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Implementation Completion Report (ICR) Review - Agriculture Sector Adjustment Credit

1. Project Data:   
Project ID:
Project Name:
Agriculture Sector Adjustment Credit
Agriculture Adjustment, Agriculture
L/C Number:
Partners Involved:
Inter American Development Bank
Prepared By:
Madhur Gautam, OEDST
Reviewed By:
Hernan Levy
Group Manager:
Gregory K. Ingram
Date Posted:

2. Project Objectives, Financing, Costs, and Components:

Objectives: To support the Government of Honduras' (GOH) medium-term Agricultural Modernization and Development Program, and to consolidate the reforms supported under the Second Structural Adjustment Loan and Credit (SAL II, Loan 3257-HO and Credit 22208-HO) in agricultural trade, pricing policy, grain marketing and rural finance.

Components: (a) improve land use by supporting modifications to the Agrarian Reform Law to secure property rights, supporting the development of property markets and consolidating the process of agrarian reform; (b) laying the basis for sustainable management of the country's rich forest resources by improving forest property rights and reorienting the public forestry sector toward the protection and management of forests and promotion of forest biodiversity conservation; and (c) improve sector planning and coordination by strengthening and making better use of the budgeting process.
Project costs and financing: The Agricultural Sector Adjustment Credit (AGSAC) was approved in September, 1993, in the amount of US$62.1 million, with two reflows attached to the first and second tranches for US$29.4 million and US$29.3 million, respectively. The original closing date was extended by two years and the credit closed in June, 1997, with total disbursements of US$120.8 million. The Inter-American Development Bank provided US$30 million as cofinancing.

3. Achievement of Relevant Objectives:

The program succeeded in substantially achieving many of its objectives and expected benefits. The reforms contributed to the improved agricultural performance by establishing clearer market signals, allocating resources towards the tradable sector, expansion of non-agricultural exports, and improving employment and purchasing power of the rural population. Substantial gains were made in land titling; the forestry program helped improve institutional efficiency, strengthening the political and legal framework, increasing stakeholder participation in management, and improved transparency in the marketing of wood products. Although the Public Administration and Expenditure Action Plan was implemented, improvements in sector planning and coordination were not fully achieved for lack of adequate weight given to Ministry of Agriculture's budget recommendations by the Ministry of Finance. The objectives of the Rural Financial Sector Action Plan were not satisfactorily achieved.

4. Significant Outcomes/Impacts:

Significant reforms sectoral policies leading to improved performance of the agricultural sector; institutionalization of land property rights and the development of land markets; consolidation of the process of agrarian reforms; restructuring of the Honduran Forestry Development Corporation; preparation of management plans for 350,000 Ha of national forests; public auction of forest resources; improvement of forest property rights.

5. Significant Shortcomings (include non-compliance with safeguard features):

Failure to take advantage of the Public Administration Action Plan developed to improve the planning and coordination of the Ministry of Agriculture; failure to make much progress on improving the efficiency of rural financial intermediation or improving the access of the small farmers to credit facilities.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
SatisfactoryMarginally Satisfactory
    The ICR rates the project marginally satisfactory in the text.
Institutional Dev.:
Bank Performance:
Borrower Perf.:
Quality of ICR:

7. Lessons of Broad Applicablity:

1. Adjustment programs do not earmark funds to cover the incremental costs of implementing reforms. In projects with components entailing incremental operating costs, especially in countries with severe fiscal problems, adequate resources for the concerned agencies should be ensured.
2. Operations using innovative and technically complex tools, and projects addressing challenging institutional issues require a realistic assessment of their implementation time frame and borrower's technical capacity for a reasonable chance of success.
3. Adjustment operations can lay the policy framework for follow-up investment operations, as demonstrated by this project with respect to land administration and forestry components (AGSAC was followed up by the Rural Land Management Project and the links between the two have been rated as best-practice by QAG).

8. Audit Recommended?  No


9. Comments on Quality of ICR:

A frank and objective assessment of the project's performance.

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