This report provides an analysis of the water and sanitation sectors in each of the Central American countries under study up until the end of 1989. During the process of finalizing this report in early 1990, however, the status of some projects has changed. For example, the water and sanitation component of USAID/Honduras's Employment Generation Project in Honduras has been cancelled, with the new Honduran Government providing funding for water and sanitation development through its Social Investment Fund. In addition, USAID/Guatemala will be adding $10 million to its rural water supply and sanitation project. These changes, along with others which have taken place in 1990, have not been included In the following report; rather, they will be recorded in the WASH Project's 1990 report. The objectives of this study are similar to determine existing levels of coverage (the number of persons and the percentage of the population with access to basic water and sanitation services); (2) to assess levels of by external support agencies and local governments to investment currently committed increase the availability of water and sanitation services; and (3) to track the progress made In each country toward meeting the 1989 goals of the LAC Bureau's Central America Initiative (CAl).