The Northern Triangle: Building Trust, Creating Opportunities

Strategic Actions of the Plan of the Alliance for the Prosperity of the Northern Triangle , and

The Northern Triangle 1 The main challenge we face is the lack of opportunities The pace of economic growth in El Salvador, Guatemala and Honduras (the countries of ’s Northern Triangle) has been low, and has not made it possible to bring about a substantial change in the generation of opportunities for progress available to a mostly young and growing population. This non- inclusive growth, the lack of opportunities, and the upsurge of violence and insecurity have become the main drivers of emigration from our countries.

Three times more Lack of Low growth vulnerable to natural opportunities and poverty disasters than the rest of Low and Latin America for young non-inclusive people economic growth

30 percent of youths aged 14–25 57 percent of the (1.7 million people) population live in poverty, with neither study marked territorial disparities nor work 2 Building Trust, Creating Opportunities The outflow of migrants assumed particular significance in 2014, when there was a substantial rise in the number of minors arriving in the United States without documentation and unaccompanied by an adult. This emergency situation has led us to take immediate, short-term steps to propose a solution to the structural causes of this migration.

High levels of violence The number of people who have decided 65 percent of the to emigrate is more than five population in the three times greater than in the other countries countries is under the age of Central America of 29, and about 10 million of those are youths between the ages of 15 and 29 High rates of migration

The homicide rate 91 pregnancies is three times per 1,000 girls between higher than the rest the ages of 15 and 19 of Central America are evidence of the high rates of teenage pregnancy, a rate that exceeds the Central American average of 9 percent of the 75 and the average for total population has medium/low-income decided to migrate in countries of 47 recent years

The Northern Triangle 3 The Plan and its strategic lines of action

To tackle these challenges, the three countries have proposed the Plan of the Alliance for the Prosperity of the Northern Triangle. This promotes the coordination and inter-linkage of actions over a five-year horizon (2016–2020), and seeks to give people incentives to stay in their own countries by means of structural change that offers economic opportunities and transforms our citizens’ quality of life, mainly in regions affected by the highest rates of poverty, migration and vulnerability. A 3 x 3 alliance: three countries and three key partners The three countries of the Northern Triangle comprise a region with great economic potential, invaluable cultural wealth and abundant human capital. Investment in our people’s development offers the possibility of transforming the structure of our societies and embarking on a path towards inclusive and sustainable prosperity. The Northern Triangle is:

13th in land 9th economy 9th exporter 30 million 4th exporter of area in the region inhabitants manufacturing

The alliance with the private sector, cooperation partners and civil society is crucial. Growth, job-creation and an improvement in the quality of life will only be possible if the private sector invests decisively and continuously in the region, if our cooperation partners take steps that complement our own efforts, and if civil society takes part in these endeavors and monitors them.

4 Building Trust, Creating Opportunities Strategic Lines

Developing Economic Opportunities

Developing Improving Fostering the Strengthening human capital public safety productive institutions and access sector to the justice system

The Northern Triangle 5 6 Building Trust, Creating Opportunities Developing human capital

To develop human capital, especially among children, youths and women, steps will be taken to improve the coverage and quality of education, primary healthcare, sexual and reproductive health, nutrition, and early childhood development. These actions will be complemented by the construction and upgrading of housing and the residential envi- ronment, and by targeted interventions geared to the social and economic reinsertion of returning migrants.

Lines of action

Broadening the Fostering coverage and Improving Building Expanding social the social improving the healthcare, and upgrading protection systems and economic quality of nutrition and housing and and conditional reintegration secondary, tertiary early childhood the residential transfer schemes of returning and vocational development environment migrants education

The Northern Triangle 7 We will seek to maximize the impact of conditional transfer Expanding programs, paying particular attention to measures that aim to social protection keep youths aged 14–18 in school. This strategy will be linked systems and to other programs geared to averting teenage pregnancies, conditional transfer schemes introducing youths into the labor force, and preventing youth violence.

STRATEGIC ACTION The Plan seeks to expand 300,000 youths the coverage of secondary between the ages of 14 and 18 in priority areas will be education in the priority included in transfer programs regions from 73 percent that emphasize their staying to 92 percent by 2020 in school

Broadening the coverage and The operational experience of conditional improving the transfer schemes shows that their effectiveness quality of depends fundamentally on the quality of the secondary, supply of social services. Hence it is essential tertiary and to expand the coverage and improve the quality vocational of educational programs. education

STRATEGIC ACTIONS 800,000 secondary 1 million youths with 150,000 teachers school students vocational training to benefit trained in priority subjects, to benefit from the construction from strengthening workforce and improvements in monitoring, and upgrading of classrooms, training centers, job centers, the assessment and incentives in the the introduction of alternative training of trainers, and youth teaching career methods of education, and the enterprise schemes use of innovative technology in schooling

8 Building Trust, Creating Opportunities Malnutrition and late entry into the education system Improving have severe consequences for students’ cognitive healthcare, development and usually affect their path through school nutrition and and into the labor force in adulthood. Hence nutrition, early childhood access to healthcare, and early childhood care and development development are crucial to making a significant change to the quality of our human capital.

STRATEGIC ACTIONS 7.4 million people 1 million youths 260,000 children to benefit from expanding the benefitting from sexual and to benefit from alternative coverage of maternal and child reproductive health programs programs for childcare, building healthcare and nutrition, and the through educational centers and upgrading classrooms construction and equipping of and the network of healthcare and community spaces at the hospitals and healthcare centers centers preschool level

Housing conditions and the residential environment affect the Building life quality of our population, as do their access to economic and upgrading housing and opportunities and their vulnerability to social problems. Hence access the residential to housing and an improvement in the quality of the residential environment environment are essential. It will be a priority to attend to and Fostering protect returning migrants. They the social STRATEGIC ACTIONS will be provided with coordinated and economic and integrated attention that reintegration 220,000 families seeks to protect their rights and to benefit from the construction of returning migrants ensure their social and economic of new housing or the refurbishment reintegration. of existing dwellings STRATEGIC ACTION 71,000 families to benefit from access Returning migrants will to clean drinking encounter better levels of water, treatment of protection, social reinsertion, waste water, and vocational training, and electricity supply productive employment relationships

The Northern Triangle 9 10 Building Trust, Creating Opportunities Improving public safety and access to justice

A comprehensive response to the problem of insecurity and violence will be provided. Strengthening prevention schemes, through citizen participation, and the construction of safe spaces; supporting vulnerable populations; and ensuring that justice is accessible to all so the rights and duties of every citizen are effectively guaranteed.

Lines of action

Expanding Strengthening Broadening community security Improving the capacity of and strengthening programs and prisons and judicial officials integrated care schemes for the centers attending and reducing case centers for social prevention to minors backlogs victims of crime

The Northern Triangle 11 Expanding community security programs A model of security and crime prevention, which emphasizes and schemes improving people’s living conditions, especially among sectors for the social at social risk. prevention of crime

STRATEGIC ACTION 7.4 million people to benefit from expanding The Plan seeks to lower the coverage of community security programs and local centers that monitor violence, making the murder rate by coordinated efforts with communities and about 10 percent a year schools, and upgrading public and community between 2016 and 2020 spaces

We will improve efficiency and effectiveness in preventing Strengthening and dealing with crime, and improving the effectiveness of the capacity of the judicial system, thereby allowing actions to be taken in judicial officials a more timely manner and enhancing public perceptions and and reducing case confidence. backlogs

STRATEGIC ACTIONS 70,000 police The institutions Consolidating the Reducing judicial officers trained and a responsible for fight against street case backlogs renewal of the teaching investigating crime gangs and “maras,” Expanding the Integrated staff in the police Modernization and drug trafficking, Judicial Centers and education system, strengthening of extortion, and the strengthening the capacity department of internal technical, scientific and smuggling and of human resources so affairs, transparency forensic tools at the trafficking of people, as to streamline and and trust national level and in using best international simplify the processing priority regions practices according to of case files; promoting the priority regions use of alternative dispute settlement mechanisms

12 Building Trust, Creating Opportunities Improving We will improve the governance of prison systems and upgrade prisons and their infrastructure, with a view to facilitating the social centers attending reinsertion of inmates and guaranteeing their human rights, to minors while at the same time eradicating crime within prisons.

STRATEGIC ACTIONS 6 prisons 10,000 young 100 percent New mechanisms to and youth detention offenders effective and sustainable assess and classify centers will be built, and will be subject to suppression of the use of the accused and in 15 existing centers alternative programs communications devices convicted according to the infrastructure will such as safeguarding of (such as cellphones their level of risk, and a be upgraded and the teenagers, and centers and internet services) system of transfers that management and control for training and social/ without the required allows inmates to be of human resources will workforce reinsertion administrative approval grouped according to the be improved level of danger they pose and the time remaining on their sentences

Broadening and strengthening An integrated model of caring for women who are the victims integrated care of various kinds of violence, especially intra-family and gender centers for violence, and to ensure women’s economic empowerment. victims

STRATEGIC ACTIONS 300,000 women and teenagers will receive care services against violence; sexual and reproductive healthcare; and economic empowerment through integrated care centers 11,000 women will benefit through the provision of women’s shelters

The Northern Triangle 13 The Plan will increase GDP growth by between 2.4 and 3.5 percent, and will create 600,000 new jobs by 2020

14 Building Trust, Creating Opportunities Fostering the productive sector

To create quality jobs, it is crucial to improve the conditions under which the productive sector operates, and to reach the most vulnerable socioeconomic levels. To that end we will take coordinated actions at the regional level to bring about an enlarged market, reduce logistical costs and times, and improve conditions in each country so as to attract greater investment and deepen integration with the rest of the world.

Lines of action

Promoting Supporting Upgrading Fostering strategic sectors the regional and expanding regional electricity and attracting integration infrastructure integration investment process and logistic

The Northern Triangle 15 Efforts will focus on policies and actions to promote Promoting strategic sectors —tourism, textiles, light strategic sectors manufacturing, agro-industry, forestry and and attracting high-value services— that allow for the successful investment insertion of micro, small and medium enterprises (MSMEs) into value chains, and that create quality jobs.

STRATEGIC ACTIONS 180,000 micro, US$900 million 500,000 families Attracting investment small and medium available to allow MSMEs in priority regions— establishment of one-stop entrepreneurs to access financing, especially those living services for registering to benefit from MSME especially those run in subsistence and those foreign and national development programs by women and young vulnerable to drought investment; introduction and integration into entrepreneurs or climate change—to of special economic production chains benefit from financing, zones, and development technical assistance, and of a regional trademark technology

To consolidate an expanded market and facilitate Supporting access to value chains, investments in logistics the regional integration infrastructure will be complemented by measures to process ensure that goods are able to move reliably, fast and at low cost.

STRATEGIC ACTIONS Trade facilitation Customs union Trade agreements Customs controls Upgrading regulations and Plan for the implementa- Taking advantage of Investment in technology improving quality, sanitary tion and start-up of the free trade agreements, and the training of and phyto-zoosanitary Honduras-Guatemala especially the CAFTA- customs officers so control systems to customs union, including DR accord and the as to guarantee the facilitate the movement the establishment of partnership agreement effectiveness and of goods through border periphery customs with the European Union efficiency of security and crossings and deepen controls and convergence control procedures for the Central American of tax and trade trade and migrant flows Integration System regulations

16 Building Trust, Creating Opportunities Fostering regional electricity integration

If we are to enhance our countries’ competitiveness, it is crucial to reduce the costs of generating electricity, promote regional energy integration, expand generating capacity, and diversify the energy matrix so as to create economies of scale and make projects and investments economically and socially viable.

The Plan seeks to reduce the cost of energy by 35 percent by 2020

STRATEGIC ACTIONS Expanding the Regional Doubling the capacity Promoting the region’s Diversification Electricity Market of the Electrical gas connection of Energy matrix (MER) by promoting Interconnection System with Mexico, by Legislative and regulatory fair, competitive and (SIEPAC) formalizing commitments changes, as well as transparent commercial from 300MW to 600MW, and moving forward with investments, to promote transactions; and though national efforts to structuring the financing renewable energy sources improving regulation and boost transmission and for the interconnection such as windpower, contracts so as to bring to adapt regulations project geothermal energy, about competitive prices biomass, gas and solar energy; and providing incentives for energy efficiency The Northern Triangle 17 Upgrading We will upgrade logistics infrastructure so as to and expanding reduce the cost of international trade of our products, infrastructure consolidate the integration of regional markets, and and logistic guarantee the productive sector’s greater access to export markets.

STRATEGIC ACTIONS 1,550 km of road network 2,500 km of rural roads Four seaports and four airports will be prioritized for construction, to be improved to have their infrastructure upgrading, maintenance of priority Ten border crossings expanded and upgraded logistics corridors and strengthening to be improved with optimized of the land transport network management

Belize Infrastructure and Mexico 8 Principal Logistic Corridors

Barrios Port Cortés Port

10 Guatemala 4 San Pedro Sula Honduras

2 Guatemala 3 5 9 Border Crossing City 7 Airport 1 Tegucigalpa Port El Salvador 1. Mesoamerican Pacific Corridor Quetzal Port San Salvador 2. Oceanic Corridor of Guatemala 6 3. Cortés Port – San Pedro Sula – San Salvador Nicaragua 4. Barrios Port – San Salvador Acajutla Port 5. San Pedro Sula – Guatemala – Quetzal Port 6. Tegucigalpa – San Salvador – Acajutla Port 7. Logistic Corridor of Honduras 8. Quetzal Port – Belize City 9. Agricultural Corridor of Honduras 10. Touristic Corridor of Honduras

18 Building Trust, Creating Opportunities The Plan seeks an 80 percent reduction in the time it takes for goods to move through border crossings, from an average of 11 hours to less than three

The Northern Triangle 19 20 Building Trust, Creating Opportunities Strengthening institutions

To increasing the efficiency and transparency of the public administration, results- based management and accountability are crucial. The introduction of the highest international standards of quality and transparency in government procurement, oversight and control, and fiscal and financial planning, will guarantee the sustainability of our institutions and the public’s trust in them.

Lines of action

Improving the Strengthening Fostering transparency and tax the convergence effectiveness of administrations of tax systems public spending

The Northern Triangle 21 STRATEGIC ACTIONS Tax collection Human resources Simplification Access to and exchange legislative reforms and reorganization of of tax systems of information actions geared to the tax administration legislation will be signing of information- fight against tax evasion, structures, and drawn up to facilitate exchange agreements and rationalization strengthening of the payment of taxes, between the three and control of tax the processes of reducing uncertainty countries, the United expenditures staff recruitment, about tax obligations States and other management, assessment countries, together with and retirement a strengthening of public records and regulatory frameworks

Our countries’ tax administrations will invest in the services and actions needed to make it easier for taxpayers to comply Strengthening tax with their tax obligations, and they will strengthen the administrations capacity of their human resources and take the necessary steps to eliminate corruption.

22 Building Trust, Creating Opportunities If regional integration and trade facilitation are to Fostering be effective, they require initiatives in the areas of the convergence standardization, harmonization, convergence, and of tax systems administrative and regulatory exchange.

STRATEGIC ACTION Harmonization of tax frameworks we will move forward in strengthening the institutional and regulatory apparatus to increase tax revenues at a regional level, especially VAT and income tax

STRATEGIC ACTIONS State effectiveness upgrading Professionalization of the civil Strengthening local governments technical equipment, as well service improving the quality and progress will be made on further as the processes for planning, oversight of processes governing decentralization, increasing implementation and accountability the recruitment, professional the financial and management in spending, procurement and development, assessment and capacities of local governments, public tenders retirement of public officials and enhancing accountability, transparency and oversight

Improving the Transparency in budgetary, financial and information management will transparency and be crucial pillars of the Plan. We will work in an integrated manner to effectiveness of strengthen all public management processes and to make them more public spending transparent.

The Northern Triangle 23 24 Building Trust, Creating Opportunities Implementation scheme

The Plan will use a responsive implementation mechanism with an independent institutional setup and regulatory framework, and with clear processes that ensure efficiency, transparency and accountability in the use of financial resources. This approach will involve the best international practices and standards, such as those of the Millennium Challenge Corporation (MCC), and will guarantee the participation of the private sector and civil society.

The principles underlying the implementation scheme will be:

Efficiency Monitoring Institutional Participation Territorial Transparency and capacity targeting evaluation

Financing the Plan

The development challenges and the financing of the actions covered by the Plan call for sizeable resources that surpass our countries’ financial and fiscal capacity, as well as our borrowing capacity. Hence it will be crucial to not only improve the efficiency of public spending and to increase fiscal revenue as to generate the necessary fiscal space, but also ensure the active participation and joint endeavors of other allied countries, the national and international private sector, multilateral organizations and development partners in the region, so as meet the proposed goals over the medium term.

The Northern Triangle 25 26 Building Trust, Creating Opportunities The three countries of the Northern Triangle are commited to implement this Plan with our own resources

The Northern Triangle 27 Graphic design: [email protected] Graphic design:

Plan of the Alliance for Prosperity in the Northern Triangle

Document Prepared by the Governments of El Salvador, Guatemala and Honduras.

28 Building Trust, Creating Opportunities