## 1htiea2023001 — Executive Summary and Key Findings

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### Context and recent economic developments
- Domestic and external shocks: Russia’s war in Ukraine, higher food and fuel prices, a cholera outbreak, and a deterioration of the domestic security situation.
- Growth and inflation:
  - Real GDP likely contracted by about -1.5 percent in FY2022 (fourth consecutive year of contraction).
  - Year-on-year inflation reached 38.7 percent in September 2022.
- Fiscal and external:
  - NFPS fiscal deficit (including grants) estimated at 2.2 percent of GDP in FY2022 (vs. 1.5 percent envisaged at SMP approval).
  - Domestic revenue in FY2022 was 90 percent of the value expected in June 2022.
  - Current account deficit estimated at 2.4 percent of GDP in FY2022.
  - Gross international reserves estimated at 4.6 months of projected imports; net international reserves declined by some US$240 million since end-FY2021.
- Authorities’ policy responses:
  - BRH raised short-term interest rates to 11.5 percent in August (from 10 percent since March 2020).
  - BRH boosted mandatory reserve requirements on liabilities, in US dollar terms, to 53 percent.
  - BRH increased interest rates on credit lines and eased loan repayment obligations—extending them for three months for households and six months for corporates.
  - Authorities prepared a detailed strategy to tackle food insecurity and strengthen the social safety net.

### Program implementation under the SMP
- Overall assessment: implementation broadly satisfactory despite missed quantitative targets (QTs) owing to a less favorable environment; SMP instrumental in catalyzing forthcoming external financing.
- QTs and indicative targets:
  - Met one end-June QT (net credit to the government); missed three other end-June QTs (one missed by a small margin).
  - Met two of three continuous QTs on arrears; missed one on domestic arrears accumulation by a large amount due to obligations to fuel companies.
  - Missed end-June indicative target on government tax revenues by about 6 billion HTG (0.3 percent of GDP).
  - Spending on social programs appears below agreed target of HTG3 billion.
  - Rollout of excise tax increases delayed and underperformed through end-June.
- Structural benchmarks and capacity development:
  - Met two recurrent SBs; of five end-September SBs none met on time but four completed with some delay.
  - Authorities adopted the FY2023 budget on December 19, 2022, with a three-year medium-term framework anchored on the NFPS.
  - Treasury Single Account coverage expanded and completed in early November.
  - FAES governing board reconvened; first quarterly report on operations published.
  - Consultations on the draft Tax Code and Draft Tax Procedure Code completed; codes adopted by decree on December 19.
  - Senior management at the revenue agency replaced, followed by immediate jump in revenue collection in July-August.
- Program monitoring: High-level Program Monitoring Committee (Comité de Suivi) met weekly/biweekly enabling close engagement.

### Outlook and risks
- Financing gap: staff assesses a financing gap only in FY2023.
- Growth and inflation projections:
  - Growth projected at 0.3 percent in FY2023 (weaker than 1.4 percent forecast at SMP approval).
  - Growth projected to reach 1.5 percent over the medium term.
  - Inflation projected to decline to 21 percent by end-FY2023 after surging in 2022.
- Fiscal and external outlook:
  - NFPS fiscal deficit projected at 2 percent of GDP in FY2023 (0.3 percentage point lower than envisaged at SMP approval).
  - Deficit projected to increase slightly to around 2.7-2.8 percent of GDP over the medium term, driven primarily by capital spending.
  - Current account deficit expected to narrow to 0.8 percent of GDP in FY2023 and to 0.6 percent of GDP in the medium term.
- Balance of risks (tilted to the downside): intensified political instability, gang-related disruptions, public health emergency (cholera), natural disasters, volatile remittances, lower-than-expected external financing, renewed surges in global food and energy prices.
- Mitigating factors: planned reduction in fuel subsidies, regular fuel price adjustments, and potential normalization of security conditions.

### Reaching the objectives of the SMP — corrective actions and priorities
- Revenue and social spending:
  - Sustain recent revenue collection efforts and intensify tax code and administration reforms.
  - Ensure meaningful budget allocation to protect the most vulnerable and implement PFM systems to monitor public funds.
- Fuel price reform guidance:
  - Not part of program conditionality but needs mitigating measures for the vulnerable, gradual and automatic pricing mechanisms, smoothing to limit reemergence of subsidies, and enhanced communication strategy.
- Monetary and exchange rate policy:
  - Continue implementation of SMP monetary and exchange framework to release market pressures and preserve NIR.
  - Reduce central bank financing of the deficit to levels consistent with low inflation and limit FX intervention to smoothing excess volatility.
- Financial sector and governance:
  - Strengthen banking supervision by moving to risk-based supervision and advance governance reforms to improve efficiency and maintain donor engagement.
  - Address Fund safeguards recommendations, including strengthening central bank law and transition to IFRS.
- Authorities’ request: financial assistance under the Food Shock Window (FSW) of the Rapid Credit Facility (RCF).

### Policy recommendations (selected)
- Adopt FY2023 budget consistent with SMP targets within a medium-term budget framework for FY2023–25.
- Ensure allocation to protect the most vulnerable and implement PFM systems to monitor public funds.
- Reduce central bank financing of the deficit and limit FX intervention to smoothing volatility.
- Sustain revenue-boosting measures and follow through on adoption of the Tax Code and customs/tax administration reforms.
- Implement safeguards recommendations and complete BRH law reforms and IFRS transition.

### Fiscal policy and FY2023 budget (highlights)
- Program objective: reduce monetary financing of the deficit (MEFP, ¶9).
- Quantitative target: floor on the primary balance of the NFPS.
- FY2023 deficit target: 1.5 percent of GDP (targeted deficit slightly below staff projections).
- New spending: food transfers of 0.5 percent of GDP, funded by forthcoming external financing.
- Net fuel revenues estimated at 1.1 percent of GDP in FY2023 (vs. -1.5 percent in FY2022), assuming pump prices remain above cost and global oil prices moderate in line with WEO projections.
- Reallocation of budget space:
  - Non-fuel transfers: 1.2 percent of GDP.
  - Pro-growth capital spending: 3.5 percent of GDP (1.4 percent domestically funded).
- Authorities’ commitment: use resources to limit monetary financing and compensate those most affected by food price rises, including through Programme d’urgence.

### Revenue mobilization and public financial management
- Administrative measures (August) to boost revenue: strengthened control of invoices for imported goods; replaced management of the revenue agency.
- Impact on domestic revenues: monthly average rose to 6.4 billion gourdes (from an average of 2.2 billion gourdes in April-June to 3.4 billion gourdes in July-August).
- Security deterioration reduced revenue capacity in September-October; monetary financing increased to 2.3 percent of GDP (49.5 billion gourdes)—0.1 percentage point larger than programmed in FY2022.
- Staff recommendations: sustain August measures; implement Tax Code and tax administration reforms.
- PFM progress: finalized new customs tariffs with Fund TA; consolidated central budgetary units’ bank accounts in the TSA; prepared medium-term budget framework with NFPS deficit as anchor.
- Contingency planning: shortfalls to be offset by cutting planned increases in current and capital spending while preserving social spending targeted to the most vulnerable.
- SDR use: BRH and MEF signed MOU clarifying obligations for use of SDR allocation; authorities to report transparently on SDR conversions.

### Social assistance and mitigation of shocks (selected program measures)
- Fuel reform principles: automatic pricing mechanism, predictable regular adjustments, smoothing mechanism, mitigating measures for vulnerable, comprehensive communication policy, strengthen petroleum regulatory framework.
- Authorities’ social measures:
  - MAST and MEF prepared detailed strategy to tackle food insecurity and strengthen social safety nets.
  - Begun cash transfers to about 50,000 of the most vulnerable households.
  - Begun school feeding programs and providing hot meals and community restaurants.
  - Plans to waive school fees and use digital tools for cash transfers with WB and IDB support.
- Social spending quantitative target: resources equivalent to 0.15 percent of GDP allocated to social benefits under Programme d’urgence — target missed.
- Text Table 1 (selected entries):
  - 250 community restaurants (300 meals/day).
  - 100,000 dry rations (per month).
  - Creation of more than 57,000 temporary jobs.
  - School feeding: 25,000 parents each receiving HTG 10,000.
  - HTG 375,000,000 subsidy for purchase of 50 new buses.
  - Six cash transfer cycles, each reaching 50,000 households.
  - Register more than 200,000 new households in SIMAST.
  - Youth vocational training for 5,000 young people.
  - Support to 5,000 artisans with HTG 5,000 for two months.

### Monetary and exchange rate policies
- Monetary performance: looser than programmed at end-June mainly due to lower-than-programmed liquidity absorption; BRH met ceiling on credit to the government at end-June.
- FX pressures: gourde and FX markets under pressure in summer due to slowdown in remittances; BRH acted in August to provide dollars and absorb gourde liquidity.
- SMP framework: greater exchange rate flexibility; ceiling on credit to NFPS to limit monetary financing to 1.5 percent of GDP; short-term liquidity operations at fixed rate with full allotment.
- Interest rate guidance: staff urged authorities to raise short-term rates further to spur disinflation given large negative real rate at about 15 percent.
- FX intervention guidance: limit interventions to smoothing excessive volatility; consider mechanisms such as well-designed weekly FX auctions, an FX intervention rule, and revise banks’ net open positions (NOP) limits.
- Staff urged boosting NIR (QT), including through less FX sales while ensuring exchange rate remains an external shock absorber.

### Financial sector policies
- Banking supervision and payment systems:
  - With Fund TA, BRH strengthening supervision and moving toward risk-based supervision.
  - Actions: external hiring and training of supervisors; pre-draft risk assessment grids and rating matrix; finalizing new regulations on risk concentration, classification, and provisioning; finalizing new chart of accounts.
- Digital money and payments modernization:
  - BRH benefited from IMF TA on central bank digital currency analysis; staff recommended robust evaluation before prototype.
  - Haiti lacks regulatory framework and updated national payment system to facilitate mobile payments; modernization should include migration to new international messaging standards.
- AML/CFT:
  - Interim TA report and detailed comments on draft AML/CFT bill produced in late November 2022; follow-up mission expected early next year.
  - Revision of AML/CFT law should be approved by the Council of Ministers by April 2023 (SB).
  - Progress on FATF ICRG Action Plan essential to prevent negative impacts on correspondent banking and remittances.

### Governance, procurement, transparency, and safeguards
- Procurement transparency: since November 2021 decree, published public procurement contracts awarded, including names of beneficial owners (monthly SB).
- Social expenditure monitoring and PFM: commit to introduce all social expenditure into the budget and associated financing into the TSA; publish comprehensive monthly reports on budget execution no later than 45 days after month end.
- Anti-corruption: staff urged finalizing anti-corruption law reforms to comply with the United Nations Convention against Corruption.
- BRH safeguards and governance reforms:
  - Resume and implement overdue 2019 safeguards recommendations.
  - Implemented publication of FY2021 financial statements; progress on BRH-MEF debt consolidation; internal audit to verify monetary data; submitted draft BRH law amendments for IMF review.
  - Priority remaining: adoption of IFRS; medium-term plan to phase out BRH development activities; align foreign investment strategy with best practices.

### Program monitoring, QTs, structural benchmarks, and adjustors
- Proposed revisions to QTs and SBs: revise December 2022 QTs and March 2023 ITs on NFPS primary balance floor, NIR floor, BRH net credit to NFPS ceiling, and floor on budget allocations to MAST; slightly lower indicative target on central government tax revenue.
- Continuous QTs to remain in place: zero ceiling on non-concessional borrowing (below 35 percent grant element), domestic arrears accumulation, and external arrears accumulation.
- Asymmetric adjustor on NFPS primary balance and NIR: floors reduced by shortfall in budget support grants; ceilings on BRH financing unchanged.
- Proposed SB resets:
  - End-September SB on BRH law amendments → reset to end-March 2023.
  - End-December SB on decree making TIN compulsory → reset to end-March 2023.
  - End-March SB on AML/CFT amendments → reset to end-April 2023.
- Program timeline: program started in June 2022 and ends May 31, 2023. Test dates: ends of June 2022 and December 2022.

### Real, fiscal, monetary, external, and social indicators (selected series and projections)
- Real GDP (percent, fiscal year ending September 30): FY2019 -1.7; FY2020 -3.3; FY2021 -1.8; FY2022 0.3; FY2023 -1.5; FY2024 0.3; FY2025 1.2; FY2026 1.5.
- Consumer prices (end-of-period, percent): FY2019 19.7; FY2020 25.2; FY2021 13.1; FY2022 27.5; FY2022 (Sep) 38.7; FY2023 21.0; FY2024 13.4; FY2025 12.4.
- Central government fiscal indicators (percent of GDP): Domestic revenue: FY2019 6.4; FY2020 6.2; FY2021 5.9; FY2022 5.8; FY2023 5.4; FY2024 6.6; FY2025 6.9; FY2026 7.3.
- Central government balance including grants (percent of GDP): FY2019 -2.1; FY2020 -2.4; FY2021 -2.6; FY2022 -1.5; FY2023 -2.2; FY2024 -2.0; FY2025 -2.5; FY2026 -2.7.
- Net international reserves (program definition, US$ million): FY2019 732; FY2020 677; FY2021 452; FY2022 492; FY2023 142; FY2024 203; FY2025 242; FY2026 285.
- Gross international reserves (US$ million): FY2019 2,100; FY2020 2,501; FY2021 2,534; FY2022 2,574; FY2023 2,328; FY2024 2,348; FY2025 2,373; FY2026 2,398.
- Balance of payments (current account including grants, US$ million): FY2019 -169; FY2020 158; FY2021 98; FY2022 154; FY2023 -481.
- External financing requirements (US$ millions, examples): FY2019 445; FY2020 66; FY2021 131; FY2022 715; FY2023 916.
- Social indicators:
  - Percent of population below poverty line (2021): 52.3.
  - Number of people undernourished (three-year average, millions): 5.4 million people (2019-2021).
- Key summary indicators:
  - Nominal GDP (2021): US$21.0 billion.
  - GDP per capita (2021): US$1,765.
  - Population (2021): 11.9 million.
  - Total public sector debt (end-of-period, percent of GDP): FY2019 26.5; FY2020 23.3; FY2021 28.5; FY2022 27.3; FY2023 29.4.

### Letter of Intent and commitments (selected)
- Date and addressee: December 21, 2022 — Ms. Kristalina Georgieva, Managing Director, IMF.
- Government requests: completion of first review of the SMP and proposed modifications to QTs and ITs for end-December 2022 and end-March 2023.
- Commitments include:
  - Limit monetary financing to 1.5 percent of GDP via a ceiling on BRH credit to the NFPS.
  - Not to impose/intensify restrictions on current international payments and transfers; not to introduce/modify multiple currency practices.
  - Limit FX intervention to smoothing excess volatility and report transparently on SDR use.
  - Complete ICRG action plan including AML/CFT legal framework strengthening.
- Selected exact figures and program table highlights:
  - Social spending under Emergency Program: 0.15 percent of GDP.
  - Target to limit monetary financing: 1.5 percent of GDP.
  - Negative real interest rate: about 15 percent.
  - Memorandum program exchange rate for May 2022–May 2023: HTG/US$ 100.0123 (BRH reference rate on December 16, 2021).
  - Appendix 1 sample balances (net central bank credit to NFPS, gourdes): September 2021: 160,047,059.23; June 2022: 202,143,310.10; September 2022: 216,907,796.47.
  - Net international reserves of the BRH (gourdes / US$): September 2021: 41,397,115.02 / 413,920.24; June 2022: 28,020,274.18 / 280,168.28; September 2022: 9,935,598.92 / 98,360.29.

*Source: EXECUTIVE SUMMARY; Sections 1, 9, 15, 22, 29, 32; Appendix I — 1htiea2023001 (IMF PDF chapter/section).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### CONTEXT AND RECENT ECONOMIC DEVELOPMENTS
- Haiti faces many difficulties, worsened by higher food and fuel prices stemming from Russia’s war in Ukraine.
- Global shock and deterioration of the domestic security situation have made the economy more fragile and the macroeconomic situation and outlook more challenging than in June 2022 (when the SMP was approved).
- Growth and inflation: growth has been weaker than expected and inflation higher in line with global trends.
- Real GDP likely contracted for the fourth consecutive year in FY2022 (ending in September) by about -1.5 percent.
- Year-on-year inflation reached 38.7 percent in September 2022.
- NFPS fiscal deficit (including grants) is estimated to have expanded slightly—to 2.2 percent of GDP relative to 1.5 percent envisaged at the time of the SMP approval.
- Domestic revenue in FY2022 was 90 percent of the value expected in June (Tables 2a and 2b).
- The current account deficit is estimated at 2.4 percent of GDP in FY2022.
- Gross international reserves are estimated at 4.6 months of projected imports; net international reserves have declined by some US$240 million since the end of FY2021.
- Policy responses by authorities:
  - BRH raised short-term interest rates to 11.5 percent in August (from 10 percent since March 2020).
  - BRH boosted mandatory reserve requirements on liabilities, in US dollar terms, to 53 percent.
  - BRH increased interest rates on credit lines.
  - BRH eased loan repayment obligations—extending them for three months for households and six months for corporates.
  - Authorities prepared a detailed strategy to tackle food insecurity and strengthen the social safety net.

### PROGRAM IMPLEMENTATION UNDER THE SMP
- Overall assessment: implementation under the SMP has been broadly satisfactory despite obstacles in meeting quantitative targets (QTs) due to a less favorable environment; the SMP has been instrumental in catalyzing forthcoming external financing.
- Quantitative and indicative targets:
  - Authorities met one end-June QT (net credit to the government) and missed three other targets, with one missed by a small margin.
  - Met two of three continuous QTs on arrears; missed one on domestic arrears accumulation by a large amount owing to a build-up of obligations to fuel companies.
  - Missed the end-June indicative target on government tax revenues by about 6 billion HTG (0.3 percent of GDP).
  - Spending on social programs appears to be below the agreed target of HTG3 billion due to institutional bottlenecks.
  - Rollout of excise tax increases was delayed and underperformed through end-June.
- Structural benchmarks and capacity development:
  - Met the two recurrent structural benchmarks.
  - Of five end-September structural benchmarks, none was met on time but four were completed with some delay.
  - Staff proposes to reset one structural benchmark that was not completed as well as the end-December and end-March structural benchmarks, and to adjust QTs to reflect the less favorable environment.
  - The authorities adopted the FY2023 budget on December 19, 2022, together with a three-year medium-term framework with the NFPS as the anchor (end-September SB).
  - Coverage of the Treasury Single Account was expanded and completed in early November (with IMF FAD technical assistance).
  - FAES governing board reconvened and the first quarterly report on its operations was published (end-June SB).
  - Monthly publication of procurement contracts awarded, including names of beneficial owners of bidders; central bank external audit (KPMG) published; central bank law is being revised with IMF Legal Department assistance.
  - Consultations on the draft Tax Code and Draft Tax Procedure Code were completed as of early-September; a meeting to explain amendments took place on December 15; the codes were adopted by decree on December 19.
  - Nomenclature on the Tax Identification Number (TIN) and national identification was produced.
  - Senior management at the revenue agency was replaced, followed by an immediate jump in revenue collection in July-August.
- Program monitoring and engagement:
  - High-level Program Monitoring Committee (Comité de Suivi) met weekly, enabling close engagement and implementation support.

### OUTLOOK AND RISKS
- Financing gap: staff assesses a financing gap only in FY2023.
- Growth and inflation projections:
  - Growth is projected at 0.3 percent in FY2023 (weaker than 1.4 percent forecast at the time of the SMP approval in June 2022).
  - Growth projected to reach 1.5 percent over the medium term.
  - Inflation would decline to 21 percent by end-FY2023 after surging in 2022.
- Fiscal and external outlook:
  - NFPS fiscal deficit is projected at 2 percent of GDP in FY2023, 0.3 percentage point lower than envisaged at the time of the SMP approval.
  - Fiscal spending would increase due to higher outlays on transfers for food to vulnerable households and health expenditure to address the cholera outbreak.
  - Deficit projected to increase slightly to around 2.7-2.8 percent of GDP over the medium term, driven primarily by capital spending.
  - Current account deficit expected to narrow to 0.8 percent of GDP in FY2023 and to 0.6 percent of GDP in the medium term.
- Balance of risks (tilted to the downside):
  - Domestic risks: intensified political instability, gang-related disruptions, public health emergency (further spread of cholera), and natural disasters.
  - External risks: volatile remittance flows, lower-than-expected external financing, and renewed surges in global food and energy prices.
- Mitigating factors:
  - Reduction in fuel subsidies expected to provide some fiscal relief.
  - Regular adjustments in fuel pricing that follow global market conditions would improve fiscal outlook and permit higher public investment.
  - Normalization of the security situation would improve the outlook.

### REACHING THE OBJECTIVES OF THE SMP
- Key corrective actions and priorities identified:
  - Sustain recent efforts on revenue collection to reach revenue targets and intensify implementation of revenue mobilization and social spending reforms.
  - Fuel price reform (not part of program conditionality) needs mitigating measures to shield the most vulnerable, adopt gradual and automatic pricing mechanisms to limit reemergence of fuel subsidies, and be supported by an enhanced communication strategy.
  - Continue implementation of the monetary and exchange rate framework laid out in the SMP to release pressures on markets and preserve Net International Reserves (NIR).
  - Strengthen banking supervision by moving to risk-based supervision.
  - Further advance governance reforms to improve efficiency and productivity of public resources and maintain donor engagement.
- Authorities’ request: authorities are requesting financial assistance under the Food Shock Window (FSW) of the Rapid Credit Facility (RCF).

### POLICY RECOMMENDATIONS
- Adopt a budget for FY2023 that is consistent with agreed targets under the SMP and in the context of a medium-term budget framework for FY2023–25.
- Ensure a meaningful budget allocation to protect the most vulnerable and implement public financial management systems to monitor the use of public funds.
- Reduce central bank financing of the deficit to levels consistent with low inflation and limit foreign exchange intervention to smoothing excess volatility.
- Sustain recent efforts to boost revenue collection, including by following through with the adoption of the tax code and customs and tax administration reforms.
- Address the Fund’s safeguards recommendations, including on strengthening the central bank’s law and transitioning to International Financial Reporting Standards.

*Source: EXECUTIVE SUMMARY (1htiea2023001) — IMF PDF chapter/section*

### 9.      The FY2023 budget, adopted on December 19, is consistent with the program objective

### 1htiea2023001 - 9.      The FY2023 budget, adopted on December 19, is consistent with the program objective

### Fiscal policy and FY2023 budget
- Program objective: reduce the monetary financing of the deficit to lower inflation and help restore stability (MEFP, ¶9).
- Quantitative target: floor on the primary balance of the NFPS.
- FY2023 deficit target: 1.5 percent of GDP (targeted deficit slightly below staff projections).
- New spending:
  - Food transfers: 0.5 percent of GDP, funded by forthcoming external financing.
- Fuel price reform effect:
  - Net fuel revenues estimated at 1.1 percent of GDP in FY2023 (vs. -1.5 percent in FY2022), assuming prices at the pump remain above cost and global oil prices moderate in line with WEO projections.
- Reallocation of additional budget space:
  - Non-fuel transfers: 1.2 percent of GDP.
  - Pro-growth capital spending: 3.5 percent of GDP (1.4 percent domestically funded).
- Authorities’ commitment: use resources to limit monetary financing of the deficit in FY2023 and compensate those most affected by food price rises, including through Programme d’urgence to be rolled out expeditiously.

### Revenue mobilization and public financial management (PFM)
- Recent administrative measures (August) to boost revenue collections:
  - Strengthened control of invoices for imported goods.
  - Replaced management of the revenue agency.
- Impact on domestic revenues:
  - Monthly average rose to 6.4 billion gourdes (from an average of 2.2 billion gourdes in April-June to 3.4 billion gourdes in July-August).
- Security deterioration effect:
  - Revenue collection capacity weakened in September-October.
  - Monetary financing increased to 2.3 percent of GDP (49.5 billion gourdes)—0.1 percentage point larger than programmed in FY2022.
- Spending adjustments accompanying revenue decline: meaningful contractions in spending (non-energy sector transfers and public investment), which was not growth friendly.
- Staff recommendations:
  - Sustain measures implemented in August to anchor monetary financing.
  - Follow through with implementation of the tax code (and the tax procedure code) and customs and tax administration reforms.
- PFM and transparency progress:
  - Finalized new customs tariffs with Fund TA (to be published later in December).
  - Consolidation of central budgetary units’ bank accounts in the Treasury Single Account (TSA) advanced.
  - Prepared a medium-term budget framework, with the NFPS deficit as main anchor, to be adopted together with the FY2023 budget.
  - Authorities committed to publish: (i) TIN data and make its use compulsory for finance agencies (SB originally set for end-December), and (ii) customs codes and tariffs (end-September SB).

### Contingency planning and SDR use
- Contingency plan: shortfalls in revenue or external budget support to be offset by cutting planned increases in current and capital spending in FY2023 while preserving social spending targeted to the most vulnerable.
- Fiscal safeguards:
  - Avoid running domestic arrears to finance shortfalls; clear existing domestic arrears.
  - Preserve FX reserves at the current adequate level.
- SDR allocation reporting:
  - Authorities to report transparently on use of SDR allocation.
  - BRH and Ministry of Finance signed MOU clarifying obligations for use of SDR allocation for fiscal purposes.
  - Authorities agreed to communicate publicly any future conversion of their SDR allocation into freely usable currencies on the BRH or MEF websites.

### Social assistance and mitigation of shocks
- Fuel price reform guidance:
  - Reform essential for medium-term fiscal sustainability.
  - SMP does not include conditions on specific timing; staff stresses good practices: adoption of an automatic pricing mechanism, predictable regular adjustments, smoothing mechanism, and mitigating measures for the vulnerable.
  - Need for comprehensive, transparent policy framework and communication policy.
  - Regulatory framework for petroleum products sector and strengthening regulatory institutions prioritized.
- Authorities’ measures to cushion shocks:
  - MAST and MEF prepared a detailed strategy to tackle food insecurity and strengthen social safety nets, leveraging ongoing programs.
  - Plan focuses on vulnerable groups: children, pregnant women, the disabled, and the elderly.
  - Ministry of Finance plans: support textile sector workers; increase cash transfers and food rations.
  - Begun cash transfers to about 50,000 of the most vulnerable households.
  - Begun school feeding programs and providing hot meals for vulnerable households and community restaurants.
  - Plans to waive school fees and consider digital tools for cash transfers, with support from the World Bank and the Inter-American Development Bank.
  - Staff welcomed increased social programs—particularly in poorer regions—while stressing that additional coverage is critical given widespread poverty.
- FAES transparency:
  - Governing board re-convened; first quarterly report published but lacked detail and did not follow accounting standards.
  - Authorities agreed to improve FAES quarterly reports and communicate on proceedings for future governing board meetings.
- Social spending quantitative target:
  - Target allocated resources equivalent to 0.15 percent of GDP to social benefits, including under the Programme d’urgence — target missed.
  - Staff urged authorities to:
    - implement governance structure envisaged in the National Policy for Social Protection and Promotion (PNPPS), approved in 2020 but not yet implemented; and
    - working with IFIs and SIMAST, elaborate by March 2023 an action plan to implement the PNPPS, which includes at least one universal benefit registered in the FY2023 budget and expands the World Bank-supported PSARA to at least one other department.

- Text Table 1 — Measures to Support Vulnerable Households in FY2023 (selected entries):
  - Expansion of social assistance programs for vulnerable households:
    - 250 community restaurants with (300 meals/day).
    - 100,000 dry rations (per month).
    - Hot meals (mobile canteens).
    - Subsidies to industrial park workers for food and transportation.
  - Temporary job creation:
    - Creation of more than 57,000 temporary jobs in agriculture, environment, and public sectors country-wide.
  - School feeding program:
    - 25,000 parents, each receiving an allowance of HTG 10,000.
    - HTG 375,000,000 subsidy to transportation company for the purchase of 50 new buses.
  - Public transit subsidy program for registered buses: Fuel for registered buses.
  - Youth vocational training programs in high-growth sectors: 5,000 young people country wide.
  - Support artisans and small businesses:
    - 5,000 artisans receiving an allowance of HTG 5,000 for two months.
  - Socio-cultural and sports-based activities for youth in vulnerable neighborhoods: 100 projects.
  - Register more than 200,000 new households in SIMAST country-wide.
  - Cash transfers:
    - Six cash transfer cycles, each reaching 50,000 households.
  - Enhance the current digital payment system to facilitate money transfers.
  - Executing parties and financing: Ministry of Economy and Finance (MEF) — Budget, WB, IDB, USAID, WFP; Ministry of Social Affairs and Labor (MAST) — Budget.

### Monetary and exchange rate policies
- Monetary framework and performance:
  - Monetary performance at end-June looser than programmed, mainly due to lower-than-programmed liquidity absorption.
  - BRH met ceiling on credit to government at end-June.
  - Gourde and FX market came under pressure in summer, partly because of slowdown in remittance inflows aggravating FX shortage.
  - BRH acted in August to provide dollars and absorb gourde liquidity.
- SMP relevance and agreed framework:
  - Greater exchange rate flexibility.
  - Ceiling on credit to the NFPS as main anchor to limit monetary financing of the deficit to 1.5 percent of GDP.
  - Short-term liquidity operations at a fixed rate with full allotment ― including at seven-days ― to manage excess liquidity and strengthen policy transmission.
- Interest rate guidance:
  - Staff urged authorities to raise short-term rates further to spur disinflation, given the large negative real rate at about 15 percent and the cost of inflation for the poor.
  - Authorities stand ready to increase the short-term rate further but consider economy contracting for the fourth consecutive year and asymmetric effects on lending and deposit rates.
- FX intervention guidance:
  - BRH should continue to limit FX market interventions to smoothing excessive or volatile exchange rate fluctuations.
  - Gourde downswing increased FX interventions, adding pressure to NIR.
  - Unwinding of FX surrender requirements with Circular 114.3 is a positive step.
  - In consultation with IMF MCM, BRH considers:
    - (i) mechanism for FX interventions, such as well-designed weekly FX auctions in lieu of FX allocation system;
    - (ii) advance work on an FX market intervention rule;
    - (iii) complete revision of banks’ net open positions (NOP) limits.
  - Staff urged boosting NIR (QT), including through less FX sales while ensuring exchange rate remains primarily an external shock absorber and reserves are preserved.

### Financial sector policies
- Payment systems and supervision reforms:
  - With Fund TA, BRH strengthening banking supervision and moving toward risk-based supervision.
  - Actions taken:
    - Reinforced human capital through external hiring and training of supervisors.
    - Finalized pre-draft of risk assessment grids and rating matrix for financial institutions.
    - Finalizing new regulations on risk concentration, classification, and provisioning of credits.
    - Finalizing new chart of accounts for financial institutions.
  - Staff commended progress and urged continuation supported by TA.
- Digital money and payments modernization:
  - BRH benefited from IMF TA in analyzing issues related to a central bank digital currency.
  - Staff recommended robust evaluation of costs and risks before prototype phase.
  - Haiti lacks regulatory framework and/or updated national payment system to facilitate mobile payments and operators.
  - Modernization should include migration toward new international messaging standards to support interoperability and financial integrity.
- Anti-money laundering (AML/CFT):
  - Interim TA report by IMF Legal Department and detailed comments on draft AML/CFT bill produced in late November 2022; follow-up mission expected early next year to agree on key amendments and reforms.
  - Revision of AML/CFT law should be approved by the Council of Ministers by April 2023 (SB).
  - Progress in meeting requirements of its Action Plan under FATF’s ICRG is essential to prevent negative impacts on correspondent banking relationships and remittance flows.

### Governance and safeguards
- Transparency and procurement:
  - Since November 2021 decree on transparency requirements, authorities published public procurement contracts, including tenders, contracts, and beneficial owners of successful bidders (monthly SB).
  - Committed to enforce governance arrangements for emergency resource spending.
- Social expenditure monitoring and PFM practices:
  - Authorities committed to introduce all social expenditure into the budget and associated financing into the Single Treasury Account at the central bank, in compliance with procurement, execution, and expenditure control procedures.
  - Agreed to strengthen transparency and audit capacity in spending of emergency resources for the most vulnerable.
  - Activated budgetary mechanisms to monitor, record, and publish all expenditure related to emergency response.
  - Will publish comprehensive monthly reports on budget execution no later than 45 days after the end of each month, while carrying out internal audits by all concerned ministries for emergency resource use under the IMF Food Shock Window.
- Anti-corruption:
  - Staff urged authorities to finalize reform of anti-corruption laws to ensure effective implementation and compliance with the United Nations Convention against Corruption and international best practices.

*Sources: National authorities and Fund staff calculations.*

### 22.      With a view to strengthen its governance and operations, the BRH should resume its

### 1htiea2023001 - 22.      With a view to strengthen its governance and operations, the BRH should resume its

### BRH governance, safeguards, and operational reforms
- Remaining overdue 2019 safeguards recommendations should be resumed and implemented.
- Implemented actions:
  - Publication of the FY 2021 financial statements (end-June 2022 structural benchmark).
  - Progress toward agreement with the MEF on consolidating government debt.
  - Internal audit function plans to verify program monetary data at program test dates, as recommended.
  - Submission of drafting amendments to the BRH organic act for IMF staff’s review (end-September 2022 structural benchmark).
- Areas needing further strengthening in the BRH organic act amendments:
  - Governance arrangements.
  - Mandate and autonomy safeguards.
- Priority recommendations still in progress:
  - Adoption of International Financial Reporting Standards.
  - Development of a medium-term plan to phase-out BRH’s involvement in development activities.
  - Alignment of the foreign investment strategy with best practices.
- IMF staff action:
  - Staff will continue to monitor the implementation of the recommendations.

### Program monitoring — quantitative targets (QTs) and continuous ceilings
- Proposed revisions:
  - Revise the December 2022 quantitative targets and March 2023 indicative targets on:
    - NFPS primary balance floor.
    - NIR floor.
    - BRH net credit to the NFPS ceiling.
    - Floor on budget allocations to the Ministry of Social Affairs and Labor (the key agency delivering social assistance).
  - Slightly lower the indicative target on central government tax revenue, consistent with the improved fiscal outlook (¶9).
- Rationale:
  - Reflect the more adverse economic environment and deterioration of the global outlook and Haiti’s fragility while permitting flexibility to support spending capacity and still meet SMP objectives.
- Continuous QTs to remain in place and consist of a zero ceiling on:
  - Non-concessional borrowing (below 35 percent grant element).
  - Domestic arrears accumulation.
  - External arrears accumulation.
- Program timeline:
  - The program started in June 2022 and ends May 31, 2023.
  - Test dates: ends of June 2022 and December 2022.
- Data provision:
  - Provision of timely data for program monitoring has improved; continued efforts should be emphasized.

### Adjustors for external budget support
- Asymmetric adjustor included on:
  - NFPS primary balance.
  - NIR.
- Mechanism:
  - If a shortfall in budget support grants arises, the floors on both the primary balance and NIR target would be reduced by the amount of the shortfall.
  - The ceiling on BRH financing to the government would not change; the government would need to raise financing from domestic sources or use concessional external financing to cover the lower primary balance.
  - If external budget support grants are above projections, the primary balance and NIR floors would not change, permitting the government to spend the excess.
- Justification:
  - Allows spending of excess grants given the need to increase spending and Haiti’s debt sustainability.

### Structural benchmarks (SBs) and timelines
- Proposed resets:
  - Reset to end-March 2023:
    - End-September SB on approval by the BRH Board of Directors of draft amendments of the BRH law.
    - End-December SB on a decree making use of TIN compulsory for all finance departments.
  - Reset to end-April 2023:
    - End-March SB on approval by the council of ministries of the amendments on the AML/CFT law.
- Coordination:
  - Team coordinated closely with Fund’s functional departments and with the EU, IDB, WB, and WFP on the structural reform agenda related to capacity development.

### Staff appraisal — macroeconomic and policy assessment
- Macroeconomic context:
  - Haiti is mid-way through a Staff-Monitored Program that has been an important anchor for policymakers despite one of the most challenging economic environments in many years.
  - External shocks (worsening global outlook and the war in Ukraine) and deterioration of the security situation have produced a macroeconomic outlook worse than at program approval and macro slippages.
- Authorities’ actions and recommendations:
  - Authorities have adopted measures to boost revenue collection and tightened monetary policy toward tackling rising inflation though real interest rate remained highly negative.
  - Authorities produced for the first time a medium-term fiscal framework.
  - Recommendation: Sustain corrective actions to help restore macroeconomic stability.
  - Fuel price reform should be a top priority; a comprehensive fuel reform strategy is necessary to avoid ad hoc price adjustments and ensure the most vulnerable are shielded.
- Public financial management (PFM) and revenue administration:
  - Improvements are welcome and necessary to promote macroeconomic stability.
  - Achievements:
    - Consolidation of central budgetary agencies in one Treasury Single Account.
    - Adoption of a Medium-Term Budgetary framework.
    - Progress on reforms relating to tax identification numbers (TIN).
  - Benefits: Greater accountability and transparency in public finances and reduced fiscal dominance.
- Monetary policy and reserves:
  - Urgent need to clarify the monetary policy framework in view of declining net international reserves.
  - Needed reforms to allow greater exchange rate flexibility and permit the central bank to focus on stabilizing prices while maintaining adequate liquidity and financial stability.
  - Staff urged authorities to finalize amendments to the central bank’s law.
  - Staff welcomes readiness to raise the policy rate to stem inflationary pressures but urges firm movement to meet program objectives of maintaining NIR levels and reducing monetary financing.
- Social safety nets:
  - Continuing to strengthen social safety nets is vital for cushioning shocks and alleviating widespread poverty.
  - Authorities’ detailed strategy to tackle food insecurity is viewed as a good step, leveraging ongoing programs with support from EU, IADB, WB, and WFP.
  - Recommendation: Elaborate an action plan in support of the National Policy for Social Protection and Promotion.
  - Budget implications: During the current fiscal year and in coming years, budget resources to support social spending—including allocations to Ministry of Social Affairs and Labor (MAST) and SIMAST—should increase, together with improved efficiency in executing social spending supported by Fund’s capacity development.
- Governance and anti-corruption:
  - Progress welcomed; sustaining progress is paramount for building public and development partner trust.
  - Actions taken:
    - Steps to strengthen accountability in the collection and use of public resources, including with extra-budgetary agencies.
    - Boosted transparency of public procurement for emergency resources.
    - Work to bring AML/CFT laws up to international standards supported by Fund’s capacity development.
    - Monthly publication of procurement contract awards, including names of beneficial owners of bidders.
    - Enhanced transparency has better defined roles of the CNMP and La Cour Superieure des Comptes et du Contentieux Administratif.

*Source: 1htiea2023001 - 22.*

### 32.      Based on Haiti’s performance under the SMP, and the authorities’ corrective actions

### 32.      Based on Haiti’s performance under the SMP, and the authorities’ corrective actions 

### Program decision and adjustments
- Staff supports the completion of the first Review.
- Staff supports resetting the quantitative targets, the indicative targets and the structural benchmarks as indicated in paragraphs 23 and 25.

### Real sector developments (2015–22)
- Real GDP continues to contract, reflecting a sharp decline in investment and exports, and negative growth in all key sectors, particularly in agriculture, services, and construction.
- Inflation rose sharply reaching 38.7 percent y/y in September.
- The output gap widened and unemployment increased.
- Selected projections and indicators (fiscal year ending September 30):
  - GDP at constant prices: FY2019 -1.7; FY2020 -3.3; FY2021 -1.8; FY2022 0.3; FY2023 -1.5; FY2024 0.3; FY2025 1.2; FY2026 1.5.
  - Consumer prices (end-of-period): FY2019 19.7; FY2020 25.2; FY2021 13.1; FY2022 27.5; FY2022 (Sep) 38.7; FY2023 21.0; FY2024 13.4; FY2025 12.4.
  - Real effective exchange rate (eop): FY2019 -11.0; FY2020 34.2; FY2021 -5.2.

### Fiscal sector developments (2015–22)
- Tax revenue has fallen after 2018 while expenditure has remained stable.
- The fiscal deficit has been driven by fuel subsidies and has been largely monetized, raising domestic debt.
- Fuel price adjustments took place in December 2021 and September 2022.
- Central government fiscal indicators (percent of GDP; fiscal year ending September 30):
  - Domestic revenue: FY2019 6.4; FY2020 6.2; FY2021 5.9; FY2022 5.8; FY2023 5.4; FY2024 6.6; FY2025 6.9; FY2026 7.3.
  - Total expenditure: FY2019 10.1; FY2020 9.9; FY2021 10.8; FY2022 10.1; FY2023 10.3; FY2024 11.1; FY2025 11.7; FY2026 12.2.
  - Central government balance including grants: FY2019 -2.1; FY2020 -2.4; FY2021 -2.6; FY2022 -1.5; FY2023 -2.2; FY2024 -2.0; FY2025 -2.5; FY2026 -2.7.
  - Forgone fuel taxes and fuel direct subsidies (in gourdes, memorandum): FY2019 32,754; FY2020 29,332; FY2021 31,984; FY2022 53,840; FY2023 62,553; FY2024 2,021; FY2025 -1,569; FY2026 7,575.
- Fiscal accounts (in millions of gourdes):
  - Total revenue and grants: FY2019 99,665; FY2020 108,524; FY2021 139,852; FY2022 184,082; FY2022 (est) 173,689; FY2023 259,708; FY2024 302,124; FY2025 357,280.
  - Total expenditure: FY2019 125,952; FY2020 143,265; FY2021 184,164; FY2022 217,344; FY2022 (est) 220,400; FY2023 317,276; FY2024 384,959; FY2025 459,694.
  - Central government balance including grants (millions of gourdes): FY2019 -26,286; FY2020 -34,741; FY2021 -44,313; FY2022 -33,262; FY2022 (est) -46,710; FY2023 -57,568; FY2024 -82,835; FY2025 -102,414.

### Monetary sector and banking system (2015–22)
- BRH financing to the government increased net credit to the government.
- Private sector credit picked up in late 2021; lending rates are volatile and periodically decouple from the BRH policy rate.
- Dollarization of deposits and credit has been stable in terms of the constant exchange rate while excess structural liquidity is rising.
- Banking system summary (selected, fiscal year ending September 30; in millions of gourdes):
  - Net foreign assets: FY2019 146,120; FY2020 117,208; FY2021 146,005; FY2022 175,822; FY2023 145,574; FY2024 151,422; FY2025 172,907; FY2026 197,069.
  - Net domestic assets: FY2019 -19,709; FY2020 37,550; FY2021 42,096; FY2022 52,710; FY2023 70,475; FY2024 94,475; FY2025 105,740; FY2026 113,912.
  - Base money: FY2019 126,411; FY2020 154,758; FY2021 188,101; FY2022 228,532; FY2023 216,049; FY2024 245,898; FY2025 278,647; FY2026 310,980.
  - Broad money: FY2019 370,830; FY2020 369,728; FY2021 510,963; FY2022 617,036; FY2023 583,333; FY2024 659,006; FY2025 741,201; FY2026 824,098.
  - Credit to the private sector (percent change, 12-month): FY2019 24.0; FY2020 -11.2; FY2021 15.2; FY2022 5.8; FY2023 6.5; FY2024 9.4; FY2025 11.2; FY2026 12.5.

### Financial sector soundness (2015–22; selected indicators)
- The banking system reports adequate capital buffers but relatively high NPLs and related provisions.
- Profitability recovered since the exchange rate shock of August 2020 and has been stable since; liquidity conditions remain favorable.
- Financial soundness indicators (June 2020 – March 2022):
  - Regulatory capital to risk-weighted assets: Jun-20 21.3; Sep-20 26.2; Dec-20 27.3; Mar-21 22.6; Jun-21 18.4; Sep-21 22.3; Dec-21 20.8; Mar-22 21.4.
  - NPLs to gross loans: Jun-20 8.0; Sep-20 5.0; Dec-20 5.4; Mar-21 7.1; Jun-21 5.9; Sep-21 5.6; Dec-21 6.3; Mar-22 7.8.
  - Provisions to gross NPLs: Jun-20 63.0; Sep-20 105.4; Dec-20 107.5; Mar-21 81.8; Jun-21 101.6; Sep-21 103.1; Dec-21 96.5; Mar-22 77.8.
  - Return on assets (ROA): Jun-20 2.1; Sep-20 1.2; Dec-20 1.4; Mar-21 2.2; Jun-21 2.2; Sep-21 2.1; Dec-21 2.0; Mar-22 1.9.
  - Liquid assets to total assets: Jun-20 49.2; Sep-20 45.3; Dec-20 47.3; Mar-21 48.6; Jun-21 48.1; Sep-21 50.3; Dec-21 48.5; Mar-22 47.8.
  - Foreign currency deposits to total deposits: Jun-20 70.6; Sep-20 58.5; Dec-20 59.6; Mar-21 60.1; Jun-21 63.8; Sep-21 66.1; Dec-21 66.5; Mar-22 66.3.

### External sector developments (2015–22)
- The trade balance improved as imports compressed amid the security crisis; remittances (in percent of GDP) returned to pre-pandemic trends.
- The current account net of grants remained in surplus and donor flows increased following the August 2021 earthquake.
- The REER depreciated after its sharp appreciation in September 2020, though it has recently trended up.
- Foreign reserves coverage remains stable, but NIR has been declining with rising external liabilities to banks.
- Balance of payments (in millions of US$; fiscal year basis):
  - Current account (including grants): FY2019 -169; FY2020 158; FY2021 98; FY2022 154; FY2023 -481; FY2024 -199; FY2025 -126; FY2026 -147.
  - Trade balance: FY2019 -3,318; FY2020 -2,879; FY2021 -3,474; FY2022 -3,984; FY2023 -3,711; FY2024 -4,030; FY2025 -4,225; FY2026 -4,394.
  - Exports of goods: FY2019 1,202; FY2020 885; FY2021 1,130; FY2022 1,209; FY2023 1,278; FY2024 1,339; FY2025 1,421; FY2026 1,509.
  - Imports of goods: FY2019 -4,520; FY2020 -3,764; FY2021 -4,604; FY2022 -5,193; FY2023 -4,989; FY2024 -5,369; FY2025 -5,646; FY2026 -5,903.
  - Remittances (net, in US$): FY2019 3,210; FY2020 3,321; FY2021 4,013; FY2022 4,616; FY2023 3,739; FY2024 4,263; FY2025 4,438; FY2026 4,566.
  - Gross international reserves (US$ million): FY2019 2,100; FY2020 2,501; FY2021 2,534; FY2022 2,574; FY2023 2,328; FY2024 2,348; FY2025 2,373; FY2026 2,398.
  - Net international reserves (program definition, US$ million): FY2019 732; FY2020 677; FY2021 452; FY2022 492; FY2023 142; FY2024 203; FY2025 242; FY2026 285.
  - Debt service (in percent of exports of goods and services): FY2019 6.6; FY2020 12.5; FY2021 9.5; FY2022 9.3; FY2023 8.8; FY2024 8.6; FY2025 8.0; FY2026 8.1.

### External financing requirements and sources (FY2019–25; US$ millions)
- Requirements (examples):
  - FY2019 445; FY2020 66; FY2021 131; FY2022 715; FY2023 916; FY2024 809; FY2025 816.
  - Components include current account deficit excluding grants and debt amortization.
- Sources (examples):
  - Official disbursements, excluding budget support: FY2019 184; FY2020 116; FY2021 190; FY2022 254; FY2023 530; FY2024 632; FY2025 639.
  - Foreign direct investment: FY2019 75; FY2020 25; FY2021 51; FY2022 57; FY2023 97; FY2024 101; FY2025 105.
  - Change in central bank's NFA (+ is decrease): FY2019 123; FY2020 -350; FY2021 -91; FY2022 206; FY2023 -20; FY2024 -25; FY2025 -25.
  - Additional financing (IMF, arrears, debt relief, etc.): FY2019 84; FY2020 211; FY2021 95; FY2022 76.

### Social indicators and welfare
- Political instability and security problems have taken a heavy toll and reversed since 2018 the small progress made at reducing poverty.
- Poverty and nutrition:
  - Percent of population below poverty line (2021): 52.3.
  - Number of people undernourished (three-year average, millions): 5.4 million people (2019-2021).
- Access and human capital:
  - People using at least basic sanitation services and basic drinking water: sanitation and water indicators are well below Fragile and Conflict-Affected states (FCS) averages.
  - Youth literacy rate (ages 15-24) in Haiti is significantly above the FCS average and close to the world average.
- Displacement:
  - Total displaced persons by violence (number of people): Haiti shows a rising trend through 2022 (IOM estimate for 2022 as of September 2022).

### Key summary indicators (Table 1 highlights)
- Nominal GDP (2021): US$21.0 billion.
- GDP per capita (2021): US$1,765.
- Population (2021): 11.9 million.
- Selected macro ratios (percent of GDP, fiscal year):
  - Gross investment: FY2019 20.3; FY2020 17.7; FY2021 18.0; FY2022 19.4; FY2023 18.7; FY2024 15.3; FY2025 15.2; FY2026 15.9.
  - Gross national savings: FY2019 19.2; FY2020 18.8; FY2021 18.5; FY2022 20.2; FY2023 16.3; FY2024 14.5; FY2025 14.7; FY2026 15.3.
  - Total public sector debt (end-of-period): FY2019 26.5; FY2020 23.3; FY2021 28.5; FY2022 27.3; FY2023 29.4; FY2024 25.3; FY2025 25.5; FY2026 25.9.

*Sources: Ministry of Economy and Finance; Bank of the Republic of Haiti; World Bank; Fund staff estimates and projections.*

### Appendix I. Letter of Intent

### Appendix I. Letter of Intent

### Context and recent shocks
- Date and addressee: December 21, 2022 — Ms. Kristalina Georgieva, Managing Director, International Monetary Fund.
- Haiti hit by multiple shocks in 2022, including:
  - Economic spillovers of Russia’s invasion of Ukraine.
  - Recent cholera outbreak.
  - Domestic escalation of violence and deteriorating security.
- Consequences noted:
  - Macroeconomic prospects more challenging relative to outlook on June 17, 2022 (date of SMP approval).
  - Need to continue structural reforms and policies to restore macroeconomic stability and strengthen governance.

### Performance under the Staff Monitored Program (SMP)
- Overall assessment: Performance remains satisfactory overall given domestic and international constraints and political transition.
- Quantitative and indicative targets at end-June 2022:
  - Met: QT for net central bank credit to the non-financial public sector.
  - Missed: QTs for net international reserves (NIR), floor on social spending, and primary balance of the non-financial public sector.
  - Arrears continuous QTs: Met two of three; missed one on domestic arrears accumulation due to build-up of obligations to fuel companies.
  - End-June indicative target (IT) on government tax revenues: Not met, mainly because of rising global oil prices and higher-than-expected tax expenditures.
- Corrective measures taken: strategy to tackle food insecurity, strengthen social safety net, sustain revenue collection, raise short-term interest rates in August.
- Structural benchmarks (SBs):
  - Met two monthly and quarterly SBs; published BRH financial audit statements.
  - Completed four of five end-September SBs with slight delay, including:
    - Expanded Treasury Single Account at central bank to include all central budgetary units.
    - Concluded public consultations on tax codes and tax procedures code and finalized the codes.
    - Adopted medium-term budget framework on December 19 and approved FY2022-23 budget.
  - Requests to reset SB deadlines:
    - Amendments of the Central Bank law to March 2023.
    - Issuance of decree making use of TIN compulsory for all finance departments to end March 2023.
    - Approval by the Council of Ministers of revisions to the AML/CFT law to end-April 2023.
- Program monitoring: High-level Program Monitoring Committee (Comité de Suivi) meets biweekly.

### Request and program adjustments
- Government requests completion of the first review of the SMP.
- Commitments and proposed modifications:
  - Limit monetary financing to 1.5 percent of GDP through a ceiling on credit to the NFPS.
  - Proposed modification of end-December 2022 QTs for:
    - Net international reserves (NIR).
    - Primary balance of the non-financial public sector.
    - Net central bank credit to the non-financial public sector.
    - Floor on social spending.
  - Proposed new ITs for end-March 2023 as described in attached MEFP and TMU.

### Macroeconomic developments and outlook (from MEFP Attachment)
- Growth:
  - Activity contracted by 1.5 percent in FY ending September 30, 2022 (relative to 0.3 percent projected at SMP approval).
  - Growth projected at 0.3 percent for FY2022-23 (versus 1.4 percent forecast at program approval).
- Inflation:
  - Reached 38.7 percent in September, year-on-year.
  - Projected to fall to 21 percent by end of FY2022-23 (versus 14 percent projected at program approval).
- Public finances and fiscal balance:
  - Primary fiscal deficit of NFPS at end-June close to QT but 0.2 percent of GDP above programmed level.
  - Fuel subsidies reached 1.5 percent of GDP at end-September (programmed 1.1 percent for FY2021-22).
  - End-September indicative fiscal targets: NFPS fiscal deficit estimated at 2.2 percent of GDP for FY2021-22 — 0.7 percent higher than planned.
  - For FY2022-23, NFPS budget deficit projected at 1.5 percent of GDP.
  - Expenditures to increase for transfers to provide food for vulnerable households and health to address cholera outbreak.
- Fuel prices and social unrest:
  - Government fuel price adjustments:
    - Kerosene: HTG 353 per gallon to HTG 670.
    - Diesel: HTG 352 per gallon to HTG 665.
    - Gasoline: HTG 250 to HTG 570 per gallon, implying a subsidy of HTG 60 per gallon (about US$0.80 per gallon).
  - Black market prices were 5-10 times higher than subsidized prices.
  - Armed gangs blocked access to main oil terminal in Varreux until end of October; closure of hospitals and schools; disruptions to food and water distribution.
  - UN Security Council approved a sanctions regime targeting gang leaders and their financiers.
- Monetary sector and reserves:
  - Monetary financing reached 2.3 percent of GDP (HTG 49.5 billion) in FY2021-22 (i.e., 0.3 percent more than planned).
  - BRH policy actions: raised short-term interest rates to 11.5 percent in August (from 10 percent since March 2020); reserve requirements on dollar liabilities to 53 percent; amended Circular 88-1 to raise interest rates on lines of credit.
  - Current account deficit widened to 2.4 percent of GDP in FY2021-22; projected at 0.8 percent of GDP in FY2022-23.
  - Gross international reserves: about 4.6 months of imports of goods and services next year.
  - Net international reserves (NIR): declining; about US$160,000,000 in November — some US$332,000,000 lower than end of FY2020-21.
  - Shortfall in NIR partly due to lower prices for fixed-rate bonds held by the BRH denominated in U.S. dollars and marked to market.
- Financial sector:
  - Capital adequacy ratio at end-March 2022: 21.4 percent.
  - Nonperforming loans at end-August 2022: 8.6 percent of total loans.
  - BRH measures after August–October deterioration: eased loan repayment obligations — extended by three months for households and six months for businesses.
  - Bank liquidity contracted in recent months; deposit growth remains important source of funding.

### Fiscal policy strategy and measures
- FY2022-23 fiscal stance:
  - Aim to limit primary balance of NFPS to a deficit of 2 percent of GDP (quantitative target).
  - New spending on food transfers expected to reach 0.5 percent of GDP, financed in part by forthcoming external financing.
  - Net oil revenue projected at 1.1 percent of GDP in FY2022-23 (versus -1.5 percent in FY2021-22).
  - Expected allocation of resources:
    - Non-fuel transfers to 1.3 percent of GDP.
    - Growth-enhancing capital expenditure to 4.5 percent of GDP (2.1 percent financed from domestic resources).
  - Monetary financing cap: plan to cap at 1.6 percent of GDP in FY2022-23.
  - Additional financing needs may be met through domestic borrowing; public debt assessed as sustainable.
  - Plan to update financing “pacte” between BRH and MEF in line with targets.
- Revenue mobilization and administration:
  - Administrative measures implemented after end-June 2022 shortfall:
    - Increased control of invoices for imported goods.
    - Appointment of new revenue agency management.
  - Monthly tax revenue expanded to HTG 6.4 billion in July-August (from HTG 2.2 billion in April-June); plan to maintain this monthly level in FY2022-23.
  - Plans to eliminate several customs exemptions, compensate for delays in registration fee collection, strengthen controls, and combat tax and customs fraud (including at the border with the Dominican Republic).
  - Tax policy reforms:
    - Adoption of Tax Code and Tax Procedure Code approved on December 19.
    - Simplification of tax system and reforms of customs and tax administration to broaden tax base.
    - Structural benchmark: publish key data on taxpayer identifier and make its use mandatory for all financial agencies.
    - Structural benchmark: publish the Customs Code.
- Public financial management:
  - Adopted FY2022-23 budget on December 19, 2022.
  - Finalized medium-term budget framework for FY2023, FY2024, and FY2025 with NFPS deficit as fiscal anchor (structural benchmark).

### Social protection measures
- Strategy to combat food insecurity and strengthen social safety net focused on vulnerable groups (children, pregnant women, people with disabilities, the elderly).
- Actions taken and planned:
  - Initiated cash transfers to about 50,000 of the most vulnerable households.
  - Launched school meal programs and provided hot meals to vulnerable households and community restaurants.
  - Plan to waive some school fees.
  - Support for textile workers and increased cash transfers and food rations for vulnerable households.
  - Rapid roll-out of Emergency Program to support those most affected by rising food and fuel prices.
  - Leverage digital tools for cash transfers with World Bank and Inter-American Development Bank support; integrate SIMAST database functions to enable automated, secure, and transparent payments through mobile operators or other means.

### Commitments to Fund norms and monitoring
- Government commitments:
  - Continue to apply program rigorously and consult Fund staff before revisions to MEFP policies.
  - Not impose or intensify restrictions on payments and transfers for current international transactions.
  - Not introduce or modify multiple currency practices.
  - Limit foreign exchange intervention to smoothing excess volatility.
  - Inform Fund staff of events or developments affecting the economic program and provide necessary data and information in accordance with the TMU or upon request.
- Policy transparency actions:
  - Discussed SDR conversion best practices with IMF staff and established a Memorandum of Understanding between BRH and MEF governing use of SDR allocation for budgetary purposes.
  - Intend to report on use of SDR allocation transparently on BRH or MEF websites.
- Commitment to complete Haiti’s ICRG action plan, including AML/CFT legal framework strengthening, with Fund technical assistance and improve AML/CFT supervision quality.

*Appendix I. Letter of Intent, Attachment I. Memorandum on Economic and Financial Policies (excerpts).*

### 15.      In this context, we have increased the transparency of the Economic and Social Assistance

### 1htiea2023001 - 15.      In this context, we have increased the transparency of the Economic and Social Assistance

### Transparency and FAES (Fonds d'Assistance Économique et Sociale)
- Restored regular functioning of the FAES Board of Directors with quarterly meetings.
- Publishing consolidated quarterly financial statements of the FAES (quarterly structural benchmark).
- Considering preparing the consolidated quarterly financial statements of the FAES in accordance with the model financial statements for public institutions (follow-up to IMF expert guidance of June 2022).

### Social protection governance and MAST (Ministry of Social Affairs and Labor)
- Intend to implement the governance structure envisaged in the National Policy for Social Protection and Promotion (Politique Nationale de Protection et de Promotion Sociale (PNPPS))—approved in 2020—before the end of the SMP (May 2023).
- Under-utilization of social spending recorded by the end-June 2022 social spending floor, including an allocation equivalent to 0.15 percent of GDP under the Emergency Program, may reflect structural problems in implementing social programs.
- Actions and commitments:
  - Centralize design and implementation of social spending under MAST; ensure organic law revisions guarantee central role of MAST (established by the Organic Law of November 24, 1983).
  - In collaboration with donors and using the SIMAST partial registry, complete development of the action plan to implement the National Policy for Social Protection and Promotion by the end of March 2023.
  - Further increase the budget allocation to the MAST in line with the floor set (excluding transfers to the population) in the SMP. The floor corresponds to the sum of the budget allocation (or expenditure implemented, if lower) for all social programs in the MAST budget (quantitative target)—including resources allocated and implemented by the FAES, the Emergency Program (2022), the Klere Chimen project, and activities of the Office of the State Secretary for the Inclusion of Persons with Disabilities (BSEIPH).

### Fuel subsidy reform
- Fuel subsidy reform deemed essential for medium-term fiscal sustainability.
- Committed to a home-grown reform approach on modalities and timing, guided by good policy principles:
  - Price adjustments will take place regularly to reflect global market price changes.
  - A smoothing mechanism could help dampen volatility and lessen need for very large adjustments.
  - Commit to elaborate a communication policy to explain reform strategy.
  - Any upward price increases will be accompanied with mitigating measures to protect the most vulnerable.

### Monetary and exchange policy
- Objectives confirmed:
  - A ceiling on BRH credit to the NFPS as main anchor to limit monetary financing of the budget deficit (quantitative objective).
  - Short-term liquidity absorption operations to reduce potential inflationary pressures and strengthen monetary policy transmission.
- Commitments and targets:
  - Plan to limit monetary financing to 1.5 percent of GDP by adopting a ceiling on the BRH’s credit to the NFPS.
  - Any surplus reserves will be sterilized through liquidity absorption.
  - Prepared to raise short-term interest rates further to initiate disinflation, given increased inflationary pressures and the significant negative real interest rate (about 15 percent).
  - Ongoing reforms to deepen the government securities market, strengthen monetary policy framework through new facilities, and review foreign exchange regulations; IMF technical assistance requested.
- Foreign exchange interventions:
  - BRH will limit FX market interventions to smoothing excessive volatility.
  - Plan to increase the NIR (quantitative target), including by reducing foreign exchange sales.
  - Phasing out of the foreign exchange repurchase requirements with Circular 114.3 noted as positive.
  - Considering measures in consultation with MCM: (i) weekly FX auctions in lieu of the FX allocation system, (ii) an FX market intervention rule, (iii) revision of limits on banks’ net open foreign exchange positions (NOP).
  - Commitment not to impose or intensify restrictions on payments and transfers for current international transactions or to introduce/modify multiple currency practices.

### Banking regulation, payments, and AML/CFT
- Strengthening risk-based supervision, payment systems, and AML/CFT framework:
  - BRH strengthened human resources through external hiring and training of supervisors for non-bank financial institutions.
  - Finalized preliminary draft risk assessment grids and rating matrix for financial institutions; will finalize new regulations on risk concentration, credit classification and provisioning, and a new chart of accounts.
  - Received IMF Capital Markets Department assistance to analyze issues related to a central bank digital currency; will examine feasibility, costs, and risks before prototype phase.
  - Modernization efforts should include migration to new international messaging standards to promote interoperability and financial integrity.
  - Interim IMF Legal Department technical assistance report and detailed comments on draft AML/CFT Law expected by end of November; possible follow-up mission in early 2023.
  - Revision of the AML/CFT Law expected to be approved by the Council of Ministers by April 2023 (structural benchmark).
  - Intend to satisfactorily complete Haiti’s ICRG action plan with Fund technical assistance, including measures to strengthen the AML/CFT legal framework and quality of AML/CFT supervision.

### Governance, procurement, transparency, and safeguards
- Governance and procurement:
  - Implement decree of November 2021 mandating transparency requirements for public procurement, including publication of beneficial owners of successful bidders in all public contracts and concessions (monthly structural benchmark).
  - Start preparations for comprehensive reform of the procurement law.
  - Ensure law governing the Supreme Court of Auditors and Administrative Disputes (CSCCA) guarantees functioning in accordance with standards for supreme audit institutions.
  - Governance Diagnostic to be led by IMF staff; commit to publishing the Diagnostic report and integrating recommendations into reforms of the second review of the SMP.
  - Finalize reform of anti-corruption laws to ensure effective implementation and compliance with the United Nations Convention against Corruption.
- Public financial management and emergency spending transparency:
  - Record all social expenditures in the budget and associated financing in the Treasury Single Account (TSA) at the central bank; comply with procurement and expenditure control procedures.
  - Strengthen transparency and audit capacity in expenditure of emergency resources for the most vulnerable households.
  - Activated budgetary mechanisms to monitor, record, and publish all expenditures related to the emergency response.
  - Publish comprehensive monthly reports on budget implementation no later than 45 days after the end of each month and conduct internal audits of expenditures by all ministries involved in use of emergency resources provided under the IMF’s Food Shock Window, should IMF Board approve the request.
- Safeguards and central bank reforms:
  - Continue to implement recommendations of the 2019 Safeguards Assessment.
  - Working with staff to refine draft amendments to the Law on the Central Bank with IMF technical assistance.
  - External audit of the BRH for the year ended September 30, 2022, was conducted by KPMG; audited financial statements published on June 30, 2022.
  - Ensure full reestablishment of the Audit Committee of the BRH board, including revised charter, by end-2022.
  - Accelerate transition to International Financial Reporting Standards (IFRS) and strengthen investment strategic asset allocation in line with safety and liquidity principles.

### Program monitoring, communication, and publication commitments
- Program monitoring:
  - Take all necessary measures agreed under the SMP as set out in Tables 1 and 2 of the Memorandum.
  - Program-monitoring committee to maintain regular engagement with IMF staff; meet at least quarterly with the Minister of Economy and Finance and the Governor of the BRH.
  - Request changes to quantitative targets at end-December 2022 for NIR, primary balance of the NFPS, net credit of the central bank to the NFPS, and the social spending floor, as well as new indicative targets at end-March 2023, as defined in Table 1.
  - Quantitative and indicative targets defined in the attached Technical Memorandum of Understanding (Annex II), which includes list and frequency of data to be provided.
- Communication:
  - Undertake internal and external communication campaigns and engage state institutions and national actors (civil society, NGOs, media) to strengthen ownership and public support.
  - Undertake to publish this Memorandum and accompanying IMF staff report online on the website of the Ministry of Economy and Finance and the BRH, as soon as the first review of the SMP has been approved by IMF Management and before the end of January 2023.

### Selected exact quantitative figures and program table highlights (as presented)
- Social spending under Emergency Program: 0.15 percent of GDP.
- Target to limit monetary financing: 1.5 percent of GDP.
- Negative real interest rate: about 15 percent.
- Audited BRH financial statements published on June 30, 2022; external audit for year ended September 30, 2022.
- Appendix 1 (selected entries from Table 1, in millions of gourdes unless otherwise indicated):
  - Net international reserves of central bank (in millions of U.S. dollars) - floor: 413.92 (Dec. 2021 Actual).
  - Primary balance of the non-financial public sector - floor: -8,813 (Dec. 2021 Actual).
  - Net central bank credit to the non-financial public sector - ceiling: 160,047 (Dec. 2021 Actual).
  - Central Government net central bank credit (Dec. 2021 Actual): 162,197.
  - Budget allocation to MAST for social expenditure - floor: 0 (Dec. 2021 Actual); Quantitative target: 3,000.
  - Memorandum: For program monitoring purposes, the program exchange rate for the period May 2022 to May 2023 is HTG/US$ 100.0123 (BRH reference rate on December 16, 2021).
- Appendix 1 Table 2 (selected proposed structural benchmarks and status):
  - Publish all public procurement contracts awarded since publication of November 2021 procurement decree No. 52, including beneficial owners: monthly — Met.
  - Approval by BRH Board of draft amendments of the BRH law: end-Sept. 2022 / end-March 2023 — Not met / In progress.
  - Approval by Council of Ministers of revisions to AML/CFT law: end-March 2023 / end-April 2023 — In progress.
  - Expand the TSA to include all central budgetary units, including emergency fund: end-Sept. 2022 — Not met / Completed (all five special treasury accounts integrated by early November 2022).
  - Prepare and adopt a medium-term budget framework for FY2023–FY2025: end-Sept. 2022 — Not met / Completed (FY2023 budget approved on December 19).
  - Publish quarterly and annual reports on FAES operations and reactivate FAES Governing Board with quarterly meetings: Quarterly — Met.
  - Issue decree making TIN compulsory and publish TIN database and file of active taxpayers: end-Dec. 2022 / end-March 2023 — Authorities expected to publish TIN database and file in Q1 2023.
  - Complete FY2021 financial audit of BRH and publish audited financial statements: end-June 2022 — Met.

*Source: 1htiea2023001 - 15.      In this context, we have increased the transparency of the Economic and Social Assistance*

### 1.      Haiti’s performance under the 12-month Staff-Monitored Program (SMP) ending May 31,

### 1htiea2023001 - Haiti’s performance under the 12-month Staff-Monitored Program (SMP) ending May 31, 2023

### Definitions and institutional coverage
- Central Government: central administration of Haiti excluding municipalities, the central bank (BRH), other public financial institutions, autonomous state organizations of an administrative, cultural, or scientific nature, and state-owned enterprises. Central government expenditures are financed by domestic taxes and other domestic levies and by foreign donors through foreign grants, ministerial accounts (comptes courants), and domestic and foreign public debt.
- Special funds and programs: include the Road Fund (Fonds d’entretien routier, FER) and resources mobilized to finance the Universal, Free, and Compulsory Schooling Program (PSUGO) via the National Education Fund (FNE). Under the SMP, resources levied to finance FER and PSUGO (through FNE) are recorded as central government revenues.
- Economic and Social Assistance Fund (FAES): autonomous state financial entity supervised by the Ministry of Economy and Finance; funds short-term, labor-intensive projects and implements social programs financed by the Treasury and foreign donors.
- Office for Monetization of Development Assistance Programs (BMPAD): autonomous state administrative organization under the Ministry of Economy and Finance; implements and monitors monetization of aid programs.
- Electricité d’Haïti (EDH): state-owned enterprise that produces, supplies, and distributes electricity. Flows between EDH and the Central Government include: (i) CG transfers to EDH (including through sales taxes collected on electricity consumption and not devolved to the CG, and payment of fuel purchase bills); (ii) payment of letters of credit in favor of independent power producers to settle power generation bills unpaid by EDH; (iii) payment of bills from independent producers for the purchase of fuel, which are the counterpart of EDH arrears for unpaid generation bills. Under the SMP, transfers from central government are recorded under operations “above the line,” while letters of credit and financial receivables are entered under operations “below the line.”
- Non-financial public sector (NFPS): includes the central government, special funds and programs, other autonomous state organizations (including FAES and BMPAD), EDH, Civil Service Pension Plan, National Old Age Insurance Office (ONA), and local governments.
- Public sector (PS): comprises the nonfinancial public sector, state-owned banks, nonbank financial SOEs (enterprises over 50 percent state-owned), and the BRH.
- Budgetary grants: grants from bilateral or multilateral partners (including the European Union, the Inter-American Development Bank, the World Bank, the Caribbean Development Bank, and bilateral donors) for general or sector budget support.

### Quantitative Targets (QTs) and program monitoring
- Monitoring basis: QTs and SBs assessed in terms of cumulated flows from a reference date set at the end of the previous fiscal year (example: for fiscal year 2021-22 the reference date is end-September 2021), as specified in Table 1 of the Memorandum on Economic and Financial Policies.
- Program exchange rates (used to value foreign-currency assets, liabilities, and flows, except elements affecting government budgetary accounts which use current exchange rates):
  - HTG 100.0123/US$ (BRH reference rate as at December 16, 2021)
  - US$1.133600/EUR
  - SDR 0.7154070/US$ (rates as at December 16, 2021 published by the IMF)

### Net Central Bank Credit to the Nonfinancial Public Sector (NFPS)
- Definition: difference between BRH assets and liabilities vis-à-vis the NFPS (net claims on the public sector) according to Standardized Report Forms 1SR or 2SR reported by the BRH to the IMF. Includes net BRH credit to central government and net BRH credit vis-à-vis the rest of the NFPS.
- Components and selected reported values (Appendix 1. Table 3; In millions of gourdes)
  - Net central bank credit to the nonfinancial public sector:
    - September 2021: 160,047,059.23
    - June 2022: 202,143,310.10
    - September 2022: 216,907,796.47
  - Net credit on central government:
    - September 2021: 162,196,977.99
    - June 2022: 181,732,827.46
    - September 2022: 194,641,384.26
    - Claims on central government:
      - September 2021: 200,791,090.44
      - June 2022: 257,194,431.71
      - September 2022: 269,884,127.20
    - Deposits by government:
      - September 2021: 38,777,196.75
      - June 2022: 75,461,604.26
      - September 2022: 75,242,742.94
        - Deposits in current accounts:
          - September 2021: 26,730,369.21
          - June 2022: 36,813,575.11
          - September 2022: 31,796,307.42
            - Sight deposits (HTG):
              - September 2021: 7,073,003.48
              - June 2022: 11,406,902.81
              - September 2022: 10,720,115.47
            - Sight deposits (US$):
              - September 2021: 19,657,365.73
              - June 2022: 25,406,672.30
              - September 2022: 21,076,191.95
        - Securities seized UCREF:
          - September 2021: 594.75
          - June 2022: 594,748.67
          - September 2022: 594,748.67
        - Sundry accounts payable:
          - September 2021: 636,307.08
          - June 2022: 6,097.41
          - September 2022: 7,233.00
        - Certified checks:
          - September 2021: 329,125.56
          - June 2022: 371,109.60
          - September 2022: 286,815.46
        - Certified bank checks:
          - September 2021: 25,041.45
          - June 2022: 25,041,448.88
          - September 2022: 25,043,228.88
        - Foreign Debt Special Fund:
          - September 2021: 55,669.97
          - June 2022: 194,883.78
          - September 2022: 117,742.54
        - Treasury special accounts:
          - September 2021: 6,762,697.60
          - June 2022: 10,361,354.81
          - September 2022: 12,201,556.37
        - Civil pension – investments transaction:
          - September 2021: 375,029.84
          - June 2022: 561,067.48
          - September 2022: 583,394.69
        - IMF debt relief after disaster:
          - September 2021: 2,410,591.87
          - June 2022: 1,907,738.95
          - September 2022: 1,965,245.23
        - Minus: Deposits from autonomous agencies (ONA):
          - September 2021: 276,996.07
          - June 2022: 390,420.44
          - September 2022: 390,990.39
  - Net credit to the rest of the nonfinancial public sector:
    - September 2021: -2,149,918.76
    - June 2022: -5,200,078.71
    - September 2022: -3,346,147.14
    - Claims on the rest of the NFPS:
      - September 2021: 610,420.96
      - June 2022: 1,274,612.09
      - September 2022: 1,563,886.60
    - Deposits by the rest of the NFPS:
      - September 2021: 2,760,339.72
      - June 2022: 6,474,690.80
      - September 2022: 4,910,033.74
        - Deposits by autonomous agencies (ONA) (HTG and US$):
          - September 2021: 276,996.07
          - June 2022: 390,420.44
          - September 2022: 390,990.39
        - Local government deposits (sight deposits and certified checks):
          - September 2021: 489,202.33
          - June 2022: 967,138.58
          - September 2022: 747,632.79
        - Deposits by state-owned enterprises (sight deposits in gourdes and US$ and certified checks):
          - September 2021: 1,994,141.32
          - June 2022: 5,117,131.78
          - September 2022: 3,771,410.56

### Net International Reserves (NIR) of the BRH
- Gross international reserves: external assets readily available to and controlled by monetary authorities (monetary gold, liquid assets including SDRs, IMF reserve position). Swaps in foreign currency with domestic financial institutions and pledged/encumbered reserve assets are excluded.
- Net international reserves: gross international reserves minus (i) gross external liabilities excluding SDR allocations and liabilities related to Haiti’s participation in capital of international financial institutions, (ii) foreign currency deposits of commercial banks at the BRH (sight deposits in US$ and EUR from BCM to BRH, and the CAM transfer), (iii) commitments related to foreign currency swap transactions, (iv) special foreign currency accounts, and (v) project accounts. Standardized Report Forms 1SR/2SR used, except IMF account balances come from IMF Finance Department.
- Selected values (Appendix 1. Table 4; In thousands; exchange rate: HTG 100,0123/US$)
  - BRH gross international reserves components (September 2021 / June 2022 / September 2022):
    - Gold holdings (gourdes / US$):
      - September 2021: 9,880,753.71 / 98,795.39
      - June 2022: 11,973,510.09 / 119,720.38
      - September 2022: 11,412,086.84 / 112,977.20
    - Foreign currency (gourdes / US$):
      - September 2021: 5,998,299.64 / 59,975.62
      - June 2022: 3,648,143.51 / 36,476.95
      - September 2022: 4,626,623.31 / 45,802.57
    - Foreign sight deposits (gourdes / US$):
      - September 2021: 24,302,710.70 / 242,997.22
      - June 2022: 19,972,438.93 / 199,699.83
      - September 2022: 16,450,821.02 / 162,859.58
    - Investments abroad (gourdes / US$):
      - September 2021: 189,797,159.80 / 1,897,738.18
      - June 2022: 196,580,981.41 / 1,965,568.05
      - September 2022: 193,091,082.97 / 1,911,560.11
    - SDRs holdings (according to IMF books) (gourdes / US$):
      - September 2021: 13,972,219.51 / 139,705.01
      - June 2022: 15,047,009.07 / 150,451.59
      - September 2022: 14,514,617.83 / 143,691.59
    - IMF reserve position (based on IMF books) (gourdes / US$):
      - September 2021: 2,818,820.50 / 28,184.74
      - June 2022: 3,161,513.40 / 31,611.25
      - September 2022: 3,094,766.71 / 30,637.52
  - Minus: Foreign liabilities (gourdes / US$):
    - September 2021: 70,137,904.62 / 701,292.79
    - June 2022: 75,598,035.47 / 755,887.38
    - September 2022: 77,193,778.83 / 764,201.77
    - Of which: Foreign liabilities (excluding liabilities related to Haiti’s participation in the capital of international financial institutions):
      - September 2021: 8,518,510.82 / 85,174.63
      - June 2022: 1,645,925.76 / 16,457.23
      - September 2022: 1,652,381.92 / 16,358.22
    - Debt service payment to PDVSA (gourdes / US$):
      - September 2021: 42,558,855.10 / 425,536.21
      - June 2022: 53,576,083.08 / 535,694.94
      - September 2022: 55,708,098.82 / 551,498.17
    - Off-balance-sheet foreign currency liabilities (gourdes / US$):
      - September 2021: 1,460,675.36 / 14,604.96
      - June 2022: 1,738,342.54 / 17,381.29
      - September 2022: 1,765,326.81 / 17,476.35
    - Liabilities to the IMF (based on IMF books) (gourdes / US$):
      - September 2021: 17,599,863.34 / 175,976.99
      - June 2022: 18,637,684.09 / 186,353.92
      - September 2022: 18,067,971.28 / 178,869.02
  - Minus: Deposits in foreign currency (gourdes / US$):
    - September 2021: 129,098,781.43 / 1,290,829.04
    - June 2022: 139,537,396.50 / 1,395,202.36
    - September 2022: 148,557,706.71 / 1,470,689.28
  - Minus: Foreign currency swap transactions (gourdes / US$):
    - September 2021: 6,002,703.60 / 60,019.65
    - June 2022: 7,088,348.85 / 70,874.77
    - September 2022: 7,370,423.81 / 72,965.61
  - Minus: Special accounts in foreign currency (gourdes / US$):
    - September 2021: 133,391.45 / 1,333.75
    - June 2022: 139,470.08 / 1,394.53
    - September 2022: 132,421.50 / 1,310.94
  - Minus: Project accounts (gourdes / US$):
    - September 2021: 67.74 / 0.68
    - June 2022: 71.34 / 0.71
    - September 2022: 68.92 / 0,68
  - Net international reserves of the BRH (gourdes / US$):
    - September 2021: 41,397,115.02 / 413,920.24
    - June 2022: 28,020,274.18 / 280,168.28
    - September 2022: 9,935,598.92 / 98,360.29

### Adjustments and contingent rules related to budgetary grants
- If budgetary grants are lower than expected, the floor on net international reserves (NIR) will be adjusted downwards by the amount of the difference. Conversely, the floor will not be adjusted upwards if budgetary grants exceed expected levels.
- Projected Budgetary Grants (In millions of US dollars; Cumulative flows since end-September 2021 / Cumulative flows since end-September 2022):
  - Dec. 2021: -
  - March 2022: -
  - June 2022: 9.1
  - Sept. 2022: 18.1
  - Dec. 2022: 0.0
  - March 2023: 18.8
  - June 2023: -
  - Sept. 2023: -

### Primary balance of the Nonfinancial Public Sector (NFPS) and financing concepts
- Domestic arrears of the central government: expenditures accepted by the Treasury and unpaid after 90 days despite delivery of corresponding goods and services. Domestic arrears do not include unpaid off-budget government commitments.
- Unpaid off-budget central government commitments: liabilities incurred outside the budgetary process (from ministries or other public bodies) which may give rise to contingent claims against central government resources.
- Net domestic financing of the NFPS: sum of (i) net central bank credit to the NFPS; (ii) net credit from domestic commercial banks to the NFPS (as reported in SRF 2SR), which includes changes in NFPS deposits and net issuance of Treasury bills and other NFPS securities to commercial banks; and (iii) net nonbank credit to the NFPS, which includes net issuance of Treasury bills and other NFPS securities to nonbank institutions, change in net position of the NFPS vis-à-vis the electricity sector (including independent power producers), and net change in suppliers’ credit and domestic arrears of central government.
- Net external financing of the NFPS: sum of (i) new external loan disbursements (excluding IMF loans) and (ii) net change in external arrears minus external loan amortizations.
- Primary balance of the NFPS for program purposes: sum of net domestic financing of the NFPS and net external financing of the NFPS, after deducting interest payments on public debt.
- Asymmetric adjuster: if budgetary grants do not reach expected levels, the floor on the primary balance of the NFPS includes an asymmetric adjuster—floors on the primary balance will be reduced by the amount of budgetary support deficits; if external budget support exceeds projections, the floor on the primary balance will not change.

### Budget allocation to the Ministry of Social Affairs and Labor (MAST)
- Definition of the budget allocation floor: sum (excluding transfers to the population) of the budget allocation (or expenditure implemented if lower) for all social programs of the MAST budget, including resources allocated and implemented by the FAES, the Emergency Program (2022), Klere Chimen, and activities of the Office of the State Secretary for the Inclusion of Persons with Disabilities (BSEIPH). The floor applies to the sum of these allocations. Other government entities may support implementation of MAST programs.

### New contracting or guaranteeing by the public sector of non-concessional external debt
- Definition of debt: per Guidelines on Public Debt Conditionality in Fund Arrangements (Decision No. 16919-(20/103) of the Executive Board, October 28, 2020), “debt” means a current (not contingent) liability created under a contractual arrangement through provision of value (assets or services) and which requires the obligor to make one or more payments in assets or services in the future; forms include loans, suppliers’ credits, and leases (PV at inception of lease of expected lease payments excluding operation/repair/maintenance payments).
- Gross public debt: debt owned by the Nonfinancial public sector and comprises the advances by the Banque de la République d’Haiti (BRH) to the government.
- Debt guarantees by the public sector: explicit legal obligation to service a debt in event of non-payment by the borrower (in return for payment in cash or in kind).
- Concessional debt: external debt with a grant element of at least 35 percent.
- External public debt: debt of the public sector contracted or serviced vis-à-vis non-residents; includes domestically issued government debt held by non-residents (TMU assumes non-residents do not hold domestically issued public sector debt; stock of external debt adjusted if new information becomes available).
- Quantitative target (ceiling): the central government undertakes not to contract or guarantee any new non-concessional external debt. This target also applies to domestic debt and to any private debt guaranteed by the central government that constitutes a contingent liability.
  - Exclusions from the ceiling: short-term (maturity less than one year) import-related credits, rescheduling arrangements, borrowing from the IMF, non-resident purchases of treasury bills, and gourde-denominated BRH bills indexed to the exchange rate.
  - Monitoring: continuous monitoring by the authorities; any non-observance will be immediately reported to the Fund.

*Italic: Source — 1htiea2023001 - 1. Haiti’s performance under the 12-month Staff-Monitored Program (SMP) ending May 31, 2023 (Technical Memorandum of Understanding), IMF.*

### 29.      Arrears on external debt of the public sector. They include all debt-service obligations

### 29.      Arrears on external debt of the public sector. They include all debt-service obligations 

### Definition and scope of external-debt arrears
- Include all debt-service obligations (principal and interest) on loans contracted or guaranteed by the public sector that are due to non-residents but not paid on the due date as set out in the loan contract.
- Exclude arrears arising from obligations being renegotiated with external creditors and (or) those that are litigious.
- For the purpose of assessing the quantitative target on the non-accumulation of new external debt arrears by the public sector, arrears resulting from non-payment of debt service due to international sanctions preventing payments to the creditor are excluded from the previous definition.

### Monitoring and reporting obligations (external arrears)
- The quantitative target on the non-accumulation of new external debt arrears by the public sector will be monitored continuously by the authorities.
- Any non-observance will be immediately report to the Fund.

### Domestic arrears of the central government
- Definition: Include all debt-service obligations (principal and interest) on loans contracted or guaranteed by the central government that are due to residents but not paid 90 days after the due date set out in the loan contract.
- The quantitative target on domestic arrears accumulation will be monitored continuously by the authorities.
- Any non-observance will be immediately report to the Fund.

### Communication of policy changes and data revisions
- The authorities will inform IMF staff in writing at least 10 working days (excluding public holidays in Haiti) before any change in economic and financial policies that may affect the outcome of the program. Examples include changes in tax or customs legislation, wage policy, and support for public or private enterprises.
- Any data revisions will be promptly communicated to IMF staff.
- With respect to continuous QTs, the authorities will report any non-observance to the IMF promptly.

### Summary of data to be provided for program monitoring (selected, frequency and reporting deadlines preserved exactly as in the source)
- Real Sector
  - National accounts: Annual — Year-end + 3 months
  - Quarterly economic indicators (economic cycle): Quarterly — Quarter-end + 2 months
  - Consumer price index (including breakdowns): Monthly — Month-end + 3 weeks
- Public Finances (selected items)
  - Fiscal revenues (internal, external, other): Monthly — Month-end + 1 week (4 final weeks final data)
  - Expenditures on Cash Basis (wages and salaries, goods and services, external debt, current accounts): Monthly — Month-end + 1 week (4 final weeks final data)
  - Table of government financial transactions (TOFE): Monthly — Month-end + 2 weeks
  - Balance on current accounts and operation of projects: Monthly — Month-end + one month
  - Detailed revenue and expenditures of BMPAD: Quarterly — Quarter-end + one month
  - Report on social protection expenditures: Quarterly — 30-day lag (final data)
  - Dashboard of the state electricity utility EDH (monthly production and composition by source and region): Monthly — 30-day lag (final data)
  - EDH commercial data (billing and collection rates): Monthly — Month-end + one week
  - Stock of unpaid off-budget central government liabilities: Monthly — Month-end + one month
  - Details of the stock of all government borrowing and debt securities (interest rate, maturity, creditor if known): Annual — End of financial year + 3 months
  - Full amortization table of domestic and external government debt: Annual — End of financial year + 3 months
- Monetary and Financial Data (selected items)
  - Exchange rate: Daily — Day-end + one day
  - Monetary base and sources thereof and currency in circulation: Weekly — Week-end + one week
  - Aide Memoire Table (including stock of BRH bonds; deposits at commercial banks; credit to private sector (in gourdes and U.S. dollars); details of inflows and outflows of foreign exchange reserves; volume of foreign exchange transactions; gross and net international reserves; net BRH credit to central government and the non-financial public sector; stocks and interest rates of BRH bills): Weekly — Week-end + one week
  - Tables of monetary statistics showing balance sheet of the BRH (Table Standardized Report Form-1SR) and the consolidated banking sector (Table Standardized Report Form -2SR): Monthly — Month-end + one month
  - IMF Weekly Tables (average and weighted interest rates on gourde and U.S. dollar-denominated deposits and credit, and excess reserves in the banking system): Monthly — Month-end + one month
  - Audited financial statements of the BRH: Annual — Year-end + 3 months
- Balance of Payments
  - Balance of payments (first version): Quarterly — Quarter-end + 6 weeks
  - Revised balance of payments: Quarterly — 3 months after the first reporting
  - BRH FX cash flow table; quarterly projections through end of fiscal year: Quarterly — Quarter-end + one month
- External Debt
  - External debt report prepared by the BRH showing monthly disbursements; debt service, debt forgiveness and rescheduling, arrears, and debt stocks: Monthly — Month-end + one month
  - Details of any external public debt and debt guaranteed by the State: Monthly — Month-end + one month
  - Data on stocks, accumulation, and repayment of external arrears: Monthly — Month-end + 6 weeks
  - Table of complete amortization of external debt: Annual — End of financial year + 3 months
  - International Investment Position (IIP): Annual — Year-end + 3 months

*Source: 1htiea2023001 - 29.      Arrears on external debt of the public sector. They include all debt-service obligations*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1htiea2023001.pdf_