to be able to show any results, but that is to be expected.  The scorecard has yet to report on years in which the Threshold Grant was active.  Honduras's deficiencies are directly attributable to the Porfirio Lobo Sosa government's actions, not the drug trade, not gangs.

Whether the Hernandez government can use the Threshold grant to turn some of these scores around remains to be seen.

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