## 1htiea2020003

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---

### Context and recent developments
- From mid-2018 until early 2020, Haiti experienced political instability and intermittent social unrest that paralyzed the economy and impeded the implementation of economic policies.
- Almost 4 million people are living with food insecurity (WFP, 2020).
- Authorities began taking steps to restore economic stability and were preparing for discussions on a potential Staff Monitored Program (SMP) following the Article IV consultation in late January.
- Recent preliminary policy actions: preparing a new budget framework for FY2020; restarting activity at the statistics agency; resuming publication of monetary statistics; increasing availability of fiscal and monetary data.
- Fiscal year end is September 30.
- Key indicators and developments:
  - Fiscal deficit widened to 3.5 percent of GDP in FY2019; domestic arrears surged; public debt jumped by 8 percent of GDP.
  - Remittances represent over 34 percent of GDP (remittances exceeded US$3 billion).
  - Gross international reserves were US$2.1 billion at end-2019 (5.7 months of imports).
  - US$/HTG exchange rate was HTG98 at end-March, a depreciation of 5 percent since October 2019.

### Impact of COVID-19 and response
- Findings on economic impact (staff estimates and projections):
  - Remittances: estimated drop of about US$557 million compared to the previous fiscal year.
  - Textile exports to the U.S.: estimated decline of about US$178 million, or 2.0 percent of GDP and 17 percent of total goods exports.
  - Foreign direct investment (FDI): estimated drop of about 0.4 percent of GDP.
  - Fiscal revenue: expected decline as a share of GDP by 0.6 percentage points, to a level 3.0 percent of GDP below the FY2016-FY2018 average.
  - Real GDP: forecast to contract by 4.0 percent in FY2020 compared to a 1.2 percent drop in FY2019.
  - Balance of payments shortfall: expected to widen to an estimated US$338 million from US$190 million in FY2019.
  - Compared to staff’s previous projections (SM/19/283), external financing needs for FY2020 are US$317 million larger.
  - Overall Balance for FY2020 (Text Table 1): -337.8 (In millions of US$); Financing includes RCF 111.2 and Other incl. decline in reserves 226.3.
- Government measures (estimated at 1.6 percent of GDP; totals in million HTG and percent of GDP):
  - Health-related expenditures: 3,432.9 million HTG, 0.4 percent of GDP.
  - Security: 1,000.0 million HTG, 0.1 percent of GDP.
  - Dry food rations: 1,800.0 million HTG, 0.2 percent of GDP.
  - Transfers to poor families: 4,000.0 million HTG, 0.5 percent of GDP.
  - Transfers to teachers: 2,000.0 million HTG, 0.2 percent of GDP.
  - Transfers to textile workers: 412.5 million HTG, 0.0 percent of GDP.
  - Other transfers: 233.6 million HTG, 0.0 percent of GDP.
  - Capital expenditures (University hospital): 500.0 million HTG, 0.1 percent of GDP.
  - Total: 13,379.0 million HTG, 1.6 percent of GDP.
- Central Bank of Haiti (BRH) measures:
  - Reduced the refinance and reference rates.
  - Lowered reserve requirements on domestic currency deposits.
  - Allowed 20 percent of treasury certificates held to count against reserves.
  - Eased loan repayment obligations for three months.
  - Suspended fees in the interbank payment system.
- Government containment measures:
  - Communication campaign; declared a state of emergency; curfew from 8pm to 5am; shut land and sea borders to persons (not freight); closed schools, factories, and places of worship; cancelled public gatherings of more than 10 people; prohibited informal trading of medicines and food.

### International support and financing needs
- International financial institutions (excluding the IMF) and the European Union expected to provide about US$253 million in FY2020, mostly project grants; only US$17 million is budget support.
- Additional international support would be required to close the financing gap and would likely materialize in conjunction with implementation of a SMP.
- Details on bilateral emergency financing were not yet available.

### Outlook and debt sustainability
- Baseline assumptions: political stability relative to recent times and modest improvements in policy implementation.
- FY2020 policy anchor: government’s FY2020 notional budget guided by medium-term principles of debt sustainability.
- Key near-term policy focus:
  - Close fiscal financing gap while providing COVID-19 relief.
  - Contain inflation by limiting monetary financing of the deficit.
  - Allow exchange rate to adjust to market pressures.
  - Rapidly enhance provision of social benefits with development partner assistance.
- Projections and key macro forecasts:
  - GDP projection: contraction of 4.0 percent in FY2020, rebound to 1.0 percent in FY2021.
  - Central bank financing for the fiscal year: to remain under HTG 26.7 billion.
  - Inflation: projected to rise to 23 percent (y/y) by September 2020.
  - Fiscal deficit: projected to widen to 6.4 percent of GDP in FY2020 absent offsetting measures.
  - Potential accumulation of arrears: about 2.8 percent of GDP if financing sources fall short.
  - External current account deficit: forecast to decline to about 0.6 percent of GDP in FY2021 as oil import costs remain low and remittances recover.
- Risks:
  - Downside: deeper and more prolonged COVID-19 impact; failure to implement comprehensive reform program and stronger governance; return to political instability and social unrest; natural disasters; larger-than-anticipated interruption in remittance flows.
  - Upside factor: continuing low fuel prices easing budget pressure.
- Debt sustainability assessment:
  - Haiti is assessed as having sustainable debt.
  - Debt-to-GDP ratio projected to remain roughly flat over the next 5-10 years under the DSA update.
  - Risk of debt distress assessed as “high”; model-based risk rating for external and overall public debt is “moderate,” but judgment raised the rating to “high” because of institutional fragilities, vulnerability to natural disasters, and high long-term risk without adjustment in outer years.

### Policy undertakings and fiscal framework
- Immediate and medium-term commitments:
  - Authorities will boost spending to mitigate COVID-19 impacts; higher fiscal deficit will be financed by external budget support, RCF resources, and domestic borrowing.
  - Authorities committed to restoring macro stability, addressing fiscal imbalances over the medium-term, and proactive financial sector oversight.
  - Authorities intend to begin discussions for an SMP directly following the Board review of Haiti’s request for disbursement under the RCF.
- SMP framework priorities:
  - Strengthen fiscal and monetary policy frameworks.
  - Improve tax administration and public finance management.
  - Tackle governance weaknesses and corruption.
  - Build a coherent social safety net.
  - Reform the energy sector.
- Fiscal framework and financing specifics:
  - New spending on health, social programs, and security expected to reach 1.6 percent of GDP.
  - Treasury-funded domestic public investment could rise by 0.5 percent of GDP.
  - Initial preparations for elections in FY2021 expected to add 0.5 percent of GDP in expenditures.
  - Authorities do not plan to incur new arrears in 2020 and will provide a stock-taking of existing budget arrears and propose a restructuring plan in preparation for SMP discussions.
  - Of gross financing needs of 6.4 percent of GDP, 21 percent would be met by external budget support from the IMF (1.3 percent of GDP); central bank financing limited to HTG 26.7 billion (3.1 percent of GDP).
  - If budget support is insufficient, options include reducing non-COVID-19 capital expenditures and implementing additional revenue measures.

### Monetary and financial sector guidance
- Staff advice to BRH:
  - Contain monetary financing of the deficit and limit foreign exchange interventions to smoothing volatility.
  - Expectation that BRH will limit monetary financing for the fiscal year to HTG 27 billion (excluding planned on-lending of RCF resources).
- Banking supervision recommendations:
  - Heighten monitoring of financial soundness.
  - Enhance frequency of dialogue with regulated entities.
  - Prioritize business continuity planning and operational resilience.
- Banking sector guidance:
  - Banks encouraged to use existing buffers and work with affected borrowers on prudent loan restructuring.
  - Loan classification, provisioning rules, and other accounting requirements should not be relaxed.

### Modalities of IMF support under the RCF
- Staff proposal:
  - Financing support of 50 percent of quota (SDR 81.9 million, about US$111.24 million) under the RCF “exogenous shock” window.
  - Staff supports the authorities’ request for a disbursement under the Rapid Credit Facility in the amount of SDR 81.9 million (50 percent of quota).
- Rationale and access assessment:
  - Haiti meets eligibility requirements for RCF support and faces an urgent balance of payments need.
  - Not feasible to implement an upper credit tranche-quality Fund-supported program at this time.
  - Haiti does not currently have an IMF arrangement and has outstanding debt to the IMF of SDR 54.6 million, or 33 percent of quota (March 2020).
  - Access of 50 percent of quota is within applicable access limits under the PRGT.
  - The amount would represent about 34 percent and 47 percent of the additional external and fiscal financing gaps, respectively.
  - If balance of payments needs widen, authorities might consider requesting another RCF disbursement, subject to policy track record and eligibility.
- Use, coverage, and remaining financing needs:
  - RCF disbursement to be disbursed to the central bank and expected to be on-lent to the government for budget support.
  - Intended uses: finance response to the COVID-19 crisis, including purchases of medical supplies and cash transfers to the most vulnerable households.
  - Proposed access of 50 percent of quota, equivalent to 1.3 percent of GDP, is not sufficient to cover the full fiscal financing gap of 2.8 percent of GDP.
  - Authorities are seeking further support to cover the remaining fiscal financing need of US$129 million, or 1.5 percent of GDP.
  - The remainder of the fiscal financing gap would need to be covered by additional revenue measures and issuance of T-bills.
  - MEF and BRH confirmed a Memorandum of Understanding clarifying on-lending terms and responsibilities for timely servicing of IMF obligations.

### Transparency, audits, and emergency measures implications
- Staff stressed importance of enforcing standard budget execution procedures and reporting for COVID-19 expenditures.
- Authorities agreed to:
  - Prepare monthly budget execution reports on all COVID-19 expenditures.
  - Undertake a thorough ex-post financial and operational audit of COVID-19-related operations.
- Expected benefits: strengthen sustainable reforms of budget processes; provide assurances on the use of external financing; improve operational efficiency of emergency responses.
- Staff recommendations on emergency-response expenditures and transparency:
  - Track, record, and publish all emergency-response expenditures.
  - Report monthly on COVID-19 expenditures.
  - Undertake an ex-post COVID-19 financial and operational audit of the expenditure response.
  - Continue to advance governance and anti-corruption reforms and implement a comprehensive economic reform strategy.

### Fiscal and macroeconomic selected indicators and projections (selected series)
- Country identifiers:
  - Nominal GDP (2018): US$9.7 billion
  - GDP per capita (2018): $890
  - Population (2016): 10.847 million
  - Percent of population below poverty line (2012): 58
- Real GDP growth (FY2018–FY2025): 1.5 -1.2 -4.0 1.2 1.0 1.1 1.2 1.4
- Consumer prices (end-of-period, FY2018–FY2025): 13.3 20.1 23.0 20.0 17.0 14.0 12.0 10.0
- Remittances (percent change, FY2018–FY2025): 21.1 8.5 -18.3 12.7 7.3 -3.0 -2.8 -0.9
- Total public sector debt (end-of-period, percent of GDP, FY2018–FY2025): 39.9 47.7 51.9 49.9 48.6 47.3 46.8 46.6
- Gross international reserves (in millions of US$, FY2018–FY2025): 2,086 2,100 1,872 1,885 1,977 2,069 2,140 2,190
- Net international reserves (program definition, in millions of US$): 677 644 268 279 368 430 469 488
- Current account (including grants, in millions of US$ FY2018–FY2025): -373 -123 -316 -52 -41 -131 -195 -264
- Central government overall balance (including grants, percent of GDP, FY2018–FY2025): -1.7 -2.4 -5.2 -2.9 -2.8 -2.4 -2.5 -2.6
- Selected nominal figures (in millions of gourdes, FY2018–FY2025):
  - Total revenue and grants: 109,107 88,998 106,170 159,930 200,379 252,891 313,700 363,480
  - Total expenditure: 119,965 106,345 150,533 190,020 235,607 287,959 356,374 412,458
  - Central government balance including grants (in millions of gourdes): -10,858 -17,347 -44,362 -30,089 -35,228 -35,069 -42,674 -48,978

### Debt sustainability (DSA) and risks
- DSA summary and ratings:
  - Risk of external debt distress: High.
  - Overall risk of debt distress: High.
  - Mechanical/model-based risk ratings: Moderate for external and public DSA but judgment raised ratings to High because of institutional fragilities, vulnerability to natural disasters, and probability of protracted threshold breaches from FY2033.
  - DSA date: April 13, 2020.
  - DSA notes: Haiti identified as an FCV country; tailored stress tests indicate high vulnerability to large natural disaster shocks; baseline projects sustainable medium-term debt but long-term risks require fiscal consolidation and higher domestic revenue mobilization.
  - DSA assumes debt service to the IMF falling due in the 24 months from April 14, 2020 will be covered under the Catastrophe Containment and Relief Trust Fund (CCRTF), subject to availability and Executive Board decisions.

### Staff appraisal and capacity to repay
- Staff assessment:
  - Haiti faces a major 2020 shock superimposed on prior political and economic fragility.
  - Emergency financing under the RCF and international partner support are needed to fill a large financing gap and finance COVID-19 response measures.
  - Risks to Haiti’s capacity to repay are moderate but may be mitigated by authorities’ commitment to policy reforms under an SMP and later UCT-level program.
  - Monetary financing of the fiscal deficit has grown by one third over the past three months, accelerating inflation and further depreciation of the gourde.
  - Without decisive external support, the situation would be unsustainable.
  - Staff support Haiti’s request for financial assistance under the RCF.
  - The proposed disbursement of 50 percent of quota would not impair Haiti’s debt sustainability or capacity to repay the Fund.

*Prepared by the Haiti team; Approved by Patricia Alonso Gamo and Jeromin Zettelmeyer; April 13, 2020. Source: IMF staff report excerpt (content unit 1htiea2020003).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context and recent developments
- From mid-2018 until early 2020, Haiti experienced political instability and intermittent social unrest that paralyzed the economy and impeded the implementation of economic policies.
- The protracted crisis placed severe strains on the population; almost 4 million people are living with food insecurity (WFP, 2020).
- Following the conclusion of the Article IV consultation in late January, the authorities began taking steps to restore economic stability and were preparing for discussions on a potential Staff Monitored Program (SMP).
- Recent preliminary policy actions include preparing a new budget framework for FY2020, restarting activity at the statistics agency, resuming publication of monetary statistics, and increasing availability of fiscal and monetary data.
- The fiscal year end is September 30.

Key indicators and developments
- Fiscal deficit widened to 3.5 percent of GDP in FY2019; domestic arrears surged; public debt jumped by 8 percent of GDP.
- Remittances represent over 34 percent of GDP (remittances exceeded US$3 billion).
- Gross international reserves were US$2.1 billion at end-2019 (5.7 months of imports).
- US$/HTG exchange rate was HTG98 at end-March, a depreciation of 5 percent since October 2019.

### Impact of COVID-19 and response
Findings on economic impact
- Remittances: estimated drop of about US$557 million compared to the previous fiscal year (based on estimated elasticities).
- Textile exports: estimated decline to the U.S. of about US$178 million, or 2.0 percent of GDP and 17 percent of total goods exports.
- Foreign direct investment (FDI): estimated drop of about 0.4 percent of GDP.
- Fiscal revenue: expected decline in fiscal revenues as a share of GDP by 0.6 percentage points, to a level 3.0 percent of GDP below the FY2016-FY2018 average.
- Real GDP: forecast to contract by 4.0 percent in FY2020 compared to a 1.2 percent drop in FY2019.
- Balance of payments shortfall: expected to widen to an estimated US$338 million from US$190 million in FY2019.
- Compared to staff’s previous projections (SM/19/283), external financing needs for FY2020 are US$317 million larger.
- Overall Balance for FY2020 (Text Table 1): -337.8 (In millions of US$); Financing includes RCF 111.2 and Other incl. decline in reserves 226.3.

Government and central bank measures
- Government measures (estimated at 1.6 percent of GDP) include:
  - Health-related expenditures: 3,432.9 million HTG, 0.4 percent of GDP.
  - Security: 1,000.0 million HTG, 0.1 percent of GDP.
  - Dry food rations: 1,800.0 million HTG, 0.2 percent of GDP.
  - Transfers to poor families: 4,000.0 million HTG, 0.5 percent of GDP.
  - Transfers to teachers: 2,000.0 million HTG, 0.2 percent of GDP.
  - Transfers to textile workers: 412.5 million HTG, 0.0 percent of GDP.
  - Other transfers: 233.6 million HTG, 0.0 percent of GDP.
  - Capital expenditures (University hospital): 500.0 million HTG, 0.1 percent of GDP.
  - Total: 13,379.0 million HTG, 1.6 percent of GDP.
- Central Bank of Haiti (BRH) measures:
  - Reduced the refinance and reference rates.
  - Lowered reserve requirements on domestic currency deposits.
  - Allowed 20 percent of treasury certificates held to count against reserves.
  - Eased loan repayment obligations for three months.
  - Suspended fees in the interbank payment system.
- Government containment measures: launched communication campaign; declared a state of emergency; instituted curfew from 8pm to 5am; shut land and sea borders to persons (not freight); closed schools, factories, and places of worship; cancelled public gatherings of more than 10 people; prohibited informal trading of medicines and food.

International support and financing needs
- International financial institutions (excluding the IMF) and the European Union are expected to provide about US$253 million in FY2020, mostly project grants; only US$17 million is budget support.
- Additional international support would be required to close the financing gap and would likely materialize in conjunction with implementation of a SMP.
- Details on bilateral emergency financing were not yet available.

### Outlook and debt sustainability
Baseline outlook and projections
- Assumes political stability relative to recent times and modest improvements in policy implementation aimed at restoring macro stability.
- FY2020 policy anchor: government’s FY2020 notional budget guided by medium-term principles of debt sustainability.
- Key near-term policy focus:
  - Close fiscal financing gap while providing COVID-19 relief.
  - Contain inflation by limiting monetary financing of the deficit.
  - Allow exchange rate to adjust to market pressures.
  - Rapidly enhance provision of social benefits with development partner assistance.
- GDP projection: further contraction of 4.0 percent in FY2020, rebound to 1.0 percent in FY2021.
- Central bank financing for the fiscal year: to remain under HTG 26.7 billion.
- Inflation: projected to rise to 23 percent (y/y) by September 2020.
- Fiscal deficit: projected to widen to 6.4 percent of GDP in FY2020 absent offsetting revenue or spending measures.
- Potential accumulation of arrears: about 2.8 percent of GDP if financing sources fall short.
- External current account deficit: forecast to decline to about 0.6 percent of GDP in FY2021 as oil import costs remain low and remittances recover.

Risks
- Downside risks: deeper and more prolonged COVID-19 impact; failure to implement comprehensive reform program and stronger governance; return to political instability and social unrest; natural disasters; larger-than-anticipated interruption in remittance flows.
- Upside factor: continuing low fuel prices easing budget pressure.

Debt sustainability assessment
- Haiti is assessed as having sustainable debt.
- Debt-to-GDP ratio projected to remain roughly flat over the next 5-10 years under the DSA update.
- Risk of debt distress assessed as “high”; model-based risk rating for external and overall public debt is “moderate,” but judgment raised the rating to “high” because of institutional fragilities, vulnerability to natural disasters, and high long-term risk without adjustment in outer years.

### Policy undertakings
Immediate and medium-term policy commitments
- Authorities will boost spending to mitigate the impact of COVID-19 on the population; higher fiscal deficit will be financed by external budget support, RCF resources, and domestic borrowing.
- Authorities indicated commitment to restoring macro stability, addressing fiscal imbalances over the medium-term, and being proactive in financial sector oversight.
- Authorities intend to begin discussions for an SMP directly following the Board review of Haiti’s request for disbursement under the RCF.
- Commitments for an SMP framework include:
  - Strengthening fiscal and monetary policy frameworks.
  - Improving tax administration and public finance management.
  - Tackling governance weaknesses and corruption.
  - Building a coherent social safety net.
  - Reforming the energy sector.

Fiscal framework and financing
- A credible notional budget framework for FY2020 was prepared to guide policies in absence of a sitting parliament.
- New spending on health, social programs, and security is expected to reach 1.6 percent of GDP.
- Treasury-funded domestic public investment could rise by 0.5 percent of GDP.
- Initial preparations for elections in FY2021 expected to add 0.5 percent of GDP in expenditures.
- Authorities do not plan to incur new arrears in 2020 and will provide a stock-taking of existing budget arrears and propose a restructuring plan in preparation for SMP discussions.
- Of gross financing needs of 6.4 percent of GDP, 21 percent would be met by external budget support from the IMF (1.3 percent of GDP); central bank financing limited to HTG 26.7 billion (3.1 percent of GDP).
- If budget support is insufficient, options include reducing non-COVID-19 capital expenditures and implementing additional revenue measures.

Monetary and financial sector guidance
- Staff advised BRH to contain monetary financing of the deficit and limit foreign exchange interventions to smoothing volatility.
- Expectation that BRH will limit monetary financing for the fiscal year to HTG 27 billion (excluding planned on-lending of RCF resources).
- Banking supervisor actions recommended:
  - Heighten monitoring of financial soundness.
  - Enhance frequency of dialogue with regulated entities.
  - Prioritize business continuity planning and operational resilience.
- Banks should be encouraged to use existing buffers and work with affected borrowers on prudent loan restructuring.
- Loan classification, provisioning rules, and other accounting requirements should not be relaxed.

### Modalities of IMF support under the RCF
- Staff propose financing support of 50 percent of quota (SDR 81.9 million, about US$111.24 million) under the RCF “exogenous shock” window.
- It is not feasible to implement an upper credit tranche-quality Fund-supported program at this time; the country meets eligibility requirements for RCF support.
- Staff supports the authorities’ request for a disbursement under the Rapid Credit Facility in the amount of SDR 81.9 million (50 percent of quota).
- Preparations for an SMP expected to resume following Board approval of the RCF request.

### Staff appraisal
- Staff assessed that Haiti faces a major 2020 shock superimposed on prior political and economic fragility.
- Emergency financing under the RCF and international partner support are needed to fill a large financing gap and finance COVID-19 response measures.
- Policy priorities include containing the spread of COVID-19, protecting vulnerable populations, limiting macroeconomic deterioration, and preparing a credible medium-term reform agenda under an SMP.

*Prepared by the Haiti team; Approved by Patricia Alonso Gamo and Jeromin Zettelmeyer; April 13, 2020.*

### 15.      It will be important to consider the implications of short-term emergency measures on

### 1htiea2020003 - 15.      It will be important to consider the implications of short-term emergency measures on

### Implications of short-term emergency measures on institutions and budget execution
- Recent emergency decisions risk undermining laws and the efficiency of resource allocation, including: allowing the government to circumvent existing public procurement standards and reviving the state fuel import monopoly that had been disbanded.
- Under current circumstances, staff stressed the importance of enforcing standard budget execution procedures and reporting regarding the spending chain, starting with COVID-19 expenditures.
- Authorities agreed to:
  - prepare monthly budget execution reports on all COVID-19 expenditures; and
  - undertake a thorough ex-post financial and operational audit of COVID-19-related operations.
- Expected benefits: strengthen sustainable reforms of budget processes; provide assurances on the use of external financing; and improve operational efficiency of emergency responses.
- Other domestically funded public investment could also rise by 0.2 percent of GDP.

### Non-financial Public Sector fiscal indicators (Text Table 3, FY2019 to FY2020)
- FY2019 | SM/19/283 | RCF request | Difference
- Revenue and grants: 12.1 | 13.4 | 12.4 | -1.0
- Revenue: 10.8 | 10.0 | 10.2 | 0.2
- Grants: 1.4 | 3.4 | 2.2 | -1.2
- Total expenditures: 14.5 | 15.6 | 17.5 | 1.9
  - of which: COVID-19 related: NANA | NANA | 1.6 | 1.6
  - Transfers (energy): 2.4 | 2.4 | 1.4 | -1.0
  - Elections: NANA | NANA | 0.5 | 0.5
  - Other: 12.1 | 13.2 | 14.1 | 0.9
- Central government balance (including grants): -2.4 | -2.2 | -5.2 | -3.0
- Transfers to EDH: -1.1 | -1.2 | -1.2 | 0.0
- Overall balance incl. grants: -3.5 | -3.4 | -6.4 | -3.0
- Financing: 3.5 | 3.4 | 3.6 | 0.2
- Financing gap: 0.0 | 0.0 | 2.8 | 2.8
- Additional financing: NANA | NANA | 1.3 | 1.3
  - RCF: 1.3 | 1.3
  - Other donors: To be determined
- Remaining financing gap: NANA | NANA | 1.5 | 1.5
- Notes: There was a massive drop in revenue collection in FY2019 (see ¶4). From this low base, the revenue/GDP forecast now for FY2020 is slightly higher than in SM/19/283 due primarily to a lower nominal GDP denominator.

### Modalities and rationale for RCF support
- Staff propose support of 50 percent of quota (SDR 81.9 million) under the RCF under the exogenous shock window.
- Rationale:
  - Haiti meets eligibility requirements for RCF support and faces an urgent balance of payments need that would cause immediate and severe economic and humanitarian disruption if not addressed.
  - Not feasible to implement an upper credit tranche (UCT)-quality Fund-supported program now due to recent political instability, erosion in administrative capacity, weakening policy frameworks, uncertainty regarding COVID-19 impact, no-travel environment constraints, and need for broader policy discussions.
- Access assessment:
  - Haiti does not currently have an IMF arrangement and has outstanding debt to the IMF of SDR 54.6 million, or 33 percent of quota (March 2020).
  - Access of 50 percent of quota is within applicable access limits under the PRGT.
  - The amount would represent about 34 percent and 47 percent of the additional external and fiscal financing gaps, respectively.
  - Should the balance of payments need widen, authorities might consider requesting another RCF disbursement, provided a solid policy track record under the SMP and meeting RCF eligibility requirements.

### Use, coverage, and remaining financing needs
- The RCF disbursement will be disbursed to the central bank and is expected to be on-lent to the government for budget support.
- Intended uses: finance response to the COVID-19 crisis, including purchases of medical supplies and cash transfers to the most vulnerable households.
- Proposed access of 50 percent of quota, equivalent to 1.3 percent of GDP, is not sufficient to cover the full fiscal financing gap of 2.8 percent of GDP.
- Authorities are seeking further support to cover the remaining fiscal financing need of US$129 million, or 1.5 percent of GDP.
- The remainder of the fiscal financing gap would need to be covered by additional revenue measures and issuance of T-bills.
- In their Letter of Intent, authorities confirm a Memorandum of Understanding between the ministry of economy and finance (MEF) and the central bank (BRH) clarifying on-lending terms and responsibilities for timely servicing of IMF obligations.

### Policy program sequencing: SMP, governance, social protection, and safeguards
- Efforts to strengthen the policy framework are expected to continue with the support of an SMP focused on:
  - restoring macroeconomic stability and the seeds of growth and employment;
  - building a better social safety net;
  - improving governance and combatting corruption.
- Fiscal measures aim to limit public sector deficits, including significant fiscal losses related to the fuel sector and the public electricity company (EDH).
- Social policy measures under the SMP should support:
  - implementation of the new national plan PNPPS (not yet approved);
  - continue to expand coverage of the social registry (SIMAST);
  - establish an effective governance structure for social spending;
  - advance Fintech reforms to help distribute cash transfers and deepen financial inclusion.
- Governance measures:
  - strengthen implementation of the 2009 Anti-Corruption Strategy;
  - advance governance reforms across the public service and the central bank;
  - increase transparency of public spending.
- Expected financing impact: with government ownership and broader stakeholder buy-in, an SMP-supported program is expected to unlock further donor support to help close the residual financing gap.
- Safeguards and central bank actions:
  - As prior actions for RCF disbursement, the BRH implemented two key recommendations from the August 2019 safeguards assessment on April 10, 2020:
    - completed the financial audit and published the audited financial statements for the year ended September 30, 2019; and
    - adopted a Board decision to strengthen governance and accountability arrangements for foreign reserve management by revising the composition of the Investment Committee (IC), amending its charter, establishing strict segregation of responsibilities within the Foreign Portfolio Department, and establishing a dedicated risk management function.
  - Authorities will continue to provide IMF staff with required audit reports, authorize external auditors to hold discussions with staff, and follow through on other safeguards recommendations in the context of the upcoming SMP.

### Capacity to repay, risks, and staff appraisal
- Staff assessment:
  - Risks to Haiti’s capacity to repay are moderate but may be mitigated by authorities’ commitment to policy reforms under an SMP and later UCT-level program.
  - Authorities committed to achieving macro stability, undertaking reforms to strengthen governance, raise employment and growth, and reduce poverty.
  - Progress can help mobilize sizeable external concessional funding and grants to ease financing constraints and mitigate capacity-to-pay risks.
- Staff appraisal highlights:
  - Haiti faces high risks related to the COVID-19 epidemic and monumental policy challenges.
  - The economy has zero buffers after eighteen months of political instability and intermittent social unrest.
  - Monetary financing of the fiscal deficit has grown by one third over the past three months, accelerating inflation and further depreciation of the gourde.
  - Without decisive external support, the situation would be unsustainable.
  - Staff support Haiti’s request for financial assistance under the RCF.
  - The RCF disbursement is expected to be used for budget support covering a sizeable share of the fiscal financing gap, complemented by other development partners.
  - The proposed disbursement of 50 percent of quota would not impair Haiti’s debt sustainability or capacity to repay the Fund.

*Source: IMF staff report excerpt (content unit 1htiea2020003).*

### 25.      Staff urge the authorities to carefully track, record, and publish all expenditures

### 25.      Staff urge the authorities to carefully track, record, and publish all expenditures

### Emergency response expenditures and transparency
- Staff urge the authorities to carefully track, record, and publish all expenditures related to the emergency response.
- Rationale: Accurate and transparent recording and accountability with respect to the allocation of financing assistance would be important to build public confidence.
- Authorities’ commitments welcomed by staff:
  - Continue to advance governance and anti-corruption reforms and to move forward with a more comprehensive economic reform strategy.
  - Proposal to report monthly on COVID-19 expenditures.
  - Proposal to undertake an ex-post COVID-19 financial and operational audit of the expenditure response.
- Expected benefits:
  - Strengthen public financial management transparency and accountability.
  - Contribute to building capacity on the efficiency of the government’s social spending and emergency response.

### Fiscal and macroeconomic context — selected indicators and projections
- Country identifiers:
  - Nominal GDP (2018): US$9.7 billion
  - GDP per capita (2018): $890
  - Population (2016): 10.847 million
  - Percent of population below poverty line (2012): 58
- GDP at constant prices (FY2018–FY2025): 1.5 -1.2 -4.0 1.2 1.0 1.1 1.2 1.4
- GDP deflator (FY2018–FY2025): 12.8 17.3 22.2 21.3 18.3 15.3 12.9 10.9
- Consumer prices (period average, FY2018–FY2025): 12.9 17.3 22.2 21.3 18.3 15.3 12.9 10.9
- Consumer prices (end-of-period, FY2018–FY2025): 13.3 20.1 23.0 20.0 17.0 14.0 12.0 10.0
- External sector highlights:
  - Exports (goods, valued in U.S. dollars, f.o.b.) (percent change): 8.8 11.4 -15.2 1.8 2.6 2.7 3.4 3.0
  - Imports (goods, valued in U.S. dollars, f.o.b.) (percent change): 24.0 -6.4 -14.8 1.8 3.9 2.4 2.4 2.4
  - Remittances (valued in U.S. dollars) (percent change): 21.1 8.5 -18.3 12.7 7.3 -3.0 -2.8 -0.9
- Public debt and debt service:
  - External public debt (medium and long-term, eop) (percent of GDP, FY2018–FY2025): 23.5 27.4 28.0 25.8 23.8 22.9 22.5 22.4
  - Total public sector debt (end-of-period) (percent of GDP): 39.9 47.7 51.9 49.9 48.6 47.3 46.8 46.6
  - External public debt service (percent of exports of goods and nonfactor services): 6.1 7.3 9.2 9.0 8.8 8.6 8.3 8.6

### Central government and nonfinancial public sector — selected fiscal figures
- Central government (percent of GDP, FY2018–FY2025):
  - Overall balance (including grants): -1.7 -2.4 -5.2 -2.9 -2.8 -2.4 -2.5 -2.6
  - Domestic revenue: 13.0 10.8 10.2 11.4 12.9 13.4 14.0 14.4
  - Grants: 4.3 1.4 2.2 3.8 3.0 3.8 4.6 4.9
  - Total expenditure: 19.0 14.5 17.5 18.0 18.7 19.6 21.2 21.8
  - Current expenditures: 12.7 12.4 13.3 12.8 13.6 13.3 13.3 13.1
  - Capital expenditures: 6.2 2.1 4.2 5.2 5.1 6.3 7.9 8.7
- Non-financial public sector (overall balance including grants, percent of GDP, FY2018–FY2025): -2.9 -3.5 -6.4 -4.0 -3.9 -3.5 -3.6 -3.7
- Selected nominal figures (in millions of gourdes, FY2018–FY2025):
  - Total revenue and grants: 109,107 88,998 106,170 159,930 200,379 252,891 313,700 363,480
  - Total expenditure: 119,965 106,345 150,533 190,020 235,607 287,959 356,374 412,458
  - Central government balance including grants (in millions of gourdes): -10,858 -17,347 -44,362 -30,089 -35,228 -35,069 -42,674 -48,978

### Banking system and reserves — selected indicators
- Net international reserves (program definition, in millions of US$): 677 644 268 279 368 430 469 488
- Gross international reserves (in millions of US$): 2,086 2,100 1,872 1,885 1,977 2,069 2,140 2,190
- Net foreign assets of the banking system (in millions of gourdes and US$): 111,424 (1,593) 145,177 (1,556) 132,010 (1,224) 157,153 (1,247) 194,596 (1,351) 233,648 (1,455) 270,315 (1,537) 302,115 (1,597)
- Broad money (M3, in millions of gourdes): 305,222 372,515 435,105 531,315 634,957 740,349 845,825 946,877

### Balance of payments — highlights
- Current account (including grants, in millions of US$ FY2018–FY2025): -373 -123 -316 -52 -41 -131 -195 -264
- Current account (excluding grants, in millions of US$ FY2018–FY2025): -759 -304 -501 -387 -318 -491 -653 -766
- Trade balance (in millions of US$ FY2018–FY2025): -3,406 -2,996 -2,557 -2,603 -2,718 -2,780 -2,837 -2,898
- Exports of goods (in millions of US$ FY2018–FY2025): 1,079 1,201 1,019 1,038 1,065 1,093 1,131 1,165
- Imports of goods (in millions of US$ FY2018–FY2025): -4,484 -4,198 -3,576 -3,640 -3,783 -3,873 -3,968 -4,063
- Projected average oil price (U.S. dollars per barrel, APSP, FY2018–FY2025): 68.3 61.4 35.6 37.9 40.9 43.2 45.0 46.4

### Policy recommendations and institutional measures (from source)
- Track, record, and publish all emergency-response expenditures.
- Report monthly on COVID-19 expenditures.
- Undertake an ex-post COVID-19 financial and operational audit of the expenditure response.
- Continue to advance governance and anti-corruption reforms and implement a more comprehensive economic reform strategy to reinforce transparency, accountability, and efficiency in social spending and emergency response.

*Source: IMF staff text and tables as provided in the supplied content unit.*

### Appendix I. Letter of Intent

### Appendix I. Letter of Intent

### Background and public-health response
- Date and place: Port-au-Prince, Haïti, April 10, 2020.
- State of Emergency announced March 19, 2020 to prevent spread of COVID-19.
- Confirmed cases and deaths as of April 9, 2020: 30 cases and 2 deaths.
- Health system capacity: 124 intensive care beds for a population of 10.7 million inhabitants.
- Containment and mitigation measures:
  - Close all borders; cease docking of cruise ships and commercial vessels; suspend all commercial international flights (except cargo and humanitarian flights).
  - Presidential executive decree implementing a curfew from 8:00 pm to 5:00 am.
  - Closure of all factories, schools and universities except essential businesses (pharmacies, medical centers, etc.).
  - Administration operating at half capacity with rotations and telework.

### Economic impact and projections
- Preliminary projection for real GDP in 2020: decline by 4.0 percent.
- Recent historical growth: growth of -1.2 percent in 2019.
- Pre-pandemic projection for 2020: -0.4 percent (revised down).
- Key channels of impact:
  - International remittances represent over 34 percent of GDP.
  - Reduction in textile exports to the U.S.
  - Drop in agriculture production.
  - Disruptions to transport, financial services, and the informal sector.

### Emergency social and fiscal measures taken
- Cash transfers to 1,500,000 families.
- Distribution of dried food rations to vulnerable families; statement: most of them living with less than US$2 per day, equivalent to about 60 percent of the population.
- Payment of half the salary to 58,000 workers in the subcontracting (textile) industry.
- Payment of the salaries of most teachers and professors.
- Subsidies to the transport and sanitation sectors.
- Deferment of the tax returns deadline by three months to June 2020.
- Central Bank (BRH) measures to ease liquidity conditions: reducing the refinance and reference rates, lowering reserve requirements on domestic currency.

### Fiscal and external financing needs
- Projected fiscal deficit in FY2020: rise to 6.4 percent of GDP — stated as 3.0 percent of GDP higher than earlier projected.
- Estimated potential drain on gross international reserves: as much as US$338 million.
- Projected fall in import values: 15 percent following the drop in fuel prices and contraction in domestic demand.
- Government position: reallocate scarce budgetary resources to disease containment and eradication, preparation for treatment, and increased social assistance.

### Request for IMF assistance and financing strategy
- Request: emergency financing under the IMF Rapid Credit Facility (RCF) in the amount of SDR 81.9 million, equivalent to 50 percent of quota.
- Purpose: help fill external and fiscal financing gaps in 2020.
- Policy assurances:
  - Do not intend to introduce or intensify exchange and trade restrictions (for balance of payments purposes) or other measures that would compound difficulties.
  - MEF signed a Memorandum of Understanding with BRH on an on-lending arrangement and roles/responsibilities for timely servicing of IMF financial obligations anticipating RCF disbursement.
- Outreach to other development partners with indications of support from the European Union, World Bank, and IDB.
- Request also made for Fund assistance under the Catastrophe Containment and Relief Trust (CCRT).

### Policy commitments and structural reforms
- Commitment to contain fiscal imbalances while responding to the emergency.
- Plan to resume discussions with IMF staff on a package of measures supported by a Staff Monitored Program (SMP) immediately after RCF disbursement; aim to reach agreement and endorsement of an SMP as soon as possible and at the latest in early May.
- Medium-term program sequencing: SMP to be followed by a medium-term, upper credit tranche-quality program supported by the Extended Credit Facility (ECF).
- Fiscal and public financial management commitments:
  - Gradual fiscal adjustment to ensure fiscal and debt sustainability and eliminate monetary financing of the deficit.
  - Boost domestic revenue collection with customs and tax administration reforms.
  - Increase EDH payment collection and strengthen EDH efficiency.
  - Curb arrears and adopt a plan to clear/restructure current stocks.
  - Improve public financial management, including better expenditure control.
- Social protection and financial inclusion:
  - Build a stronger social safety net; support implementation of the Politique Nationale de Protection et de Promotion Sociale (PNPPS).
  - Deepen financial inclusion with Fintech and development of mobile money infrastructures to formalize distribution channels for cash transfers.
- Governance and transparency:
  - Strengthen efforts to combat corruption and advance governance reforms through more comprehensive, transparent, and tightly managed budget processes and improved reporting systems at the MEF and BRH.
  - Immediate strengthening of standard budget reporting by documenting phases of execution of public spending of COVID-19 resources through monthly budget execution reports of all COVID-19 expenditures.
  - Undertake a thorough ex post financial and operational audit of all COVID-19 related operations.
- Safeguards commitments:
  - Continue implementation of recommendations from the IMF safeguards assessment concluded in 2019.
  - Prior actions implemented by BRH prior to the RCF Board meeting: (i) completed the financial audit and published the audited financial statements for the year ended September 30, 2019; and (ii) adopted a decision to strengthen governance and accountability arrangements for foreign reserve management by revising the composition of the Investment Committee (IC) and amending its charter, establishing strict segregation of responsibilities within the Foreign Portfolio Department, and establishing a dedicated risk management function.
  - Commit to continue providing IMF staff with necessary central bank audit reports and authorize external auditors of the central bank to hold discussions with staff.
  - Further safeguards recommendations to be followed through in the context of the upcoming SMP.

### Debt Sustainability Analysis (DSA) — joint Bank-Fund summary
- Document: Haiti: Joint Bank-Fund Debt Sustainability Analysis.
- Risk ratings:
  - Risk of external debt distress: High.
  - Overall risk of debt distress: High.
  - Granularity note: Debt is sustainable in the medium-term. Long-term sustainability will require fiscal consolidation, including through higher domestic revenue mobilization.
  - Application of judgment: Yes — High probability of protracted and substantial threshold breaches from FY2033.
- Macroeconomic projection adjustments compared to December 2019 DSA:
  - Growth in the short-term has been revised down and inflation revised up.
  - Projected fiscal deficit as a percent of GDP is 3.0, 0.8 and 0.9 percent higher respectively in FY2020, 2021-24, and 2025-35.
  - Projected current account deficit is higher in the short term, but 0.5 percent of GDP smaller on average over 2025-35.
- Financing strategy in the DSA:
  - Future gross financing needs assumed to be met both internally—by the rollover of central bank advances to the government—and externally.
  - Remaining internal financing takes the form of short-term treasury bills held by commercial banks.
  - External debt financing, contracted or guaranteed, is assumed to be mostly concessional.
- Realism tools flagged: baseline assumptions credible and the projected fiscal adjustment is realistic.
- Mechanical risk ratings:
  - Under the external DSA: Moderate risk.
  - Under the public DSA: Moderate risk.
- Approved by: Patricia Alonso-Gamo, Jeromin Zettelmeyer (IMF), and Marcello Estevão (IDA).
- Prepared by the staffs of the International Monetary Fund and the International Development Association.
- DSA date: April 13, 2020.
- Additional DSA notes:
  - The DSA was prepared in accordance with the revised joint Bank-Fund debt sustainability framework (DSF) for low-income countries (LICs) and updates the 2019 Article IV Consultation DSA.
  - An application of judgment raised the rating from “moderate” to “high” because of the high probability of threshold breaches under the baseline from FY2033, Haiti’s institutional fragilities, and exceptional vulnerability to natural disasters.
  - Haiti is identified as an FCV country (fragility, conflict, and violence as defined by the World Bank).
  - Tailored stress tests indicate high vulnerability to large natural disaster shocks.
  - Despite vulnerabilities, the moderate level of public debt and broadly stable debt trajectory over the next ten years point to sustainable public debt.
  - The DSA assumes that debt service to the IMF falling due in the 24 months from April 14, 2020 will be covered under the Catastrophe Containment and Relief Trust Fund (CCRTF), subject to availability of resources and decisions of the Executive Board of the IMF.

*Source: Appendix I. Letter of Intent (Port-au-Prince, Haïti, April 10, 2020) and Haiti: Joint Bank-Fund Debt Sustainability Analysis (April 13, 2020).*

### 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the

### 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the percent of sample is found on the vertical axis.

### Chart title and measure
- Fiscal Adjustment and Possible Growth Paths 1/
- 3-Year Adjustment in Primary Balance (Percentage points of GDP)

### Horizontal axis (3-year adjustment from program inception)
- -4 .5-4 .0-3 .5-3 .0-2 .5-2 .0-1 .5-1 .0-0 .5
- 0. 00. 51. 0
- 1. 52. 02. 53. 03. 54. 04. 55. 05. 56. 06. 57. 07. 58. 0

### Vertical axis (percent of sample)
- 0
- 2
- 4
- 6
- 8
- 10
- 12
- 14

### Labels and annotations (as presented)
- Mo re
- Distribution 1/
- Pr ojec t ed 3-yr adjustment
- 3-year PBadju stment greater than

*Source: 1htiea2020003 - 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the percent of sample is found on the vertical axis.*

### 2.5 percentage points of GDP in

### 1htiea2020003 - 2.5 percentage points of GDP in

### External debt and sustainability (Baseline scenario, 2017–40)
- External debt (nominal) by year (in percent of GDP): 2017: 24.2; 2018: 23.5; 2019: 27.4; 2020: 28.0; 2021: 25.8; 2022: 23.8; 2023: 22.9; 2024: 22.5; 2025: 22.4; 2030: 30.8; 2040: 55.8; (additional point values listed: 20.1, 25.2).
- Residency-based of which: public and publicly guaranteed (PPG) matches external debt series above.
- Change in external debt (in percent of GDP): -3.2; -0.7; 3.9; 0.6; -2.2; -2.0; -0.9; -0.4; -0.1; 2.4; 0.2.
- Identified net debt-creating flows (in percent of GDP): -4.9; -0.4; 3.1; 4.3; -1.2; -1.3; -0.4; 0.2; 0.8; 0.6; 0.8; 1.6; 0.5.
- Non-interest current account deficit (in percent of GDP): 0.8; 3.7; 1.2; 3.4; 0.3; 0.2; 1.2; 1.8; 2.3; 2.4; 2.3; 3.6; 2.0.
- Deficit in balance of goods and services (in percent of GDP): 36.0; 40.3; 41.5; 36.9; 36.5; 36.8; 36.4; 35.9; 35.5; 36.0; 35.8; 37.8; 36.2.
- Exports (in percent of GDP): 19.8; 18.4; 18.2; 14.8; 15.7; 15.6; 15.5; 15.4; 15.4; 14.9; 15.1.
- Imports (in percent of GDP): 55.8; 58.7; 59.7; 51.8; 52.2; 52.3; 51.8; 51.4; 50.8; 50.8; 50.8.
- Net current transfers (negative = inflow, in percent of GDP): -34.3; -35.9; -39.5; -33.0; -35.3; -35.7; -34.4; -33.3; -32.3; -32.5; -31.8; -33.6; -33.4.
  - of which: official transfers (in percent of GDP): -4.6; -4.0; -2.1; -2.2; -3.8; -3.0; -3.8; -4.6; -4.9; -4.8; -4.6.
- Net FDI (negative = inflow, in percent of GDP): -4.5; -1.1; -0.9; -0.5; -1.5; -1.5; -1.5; -1.5; -1.5; -1.8; -1.8; -1.8; -1.6.
- Endogenous debt dynamics (contribution, in percent of GDP): -1.2; -2.9; 2.8; 1.3; -0.1; 0.0; 0.0; -0.1; -0.1; 0.0; 0.3.
  - Contribution from nominal interest rate: 0.2; 0.2; 0.2; 0.2; 0.2; 0.2; 0.2; 0.2; 0.2; 0.4; 1.0.
  - Contribution from real GDP growth: -0.3; -0.3; 0.3; 1.1; -0.3; -0.2; -0.3; -0.3; -0.3; -0.4; -0.8.
  - Contribution from price and exchange rate changes: -1.1; -2.8; 2.3.
- Residual (includes exceptional financing, valuation adjustments, in percent of GDP): 1.7; -0.3; 0.8; -3.6; -0.9; -0.7; -0.5; -0.6; -0.8; 1.8; -0.6; -0.7; -0.2.
  - of which: exceptional financing (in percent of GDP): -1.7; -0.9; -1.1; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0.
- Sustainability indicators:
  - PV of PPG external debt-to-GDP ratio (in percent): 16.1; 17.1; 16.2; 15.2; 14.9; 14.9; 15.1; 21.6; 41.1.
  - PV of PPG external debt-to-exports ratio (in percent): 88.6; 115.5; 103.5; 97.8; 96.6; 96.4; 98.3; 145.1; 273.3.
  - PPG debt service-to-exports ratio (in percent): 5.7; 6.1; 7.3; 9.2; 8.9; 8.8; 8.6; 8.4; 8.2; 11.6; 19.8.
  - PPG debt service-to-revenue ratio (in percent): 8.0; 8.6; 12.3; 13.5; 12.3; 10.6; 9.9; 9.2; 8.8; 11.5; 19.6.
- Gross external financing need (Million of U.S. dollars): -210.9; 356.4; 142.3; 368.7; 22.8; 8.4; 95.6; 153.2; 215.3; 253.7; 462.6.

### Key macroeconomic assumptions and projections (selected)
- Real GDP growth (in percent): 1.2; 1.5; -1.2; -4.0; 1.2; 1.0; 1.1; 1.2; 1.4; 1.4; 1.4; 1.4; 0.8.
- GDP deflator in US dollar terms (change in percent): 4.2; 13.2; -8.7; 2.9; 2.0; 2.6; 2.5; 2.4; 2.4; 0.4; 0.4; 1.7; 1.4.
- Effective interest rate (percent): 0.7; 1.0; 0.9; 0.8; 0.9; 0.9; 0.9; 1.0; 1.1; 1.6; 1.9; 0.5; 1.1.
- Growth of exports of G&S (US dollar terms, in percent): 3.2; 6.9; -10.9; -19.5; 9.1; 2.9; 2.9; 3.5; 3.2; 1.8; 2.4; 4.9; 0.6.
- Growth of imports of G&S (US dollar terms, in percent): 11.7; 20.9; -8.3; -14.4; 4.1; 3.8; 2.7; 2.7; 2.7; 1.8; 1.8; 7.6; 0.9.
- Grant element of new public sector borrowing (in percent): 35.4; 35.4; 30.7; 30.7; 30.7; 30.7; 30.7; 30.7; 31.6 (selected projection values shown).
- Government revenues (excluding grants, in percent of GDP): 14.0; 13.0; 10.8; 10.2; 11.4; 12.9; 13.4; 14.0; 14.4; 14.9; 15.2; 12.9; 13.6.
- Aid flows (in Million of US dollars): 1186.1; -2965.9; -6672.2; 253.1; 380.0; 314.8; 359.4; 458.0; 502.1; 534.9; 607.9.
- Grant-equivalent financing (in percent of GDP): 2.9; 4.0; 3.2; 4.2; 5.1; 5.5; 6.1; 5.5; 4.9.
- Grant-equivalent financing (in percent of external financing): 67.3; 92.4; 92.4; 82.3; 81.6; 81.6; 79.9; 67.9; 72.3; 77.9.
- Nominal GDP (Million of US dollars) (selected years): 8,409; 9,658; 8,708; 8,601; 8,875; 9,196; 9,531; 9,879; 10,258; 11,088; 13,205.
- Nominal dollar GDP growth (in percent): 5.4; 14.9; -9.8; -1.2; 3.2; 3.6; 3.6; 3.6; 3.8; 1.8; 1.8; 3.1; 2.2.

### Public sector debt and fiscal metrics (Baseline scenario, 2017–40)
- Public sector debt (in percent of GDP): 2017: 38.3; 2018: 39.9; 2019: 47.7; 2020: 51.9; 2021: 49.9; 2022: 48.6; 2023: 47.3; 2024: 46.8; 2025: 46.6; 2030: 53.6; 2040: 70.9.
- Of which external debt (in percent of GDP): matches External debt series (e.g., 24.2; 23.5; 27.4; 28.0; 25.8; 23.8; 22.9; 22.5; 22.4; 30.8; 55.8).
- Change in public sector debt (in percent of GDP): -2.5; 1.6; 7.7; 4.3; -2.0; -1.3; -1.2; -0.5; -0.2; 1.3; 1.7.
- Identified debt-creating flows (in percent of GDP): -5.4; 0.5; 4.8; 3.0; -1.7; -1.0; -1.0; -0.3; 0.0; 1.5; 1.7; 2.2; 0.6.
- Primary deficit (in percent of GDP): 0.7; 2.6; 3.0; 6.1; 3.6; 3.5; 3.2; 3.3; 3.3; 2.8; 2.2; 3.4; 3.5.
- Revenue and grants (in percent of GDP): 17.7; 17.3; 12.1; 12.4; 15.2; 15.9; 17.2; 18.7; 19.2; 19.7; 19.8; 19.1; 17.9.
  - of which: grants (in percent of GDP): 3.7; 4.3; 1.4; 2.2; 3.8; 3.0; 3.8; 4.6; 4.9; 4.8; 4.8; 4.6.
- Primary (noninterest) expenditure (in percent of GDP): 18.4; 19.9; 15.2; 18.4; 18.7; 19.4; 20.4; 22.0; 22.5; 22.6; 21.9; 22.5; 21.4.
- Automatic debt dynamics (contribution, in percent of GDP): -6.0; -2.1; 1.8; -3.0; -5.3; -4.6; -4.1; -3.6; -3.2; -1.3; -0.5.
  - Contribution from interest rate/growth differential: -2.1; -2.3; -2.1; -2.1; -4.8; -4.2; -3.8; -3.3; -3.0; -1.8; -1.3.
  - Contribution from average real interest rate: -1.6; -1.7; -2.5; -4.1; -4.2; -3.7; -3.2; -2.8; -2.3; -1.1; -0.4.
  - Contribution from real GDP growth: -0.5; -0.6; 0.5; 2.0; -0.6; -0.5; -0.5; -0.6; -0.6; -0.7; -1.0.
  - Contribution from real exchange rate depreciation: -4.0; 0.8; 16.3.
- Residual (in percent of GDP): 2.9; 1.1; 3.0; 0.3; -0.8; -0.7; -0.6; -0.5; -0.5; 0.3; 0.9; -0.7; -0.2.
- Sustainability indicators:
  - PV of public debt-to-GDP ratio (in percent): 38.2; 42.5; 41.3; 40.8; 40.0; 39.7; 39.7; 44.7; 56.9.
  - PV of public debt-to-revenue and grants ratio (in percent): 314.5; 343.7; 272.5; 256.5; 232.4; 212.7; 206.4; 226.4; 287.6.
  - Debt service-to-revenue and grants ratio (in percent): 72.6; 73.1; 121.7; 152.0; 139.5; 137.0; 132.2; 122.3; 119.8; 123.3; 80.6.
  - Gross financing need (in percent of GDP): 13.5; 15.2; 17.8; 24.8; 24.7; 25.3; 25.9; 26.1; 26.3; 27.2; 18.1.

### Sensitivity analysis (public and publicly guaranteed external debt; 2020–40)
- Baseline PV of debt-to-GDP ratio and alternative scenario outcomes are reported by year; selected baseline values: 2020: 17; 2025: 18; 2030: 26; 2035: 31; 2040: 41.
- Bound tests and tailored tests show indicators under shocks:
  - B1. Real GDP growth, B2. Primary balance, B3. Exports, B4. Other flows, B5. Depreciation, B6. Combination of B1-B5.
  - Tailored tests include C1. Combined contingent liabilities and C2. Natural disaster.
- Thresholds for indicators presented (e.g., PV of debt-to-GDP threshold: 40; PV of debt-to-exports threshold: 180; debt service-to-exports/ debt service-to-revenue threshold values shown across tables).
- Bold values indicate breach of threshold (table formatting note from source).

### Sensitivity analysis (public debt; 2020–40)
- Baseline public debt trajectory (selected years): 2020: 42; 2025: 43; 2030: 48; 2035: 53; 2040: 57.
- Public debt benchmark: 55 (benchmark line across projection horizon).
- Alternative scenarios and bound tests report public debt and debt-service indicators under shocks (B1–B6) and tailored tests (C1, C2).
- Selected severe-tail outcome: Natural disaster (C2) results in large spikes (e.g., 2021: 436; 2022: 396 in certain series shown).

### Statement by Haiti's Executive Director and Alternate (April 17, 2020) — key points
- Acknowledgement:
  - Thanks to management, Ms. Laframboise and team for expedited work on Haiti’s RCF disbursement request.
  - Authorities demonstrated urgency and commitment to engage with the Fund and pursue a medium-term strategy including agreeing on an SMP and aiming for an upper-credit tranche arrangement.
- Program implementation and safeguards actions completed:
  - Resumed publication of real, monetary and fiscal data.
  - Secured a discussion date of April 23rd for approval of the social protection policy (PNPPS - Politique Nationale de la Promotion et de la Protection Sociale) by the Council of Ministers.
  - Working to: (i) set up the Steering Committee under the 2009 anti-corruption strategy with broad participation including independent civil society representatives; (ii) resume reporting of total number of people required to submit asset declarations and compliance rates; (iii) provide a stock-taking of budget arrears at end-2019 or latest available data (including breakdown by main categories—e.g., wages, external and domestic suppliers).
  - Central Bank (BRH) implemented safeguards recommendations: created a Risk Management Unit (UGR); amended Investment Committee (CI) for reserve portfolio; established CI charter and developing guidelines; published audited financial statements for 2019 on the BRH website.
- Socio-political context and COVID-19 impact:
  - 2019: GDP contracted by 1.2 percent; exchange rate depreciated by 30 percent; fiscal deficit reached 3.8 percent of GDP.
  - 2019 lockdowns caused severe impact on economic activity, tourism, export sectors and decapitalized many SMEs; social indicators worsened with increases in food insecurity and extreme poverty.
  - Early 2020: parts of the country close to humanitarian disaster; UN appeal collected less than 10 percent of requested amounts.
  - Despite hope in late 2019, GDP projected to recover in 2021 prior to COVID-19 shock; COVID-19 is projected to cause GDP to contract by 4 percent in 2020.
- Fiscal and monetary responses to COVID-19:
  - Public health measures: closing of airports and borders (except trade), school and export-sector shutdowns, curfew, mask requirements.
  - Fiscal measures: clemency measures for taxpayers (income tax returns and real estate taxes deferred from end-March to end-June); extended validity of fiscal compliance certificate to end-June.
  - Social support: income assistance to 1.5 million households via mobile wallets and food kits; expanded social public spending announced.
  - Monetary measures by BRH: cut main policy rate and reserve requirement on local currency deposits by 5 percentage points; allowed a moratorium of 3 months on credit payments; promoted wider use of electronic transfers and requested banks waive or reduce fees.
  - Authorities expect RCF disbursement to help cover part of the financing gap and signal to donors to attract additional support.
- Urgent need for international financial assistance:
  - Timely external assistance is crucial to avoid wider financing gap and enable project implementation.
  - If pandemic persists, additional spending and mobilization of funding from all partners including the IMF may be necessary.
- Macroeconomic strategy going forward:
  - Short-term anchor: SMP with view to start FY21 with a medium-term program supported by an ECF.
  - Key near-term objectives: (i) continue fight against pandemic; (ii) strengthen governance and transparency, including combating corruption; (iii) quell fiscal dominance by working toward fiscal consolidation; (iv) strengthen social safety nets.
  - Authorities focus on raising fiscal revenue and curbing non-priority expenditures; curtailing subsidies to the energy sector is a key priority.
  - Authorities intend to adopt a plan for clearing arrears over the next few years aligned with projected resources and FY21 priorities.
  - Transparency measures: first monthly publication of COVID-19 expenditures posted on the Ministry of Economy and Finance website on April 15, 2020.

*Sources: Country authorities; and staff estimates and projections.*

### Conclusion

### Conclusion

### Request for IMF Support
- The Haitian authorities express gratitude for "the additional liquidity the IMF short-term debt relief will make available" for funding their response to the COVID-19 pandemic.
- The authorities request a disbursement under the RCF of the equivalent of 50 percent of Haiti’s quota.
- This disbursement "will cover about a third of the currently estimated gap."

### Program Implementation and Reforms
- The authorities intend to implement, "with the support the Fund, an ambitious but realistic adjustment and structural reform program."
- The program and policies are designed "to curb contagion and protect economic activity."

### Contingency and Call to IMF Board
- "In case the financing gap becomes wider than anticipated and additional financing is urgently needed to continue supporting the government’s efforts to proceed with the reforms and required measures, we call on our IMF Board colleagues to stand ready to act swiftly as warranted."

### Outlook
- The authorities express confidence that, "with strong ownership and the partnership of the international community, Haiti will pull itself out of a protracted fragile situation."

*Source: 1htiea2020003 - Conclusion (IMF)*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1htiea2020003.pdf_