EU aid to Honduras plagued by ‘lack of expertise’ and shortcomings, auditors find

The EU aid for Honduras was partly intended to prevent deforestation - in fact, it increased. [Scubabix/Flickr]

EU aid to Honduras, one of the poorest countries on the planet, was plagued by a lack of management expertise, focus and overlapping support, a damning report from the Court of Auditors found today (12 January).

The EU payments totalled some €119 million over the period of 2007-2015, intended to help with poverty reduction, deforestation, and a sky-high murder rate.

Instead, the report finds, “poverty had increased, the areas of forest decreased, and there is still widespread violence with a very high homicide rate”.

The Luxembourg-based auditors blame a variety of factors – not all of them the fault of the EU – but including that “the EU delegation in Honduras lacked the necessary macroeconomic and public financial management expertise to manage budget support operations”.

However, it concedes that this was always going to be difficult as there were “substantial risks” in Honduras due to an unstable macroeconomic framework and “weak public financial management”.

The three-strong audit team add, however: “The Commission did not always react consistently when the partner country did not respect the budget support eligibility conditions…this sent contradictory messages that could be detrimental to aid effectiveness.”

They further note: “The Commission’s approach was insufficiently focused because the financial assistance spread over many areas, thus increasing the risk of jeopardising its impact.

“We found shortcomings in the tools used by the Commission to monitor the performance of the EU actions.”

The EU is the world’s largest aid donor, although it is only Honduras’ fourth largest donor, with approximately 11% of the Central American country’s development aid coming from Brussels.

The country of just 8 million has been ruled by the same political party since elections following a coup in November 2009.

It is currently 131 out of 188 countries on the United Nations human development index.

Nearly 40% of Honduras lives in “extreme poverty”. The country has one of the highest poverty rates in Latin America at 68.2%, and one of the most inequitable societies in the Americas.

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An example the report gives is of spending on water reservoirs, garbage bins around schools, paths, kiosks and parks and solar panels – without addressing the underlying issue of land tenure uncertainty.

Another downfall cited by the report is that in the water and sanitation sector, “half of all municipalities received no support at all, but many others received support from multiple donors simultaneously”.

The Hondurans themselves are not without blame. The auditors found that government spending exceeded both the budget and available income, public procurement was not transparent, corruption “problematic” and “the level of payment arrears remains unknown.”

Despite the focus on forestry, the report notes simply: “The reforms have not yet achieved much overall impact.”

In fact, forest land in Honduras has decreased markedly, from 59% in 2011 to 48% just three years later.

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Although there has been a small decline in homicides, in one of the most violent societies on earth, the report says, “it is likely that the impact of EU funding was fairly limited”.

In response, the European Commission stated that it is “doing its utmost to help the country improve its level of development. It considers that under difficult circumstances, the EU’s development support has demonstrated a real impact in the areas of intervention.

“The Commission will continue to improve identified weaknesses in the management of its aid following the suggestions made by the Court. It would like to point out, however, that it is not possible to establish to what extent the ‘management weaknesses’ hindered the EU’s development impact, especially in the context of a wide array of external factors.”

Following the review period, the audit reports that the priorities for 2014-2020 are family agriculture, employment and rule of law.

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