IMF Concludes Staff Visit to HaitiPress Release No. 13/173
June 12, 2013
A mission from the International Monetary Fund (IMF) headed by Mr. Boileau Loko visited Port-au-Prince during May 29-June 7, 2013 to conduct the discussions for the sixth review under the Extended Credit Facility (ECF) arrangement.1 The mission met with Prime Minister Laurent Lamothe; Minister of Economy and Finance Wilson Laleau; Governor of the Bank of the Republic of Haiti Charles Castel; other senior government officials, representatives of the private sector, and development partners. At the end of the visit, Mission Chief Boileau Loko issued the following statement:
“Implementation of the ECF-supported program is broadly on track. Despite a relatively strong performance of non-agricultural sectors, preliminary data indicate that a weak recovery of agricultural production will limit the yearly growth rate of gross domestic product (GDP) to about 3.4 percent in FY2013, below the program forecast of 6.5 percent. Inflation, after peaking at 7.7 percent at end-March, mainly because of pressures on domestic food supply and prices after last year’s drought and hurricanes, receded to 7.3 percent at the end April (on a twelve-month basis). The fiscal position is still fragile as revenue collection and disbursement of official budget support remain well below projections. Overall credit growth continues to rise while gross foreign reserves remain comfortable, at 6 months of imports at end-April.
“The government of Haiti and the mission reached broad agreement on the main elements of a program for 2013-14 supported by an extension of the current ECF. The authorities’ program will continue to focus on preserving macroeconomic stability, supporting economic recovery, and reducing poverty. The budget for 2013-14 will continue to support reconstruction and contain the wage bill so as to provide the flexibility needed to respond to shocks.
“In the context of declining external aid, mobilization of additional resources to fund capital expenditure and poverty reduction spending through government revenue collection will be crucial. More efficient management of government expenditures will also be required, including through lower subsidies to the national electricity company (EDH). An appropriate combination of budgetary, monetary, and foreign exchange policies should help maintain inflation at around 5 percent and preserve a strong external position.
“The elements of the structural reform program will focus mainly on: (i) raising domestic revenue collection, primarily through strengthening the tax and customs administrations; (ii) further improving public financial management and economic governance; (iii) strengthening institutional capacity to enhance the execution and efficiency of public investment; (iv) enhancing financial intermediation and the financial sector; and (v) accelerating reforms to improve the business environment. Close coordination between the government and the donor community should be maintained to ensure the success of the program.
“The mission would like to thank the authorities for their warm hospitality and the close cooperation and frank discussions that prevailed throughout its stay. The IMF staff plans to recommend that management submit the staff report for the sixth review and the extension of the ECF to the Executive Board in July 2013.”
1 The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.