## 1htiea2025002-print-pdf ## Source details **Canonical URL:** [1htiea2025002-print-pdf](https://www.imf.org/-/media/files/publications/cr/2025/english/1htiea2025002-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1htiea2025002-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1htiea2025002-print-pdf.pdf.json) --- ### Executive summary — recent developments - Security situation dire and further deteriorated; MSS Kenya-led mission understaffed and underfinanced; accelerated deployment of personnel from the Caribbean and Central America. - United States reconfirmed support for the MSS. - Temporary Protected Status for Haitian migrants in the United States set to expire on August 3, 2025, unless extended. - If security does not improve, elections unlikely by February 2026. - Bipartisan working group report on constitutional reforms finalized but not published in the official gazette, making a referendum ahead of elections unlikely. - Humanitarian crisis with pervasive food insecurity (WFP-confirmed). - New Saint-Louis du Sud International Port opened January 2025 after a 25-year project to reduce reliance on gang-controlled port areas. ### Program implementation under the SMP - Overall assessment: broadly satisfactory; objectives remain achievable but uncertainty about future aid flows poses substantial risks. - Quantitative targets: all met, with a comfortable margin. - Structural benchmarks (seven assessed): four met on time; two implemented with a small delay; one not met due to capacity constraints (expected met by June). - Policy outcomes: - Monetary financing held at zero. - Revenue surging recently due to enhanced revenue administration. - Engagement: high-level SMP Program Monitoring Committee meets biweekly. ### Macroeconomic snapshot and recent trends - Consecutive contractions: Haiti’s economy contracted for six consecutive years. - Growth: FY2024 growth was negative 4.2 percent. - Potential GDP scarring: staff estimates potential GDP growth fell by an average of 2 percent a year since the pandemic. - Inflation: 28.4 percent in February 2025. - Current account: FY2024 deficit narrowed to 0.6 percent of GDP. - Balance of payments: large errors and omissions about 3 percent of GDP for FY2023-24. - Reserves: - Net international reserves (NIR): US$1.159 billion in December (up from US$920 million in September). - Gross international reserves: US$2.7 billion (about seven months of imports). - Central bank net FX purchases: about US$300 million during October 2024-February 2025. - Exchange rates and REER: - Nominal exchange rate about 132 gourdes per dollar over the last year. - Real effective exchange rate (REER) appreciated 28 percent in FY2024 and about 60 percent during FY2022-24. - Monetary financing: declined from averaging 2 percent of GDP a year during FY2020-23 to zero in FY2024. - Public debt: 14.6 percent of GDP (end September 2024). - External assistance: USAID disbursements in 2024 equivalent to US$340 million or 1.2 percent of GDP. ### Key reserve and balance indicators (selected exact figures) - Gross International Reserves (millions of US dollars): Sep 2023: 2,352.7; Dec 2023: 2,587.4; Sep 2024: 2,613.6; Dec 2024: 2,722.0. - Net International Reserves, 2024 SMP definition (A - B - C - D) (millions of US dollars): Sep 2023: 253.8; Dec 2023: 626.2; Sep 2024: 1,045.2; Dec 2024: 1,159.2. - Monetary gold (millions of US dollars): Sep 2023: 108.9; Dec 2023: 121.0; Sep 2024: 154.3; Dec 2024: 151.9. - Demand deposits abroad (millions of US dollars): Sep 2023: 377.6; Dec 2023: 542.4; Sep 2024: 525.6; Dec 2024: 694.2. ### Trade and remittances (fiscal year to date and latest month; amounts in millions of US dollars; percentage changes as presented) - Fiscal year to date (October-January/February): - Exports October-January: FY20-24 average 316; FY24 260; FY25 221; FY25 vs. FY20-24 average -30; FY25 vs FY24 -15. - Imports October-February: FY20-24 average 1,716; FY24 1,830; FY25 1,824; FY25 vs. FY20-24 average 60. - Net Remittances October-February: FY20-24 average 1,209; FY24 1,364; FY25 1,626; FY25 vs. FY20-24 average 351; FY25 vs FY24 19. - Latest available month: - Exports January: amount 58; FY24 46; FY25 36; percentage change -38; -22. - Imports February: amount 343; FY24 320; FY25 327; percentage change -52. - Net Remittances February: amount 224; FY24 241; FY25 316; percentage change 42; 31. ### Outlook and risk scenarios - Baseline and risks: outlook uncertain, risks tilted to the downside. - Specific risk channels and impacts: - Lower remittances (linked to tightening US migration policies, including TPS termination affecting half a million Haitians by August 3, 2025, unless extended, and parole terminations involving about 200,000 Haitians) would substantially reduce remittances starting in 2026, though remittances could rise in the short term. - Prospective 10 percent increase in tariffs would have negative BOP impact. - Expiration of HOPE/HELP preferences by September 2025 (if not renewed) would reduce exports and FDI. - Remittances projection: projected to lower to 8.7 by 2029 (from 12.7 in 2024). - Staff remittances FY2025 projection: 4.5 percent increase year-on-year, from US$3.3 billion to US$3.5 billion. - Security-adjusted growth scenarios: - Model elasticity: TFP elasticity with respect to log homicide rate is -0.3. - Four alternative security scenarios constructed; assigning probabilities yielded expected growth for 2025 of negative 1 percent (assumes improved security in second half). - Nowcasting models without security improvement predict on average a recession of -2 percent; most adverse forecast -4.3 percent. ### Policy recommendations (aggregate and prioritized) - Advance governance and anti-corruption reforms per the Governance Diagnostic report. - Strengthen revenue collection and expenditure management; increase budget allocations for social spending to protect the most vulnerable. - Implement the supplementary budget in line with SMP objectives. - Strengthen public finance reporting, transparency, and accountability in use of public funds. - Implement risk-based foreign exchange interventions. - Complete and publish the audit of the Central Bank for FY2023 by August 2025. - Continue timely data provision to the Fund and enhance data transparency through timely publication of core economic data. ### Current account and macro-fiscal outlook (section 6 highlights) - Current account FY2025: expected surplus of 0.2 percent of GDP. - Fiscal deficit of the non-financial public sector (NFPS): projected about zero in FY2025. - Downside risk: resumed substantial monetary financing if social and political risks worsen. - Debt outlook: debt sustainability risk rating remains high; debt outlook worsened due to downward macro revisions. - Upside conditionality: normalization of security could improve outlook but requires additional external financing plus sound domestic policies. ### Fiscal policy — findings, projections, and fiscal instruments - Revenue: tax revenue still at 5 percent of GDP; revenue rebounded to 35 percent (y/y) increase in February (or 50 percent relative to FY2021-24 average) after DGI resumed operations. - Spending: - Public spending rebounded December 2024-February 2025, rising on average by 9 percent y/y. - Social spending equivalent to 0.38 percent of GDP during October 2024-February 2025. - Food Shock Window (FSW): - FY2024 supplementary budget allocated 9.2 billion gourdes for FSW projects. - Actual spending: 6.8 billion gourdes executed in October 2024 (permissible période complémentaire). - By end-February 2025, 10.2 billion gourdes spent since January 2023; 5.3 billion gourdes (or US$39.7 million) still available. - Authorities allocated 5.7 billion gourdes for FSW in FY2025 supplementary budget, 4.8 billion gourdes more than initial FY2025 budget. - FY2025 budget: balanced; staff projections more conservative on revenue and more contained on spending. - Authorities committed to zero monetary financing and preparing for new tax code possibly in October 2025 pending security improvement. ### Fiscal policy — structural reforms and targets - Administrative cooperation protocol between DGI and AGD to interconnect IT systems and data exchange. - Launch and implement digitalization of tax declarations and payments through all commercial banks for large taxpayers registered at the DGI. - Medium-term target: increase tax revenue from 5 percent to 10 percent of GDP. - Policy tools: strengthen customs compliance, digitalization, rationalize tax exemptions, reinstate financial controller prerogatives, adopt expenditure execution manual, improve treasury cash management. ### Social assistance — programs and constraints - Fuel cards: about 3,800 fuel cards distributed nationwide to public transport vehicle owners. - Cash transfers and SIMAST: SIMAST covers 30 percent of the population; World Bank and WFP support maintenance and expansion. - FY2024 FAES coverage: - 94,658 people received food kits. - 18,000 people received hot meals. - 26,960 vulnerable households received 20,000 gourdes. - 186,788 parents of students received 20,000 gourdes. - Delivery channels: telecom operators Digicel and Natcom used for cash transfers. - FAES FY2025 Q1 (October–December 2024): 80,000 people receiving food kits; 23,973 people receiving hot meals; 16,976 vulnerable households receiving 20,000 gourdes. ### Fuel subsidies — reform priorities (section 20 highlights) - Importance: progress in reducing fuel subsidies essential for medium-term fiscal sustainability; reallocations to social assistance possible. - Measures taken: - Reviewed retail price-setting mechanism with smoothing mechanism to cap monthly retail price variation. - Agreed need to reform smoothing mechanism to protect budget and encourage efficient fuel consumption. - Reform priorities: - Establish regulatory framework for petroleum-products sector. - Strengthen related regulatory institutions. - Staff recommendation: implement fuel reform strategy slowly, pass international price changes gradually to consumers, and accompany with mitigating measures for the vulnerable. ### Governance, transparency, and public financial management (PFM) - Governance Diagnostic published end-February (structural benchmark met). - PFM improvements: - Publish more detailed monthly budget execution data and quarterly FAES financial statements. - Limit unspecified spending to around 3-5 percent of total government expenditure. - Reinstate financial controller prerogatives; adopt a revised expenditure execution manual; revise procurement law to improve competitiveness and transparency. - Strengthen internal and external audits (Inspectorate General of Finance and CSCCA) and publish annual reports. - Safeguards and BRH governance: - 2024 safeguards monitoring mission confirmed slower-than-expected progress on 2019 recommendations. - BRH receiving World Bank assistance on reserves management and governance. - Structural benchmark reset to end-September 2025 for BRH medium-term plan on investment portfolio and strategic asset allocation. ### Monetary policy, FX management, and financial sector resilience - Monetary framework: zero monetary financing strengthened central bank credibility; monetary policy restrictive despite large negative real rates (about 15 percent). - FX interventions: focused on smoothing excessive volatility and rebuilding NIR; FX interventions strong in first three months of FY2025 then slowed; led to NIR buffer rebuild but gourde appreciated. - Recommendations: - Implement risk-based FX intervention rather than fixed volatility rule. - Complete revision of banks’ net open position limits. - Complete FY2023 BRH audit and publish by August 2025. - Financial sector vulnerabilities: - Performing loans increased from 8 percent in March 2022 to 12.7 percent in September 2024. - Regulatory capital ratio increased from 18.2 percent to 21.5 percent since Q3 2022. - NPL provision coverage decreased by almost 20 percentage points through September 2024. - Supervision actions: - Adopt regulation on liquidity aligning with Basel; operationalize risk-based supervision; enhance off-site and on-site inspection capabilities. - Final version of revised regulation on credit risk classification and provisioning expected by end-May 2025. ### Data provision, nowcasting, and transparency (Annex I and section 37) - Staff welcomes strong progress in improving data provision and recent publication of central bank data. - Priority areas: quality and timeliness of monetary and reserve-asset data; budget execution data; real-sector data weaknesses to be addressed with TA. - Nowcasting approach: - Purpose: provide timely GDP and revenue estimates where official statistics are sparse/lagged. - Quarterly inputs: revenue, expenditure, secondary income, exports, imports, real base money, real credit (since at least 2001). - Machine-learning nowcast for monthly real revenue uses NTL, NDVI, NO₂, Port Watch, ASI, VHI with random forests; out-of-sample mean absolute deviation about 10 percent; most predictive features NO₂ and nightlight intensity. - Nowcasting real GDP model results (no security improvement scenario — exact figures): - Principal Component Analysis: 0.5 - Principal Component Analysis+Structural Break: -1.5 - Dynamic Factor Model: -4.3 - Dynamic Factor Model+Structural Break: -2.6 - Simple average: -2.0 - Median: -2.1 - Weighted average (R squared used for weights): -1.8 ### SMP monitoring, quantitative targets, and selected program outturns (Appendix I / TMU highlights) - All quantitative and indicative targets at end-December 2024 met by a large margin. - Selected outturns: - Net international reserves: US$239 million (exceeding program’s floor of US$60 million) [program table]. - Primary balance of NFPS: 10,205 million gourdes surplus (above program’s deficit floor of -239 million gourdes). - Net central bank credit to NFPS: -6,263 million gourdes (below ceiling of zero monetary financing). - Budget allocations for social expenditure: 11,892 million gourdes (above program’s target of 11,000 million gourdes). - Central government fiscal revenue (excluding grants): actual 48,003 million gourdes (adjusted target 40,000). - No accumulation of domestic arrears and no accumulation of external arrears; public sector did not contract or guarantee new non-concessional debt. ### Risk Assessment Matrix — key domestic and global risks - Domestic risks (relative likelihood / impact): - Worsening security and political instability: High / High ST/MT. - Natural disasters: High / High ST/MT. - Infectious diseases: High / High ST/MT. - Insufficient international support: Medium / High ST/MT. - Global risks: - Commodity price volatility: Medium / High ST/MT. - Social discontent: Medium / High ST/MT. - Deepening geoeconomic fragmentation: High / High ST/MT (specific risk: HOPE/HELP expiration by September 2025). - Climate change: Medium / High MT/LT. - Policy responses emphasize donor outreach, protecting vulnerable groups, fiscal targeting, and strengthening governance and AML/CFT. ### Annex II — governance and PFM quantitative projections (selected fiscal and external numbers) - Total Revenue and Grants (millions of gourdes): FY2021 118,340; FY2022 142,478; FY2023 204,261; FY2024 Budget 257,980; FY2024 Revised 238,647; FY2024 Est. 398,028; FY2025 Budget 302,860; FY2025 Revised 292,687; FY2025 Prog. 259,314; FY2025 Proj. 266,308; FY2026 Proj. 314,509; FY2027 Proj. 371,040; FY2028 Proj. 448,534; FY2029 Proj. 505,529. - Domestic revenue (millions of gourdes): FY2021 100,635; FY2022 114,919; FY2023 178,483; FY2024 Budget 196,545; FY2024 Revised 172,678; FY2024 Est. 167,118; FY2025 Budget 227,739; FY2025 Revised 224,755; FY2025 Prog. 210,413; FY2025 Proj. 218,514; FY2026 Proj. 280,554; FY2027 Proj. 338,435; FY2028 Proj. 410,373; FY2029 Proj. 462,167. - Nominal GDP (millions of gourdes): FY2021 1,699,208; FY2022 2,168,223; FY2023 2,798,324; FY2024 Budget 3,672,147; FY2024 Revised 3,460,941; FY2024 Est. 3,460,941; FY2025 Budget 4,294,144; FY2025 Revised 4,461,083; FY2025 Prog. 4,294,144; FY2025 Proj. 4,459,465; FY2026 Proj. 5,447,732; FY2027 Proj. 6,282,281; FY2028 Proj. 7,208,219; FY2029 Proj. 7,834,502. - Current Account (including grants) (US$ millions): FY2021 88; FY2022 -492; FY2023 -682; FY2024 Est. -3,145; FY2025 Prog. -203; FY2025 Proj. 60; FY2026 Proj. -196; FY2027 Proj. -302; FY2028 Proj. -318; FY2029 Proj. -378. - Gross international reserves (US$ millions): FY2021 2,534; FY2022 2,067; FY2023 2,346; FY2024 2,526; FY2025 2,651; FY2026 2,698; FY2027 2,798; FY2028 2,923; FY2029 3,073; FY2030 3,223. - Net international reserves (US$ millions): FY2021 1,969; FY2022 1,526; FY2023 1,796; FY2024 2,441; FY2025 2,627; FY2026 2,674; FY2027 2,804; FY2028 2,954; FY2029 3,126; FY2030 3,298. - Financial soundness indicators (selected): regulatory capital to risk-weighted assets (percent): Mar-22 21.4; Jun-22 20.7; Sep-22 18.2; Dec-22 20.3; Mar-23 19.6; Jun-23 19.4; Sep-23 20.4; Dec-23 20.3; Mar-24 20.3; Jun-24 21.4; Sep-24 21.5. NPLs to gross loans (percent): Mar-22 7.8; Jun-22 8.7; Sep-22 6.7; Dec-22 10.9; Mar-23 11.1; Jun-23 10.5; Sep-23 8.5; Dec-23 8.8; Mar-24 12.8; Jun-24 12.0; Sep-24 12.7. - Inflation: "still very high (just below 30 percent)" as stated in the source. ### Program monitoring and conditionality — selected structural benchmarks status - Met on time: Publish Governance Diagnostic Report (target end-February 2025); publish monthly Haiti Food Shock Window execution reports; publish quarterly FAES reports; provide granular central bank balance sheet data. - Implemented with small delay: publish new public procurement contracts including beneficial ownership; report internal audits of Food Shock Window spending to the Superior Court of Accounts (reported in January, not December). - Not met (expected by end-June 2025): CSCCA financial and operational compliance audit of all RCF (FSW) expenditure for 2023/24 fiscal year and publish it. - Benchmarks reset: several BRH and tax digitalization SBs reset to end-September 2025 or end-August 2025 due to security-related capacity constraints. *International Monetary Fund — EXECUTIVE SUMMARY (1htiea2025002-print-pdf), April 28, 2025* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Recent Developments - Haiti is facing exceptional humanitarian, economic, social, and political challenges while the security situation remains dire and has further deteriorated. - The Kenya-led Multinational Security Support Mission (MSS) has struggled to contain gang violence because of understaffing and lack of financing; this led to accelerated deployment of additional personnel from the Caribbean and Central America. - The United States has reconfirmed its support for the MSS. - The Temporary Protected Status for Haitian migrants in the United States is set to expire on August 3, 2025, unless extended. - If the current security crisis does not improve, elections are unlikely to take place by February 2026. - A bipartisan working group report on constitutional reforms (tasked in July 2024) was finalized but has yet to be published on the official gazette by the Transitional Presidential Council, making a referendum on constitutional reform ahead of elections unlikely in the near term. - Haiti faces a humanitarian crisis with pervasive food insecurity, as confirmed by the World Food Program (WFP). - The capital’s main port is subject to periodic gang control; in January 2025 a new port in the south (Saint-Louis du Sud International Port) was opened, a 25-year-long project that could reduce future reliance on gang-controlled areas. ### Program Implementation under the SMP - Implementation under the SMP has been broadly satisfactory and its objectives remain achievable, though uncertainty about future aid flows poses substantial risks. - All quantitative targets have been met, with a comfortable margin. - Of seven structural benchmarks assessed under this review: four were met on time, two were implemented with a small delay, and one was not met owing to capacity constraints (but it is expected to be met by June). - Policies supported by the SMP have moved in the right direction: - Monetary financing held at zero. - Revenue surprising on the upside in recent months due to enhanced revenue administration. - The authorities continue deep engagement with staff through the high-level SMP Program Monitoring Committee. ### Macroeconomic Snapshot and Recent Trends - Haiti’s economy has contracted for six consecutive years. - In FY2024 (ending September), growth was negative 4.2 percent. - Staff estimates that, since the pandemic, scarring from multiple crises has caused Haiti’s potential GDP growth to fall by an average of 2 percent a year owing to crime, the 2021 earthquake, and deteriorating public health. - Inflation stood at 28.4 percent in February 2025. - The current account deficit narrowed in FY2024 to 0.6 percent of GDP due to import compression and strong remittances. - Balance of payment figures for FY2023-24 report large errors and omissions (about 3 percent of GDP). - Net international reserves (NIR) exceeded US$1 billion (US$1.159 billion) in December (up from US$920 million in September). - Gross international reserves were US$2.7 billion (about seven months of imports). - Central bank net FX purchases were about US$300 million during October 2024-February 2025. - Nominal exchange rate remained at about 132 gourdes per dollar over the last year. - Real effective exchange rate (REER) appreciated 28 percent in FY2024 and about 60 percent during FY2022-24. - Monetary financing of the budget declined from averaging 2 percent of GDP a year during FY2020-23 to zero in FY2024. - Public debt is 14.6 percent of GDP (at end September 2024). - Haiti was among the top 15 recipients of USAID, with total disbursements in 2024 equivalent to US$340 million or 1.2 percent of GDP. Key reserve and balance indicators (selected) - Gross International Reserves (selected months, in millions of US dollars): Sep 2023: 2,352.7; Dec 2023: 2,587.4; Sep 2024: 2,613.6; Dec 2024: 2,722.0. - Net International Reserves, 2024 SMP definition (A - B - C - D) (in millions of US dollars): Sep 2023: 253.8; Dec 2023: 626.2; Sep 2024: 1,045.2; Dec 2024: 1,159.2. - Monetary gold (selected months, in millions of US dollars): Sep 2023: 108.9; Dec 2023: 121.0; Sep 2024: 154.3; Dec 2024: 151.9. - Demand deposits abroad (selected months, in millions of US dollars): Sep 2023: 377.6; Dec 2023: 542.4; Sep 2024: 525.6; Dec 2024: 694.2. Trade and remittances (fiscal year to date and latest month; amounts in millions of US dollars; percentage changes retained as presented) - Fiscal year to date (October-January/February): - Exports October-January: FY20-24 average 316; FY24 260; FY25 221; FY25 vs. FY20-24 average -30; FY25 vs FY24 -15. - Imports October-February: FY20-24 average 1,716; FY24 1,830; FY25 1,824; FY25 vs. FY20-24 average 60. - Net Remittances October-February: FY20-24 average 1,209; FY24 1,364; FY25 1,626; FY25 vs. FY20-24 average 351; FY25 vs FY24 19. - Latest available month: - Exports January: amount 58; FY24 46; FY25 36; percentage change -38; -22. - Imports February: amount 343; FY24 320; FY25 327; percentage change -52. - Net Remittances February: amount 224; FY24 241; FY25 316; percentage change 42; 31. ### Outlook and Risks - Haiti’s macroeconomic outlook remains uncertain, with risks tilted to the downside. - Channels in the baseline and risks include lower remittances and a prospective 10 percent increase in tariffs that will have negative BOP impact, while Haiti benefits from lower oil prices. - Recent tightening of US migration policies (termination of Temporary Protected Status for Haitian migrants—affecting half a million Haitians—by August 3, 2025, unless extended; and termination of parole processes involving about 200,000 Haitians) would substantially reduce remittances starting in 2026, although remittances could rise in the short term. - The expiration of the HOPE/HELP duty-free preferential trade preferences for Haitian textiles (expected by September 2025, if not renewed) would reduce exports and FDI. - Remittances are projected to lower to 8.7 by 2029 (from 12.7 in 2024). - To incorporate security into 2025 growth projections, staff built upon a model where the elasticity of total factor productivity (TFP) with respect to the log of the homicide rate is -0.3 and constructed four alternative security scenarios. Assigning probabilities yielded an expected growth value for 2025 of negative 1 percent, which assumes an improved security outlook in the second half of the year. - Staff projections on remittances for FY2025 are conservative and point to a 4.5 percent increase year-on-year, from US$3.3 billion to US$3.5 billion. - Growth forecast revisions and scenarios: staff revised GDP growth down by 1½ percent to negative 1 for FY2025 (relative to ½ percent projected at SMP negotiation in December 2024). Nowcasting models that do not assume security improvement point to a possible recession, on average across models, of 2 percent (with negative 4.3 percent being the most adverse forecast, Annex I). Under that downward scenario, authorities would need to cut spending further and suffer even larger import compression than in the baseline. ### Policy Recommendations - Advance governance and anti-corruption reforms, in line with the recently published governance diagnostic report. - Adopt measures to strengthen revenue collection, expenditure management and increase budget allocations for social spending to protect the most vulnerable. - Implement the supplementary budget in line with SMP objectives. - Strengthen public finance reporting, transparency, and accountability in the use of public funds. - Implement risk-based foreign exchange interventions. - Complete, with no further delay, and publish the audit of the Central Bank for FY2023 by August 2025. - Continue to provide timely data to the Fund building on strong progress and enhance data transparency through timely publication of core economic data. *International Monetary Fund — EXECUTIVE SUMMARY (1htiea2025002-print-pdf), April 28, 2025* ### 6. Current account and fiscal outlook. The current account balance for FY2025 is now ### 6. Current account and fiscal outlook ### Current account and macro-fiscal outlook - The current account balance for FY2025 is expected to improve to a surplus of 0.2 percent of GDP, as preliminary data for October-December point to imports being lower than anticipated at the approval of the SMP. - The fiscal deficit of the non-financial public sector (NFPS) is projected at about zero in FY2025. - Downside risk: if social and political risks worsen, substantial monetary financing of the budget could resume, undermining macroeconomic stability. - Risks identified: - Intensified political instability. - Deteriorating gang-related economic and institutional disruption. - A prolonged drop in aid flows. - A worsening food crisis (Annex III). - Debt outlook: - The debt sustainability analysis risk rating (both external and overall) remains high, unchanged from the 2024 December debt sustainability analysis. - The debt outlook has worsened given downward revisions of macroeconomic projections. - Upside conditionality: - Normalization of the security situation could improve the short- and medium-term outlook but would require additional external financing plus sound domestic policies. - Official transfers could rise if countries in the region support the Kenya-led MSS operation with additional financing and if Haiti receives added international support for reconstruction—although this upside risk is limited. ### Program implementation under the SMP - Overall assessment: Program performance has been broadly satisfactory. - Key program developments: - Monetary financing held at zero also in the supplementary budget approved by the council of ministries in mid-April 2025. - Revenue mobilization supported by resumption of work at the Directorate of General Taxes (DGI) after a three month-long strike and enhanced customs verification. - Despite worsening security, authorities remain engaged with staff through the high-level SMP Program Monitoring Committee, which meets biweekly. - Quantitative and indicative targets: - Authorities fully met all QTs and indicative targets by a large margin for December 2024 (Appendix I. Table 2). - Ceiling on the public sector’s contracting non-concessional external debt is zero. - Authorities informed staff that no additional external debt has been contracted (as of end-February) and that they do not plan to contract any non-concessional loans. - Indicative targets (ITs) for March 2025 and September 2025 and QTs for June 2025 will be assessed at the time of the second review. - Structural benchmarks (status of seven assessed under this review): - Four met on time: - Publication of the governance diagnostic. - Publication of the quarterly report of FAES. - All monthly reports on execution of fiscal expenditure through Haiti Food Shock Window account. - More granular central bank balance sheet data. - Two implemented with a small delay: - Publication of all new public procurement contracts, including beneficial ownership information. - Reporting the internal audits of Food Shock Window spending to the Superior Court of Accounts, but in January, not in December. - One not met yet due to capacity constraints: - Having the supreme court conduct a financial and operational compliance audit of all expenditure in connection with the RCF (FSW) for 2023/24 fiscal year and publish it; implementation expected by end-June 2025. - Of nine benchmarks to be assessed during the second review, two are proposed to be reset from June to September, and one (audit of the central bank for the fiscal year ending September 2023) from June 2025 to August 2025 due to slower-than-expected implementation capacity caused by insecurity. - Staff stressed the importance of initiating the central bank’s audit also for the FY2024 (not a structural benchmark). - If an extended SMP is necessary, additional QTs (and possibly structural benchmarks) would need to be proposed at the time of the Second Review. - Data and reserve management: - Provision of timely data for program monitoring has improved greatly; efforts should continue. - Ongoing work to revise data sources and methodology of GDP data and steps needed to implement the reserve template. - Improving timeliness and quality of monetary and reserve data is essential to establish a track record. - The Fund will provide further TA on revision of national accounts, improvement of external sector and monetary statistics, compilation of reserve template, and on central bank reserve management. ### Reaching the objectives of the SMP - Objectives remain achievable but uncertainty about future US financial support poses risks. - Staff recommendations to support program implementation despite worsening prospects for external support: - Enhanced revenue mobilization to reach revenue targets and expand assistance to vulnerable households. - Avoid any monetary financing of government spending. - Accumulation of NIR should align with program objectives, while limiting other FX interventions to specific instances of liquidity provision. - Technical assistance should focus on increasing transparency of public spending and central bank operations. - Implement recommendations of the governance diagnostic report (Annex II) to improve efficiency and quality of public spending and permit better accounting for aid flows to strengthen trust of development partners. ### A. Fiscal Policy — Findings and projections - Revenue position: - Tax revenue remained weak until recently and is still at 5 percent of GDP. - After weak performance in the first two months of FY2025 (beginning in October), revenue rebounded during December-February, reaching a 35 percent (y/y) increase in February (or 50 percent relative to FY2021-24 average). - The rebound reflected resumption of DGI operations (after a strike disrupting collections during September-November 2024) and improvements in customs administration (enhanced control and verification through digitalization). - Spending: - Lockdowns triggered by gang violence hampered spending ability in FY2024. - Public spending rebounded sharply during December 2024-February 2025 rising on average by 9 percent y/y. - Social spending was equivalent to 0.38 percent of GDP during October 2024-February 2025, slightly lower than the previous year. - Food Shock Window (FSW) execution: - FY2024 supplementary budget (approved in August) allocated 9.2 billion gourdes for projects to be supported by FSW resources. - Actual spending: 6.8 billion gourdes executed in October 2024 (permissible période complémentaire). - By the end of February 2025, 10.2 billion gourdes had been spent since January 2023, leaving 5.3 billion gourdes (or US$39.7 million) still available to be spent. - Authorities allocated 5.7 billion gourdes for FSW in the recently adopted FY2025 supplementary budget, 4.8 billion gourdes more than the initial FY2025 budget. - FY2025 budget and supplementary budget: - The FY2025 budget is balanced and the fiscal balance is in line with staff projections (staff projections more conservative on revenue and more contained on spending). - Consistent with SMP goal of maintaining monetary financing at zero while effectively executing social spending. - Authorities committed to reducing capital expenditures with least impact on the poor, should revenues fall short. - Mid-April 2025 supplementary budget reflects €19.5 million of budget support approved by the EU (to be disbursed later in April 2025) and supports police forces combating gang violence and restoring security. - Authorities indicated they will continue to have zero monetary financing. - Authorities preparing for implementation of the new tax code possibly in October 2025, pending improvement of the security outlook. ### A. Fiscal Policy — Policy priorities and structural reforms - Policy priorities to enhance revenues (structural benchmarks 7 and 8 in Attachment 1, Table 1): - Establish an administrative and technical cooperation protocol between DGI and AGD that addresses: - Interconnection of IT systems. - The nature, format and frequency of information and data to be exchanged between the two administrations. - Preventive measures (text as in source). - Launch and implement digitalization of tax declarations and payments through all commercial banks for large taxpayers registered at the DGI. - Structural benchmarks under the SMP aim to broaden the tax base and enhance transparency of collection through digitalization. - Staff urged: - Continue strengthening domestic revenue mobilization and avoid monetary financing of the budget. - Sustain reforms to enhance digitalization, transparency, and accountability in tax revenue collection and use of public funds. - Authorities’ medium-term target: - Top priority is fiscal and tax reform with a goal of increasing tax revenue from 5 percent to 10 percent of the GDP in the medium term. - Authorities requested IMF technical assistance to support this goal. - Public spending quality and investment management: - SMP is helping authorities adopt spending reforms needed to overcome fragility. - Need to improve quality of public spending (health and education), invest in resilient infrastructure (physical and digital), and human capital. - Recommendations include targeted social spending (conditional cash transfers encouraging girls’ access to education, child allowances), and adoption of investment practices per PIMA 2022 recommendations. - Strengthen medium-term fiscal framework: prepare baseline projections and determine fiscal space for new initiatives before involving line ministries in baseline projections and priority projects. - Reinstate financial controller’s prerogatives for a priori control of public investment spending; adopt a budgetary control guide and a renovated expenditure execution manual; improve treasury cash management with technical assistance. ### B. Social Assistance — Programs and constraints - Fuel cards program: - Fuel cards provided to owners of registered public transport vehicles designated for passenger or goods transport. - About 3,800 fuel cards distributed nationwide to date. - Insecurity has hindered interaction with drivers and data collection, limiting registration of additional transport vehicles. - Cash transfers and SIMAST: - Fuel cards accompanied by cash transfers (checks) for the most vulnerable as identified in the SIMAST database which cover 30 percent of the population; World Bank and WFP have helped maintain and expand these transfers. - Authorities’ efforts to improve SIMAST and expand coverage are ongoing but slow due to security conditions. - FY2024 FAES programs (coverage): - 94,658 people received food kits. - 18,000 people received hot meals. - 26,960 vulnerable households received 20,000 gourdes. - 186,788 parents of students received 20,000 gourdes. - Delivery channels and limitations: - Cash transfers implemented through telecom operators, Digicel and Natcom, although mobile phone use is still limited relative to other Caribbean countries and Fragile and Conflict-Affected States. - Energy and fuel subsidies: - In FY2024, energy subsidies to the electricity company (EDH) were about 3 billion gourdes, owing to reduced electricity consumption caused by the security situation. - Authorities allocated 7.5 billion gourdes in the FY2025 budget, assuming a resumption of economic activity. - They plan to reduce energy subsidies to EDH in the FY2025 supplementary budget relative to the initial budget. - Fuel subsidies have been at zero since FY2023, driven by lower international oil prices rather than systemic reforms (e.g., smoothing price mechanism, improving energy billing and collection). *Source: 6. Current account and fiscal outlook (Content unit: 1htiea2025002-print-pdf).* ### 20. Progress in reducing fuel subsidies is essential for medium-term fiscal sustainability. ### 1htiea2025002-print-pdf - 20. Progress in reducing fuel subsidies is essential for medium-term fiscal sustainability. ### Fuel subsidies and social mitigation - Progress in reducing fuel subsidies is essential for medium-term fiscal sustainability. - Lower fuel subsidies would allow funds to be reallocated to other urgent priorities, including social assistance programs targeting the country’s most vulnerable households. - Authorities have moved cautiously given political and social challenges; they: - reviewed the retail price-setting mechanism to allow changes in international fuel prices and exchange rates to be partly passed on to consumers, with a smoothing mechanism that would cap the monthly variation in retail prices; - agreed on the need to reform this smoothing mechanism to protect the budget from substantial international price volatility, improve public finance management, and encourage the efficient consumption of fuel products. - Staff emphasized the importance of an effective communication policy to facilitate implementation. - Reform priorities include: - establishment of a regulatory framework for the petroleum-products sector; and - strengthening related regulatory institutions. - Staff recommendation: continue implementing the fuel reform strategy slowly so changes in international fuel prices are gradually passed on to consumers, accompanied by mitigating measures to protect the most vulnerable. - FAES program delivery in the first quarter of FY2025 (October – December 2024): - 80,000 people receiving food kits; - 23,973 people receiving hot meals; - 16,976 vulnerable households receiving 20,000 gourdes. ### Governance, transparency, and public financial management (PFM) - Governance reforms are paramount for overcoming Haiti’s fragility; authorities reiterated commitment to fighting corruption and strengthening governance, including implementing the Governance Diagnostic report published at end-February (structural benchmark). - Progress on cooperation between tax and customs offices, working toward a technical cooperation protocol on interconnection of IT systems (June structural benchmark). - PFM improvements underway: - providing more detailed monthly data on budget execution (including spending on wages, goods and services, and capital investment by ministry and by project); - publishing on the Direction Générale du Budget (MEF) website all budget execution details and quarterly financial statements for the Fund for Economic and Social Assistance (FAES). - Additional PFM recommendations: 1. limit the volume of unspecified spending in the budget to around 3-5 percent of total government expenditure to improve fiscal transparency; 2. reinstate the financial controller’s prerogatives about a priori control over public investment expenditures; 3. adopt and implement a revised expenditure execution manual; 4. revise the procurement law to streamline internal control mechanisms and make the procurement system competitive and transparent; 5. further strengthen internal and external audits, including by the Inspectorate General of Finance and the Superior Court of Accounts and Administrative Disputes (CSCCA), to produce and publish an annual report. - Mission strongly advised: - build up an investment project database, set up an investment project bank, and refine the three-year public investment plan; - introduce multi-year commitments authorizations and annual credits appropriation to protect funding for investment projects. - Safeguards and foreign reserves governance: - 2024 tailored safeguard monitoring mission confirmed slower-than-expected progress in implementing 2019 safeguards recommendations (strengthening BRH autonomy and governance, financial reporting practices, and management of foreign reserves). - BRH receiving World Bank assistance to address shortcomings and align with leading practices in management of foreign reserves, governance, investment policy, guidelines, strategic asset allocation, and portfolio composition. - Structural benchmark (reset for end-September 2025, from end-June 2025): BRH adopting a medium-term plan for improving investment portfolio composition, a new strategic asset allocation, and updated investment policy and guidelines. - SDR-related guidance: - after the 2021 SDR allocation, a portion was converted into US dollars to service government external obligations; SDR holdings have been used to pay obligations to the IMF. - transfers of SDR resources to the Haitian government are usually made in gourde equivalent and are subject to a memorandum of understanding and/or retrocession agreement. - Staff underscored need to maintain strong institutional frameworks governing fiscal use of SDRs, avoid costs from gaps between SDR holdings and allocations, ensure transparency for SDR-related spending, publicly communicate any future conversion of SDRs into freely usable currencies on BRH or MEF websites, and engage Fund staff on future SDR conversions. ### Monetary policy and exchange rate management - Monetary framework strengthened as financing of the deficit was reduced to zero, enhancing central bank credibility. - Despite large negative real rates, monetary policy has been restrictive due to: - zero monetary financing of the budget; and - stronger real effective exchange rate. - Current policy mix (continued fiscal adjustment and zero monetary financing) should help bring inflation down from currently high levels (which have led to large negative real rate of about 15 percent). - Authorities committed to zero financing of fiscal spending (ceiling on credit to the NFPS). - Agreed relevance of short-term liquidity-absorbing operations at a fixed rate (policy rate) and full allotments to strengthen monetary and exchange rate frameworks. - FX interventions: - should remain focused on smoothing excessive exchange rate volatility and adequately building-up NIR; - FX intervention maintained a strong pace in the first three months of FY2025, slowing afterward; this helped rebuild a NIR buffer but did not prevent the gourde from gradually appreciating. - FX intervention has been mostly reactive to offers from commercial banks, required to maintain a zero net foreign position. - stabilization of the nominal exchange rate has not prevented high domestic inflation, attributed to disruptions in the flow of goods and shortages of non-tradable goods. - Risks to the exchange rate include deterioration in remittances, reheating of economic activity and imports, and a warranted revision of the minimum wage (unchanged for 2½ years). - Deposit and credit dollarization remains high, limiting monetary policy effectiveness and heightening susceptibility to external shocks and financial instability. - Ongoing project to move to an electronic FX platform is on hold due to security constraints. - Staff recommendations: - Implement a risk-based FXI rather than a fixed volatility rule; - Complete the revision of banks’ net open position limits. - Staff noted interest from authorities in a framework for risk-based FXI to provide adequate liquidity during excessive market volatility. - Staff recommended aligning the foreign reserves framework with best practices and urged the FY2023 financial audit of the BRH be completed and published by August 2025. ### Financial sector resilience and supervision - Security crisis and governance issues have weakened the financial sector: - performing loans increased from 8 percent in March 2022 to 12.7 percent in September 2024; - steady decline in real credit growth; - NPL provision coverage decreased by almost 20 percentage points through September 2024, reducing banks’ loss-absorbing capacity. - Regulatory capital: - ratio of capital to risk-weighted assets for the banking system increased from 18.2 percent to 21.5 percent since Q3 2022. - BRH strengthening banking supervision with Fund assistance to upgrade the regulatory framework and move to risk-based supervision. - Actions and recommendations over the medium term: - adopt regulation on liquidity aligning with Basel standards (initiative already started); - operationalize risk-based supervision using financial institutions' risk assessment grids and rating matrix; - enhance off-site and on-site inspection capabilities. - Specific items: - Emergency liquidity assistance (ELA): BRH considering providing ELA to banks; technical assistance (TA) will be needed to implement it. - Banking supervision: BRH tested new risk assessment grids and rating matrix on two banks; adopted and published revised regulation on credit risk concentration; final version of revised regulation on credit risk classification and provisioning expected by end-May 2025. - Staff recommended: - finalize the new chart of accounts for financial institutions (submitted to stakeholders for comments); - reactivate off-site supervision following a quasi-suspension; - continue execution of the annual on-site inspection program. - AML/CFT: progress includes resumption of national risk assessment work (now expected to be completed in December 2025) and operationalization of a tool for risk-based supervision of financial institutions by the BRH. - Authorities should continue steps to exit the FATF grey list and ease pressures on correspondent banking relationships, including: - assess risks related to the informal cash-based sector and legal persons; - step up on-site inspections (to the extent permitted by the security situation) and apply remedial actions for non-compliance; - ensure transparency of basic and beneficial ownership information on legal persons; - take urgent steps to designate supervisors for high-risk Designated Non-Financial Businesses and Professions (gambling and lottery sectors; notaries and lawyers performing trust and company service provider activities). ### Staff appraisal and policy priorities - Haiti faces a multidimensional crisis with a challenging, highly uncertain outlook; risks are tilted to the downside, including worsening political instability and insecurity that would constrain business activity and reform implementation. - Restoration of security is the priority; the supply-side shock from the security crisis will continue to suppress growth and feed inflation unless security improves. - Despite difficulties, authorities are committed to implementing the SMP and have managed to contain impacts of shocks: - Net international reserves were valued at over US$1 billion at the end of December 2024. - Ministry of Finance and Reserve Bank of Haiti remained continuously engaged with Fund staff throughout political transition and insecurity. - Reforms on macro and governance fronts should proceed without waiting for normalization of the security situation, but must be tailored to capacity constraints. - Urgent priorities: - continue enhancing revenue mobilization to support development needs and boost well-targeted spending; - strengthen the social safety net to cushion shocks and alleviate widespread poverty; - audit the use of FSW resources for FY2024 without delay in line with SMP commitments. - External assistance: - government-led strategy to strengthen resilience requires financial support of the international community in the form of grants; - authorities should avoid contracting non-concessional loans to remain consistent with SMP commitments; non-concessional loans would undermine debt sustainability. - Monetary stance: - authorities’ careful pace of monetary tightening has been appropriate; commitment to zero monetary financing of the deficit has enhanced credibility; - restrictive stance unlikely to be sufficient to keep inflation under control without normalization of security. - Financial-sector vulnerabilities: - high NPLs warrant close monitoring and an urgent plan to limit their growth; - BRH continues strengthening supervision with Fund assistance; sustained effort and technical assistance needed. *Source: 1htiea2025002-print-pdf - 20. Progress in reducing fuel subsidies is essential for medium-term fiscal sustainability.* ### 37. Staff welcomes the authorities’ strong progress in improving data provision to the ### 1htiea2025002-print-pdf - 37. Staff welcomes the authorities’ strong progress in improving data provision to the ### Data provision, transparency, and governance - Staff notes “strong progress in improving data provision to the Fund for program and surveillance purposes” and highlights the “recent publication of central bank data, previously only provided to the Fund.” - Public dissemination of economic data should “continue to be a top priority.” - MEF data dissemination “had already greatly improved under previous SMPs and should continue.” - Priority areas for continued improvement: - Quality and timeliness of monetary and reserve-asset data. - Budget execution data. - Real-sector data weaknesses (example: “underestimation of the destruction in capital stock due to crime”) to be addressed with forthcoming technical assistance. - Staff “commends the authorities for recent timely publication of the Governance Diagnostic Report and associated action plan.” - Governance reforms are “closely intertwined with the SMP” and “should be implemented in close collaboration with development partners.” - Strengthening governance is presented as essential to: - Ensure inclusive growth. - Build private-sector trust to attract FDI. - End the “fragility trap” and attract grants amid changing aid strategies. ### SMP implementation status, risks, and Fund support - Haiti’s engagement with the Fund is assessed as “important for helping the country deal with protracted and serious difficulties” with performance “broadly satisfactory despite the headwinds.” - Staff supports the authorities’ request for: - Completion of the First Review of the SMP. - Resetting the target date for three benchmarks given “ongoing capacity constraints due to further deterioration of insecurity.” - Identified risks to SMP implementation: - Prevailing security environment. - Less certain aid flows. - Potentially lower remittances. - Fund support commitments: - Continued Fund capacity development assistance for the SMP. - Continued collaboration with Haiti’s main development partners in line with the Country Engagement Strategy and the Fund Strategy for Fragile and Conflict-Affected States. - Contingency for an SMP extension: - “Should an extension of the SMP be necessary, depending on the election timeline, additional quantitative targets (and possibly structural benchmarks) would need to be proposed at the time of the Second Review in an extended SMP.” ### Annex I — Framing and nowcasting approach - Purpose of nowcasting: - Provide up-to-date assessments of current economic conditions given scarcity and lag in official statistics. - In Haiti, official data on real GDP and GDP deflator are available only on an annual basis; nowcasting enables quarterly updates. - Official revenue data are compiled monthly with a one-month lag. - The GDP growth forecast produced by the nowcasting models “represents a downward scenario, assuming no improvement in the security outlook (which prevents the implementation of policy at the same pace as in the baseline).” ### Nowcasting real GDP — data and methodology - Quarterly data used: revenue, expenditure, secondary income, exports, imports, real base money, and real credit (available since at least 2001). - Two main challenges: - Structural break in GDP growth starting in 2019 due to multiple shocks (COVID-19 in 2020; assassination of President Moïse in July 2021; generalized unrest in August-October 2022; spike in gang violence of March 2024). - Satellite data availability only from 2011 onward and, in some cases, only from 2019. - Modeling strategy (three steps): 1. Principal components: compute the first three principal components of the listed macro drivers. 2. Bridge regression: aggregate factors to yearly averages and regress yearly factors on GDP growth including a dummy I2019 that equals one if year is 2019 or higher. 3. Forecasting: estimate a VAR for quarterly factors, forecast quarters, and apply bridge regression; also estimate a Dynamic Factor Model to account for factor dynamics. - A structural break is introduced in 2019 within the bridge regression; an alternative model for factor evolution is proposed. ### Nowcasting real GDP — model results (key statistics) - Table of 2025 growth forecasts across models (scenario: “with no security improvement”): - Principal Component Analysis: 0.5 - Principal Component Analysis+Structural Break: -1.5 - Dynamic Factor Model: -4.3 - Dynamic Factor Model+Structural Break: -2.6 - Simple average: -2.0 - Median: -2.1 - Weighted average (R squared used for weights): -1.8 - Aggregate statements: - “On average, the models predict an economic contraction of -2 percent, while the median forecast is -2.1 percent, which is less sensitive to outliers.” - These forecasts “do not include an improvement in security as in our baseline projection.” - Model performance: - The Dynamic Factor Model with a structural break “performs well in-sample, exhibiting a low mean squared error.” ### Nowcasting monthly real revenue — data, methodology, and performance - Goal: generate timely estimates and forecasts of real revenue during the month using higher-frequency real-time data; satellite data are used to meet frequency and timeliness requirements. - Satellite and related high-frequency indicators used: - Nighttime Lights (NTL). - Normalized Difference Vegetation Index (NDVI); NDVI defined as (NIR − R)/(NIR + R) with band descriptions; index scales from -1 to 1 and proxies vegetation health/agricultural output. - Nitrogen dioxide (NO₂) observations as proxy for economic activity linked to fossil fuel combustion. - Port Watch: daily-frequency near-real-time shipping/port-call indicators built from AIS vessel-tracking data. - Agricultural Stress Index (ASI), based on NDVI, to detect cropland water stress. - Vegetation Health Index (VHI), computed using NDVI and Land Surface Temperature via VCI and TCI. - Methodology: machine learning using random forests. - Random forest constructs multiple decision trees using bootstrapped subsamples and random subsets of regressors; splits minimize mean squared error; final forecast averages tree predictions (bagging). - The forecasting formula averages predictions across trees: the final forecast equals the average of Tm(x) across trees. - Model performance: - Figure 2 indicates a strong in-sample fit. - Out-of-sample mean absolute deviation of about 10 percent. - Most significant predictive features: NO₂ levels and nightlight intensity. - Note on definitions: - Real revenue growth (figure note) is “equal to the monthly growth rate of total revenue divided by CPI.” - Nowcast refers to estimating a Random Forest model of real revenue as a function of NTL, NDVI, NO₂, ASI. *Source: IMF staff calculations and Haitian authorities as presented in the supplied IMF content.* ### Annex II. Strengthening Governance to Ensure Macro-Stability ### Annex II. Strengthening Governance to Ensure Macro-Stability ### Fiscal Governance: revenue administration and tax system - Problem: Low tax revenue at less than 6 percent of GDP - Goal: Enhance revenue administration, improve collection efficiency, and broaden the tax base - Diagnosis: - An inefficient tax system (too many small taxes) and red tape. - A narrow tax base due to high informality. - Low compliance rates among medium and large businesses. - Under-invoicing, under-valuation of imports lowering tariff payments, misclassification and bribery of customs officials. - Smaller enterprises pay bribes as a standard practice. - Fraud and smuggling practices. - Poor traceability of tax and customs revenue due manual systems and lack of digitalization, resulting in leakages in the tax and customs collection system. - Low job attractiveness. - Weak partnership: poor interaction among taxes and custom offices, and financial intelligence unit; and with the private sector and civil society. - Actions: - Prepare overarching digital strategy and implement e-government services: - Implement modern tax administration practices using digitalization: develop online user-friendly platforms for essential services (e.g., tax filing, business registration), taking advantage of technological solutions developed by the two mobile phone operators to set up tax payments by mobile telephone initially, and subsequently by bank transfer. - Implementing tax and custom codes, and continuing streamlining the number of taxes. - Rationalize tax expenditure (inefficient tax benefits). - Provide training and resources to tax officials. - Prepare MOU among tax and customs authorities and financial intelligence unit. ### Public Financial Management (PFM) and procurement transparency - Problem: Weak public financial management system - Goal: Improve transparency of public spending, fiscal reporting and budget planning; enhance access to procurement info for the public - Diagnosis: - Budget process with no multi-year budget planning nor ex-ante public investment assessment. - Weaknesses in budget execution persist on 1) spending side, due to excessive allocations of unspecified expenditure items, misclassification of capital expenditure; and 2) cash management where tools are still limited. - Consolidation of central government accounts in the single treasury account at the central bank is still in progress. - Fiscal reporting issues persist (e.g., reporting on expenditure execution is not by ministry nor does it specify the stages of expenditure: commitment, settlements, or payments, making unclear if spending has actually occurred; report on execution does not provide info on grants (except for budget support which is rare and very limited), nor the totality of the source of funding, nor the factors justifying under/over-execution). - Public procurement: limited competitive bidding (only 40 percent through open tendering). - Actions: - Procurement: implement open and competitive bidding for public contracts and publish information all new public procurement contracts, including beneficial ownership information (the latter is an SMP benchmark). - Audit: improve audit process by reinforcing the independence and capacity of audit institutions and regularly publish audit findings and follow up on recommendations. - Investment: ex-ante evaluation of investment projects is paramount: this requires strong collaboration between ministry of economy and finance and ministry of planning and external cooperation. - Aid: set up a database with all aid-flow information to be published; strengthen collaboration between Ministry of Economy and Finance and Ministry of Planning and External cooperation; better integrate aid-flow information in the budget process. ### Enhancing Judicial and AML/CFT framework - Problem: Corruption has severely undermined the rule of law and anti-Money Laundering measures - Goal: Strengthen accountability by effective investigation and prosecution of the most significant corruption, organized crime/ and money laundering cases, in parallel to enhancing legal frameworks and institutional capacities. - Diagnosis: - Systemic corruption has undermined the rule of law and has rendered anti-corruption and anti-money laundering frameworks ineffective in addressing macro-critical vulnerabilities within core state functions. - Actions: - Create, based on existing anti-corruption institutions, and operationalize an Anti-Corruption Pôle—an ad hoc mechanism—to investigate and prosecute the most significant corruption, organized crime and money laundering cases, including those involving PEPs. - Facilitate investigation of laundering of proceeds of Haitian corruption and organized crime abroad. - Implement the September 2023 Decree reinforcing the operational autonomy and independence of the Financial Intelligence Unit (UCREF) providing it with a clear mandate to conduct operational and strategic analyses on money laundering crimes, and ensure it has the power to cooperate and share information with domestic and international counterparts. ### Enhancing financial sector oversight - Problem: Governance frameworks are broadly aligned with international standards - Goal: Resolve pending implementation issues - Diagnosis: - The finalization of the prudential regulations, such as the risk-based supervision, are being slowed down due to brain drain. - Actions: - Update the document on the banking supervision framework published by central bank (which does not reflect the 2017 organization of the supervision system), as soon as the risk-based supervision system has been operationalized. - Resume the publication of the central bank annual report (last one was in 2018) to ensure transparency on banking supervision (developments, results, main issues, and outlook). - Adopt a risk-based supervision approach. - The Directorate of Supervision of Banks and other Financial Institutions of the central bank should establish a system for monitoring the measures taken by financial institutions to comply with new prudential regulations undertaken by the central bank on capital adequacy requirements, internal supervision, IT security, consolidated supervision, and credit risk concentration. ### Key fiscal and external numbers cited - Total Revenue and Grants (in millions of gourdes): FY2021 118,340; FY2022 142,478; FY2023 204,261; FY2024 Budget 257,980; FY2024 Revised 238,647; FY2024 Est. 398,028; FY2025 Budget 302,860; FY2025 Revised 292,687; FY2025 Prog. 259,314; FY2025 Proj. 266,308; FY2026 Proj. 314,509; FY2027 Proj. 371,040; FY2028 Proj. 448,534; FY2029 Proj. 505,529. - Domestic revenue (in millions of gourdes): FY2021 100,635; FY2022 114,919; FY2023 178,483; FY2024 Budget 196,545; FY2024 Revised 172,678; FY2024 Est. 167,118; FY2025 Budget 227,739; FY2025 Revised 224,755; FY2025 Prog. 210,413; FY2025 Proj. 218,514; FY2026 Proj. 280,554; FY2027 Proj. 338,435; FY2028 Proj. 410,373; FY2029 Proj. 462,167. - Domestic taxes (in millions of gourdes): FY2021 74,012; FY2022 82,525; FY2023 111,881; FY2024 Budget 72,018; FY2024 Revised 60,692; FY2024 Est. 106,579; FY2025 Budget 99,575; FY2025 Revised 103,421; FY2025 Prog. 129,274; FY2025 Proj. 134,251; FY2026 Proj. 174,567; FY2027 Proj. 212,693; FY2028 Proj. 262,062; FY2029 Proj. 296,583. - Central government balance incl. grants (in millions of gourdes): FY2021 -39,879; FY2022 -38,037; FY2023 21,482; FY2024 Budget -15,049; FY2024 Revised 5,734; FY2024 Est. 232,233; FY2025 Budget 1,795; FY2025 Revised -708; FY2025 Prog. -2,655; FY2025 Proj. -5,133; FY2026 Proj. -29,637; FY2027 Proj. -68,524; FY2028 Proj. -84,663; FY2029 Proj. -98,342. - Nominal GDP (in millions of gourdes): FY2021 1,699,208; FY2022 2,168,223; FY2023 2,798,324; FY2024 Budget 3,672,147; FY2024 Revised 3,460,941; FY2024 Est. 3,460,941; FY2025 Budget 4,294,144; FY2025 Revised 4,461,083; FY2025 Prog. 4,294,144; FY2025 Proj. 4,459,465; FY2026 Proj. 5,447,732; FY2027 Proj. 6,282,281; FY2028 Proj. 7,208,219; FY2029 Proj. 7,834,502. - Current Account (including grants) (US$ millions): FY2021 88; FY2022 -492; FY2023 -682; FY2024 Est. -3,145; FY2025 Prog. -203; FY2025 Proj. 60; FY2026 Proj. -196; FY2027 Proj. -302; FY2028 Proj. -318; FY2029 Proj. -378. - Gross international reserves (US$ millions): FY2021 2,534; FY2022 2,067; FY2023 2,346; FY2024 2,526; FY2025 2,651; FY2026 2,698; FY2027 2,798; FY2028 2,923; FY2029 3,073; FY2030 3,223 (as presented). - Net international reserves (NIR) (US$ millions): FY2021 1,969; FY2022 1,526; FY2023 1,796; FY2024 2,441; FY2025 2,627; FY2026 2,674; FY2027 2,804; FY2028 2,954; FY2029 3,126; FY2030 3,298. - Banking system: Base Money (in gourdes, selected years): FY2021 188,101; FY2022 231,487; FY2023 238,738; FY2024 255,660; FY2025 286,405; FY2026 298,742; FY2027 341,645; FY2028 387,149; FY2029 435,694; FY2030 462,656. - Broad Money (M3, in gourdes): FY2021 510,963; FY2022 618,634; FY2023 647,109; FY2024 666,132; FY2025 750,380; FY2026 782,705; FY2027 891,761; FY2028 1,020,098; FY2029 1,164,039; FY2030 1,247,098. - Financial soundness indicators (selected): Regulatory capital to risk-weighted assets (percent): Mar-22 21.4; Jun-22 20.7; Sep-22 18.2; Dec-22 20.3; Mar-23 19.6; Jun-23 19.4; Sep-23 20.4; Dec-23 20.3; Mar-24 20.3; Jun-24 21.4; Sep-24 21.5. NPLs to gross loans (percent): Mar-22 7.8; Jun-22 8.7; Sep-22 6.7; Dec-22 10.9; Mar-23 11.1; Jun-23 10.5; Sep-23 8.5; Dec-23 8.8; Mar-24 12.8; Jun-24 12.0; Sep-24 12.7. - Inflation: "still very high (just below 30 percent)" as stated in the source. - Real GDP: "has contracted for six consecutive years" and key sectoral contractions include construction, manufacturing, and agriculture (charts and series presented in source). *This Annex is informed by the Governance Diagnostic report prepared by IMF staff from legal (lead), fiscal affairs, and monetary and financial markets departments, at the request of the authorities of Haiti.* ### Annex III. Risk Assessment Matrix ### Annex III. Risk Assessment Matrix ### Global Risks — sources, likelihood, impacts, and policy responses - Commodity price volatility - Relative Likelihood: Medium - Impact: High ST/MT - Key impacts: Persistent inflationary pressures. Eroding real incomes. Worsening fiscal and external balances. - Policy response: Protect the vulnerable through targeted fiscal measures. Continue the fuel subsidy reform to ensure long-term fiscal sustainability. - Social discontent - Relative Likelihood: Medium - Impact: High ST/MT - Key impacts: Real income loss, spillovers from conflicts, dissatisfaction with migration, and worsening inequality ignite social unrest, populism, polarization, and resistance to reforms or suboptimal policies. This weakens growth and leads to policy uncertainty and market repricing. - Specific risk: Reversal of migration policies leads to lower remittances, creating adverse spillovers to the broad economy. Worsening fiscal and external balances. - Policy response: Protect the vulnerable through targeted fiscal measures. Monitor financial risks closely and strengthen banking supervision. - Deepening geoeconomic fragmentation - Relative Likelihood: High - Impact: High ST/MT - Key impacts: Persistent conflicts, inward-oriented policies, protectionism, weaker international cooperation, labor mobility curbs, and fracturing technological and payments systems lead to higher input costs, hinder green transition, and lower trade and potential growth. - Specific risk: Delay in renewing or expiration of HOPE/HELP trade preferences (currently in place through September 2025). Lower aid and FDI inflows. - Policy response: Improve competitiveness through structural reforms. - Climate change - Relative Likelihood: Medium - Impact: High MT/LT - Key impacts: Extreme climate events driven by rising temperatures cause loss of life, damage to infrastructure, food insecurity, supply disruptions, lower growth, and financial instability. - Secondary impact: Lower long-term growth and FDI inflows. - Policy response: Seek donor financing to build ex ante structural and financial resilience and enhance post-disaster response. ### Domestic Risks — sources, likelihood, impacts, and policy responses - Worsening security and political instability - Relative Likelihood: High - Impact: High ST/MT - Key impacts: Interruptions or delays in the full deployment of the Multinational Security Support Mission. Intensification of gang criminal activity. A delay in planned elections due to persistent insecurity. Further displacements of people, restrictions to flow of people and supply chain disruption (including fuel shortages), lower FDI inflows and long-term growth. - Policy response: Continue to coordinate closely with development partners and intensify request for international support to enhance security. Prioritize government spending, ensure sound financial institutions, strengthen governance, including AML/CFT publishing timely and accurate data to reassure markets and donors. - Natural disasters - Relative Likelihood: High - Impact: High ST/MT - Key impacts: Hurricanes, heavy rains, earthquakes, and droughts cause disruption in economic activity, lower FDI inflows and long-term growth. - Policy response: Seek donor financing to build structural resilience and enhance post-disaster response. - Infectious diseases - Relative Likelihood: High - Impact: High ST/MT - Key impacts: Depleted sanitation and health infrastructure leads to outbreaks of communicable diseases (e.g., cholera, tuberculosis). Disruption of economic activities and lower long-term growth. Increased pressure on public health system. - Policy response: Increase the health spending targeted at infectious diseases. Seek international donor support for building resilience and addressing emergencies. - Insufficient international support - Relative Likelihood: Medium - Impact: High ST/MT - Key impacts: Financial support is delayed and insufficient to address short-term security and humanitarian needs, and to support the medium-term reconstruction and institutional needs. Persistence of insecurity, impediments to economic activity, and worsening of the humanitarian crisis. Increased pressure on fiscal resources. - Policy response: Intensify outreach to donors. Increase international communication on financing needs. --- ### Appendix I. Letter of Intent — macroeconomic outlook and program status ### Macroeconomic framework and outlook - FY2024 - Growth in 2024: minus 4.2 percent (negative for the sixth consecutive year). - Year-on-year inflation in 2024: 27.9 percent. - Current account deficit in 2024: -0.6 percent of GDP. - Gross international reserves in FY2024: 2.5 billion dollars (or 5.7 months of imports). - FY2025 outlook and medium term - Growth in 2025: 1 percent (economic activity will still drop by 1 percent because of the security outlook). - Growth in 2026: 1 percent, then accelerate moderately to 1½ percent in the medium term. - Inflation: projected to decline slightly in 2025 and ease further in the medium term as the supply shock caused by gang violence subsides and the policy of zero monetary financing of the budget deficit is maintained. - Gross international reserves projected for FY2025: 2.7 billion (or 7 months of imports). - Policy commitment: monetary financing of the fiscal deficit should be maintained at zero. ### Results under the SMP-supported program (end-December 2024) - All quantitative and indicative targets at end-December 2024 were met by a large margin. - Key outturns and program thresholds: - Net international reserves: US$ 239 million (exceeding the program’s floor of US$60 million). - Primary balance of the nonfinancial public sector: 10.2 billion gourdes surplus (well above the program’s deficit floor of -239 million gourdes). - Net central bank credit to the nonfinancial public sector: -6.3 billion gourdes (well below the program’s ceiling of zero monetary financing). - Budget allocations for social expenditure: 11.9 billion gourdes (exceeding the program’s target of 11 billion). - No accumulation of domestic arrears by the central government and no accumulation of external arrears by the public sector were recorded. - The public sector did not contract or guarantee new non-concessional debt. - Indicative target on central government fiscal revenue: 48 billion gourdes (above the target of 40 billion). - Structural benchmarks (of seven assessed): - Four met on time. - Two not met on time but implemented with short delay due to institutional constraints. - One missed and expected to be implemented by end June 2025 (supreme court audit of expenditures in connection with the RCF of the FSW for 2023/24 fiscal year and publish it). - Other governance and transparency actions: publication of monthly Haiti Food Shock Window execution reports, quarterly FAES operations and financial status reports, quarterly internal expenditure audits reported to the Superior Court of Accounts and Administrative Disputes (CSCCA), and publication of the governance diagnostic report. --- ### Fiscal policy — objectives, recent measures, and structural benchmarks ### Fiscal outlook and adjustments - Revenue and spending projections: - Fiscal revenue expected to grow to 4.9 percent of GDP in 2025 from 4.8 percent in 2024. - Domestically financed expenditure expected to increase to 5 percent of GDP in 2025 from 4.1 percent in 2024. - Fiscal balance expected to be on balance for 2025. - Supplementary budget (mid-April 2025): - Endorsed to account for new budget support from donors and extra security spending to fight gangs. - Will be in line with SMP objectives and does not include monetary financing from the central bank. - Reallocations to increase social spending. ### Fiscal priorities and benchmarks - Overarching priority: strengthen tax revenue mobilization while improving transparency and accountability in public spending; maintain zero monetary financing of the fiscal deficit. - Program fiscal structural benchmarks (SBs): - (i) CSCCA to conduct and publish a financial and operational compliance audit of all expenditure in connection with the Rapid Credit Facility Food Shock Window for 2022-23 (SB met) and 2023/24 fiscal years—publish audit report on CSCCA, MEF, and DGB websites (end-March 2025 SB). - (ii) Sign and publish on the MEF and DGB websites an administrative and technical cooperation protocol between the Directorate of General Taxes (DGI) and General Administration of Customs (AGD) for interconnection of their IT systems (end-June 2025 SB) for permanent and automated exchange and joint actions to prevent and combat frauds. - (iii) Launch and implement the digitalization of tax declarations and payments through all commercial banks for the large taxpayers registered at the DGI (end-September 2025 SB). - Other fiscal reform measures with TA from IMF and donors: - Stepping up capacity development of the customs administration to improve compliance in customs valuation of imports. - Implementing the roadmap for rolling out the Tax Code and supporting regulations. - Gradually completing implementation of the fuel subsidy reform, including: - introduction of a simple mechanism for adjusting and smoothing prices to variations in international oil prices and the exchange rate; - establishment of a regulatory framework for the petroleum products sector; - strengthening of related regulatory institutions; - implementation of an appropriate communication strategy to promote public acceptance. - Strengthening social safety nets (quantitative targets) by expanding social programs, increasing cash transfers and food rations, expanding school feeding programs, providing hot meals via community restaurants, eliminating some school fees, accelerating IMF Food Shock Window spending, and improving execution and targeting of social expenditure by MAST and line ministries. --- ### Monetary, exchange rate, and financial policies — stance and transparency measures ### Monetary policy stance and actions - Objective: contain inflationary pressures without overly tightening monetary conditions amid slowing activity. - Operational anchors: - Zero ceiling on net credit to the government. - Optimal management of excess liquidity through BRH bonds. - Maintain unchanged key policy rates and reserve requirements. - Commitment to develop the domestic securities market to strengthen monetary policy transmission. - TA acknowledgement: IMF Statistics Department provided TA to help BRH compile the reserve template for monthly publication. ### Central bank transparency and reserve management benchmarks - Structural benchmarks for BRH: - Provide IMF staff the full balance sheet of the central bank according to the SRF-1SR with two-month lag from the end of the reference period, starting from the balance sheet for end-December 2024, to be provided by end-February 2025 (end-February 2025 SB). - Publish on the BRH's web site the BRH audit report and audited financial statements for FY2023 (ending in September 2023) conducted by an independent international audit firm (end-August 2025 SB). Once accomplished, start the audit for FY2024. - BRH Board approval of: (i) a medium-term plan for improving the composition of the investment portfolio, (ii) new strategic asset allocation, (iii) updated investment policy, and (iv) updated investment guidelines, in close consultation with IMF staff (end-September 2025 SB). *Source: Annex III. Risk Assessment Matrix; Appendix I. Letter of Intent; Attachment I. Memorandum of Economic and Financial Policies (MEFP) — 1htiea2025002-print-pdf* ### 11. The BRH foreign exchange policy has so far mainly focus on smoothing excessive ### 1htiea2025002-print-pdf - 11. The BRH foreign exchange policy has so far mainly focus on smoothing excessive ### Foreign exchange policy (BRH) - Objectives and measures: - Maintain the adoption of a floor on net international reserves. - Establish an appropriate mechanism for foreign exchange interventions, such as well-designed weekly foreign exchange auctions instead of the foreign exchange allocation system. - Advance the ongoing work to ensure a more risk-based approach to foreign exchange interventions. - Complete the revision of net open position (NOP) limits for commercial banks. ### Banking supervision and financial inclusion - Reforms to support growth: - Advance the design and implementation of a risk-based banking supervision framework with the support of CARTAC. - Closely monitor the soundness of financial institutions and finalize outstanding texts on banking regulation. ### Safeguards, accounting standards, and BRH involvement in development finance - Implementation priorities: - Continue to implement recommendations from the 2019 Safeguards Assessment and the 2024 safeguards monitoring mission. - Finalize the transition to International Financial Reporting Standards (IFRS) accounting standards. - Develop a medium-term plan to phase out the involvement of the BRH in development finance activities. - Align the asset allocation strategy with best practices. - Conditionality note: - It is understood that a new safeguards assessment must normally be completed prior to the approval of any subsequent IMF arrangement with Haiti. ### Governance and anti-corruption reforms - Commitments and deliverables: - Implement the main recommendations of the IMF governance diagnostic report action plan as a medium-term roadmap for improving governance and fighting corruption. - Upgrade legal AML/CFT framework with technical assistance from the IMF Legal Department and take additional steps needed to exit the FATF grey list. - Specific AML/CFT actions (deadline-sensitive): - Complete sectoral risk assessments. - Implement an AML/CFT risk-based supervision regime for financial institutions and designated non-financial businesses and professions. - Ensure transparency of basic and beneficial ownership information on legal persons. - Complete a sectoral risk assessment of AML/CFT risks related to financial institutions, designate supervisory authorities for high-risk DNFBPs (including notaries and lawyers and the gambling and lottery sectors), and strengthen risk-based supervision of financial institutions, by May 2025. ### Program monitoring and institutional arrangements - Monitoring framework: - Monitoring based on structural benchmarks (Appendix I. Table 1) and quantitative targets (Appendix I. Table 2) as defined in the Technical Memorandum of Understanding (TMU). - Authorities to submit statistical data and information in accordance with the TMU. - Program monitoring committee: - Committee in place including representatives from the Ministry of Economy and Finance and the BRH; may request participation of other sectors. - Committee will meet at least quarterly with the Minister of Economy and Finance and the Governor of the BRH to report on implementation of the Staff Monitored Program. - Transparency commitment: - Authorities undertake to publish this Memorandum and the accompanying IMF Staff Report on the websites of the Ministry of Economy and Finance and the BRH as soon as the Staff Monitored Program is approved by IMF Management. ### Structural benchmarks (selected items and status) — Governance and PFM - 1: Publish Governance Diagnostic Report, including action plan. - Purpose: Enhance governance - Target date: End-February 2025 - Status: Met - 2: Publish all new public procurement contracts (including beneficial ownership information) on CNMP and MEF websites within 45 days after award, starting from contracts awarded in December 2024 (publication due by mid-February 2025). - Purpose: Increase transparency of public spending - Target date: Monthly starting from December 2024 - Status: Not met (Implemented with delay) - 3: Publish all monthly reports on execution of fiscal expenditure through Haiti Food Shock Window account since its first disbursement by February 2025; future disbursements no later than 45 days after reference period, starting from December 2024 report (due by mid-February 2025). - Purpose: Increase transparency of public spending - Target date: Monthly starting from end December 2024 - Status: Met - 4: Through the General Finance Inspectorate, complete quarterly internal expenditure audits of all ministries involved in the Haiti Food Shock Window account and report to the CSCCA within three months from the end of the reference period, starting from July-September 2024 quarter (report to CSCCA by December 2024). - Purpose: Increase transparency of public spending - Target date: Quarterly starting from end-December 2024 - Status: Not met (Implemented with delay) - 5: Have the CSCCA conduct and publish a financial and operational compliance audit of all expenditure for the Rapid Credit Facility Food Shock Window for 2022-23 and 2023/24 fiscal years. - Purpose: Improve accountability and increase transparency of public spending - Target date: End-March 2025 - Status: Not met - 6: Publish quarterly reports (with one quarter lag) on operations and financial status of the Economic and Social Assistance Fund (FAES), including board meeting reports, starting from July-September (publication due by end-December 2024). - Purpose: Increase transparency of public spending - Target date: Quarterly starting from end-December 2024 - Status: Met - 7: Sign and publish on MEF and DGB websites an administrative and technical cooperation protocol between DGI and AGD for interconnection of IT systems. - Purpose: Strengthen domestic revenue mobilization - Target date: End-June 2025 - Status: (Not provided) - 8: Launch and implement digitalization of tax declarations and payments through all commercial banks for large taxpayers registered at the DGI. - Purpose: Strengthen domestic revenue mobilization - Target date: End-June 2025 (reset for end-September 2025) - Status: (Not provided) - 9: Publish on the BRH's web site the BRH audit report and audited financial statements for FY2023 (ending in September 2023) conducted by an independent international audit firm. - Purpose: Enhance transparency of Central Bank's operation - Target date: End-June 2025 (reset at end-August 2025) - Status: (Not provided) - 10: BRH Board approval of: (i) a medium-term plan for improving composition of the investment portfolio, (ii) new strategic asset allocation, (iii) updated investment policy, and (iv) updated investment guidelines, in close consultation with IMF staff. - Purpose: Align Central Bank's reserves management framework with sound governance arrangements and the principles of safety and liquidity. - Target date: End June 2025 (reset for end-September 2025) - Status: (Not provided) - 11: Provide to IMF staff the full balance sheet of the central bank according to SRF-1SR, including detailed data on government deposit accounts, with two-month lag from the end of the reference period, starting from end-December 2024 balance sheet to be provided by end-February 2025. - Purpose: Strengthen transparency of Central Bank's balance sheet - Target date: Monthly periodicity and two-month lag, starting to be provided to IMF staff by end-February 2025 - Status: Met ### Quantitative targets and program indicators (selected figures) - Net international reserves (NIR) of the central bank (in millions of U.S. dollars)—floor: - Adjusted target: 920 - Actual (period): 60; 60; 239 - Status: Met - Indicative targets / Actuals: 80 / 100 / 120 - Primary balance of the nonfinancial public sector (NFPS, in millions of gourdes)—floor: - Adjusted target: -239 - Actual (period): 10,205 - Status: Met - Indicative targets / Actuals: -479 / -718 / -958 - Net central bank credit to the nonfinancial public sector (in millions of gourdes)—ceiling: - Adjusted target: 240,212 - Actual (period): 0; 3,000; -6,263 - Status: Met - Indicative targets / Actuals: 0 / 0 / 0 - Central government component of net central bank credit: - Adjusted target: 245,284 - Actual (period): 0; 3,000; -5,629 - Status: Met - Indicative targets / Actuals: 0 / 0 / 0 - Other nonfinancial public sector entities component: - Adjusted target: -5,072 - Actual (period): 0; 0; -634 - Status: Met - Budget allocations for social expenditure (in millions of gourdes)—floor: - Adjusted target: 11,000 - Actuals: 11,892; Met - Further actuals: 19,810; 29,714; 39,619 - Continuous quantitative targets (selected): - Accumulation of domestic arrears by the central government (in millions of gourdes)—ceiling: 0 (Met) - Accumulation of external arrears by the public sector (in millions of U.S. dollars)—ceiling: 0 (Met) - Contracting or guaranteeing by the public sector of new nonconcessional external debt (in millions of U.S. dollars)—ceiling: 0 (Met) - Indicative target — Central government fiscal revenue, excluding grants (in millions of gourdes)—floor: - Adjusted target: 40,000 - Actual: 48,003 - Status: Met - Indicative targets / Actuals: 90,000 / 140,000 / 200,000 - Memorandum items (selected): - Provision for undisbursed FY24 expenditures (in millions of gourdes): 9,200 / 6,200 - Food Shock Window resources held in the central bank, but not yet transferred to the TSA (in millions of gourdes): 1,542 - Undisbursed resources received from the IMF Catastrophe Containment and Relief Trust (CCRT, in millions of gourdes): 1,534 - Budget support (in millions of U.S. dollars): 0 / 0 / 0 / 21 / 39 - Gross international reserves (in millions of U.S. dollars): 2,525 / 2,722 - Gross international reserves (in months of imports of goods and services of the following year): 6.3 / 6.8 ### Technical Memorandum of Understanding (TMU) — definitions and measurement rules (selected) - Program assessment horizon: - Haiti’s performance under the 12-month Staff-Monitored Program (SMP) ending December 2025 will be assessed based on quantitative targets (QTs) and structural benchmarks (SBs). - Central government definition: - Central government excludes municipalities, BRH, and other public financial institutions, autonomous state organizations, and state-owned enterprises. - Special funds and programs: - Include the Road Fund (FER) and resources to finance PSUGO; resources levied to finance FER and PSUGO (through FNE) will be recorded as central government revenues. - FAES and BMPAD definitions and roles provided. - Net central bank credit to the NFPS: - Defined as the difference between BRH assets and liabilities vis-à-vis the nonfinancial public sector as reported by the BRH to the IMF. - BRH liabilities toward the central government include a provisional account of HTG 9.2 billion for government expenses contracted in FY 2024 but not yet disbursed by end-September 2024. - Program exchange rates for valuation: - HTG 132.0563 = USD 1 (BRH reference rate as of September 30, 2024) - USD 1.119600 = EUR 1 - SDR 0.737261 = USD 1 (rates as at September 30, 2024) - Adjustors to net central bank credit to the NFPS: - (i) Adjust upward by disbursements after September 30, 2024 related to FY 2024 expenses up to HTG 9.2 billion. - (ii) Adjust upward by disbursements after September 30, 2024 of remaining resources related to the 2023 Food Shock Window and debt relief from the CCRT. - (iii) Adjust upward by increases in central government liabilities caused by exchange rate differences in BRH account 172160 (“Avance difference de change FMI”). ### Net central bank credit to the NFPS — component table (selected figures, in millions of gourdes) - Net central bank credit to the nonfinancial public sector: - September 2024 (preliminary): 240,020.92 - September 2024 (revised): 240,212.35 - December 2024: 233,949.69 - Net credit on central government: - September 2024 (preliminary): 245,097.04 - September 2024 (revised): 245,284.26 - December 2024: 239,655.63 - Claims on central government: - September 2024 (preliminary): 349,591.17 - September 2024 (revised): 349,543.64 - December 2024: 331,057.49 - Holdings of government debt securities: 221,360.50 (consistent across dates shown) - Loans and advances to the central government: - September 2024 (preliminary): 128,230.67 - September 2024 (revised): 128,183.14 - December 2024: 109,696.98 - Liabilities to central government: - September 2024 (preliminary): 104,494.13 - September 2024 (revised): 104,259.39 - December 2024: 91,401.86 - Other gourde liabilities to central government (provisional account for FY2024 expenses): - September 2024 (preliminary): 9,200.00 - September 2024 (revised): 9,200.00 - December 2024: 6,200.00 - Net claims on other nonfinancial public sector entities: - September 2024 (preliminary): -5,076.12 - September 2024 (revised): -5,071.91 - December 2024: -5,705.94 *Source: Excerpt from the IMF Staff-Monitored Program documentation contained in the provided PDF content.* ### 14. The gross international reserves of the central bank are those external assets that are ### 14. The gross international reserves of the central bank are those external assets that are readily available to and controlled by monetary authorities ### Definition of gross international reserves - Gross international reserves of the central bank are external assets readily available to and controlled by monetary authorities for: - meeting balance of payments financing needs; - intervening in exchange markets to affect the exchange rate; and - other related purposes such as maintaining confidence in the currency and the economy and serving as a basis for foreign borrowing. - Reserve assets must be foreign currency assets and assets that exist; contingent assets and foreign currency assets pledged as collateral are excluded if encumbered. - Gross international reserves include: - monetary gold; - liquid external assets, including holdings of Special Drawing Rights (SDRs); and - IMF reserve position. - For program purposes, holdings of SDRs and IMF reserve position will be calculated based on data from the IMF Finance Department. ### Net international reserves (program definition) and calculation - Program Net International Reserves (NIR) = Gross International Reserves of the central bank minus: - Reserve-related liabilities (liabilities denominated in foreign currency to non-residents), such as: - short-term loans (lines of credit) contracted by the central bank; - certified checks in U.S. dollars; - all Haiti liabilities to the IMF, based on data from the IMF Finance Department. - Domestic foreign currency–denominated central bank liabilities to residents, such as: - foreign currency deposits of commercial banks at the BRH (sight deposits in US dollars and euro, including from BCM and the CAM transfer); - other foreign currency–denominated liabilities to other depository corporations included in monetary base; - foreign currency demand deposits of other financial corporations; - commitments related to foreign currency swap transactions with domestic financial institutions. - Other liabilities in foreign currency, such as: - foreign currency special accounts; - foreign currency project accounts; - central bank off-balance sheet foreign currency liabilities. - Adjustment rule for budgetary grants: - If budgetary grants are lower than expected the floor on net international reserves will be adjusted downwards by the amount of the difference. - The floor will not be adjusted upwards if budgetary grants exceed expected levels mentioned in Table 3. ### Program NIR illustrative figures (Attachment II. Table 2, In millions of U.S. dollars) - A. Gross International Reserves (September 2024 provisional / September 2024 revised / December 2024): - Total: 2,525.2 2,525.2 2,722.0 - Monetary gold: 153.1 153.1 151.9 - Holdings of foreign currency: 37.5 36.7 34.4 - Demand deposits abroad: 444.2 444.1 694.2 - Investments abroad: 1,769.3 1,769.3 1,726.8 - SDR holdings 1/: 93.2 94.2 86.9 - Reserve Position in the Fund 1/: 27.9 27.9 27.9 - B. Reserve Related Liabilities: - Total: 306.6 306.6 242.2 - Liabilities to the IMF 1/ 2/: 245.1 245.1 239.8 - Short-term loans from private non-residents: 60.2 60.2 0.0 - Liabilities to IFIs: 1.3 1.3 2.4 - Certified checks in FX: 0.3 0.3 0.3 - C. Liabilities to Residents Denominated in Foreign Currency: - Total: 1,263.4 1,263.4 1,286.9 - Financial sector FX deposits in the central bank: 1,231.0 1,231.0 1,254.2 - Swaps with financial institutions: 32.4 32.4 32.7 - D. Other Liabilities Denominated in Foreign Currency: - Total: 35.2 35.2 33.9 - Off-balance sheet FX liabilities: 15.0 15.0 15.0 - Project accounts: 20.2 20.2 18.8 - Special accounts: 0.1 0.1 0.1 - E. Net International Reserves, 2024 SMP definition (A - B - C - D): - 919.9 919.9 1,159.2 - Memorandum items (not included in program NIR calculation): - Miscellaneous central bank FX liabilities (including values for adjustment): 25.0 23.4 25.0 - Central government FX deposits in the central bank: 228.9 228.9 239.5 - Short-term central government FX liabilities (next 12 months): 24.8 26.7 29.3 - Notes: - 1/ Based on IMF books. For the purposes of the 2024 SMP, between December 2024 and September 2025, the amounts in SDR will be converted to U.S. dollars using the exchange rate as of September 30, 2024 (1 USD = 0.737261 SDR). - 2/ For program purposes, all outstanding Haiti liabilities to the IMF are considered, including the January 2023 Rapid Credit Facility (Food Shock Window), disbursed at a government account in the BRH, for an amount of SDR 81.9 million. ### Projected budgetary grants (Attachment II. Table 3) - Cumulative flows since end-September 2024: - September 2024: 0 - March 2025: 0 - June 2025: 21 - September 2025: 39 ### Primary balance of the Nonfinancial Public Sector (definitions and adjustors) - Domestic arrears of the central government: - Expenditure accepted by the Treasury and unpaid after 90 days, despite delivery of corresponding goods and services. - 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 nonfinancial public sector (NFPS) comprises: - net central bank credit to the NFPS; - net credit from domestic commercial banks to the NFPS (as reported in the Standardized Report Form 2SR), which includes changes in NFPS deposits and the net issuance of Treasury bills and other NFPS securities to commercial banks; - net nonbank credit to the NFPS, which includes the net issuance of Treasury bills and other NFPS securities to nonbank institutions, the change in the net position of the NFPS vis-à-vis the electricity sector (including independent power producers), and the net change in suppliers’ credit and domestic arrears of central government. - Net external financing of the NFPS comprises: - new external loan disbursements (excluding IMF loans); and - net change in external arrears minus external loan amortizations. - For program purposes, the primary balance of the NFPS = net domestic financing of the NFPS + net external financing of the NFPS − interest payments on public debt. - If budgetary grants do not reach expected levels, the floor on the primary balance includes an asymmetric adjustor: - If budgetary support is in deficit, floors on the primary balance will be reduced by the amount of those deficits. - If external budget support exceeds projections, the floor on the primary balance will not change. ### Budget allocations to social expenditure and execution monitoring - For the program, social spending is defined as the budget envelope allocated to: - Ministry of Social Affairs and Labor (MAST); - Ministry of Education; - Ministry of Agriculture; and - Ministry of Public Health. - The floor on the QT applies to the sum of the budget allocations to these ministries as executed at end-month (end-December and end-June for QTs and end-March for ITs). - Provisional appropriations (expenditure under way before actual budget appropriation) will be included. ### Debt definitions, treatment, and limits - Definition of debt (per paragraph 8 of the Guidelines on Public Debt Conditionality): - Debt means a current, not contingent, liability created under a contractual arrangement through provision of value (assets or services) and requiring future payments in assets or services to discharge principal and/or interest. - Primary forms include: - loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swap arrangements); - suppliers’ credits (supplier permits deferral of payment); and - leases (debt equals PV at inception of all lease payments expected during agreement period, excluding payments for operation, repair, or maintenance). - Public sector coverage for the debt limit ceiling: public and publicly guaranteed debt (public sector defined in paragraph 8 of the TMU). - Debt guarantees by the public sector: - An explicit legal obligation to service a debt in the event of non-payment by the borrower (in return for payment in cash or in kind). - Concessionality for program purposes: - A debt is concessional if it includes a grant element of at least 35 percent. - Grant element = (PV of debt subtracted from nominal value) expressed as percent of nominal value. - For debts with a grant element equal or below zero, PV is set equal to nominal value. - Discount rate used: unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97). - External debt (for the ceiling on contracting or guaranteeing new non-concessional external debt): - Any debt contracted or guaranteed by the public sector on non-concessional terms with non-residents or denominated in foreign currency (currency other than Haiti’s currency). - Includes, where applicable, debt issued domestically by the government and held by non-residents. - Commitment by the public sector: - The public sector undertakes not to contract or guarantee any new non-concessional external debt. - Also applies to any private debt guaranteed by the public sector that constitutes a contingent liability. - Exclusions from the ceiling: - short-term import-related credits (maturity < one year); - rescheduling arrangements; - borrowing from the IMF; - non-resident purchases of treasury bills; - gourde-denominated BRH bills indexed to the exchange rate. - This quantitative target will be monitored continuously and any non-observance will be immediately reported to the Fund. ### Arrears definitions and monitoring - Arrears on external debt of the public sector: - Include all debt-service obligations (principal and interest) on loans contracted or guaranteed by the public sector due to non-residents but not paid on the due date as set out in the loan contract. - Exclude obligations being renegotiated with external creditors and/or those that are litigious. - Arrears resulting from non-payment of debt service due to international sanctions preventing payments to the creditor are excluded for the purpose of assessing the quantitative target on non-accumulation of new external debt arrears. - This quantitative target will be monitored continuously and any non-observance immediately reported to the Fund. - Arrears on domestic debt of the central government: - 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 and any non-observance immediately reported to the Fund. ### Reporting of data for program monitoring (summary of data to be provided) - The government will provide IMF staff with the information in the summary table; any data revisions will be promptly communicated to IMF staff. - 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 program outcome. - Continuous QTs: authorities will report any non-observance promptly. - Examples of required data series, periodicity, and timeliness (Attachment II. Table 4 includes detailed items): - Fiscal revenues (internal, external, other): Monthly, Four weeks. - Expenditures on cash basis (wages and salaries, goods and services, external debt, current accounts): Monthly, Four weeks. - Table of government financial transactions (TOFE): Monthly, Two weeks. - Balance on current accounts and operation of projects: Monthly, One month. - Consumer price index (including breakdowns): Monthly, Three weeks. - Exchange rate: Daily, One day. - Monetary base and sources thereof and currency in circulation: Weekly, One week. - Aide Memoire Table (stock of BRH bonds; deposits at commercial banks; credit to private sector in gourdes and U.S. dollars; details of inflows/outflows of foreign exchange reserves including budget support received; volume of foreign exchange transactions including BRH sales and purchases; gross and net international reserves; net BRH credit to central government and the NFPS; stocks and interest rates of BRH bills): Monthly, One week. - EDH dashboards and EDH cash data: Monthly, One month (EDH commercial data: Monthly, One week). - External debt and arrears reporting: Monthly, One month (data on stocks, accumulation, and repayment of external arrears: Monthly, Six weeks). - Monetary and financial statistics (Standardized reporting form, balance sheets of the Central Bank and other depository corporations): Monthly, One month. - Information on composition of gross and net international reserves (Reserve template when available): Monthly, One month. - International Investment Position (IIP): Annual, Three months. - Balance of payments (first version): Quarterly, Six weeks; Revised balance of payments: Quarterly, Three months after the first reporting. - Full amortization table of domestic and external government debt: Annual, Three months. - Statement of stocks and flows of repayment of suppliers’ credits and payment arrears: Monthly, One week. *Source: Attachment II, Haiti program documentation (selected sections and tables).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1htiea2025002-print-pdf.pdf_