## Haiti: FY2025 Budget, External Position, and SMP Implementation (1htiea2025003-source-pdf) ## Source details **Canonical URL:** [Haiti: FY2025 Budget, External Position, and SMP Implementation (1htiea2025003-source-pdf)](https://www.imf.org/-/media/files/publications/cr/2025/english/1htiea2025003-source-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1htiea2025003-source-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1htiea2025003-source-pdf.pdf.json) --- ### Executive summary — context and security - Gang violence intensified, undermining state authority and disrupting economic activity. - Murdered persons reported: "4,864 murders between October 2024 and June 2025." - Internally displaced persons: "More than 1.4 million people were internally displaced as of September 2025." - Humanitarian needs: "Half the population (5.7 million) faces hunger." - Political transition: - Plans for a new constitution abandoned in early October 2025. - Elections expected under the 1987 constitution with a first round "scheduled for late August 2026, and the second round in early December 2026, if security conditions are adequate." - International security response: - United Nations authorized Gang Suppression Force (GSF) "for an initial period of 12 months and a force of up to 5,550 members," effective October 2. - Establishment of United Nations Support Office for Haiti (UNSOH). - Complementary initiatives: OAS Haitian-led Roadmap for Stability and Peace; US designations of specific gangs. ### Recent economic developments and shocks - Real GDP and activity: - "Real GDP is estimated to have contracted by 3.1 percent in FY2025." - "Projected to contract by 1.2 percent in FY2026." - Index of economic activity contracted by "2.4 percent over the first three quarters of FY2025 (October to June)." - Inflation: "31.9 percent in FY2025." - External policy shifts and external inflows: - Expiration of TPS for Haitians in the United States. - Termination of textile and apparel trade preferences under HOPE/HELP (expired September 2025). - Introduction of a "new cash remittance tax." - These shifts are "expected to reduce remittances and exports" and "reduce foreign inflows and increase external and fiscal pressures." - Hurricane Melissa: occurred in late October; "caused significant loss of life and widespread damage to infrastructure and agricultural areas." - Deportations: "207,000 deportations of Haitians from the Dominican Republic since January 2025." - Ports and trade: - International flights suspended in Port-au-Prince; several ports closed or restricted. - Port of Saint-Louis du Sud opened in January 2025 may help reroute essential imports. - Satellite-based port data show declines in average daily ship arrivals and import volumes; total trade remains below pre-pandemic levels. ### Fiscal and budgetary developments - FY2025 second supplementary budget: - Adopted on September 23 with overall spending envelope of "317.7 billion gourdes"—"1.8 percent lower than the April supplementary budget." - "About 3.8 billion gourdes were reallocated to social spending" including cash transfers to "approximately 200,000 parents," school infrastructure improvements, and school kits distribution. - FY2025 fiscal outcomes: - Fiscal position reported as balanced, reflecting "both low revenue collection and low spending execution." - Revenues (Indicative Target, IT) rose by "12.8 percent" despite a three-month strike at the DGI. - Revenue-to-GDP ratio declined to "4.7 percent"—"0.6 percentage points below FY2024." - FY2026 budget and projections: - Global envelope for FY2026: 345.5 billion gourdes — an 8.8 percent increase versus the second supplementary budget. - Domestic revenues: 250.4 billion gourdes (4.7 percent of GDP). - Public expenditures: 328.5 billion gourdes (6.2 percent of GDP). - Capital expenditures: 115.0 billion gourdes (2.2 percent of GDP). - Authorities’ projection for overall fiscal balance: -0.3 percent of GDP in FY2026. - Supplementary budget execution and capital execution: - Supplementary budget execution reached 72.1 percent; capital execution at 37.5 percent. - Expenditures amounted to 44.1 billion gourdes in September 2025 (end‑FY cash spike). ### Social spending and Food Shock Window (FSW) - Social spending (quantitative target, QT) rose 41.4 percent. - Of the USD 105 million (15.6 billion gourdes) received under the 2023 IMF FSW: - About 91 percent (14.1 billion gourdes) executed by September; - Remainder (about 1.45 billion gourdes) carried over into FY2026 budget. - Selected September 2025 executions: - 0.5 billion gourdes: distribution of textbooks to students. - 0.3 billion gourdes: school infrastructure improvement. - 3.4 billion gourdes: MAST executed to strengthen support for vulnerable groups. - FSW cumulative allocations and spending (amounts in millions of gourdes): - Total original allocation: 15,600 - Spent (FY2023): 3,089 - Spent (FY2024): 6,782 - Spending up to August 2025 (FY2025): 1,668 - Selected line item examples: Reactivation of community restaurants and mobile canteens: 2,000 / - / 115 / 713; Ministry of National Education (Support to parents): 7,500 / 442 / 5,155 / -. ### External position, remittances, and reserves - Current account: - Recorded a moderate surplus in FY2025, following a deficit of 0.6 percent of GDP in FY2024. - Remittances: - Net remittances increased by about 24 percent (October-August) relative to same period in FY2024. - Text Table (cumulative, October-June/July/August): Net Remittances (October-August) — FY20-24 average 2,859; FY24 3,065; FY25 3,786; percent changes: 14.3, 12.1, 11.7; FY25 vs. FY20-24: 32.4; FY25 vs FY24: 23.5. - Latest monthly: Net Remittances (August): FY25 346 (FY25 vs FY24: 20.5; FY25 vs FY20-24: 27.3). - International reserves and NIR: - BRH accumulated NIR (QT) of US$567 million by end-June—well above QT target of US$100 million. - Gross international reserves exceeded US$3.1 billion (over 7 months of prospective imports) as of end-July. - Nominal exchange rate remained stable at around 130 gourdes per dollar throughout the FY. - Real exchange rate estimated to have appreciated over 30 percent during FY2025. - Net International Reserves (2024 SMP definition, selected values in millions of US dollars): - Gross International Reserves: Mar 2024 2,425.3; Jun 2025 3,105.1; Jul 2025 3,120.4. - Reserve Related Liabilities: Mar 2024 488.4; Jun 2025 235.9; Jul 2025 235.2. - FX Denominated Liabilities to Residents: Mar 2024 1,296.6; Jun 2025 1,364.7; Jul 2025 1,362.4. - Net International Reserves (A - B - C - D): Mar 2024 622.5; Jun 2025 1,483.0; Jul 2025 1,484.4. ### Financial sector and banking - Bank credit and lending: - Bank credit estimated at "3.1 percent of GDP in FY2025," down from "3.8 percent of GDP in FY2024." - Credit-to-GDP gap reached "-11 percent in June 2025." - Asset quality and provisioning: - Nonperforming loans (NPLs) reached "14.2 percent in June 2025" (from "13.7 percent in March"). - Provisions to gross NPLs fell from "81.5 percent in December 2024 to 66.0 percent in June 2025." - Profitability and capitalization: - Return on assets at "1.5 percent as of June 2025." - Capital adequacy ratio at "22.3 percent," above regulatory minimum of "12 percent." - Banking system structure and trends: - Banking system now composed of 7 banks (2 public and 5 private); two largest private banks hold over 60 percent of banking assets. - Citigroup exit reduces international banking presence; it accounted for 2 percent of banking sector assets as of June 2024. - Loan dollarization increasing; private sector credit contracted significantly since late 2022. - Supervisory reforms and AML/CFT: - BRH adopted revised regulations on credit risk concentration; final credit risk classification and provisioning regulations expected by end-November 2025. - Advanced risk-based supervision piloted on selected banks; integration into BRH Banking Supervision Software recommended. - UCREF board expected to be appointed by February 2026; NRA for ML/TF expected by December 2025. ### Program performance under the Staff‑Monitored Program (SMP) - Implementation progress: - "All end-June quantitative and indicative targets have been met." - "Monetary financing of the fiscal deficit has been maintained at zero." - "International reserves continue to accumulate." - Reform agenda advanced: "implementation of most structural benchmarks, despite delays in some areas." - Six of eleven structural benchmarks met; two additional SBs delivered albeit delayed. - Structural benchmark specifics (selected): - SB1 (GDR published): Met. - SB2 (Procurement contracts published): Not met (continuous SB). - SB3 (FSW monthly execution reports): Met. - SB4 (Quarterly internal expenditure audits): Not met (implemented with delay). - SB5 (CSCCA FSW audit for FY2022-23 published; FY2023-24 missed): Not met. - SB7 (DGI-AGD IT interconnection protocol signed): Met. - SB8 (Digitalization of tax declarations/payments through banks): Not met; proposed reset to end-March 2026. - SB9 (BRH audit for FY2023 completed and published but delayed): Not met (implemented with delay). - SB10 (BRH reserve management framework approved): Met. - SB11 (BRH full balance sheet to IMF staff): Met. - Authorities’ request and staff recommendation: - Authorities requested a "nine-month extension of the Staff-Monitored Program." - Staff proposes the extension to support macro stability and preserve reform momentum amid worsening security and political uncertainty. - Extension intends to complete remaining SBs and introduce new SBs to reinforce revenue collection and safeguards. ### Proposed SMP extension — new and revised structural benchmarks (selected) - Modify SB5: publish FSW expenditure audit report for FY2025 by end March 2026. - Reschedule SB8: launch/implementation of digital tax declarations/payments rescheduled to end March 2026. - Introduce SB12 (end March 2026): interconnect Tax Administration System and SYDONIA; issue joint communiqué and publish aggregate analysis on MEF website. - Introduce SB13 (end June 2026): adopt framework to strengthen BRH bank-wide IT security and business continuity. - Introduce SB14 (end June 2026): publish BRH external audit report and audited financial statements for FY2024. - Review schedule: - Third review to be completed by end April 2026 (assess SBs 2–6, SB8, SB11–12 and end-December 2025 QTs). - Fourth review to be completed by September 19, 2026 (assess end-June 2026 QTs and SBs). ### Outlook and risks - Growth and inflation projections: - Real GDP projected to decline by 1.2 percent in FY2026. - Conditional on steady security improvements: real GDP expected to grow by 0.5 percent in FY2027 and converge to 1.5 percent over the medium term. - Inflation projected to reach single digits by FY2029, provided policy credibility and easing supply shocks. - Fiscal projections: - Domestic revenue (excluding grants) expected to reach 4.7 percent of GDP in FY2026 and rise to 6.0 percent by FY2030. - Total expenditure projected to increase from 5.5 percent to 7.6 percent of GDP over same period. - Deficit expected to widen from 0.2 percent of GDP in FY2026 to 1.5 percent in FY2030. - Public debt projected to remain about 11 percent of GDP over the medium term. - External sector outlook: - Staff assesses Haiti’s external position in FY2024 as broadly in line with fundamentals; CA gap estimated at -0.9 percent of GDP. - Over medium term, CA projected to stabilize at around -2.0 percent of GDP. - Remittances projected to decline by about 3 percent of GDP in FY2026—down from 12.8 percent of GDP in FY2025—due to TPS termination in February 2026 and introduction of a one-percent tax on certain cash remittances. - Remittances projected to fall to 7 percent of GDP over FY2027-30. - International reserve coverage expected to remain adequate at about 8 months of prospective imports by 2030. - Risk scenarios and specific shocks: - Downside risks: rise in gang-related disruptions, escalation of violence and social unrest, tightening of US trade and migration policies, reduced external financing, political instability. - Adverse external shock scenario could increase CA deficit by 1.4 percentage points and lower real GDP growth by 0.9 percentage points in FY2026 relative to baseline, generating additional external financing needs of about $568 million (1.4 percent of GDP—38 percent of NIRs). - Preliminary staff estimates: Hurricane Melissa could reduce real GDP growth in FY2026 by around 0.2 to 0.4 percentage points. - Non-renewal of HOPE/HELP (expired September 2025) removes preferential access; textiles account for about 77 percent of goods exports and generate over 27,000 formal jobs. - Fiscal response to Hurricane Melissa could heighten liquidity risks; 1.45 billion gourdes carried over from 2023 IMF FSW could be used. ### Annex I — Spillovers from external policy shifts (selected quantification) - US accounts for 85 percent of Haiti’s exports and over 2.2 billion in annual remittances since 2020. - Staff estimates US policy changes (TPS suspension, one percent remittance tax, expiration of HOPE/HELP) could reduce foreign inflows by up to USD 106 million in FY2026 (about 3 percent of projected gross international reserves). - Deportations: - Baseline: continuous decline in remittances of about USD 6 million per year (0.4 percent of current NIRs) starting in FY2026. - Assumptions: additional 3,000 Haitian nationals returned annually from US; annual loss per removal USD 2,000. - Deportations from Dominican Republic: 207,000 in 2025, estimating loss of about one percent of total remittances and humanitarian fiscal cost of about 0.13 percent of GDP. - Cash remittance tax: - One percent tax (introduced in July) could reduce formal inflows by up to USD 40 million in FY2026 (1.3 percent of GIR). - Tax applies to transfers via cash, money orders, and cashier’s checks. - HOPE/HELP expiration: - Staff estimate: permanent USD 66 million export loss starting in FY2026 under assumptions of 13 percentage points tariff increase and unitary import demand elasticity. - Sector employment: over 27,000 formal jobs dependent on textiles. ### Illustrative quantification of downside risks (Annex III — Table 1, selected) - Shock magnitudes (Percent declines relative to baseline): - Fall in Remittances: -10 - Decline in International Aids: -50 - Fall in Export: -10 - Combined impact on macro variables (selected, in percent of GDP or percentage points, preserve wording): - Remittances: Baseline 12.8 (FY2025), 9.7 (FY2026); + shock: -1.0 - Grants: Baseline 0.9 (FY2025), 0.5 (FY2026); + shock: -0.3 - Exports of goods and services: Baseline 2.4 (FY2025), 1.6 (FY2026); + shock: -0.2 - Real GDP Growth: Baseline -3.1 (FY2025), -1.2 (FY2026); + shock: -0.9 total (-0.5 remittances; -0.2 grants; -0.2 exports) - Current Account: Baseline 0.7 (FY2025), -0.4 (FY2026); + shock: -1.4 total (-1.0 remittances; -0.3 grants; -0.2 exports) - External Finance Needs: + shock: -1.4 total (-1.0 remittances; -0.3 grants; -0.2 exports) - Footnote: Staff estimates assume no impact on imports. ### Debt sustainability and DSA highlights - Public debt and coverage: - Public debt estimated at 11.7 percent of GDP at end-FY2025. - Total public debt (end-FY2024): US$3,824.7 (15.1 percent of GDP). - External public debt (end-FY2024): US$558.0 (2.2 percent of GDP). - DSA risk ratings: - Risk of external debt distress: High. - Overall risk of debt distress: High. - Debt assessed as sustainable under baseline but highly vulnerable. - Key DSA projections and indicators: - PV of external PPG debt-to-exports ratio projected to rise from 68.4 percent in FY2025 to 142.2 percent in FY2028 (breaching 140 threshold). - External debt-service-to-exports ratio projected to rise from 4.8 percent in FY2025 to 10.9 percent in FY2028 (breaching 10 percent threshold). - Total public debt (nominal) projected path: declines from 11.7 percent of GDP in FY2025 to 8.9 percent in FY2027 then rises to 20.8 percent in FY2045. - Natural disaster (one-off major) scenario assumes damage equivalent to 25 percent of GDP; under this shock PV of external PPG debt-to-GDP rises sharply. - Policy implications from DSA: - Prioritize concessional external financing. - Strengthen revenue mobilization and governance. - Secure donor support and restore security to revive exports. ### Policy priorities and recommendations (selected) - Core SMP priorities: - Strengthen governance and anti-corruption in line with the Governance Diagnostic Report. - Safeguard adequate reserve coverage. - Improve public financial management—including "revenue mobilization and expenditure efficiency." - Expand targeted social assistance. - Macroeconomic safeguards: - Maintain monetary financing of the deficit at "zero." - Maintain international reserves at an adequate level while "preserving the nominal anchor currently provided by the exchange rate." - Revenue mobilization and PFM reforms: - Implement new tax code (postponed to October 2026). - Digitalization priorities: rollout of RMS, interconnect DGI and SYDONIA, e-filing and e-payment; SB8 proposed reset to end-March 2026. - High-impact short-term priorities (selected, Annex V): clearing tax arrears (★), risk assessment of large taxpayers (★), rollout of RMS (★), IT interconnection (★), digital customs clearance (★), publication of updated taxpayer registry (★). - Budget execution and investment management: - Adopt budgetary control guide, update expenditure execution manual, strengthen project appraisal/selection, publish multi-year fiscal goals, and develop a prioritized three-year public investment plan. - Limit unspecified budget allocations to 3-5 percent of spending. - Reinstate financial controller’s authority over public investment spending. - Social protection and contingency planning: - Expand SIMAST (currently covers 0.8 million households — 3.3 million individuals across 92 communes, about 30 percent of the population); plans to add 11 communes (~60,000 households). - Two-phased response for TPS expiration estimated to cost about 0.2 percent of GDP (8.3 billion gourdes) if fully implemented. - Emergency fund about 0.07 percent of GDP (3.1 billion gourdes); strengthen operational protocols and maintain CCRIF coverage. - Governance, safeguards, and BRH transparency: - Strengthen BRH internal controls, publish audited financial statements timely (FY2024 audit proposed SB14 end-June 2026). - Strengthen safeguards and bank-wide IT security (proposed SB13 end-June 2026). - Publish conversions of SDRs into freely usable currencies on BRH or MEF websites. - Financial sector oversight: - Continue risk-based supervision, integrate risk assessment grid into supervision software, strengthen on-site and off-site supervision, enhance AML/CFT (complete NRA, resource UCREF). ### Staff appraisal and program support - Program performance broadly satisfactory despite challenging conditions; all end-June QT/ITs met. - Staff supports authorities’ request for a nine-month SMP extension through September 19, 2026 to: - Advance revenue mobilization, governance, and AML/CFT framework. - Consolidate macroeconomic gains and complete key structural benchmarks. - IMF TA and partner coordination emphasized as instrumental under the IMF Strategy for Fragile and Conflict-Affected States. *Source: 1htiea2025003-source-pdf (IMF country report content supplied).* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context and security environment - Gang violence has intensified, undermining state authority and disrupting economic activity. - Murdered persons reported: "4,864 murders between October 2024 and June 2025." - Internally displaced persons: "More than 1.4 million people were internally displaced as of September 2025." - Humanitarian needs: "Half the population (5.7 million) faces hunger." - Political transition uncertainty: feasibility of holding general elections in 2026 remains uncertain; plans for a new constitution were abandoned in early October 2025; elections now expected under the 1987 constitution with a first round "scheduled for late August 2026, and the second round in early December 2026, if security conditions are adequate." - International security response: - United Nations authorization to deploy a new Gang Suppression Force (GSF) "for an initial period of 12 months and a force of up to 5,550 members," effective October 2. - Establishment of a United Nations Support Office for Haiti (UNSOH) to assist the GSF, BINUH, and Haitian Police and Armed Forces. - Complementary international initiatives include the OAS Haitian-led Roadmap for Stability and Peace and US designations of specific gangs as Foreign Terrorist Organizations and Specially Designated Global Terrorists. ### Recent economic developments and shocks - Real GDP and activity: - "Real GDP is estimated to have contracted by 3.1 percent in FY2025." - "Projected to contract by 1.2 percent in FY2026." - Index of economic activity contracted by "2.4 percent over the first three quarters of FY2025 (October to June)." - Inflation: "31.9 percent in FY2025." - External policy shifts and external inflows: - Expiration of the Temporary Protected Status (TPS) for Haitians in the United States. - Termination of textile and apparel trade preferences under HOPE/HELP. - Introduction of a "new cash remittance tax." - These shifts are "expected to reduce remittances and exports" and "reduce foreign inflows and increase external and fiscal pressures." - Hurricane impact: Hurricane Melissa in late October "caused significant loss of life and widespread damage to infrastructure and agricultural areas," exacerbating humanitarian needs and likely constraining resources further. - Deportations: "207,000 deportations of Haitians from the Dominican Republic since January 2025." - Ports and trade: - International flights remain suspended in Port-au-Prince; several ports face closures or restricted access. - Port of Saint-Louis du Sud opened in January 2025 may help reroute essential imports (e.g., rice and cement). - Satellite-based port data show average daily ship arrivals and import volumes have declined in recent months; total trade activity remains below pre-pandemic levels and export volumes remain particularly weak. ### Fiscal and budgetary developments - FY2025 second supplementary budget: - Adopted on September 23 with an overall spending envelope of "317.7 billion gourdes"—"1.8 percent lower than the April supplementary budget." - "About 3.8 billion gourdes were reallocated to social spending" including cash transfers to "approximately 200,000 parents," school infrastructure improvements, and school kits distribution. - Fiscal outcomes FY2025: - Fiscal position reported as balanced, reflecting "both low revenue collection and low spending execution." - Revenues (Indicative Target, IT) rose by "12.8 percent" despite a three-month strike at the Directorate of General Taxes (DGI). - Revenue-to-GDP ratio declined to "4.7 percent"—"0.6 percentage points below FY2024." ### Financial sector and banking - Bank credit and lending: - Bank credit estimated at "3.1 percent of GDP in FY2025," down from "3.8 percent of GDP in FY2024." - Credit-to-GDP gap reached "-11 percent in June 2025." - Asset quality and provisioning: - Nonperforming loans (NPLs) reached "14.2 percent in June 2025" (from "13.7 percent in March"). - Provisions to gross NPLs fell from "81.5 percent in December 2024 to 66.0 percent in June 2025." - Profitability and capitalization: - Return on assets at "1.5 percent as of June 2025." - Capital adequacy ratio at "22.3 percent," above the regulatory minimum of "12 percent," with variability across institutions. ### Program performance under the Staff‑Monitored Program (SMP) - Implementation progress: - "All end-June quantitative and indicative targets have been met." - "Monetary financing of the fiscal deficit has been maintained at zero." - "International reserves continue to accumulate." - Reform agenda advanced: "implementation of most structural benchmarks, despite delays in some areas." - Authorities remain strongly engaged through the high-level SMP Monitoring Committee. - Authorities’ request and staff recommendation: - Authorities requested a "nine-month extension of the Staff-Monitored Program." - Staff proposes the extension for Management’s approval to "support macroeconomic stability and preserve reform momentum, amid worsening security conditions and heightened political uncertainty." - Extension aims to allow completion of remaining structural benchmarks and advance governance/reform agenda through new structural benchmarks. - Staff supports adjustments to structural benchmarks "to reinforce revenue collection, and enhance safeguards, accountability, and transparency." ### Policy priorities and recommendations - Core priorities to maintain under the SMP: - Strengthen governance and anti-corruption efforts "in line with the Governance Diagnostic Report." - Safeguard adequate reserve coverage. - Improve public financial management—including "revenue mobilization and expenditure efficiency." - Expand targeted social assistance. - Macroeconomic stability safeguards: - Maintain monetary financing of the deficit at "zero." - Maintain international reserves at an adequate level while "preserving the nominal anchor currently provided by the exchange rate." - Continue domestic revenue mobilization efforts and governance reforms. - With the proposed SMP extension, staff proposes adjustments to structural benchmarks to: - Reinforce revenue collection. - Enhance safeguards, accountability, and transparency. ### Mission and report preparation - Policy discussions were conducted remotely "during September 30-October 8, 2025." - Approved by Dora Iakova (WHD) and Jay Peiris (SPR). *Source: EXECUTIVE SUMMARY, 1htiea2025003-source-pdf* ### 39.6 percent. However, the execution of spending ### Haiti: FY2025 Budget, External Position, and SMP Implementation ### Fiscal performance and budget execution - Supplementary budget execution reached 72.1 percent of the total supplementary budget, with capital execution at 37.5 percent, attributed to inadequate project appraisal and limited administrative capacity. - Expenditures amounted to 44.1 billion gourdes in September 2025, due to a temporary spike in cash payments and commitments during the final month of the FY. - The global envelope for FY2026 is 345.5 billion gourdes—a 8.8 percent increase compared to the second supplementary budget. - FY2026 budget projections: - Domestic revenues: 250.4 billion gourdes (4.7 percent of GDP). - Public expenditures: 328.5 billion gourdes (6.2 percent of GDP). - Capital expenditures: 115.0 billion gourdes (2.2 percent of GDP). - Overall fiscal balance (authorities’ projection): -0.3 percent of GDP in FY2026. - FY2025 outcomes and context: - Monetary financing (QT) remained at zero in FY2025, down from an average of 2 percent of GDP during FY2020-23. - Public debt is estimated at 11.7 percent of GDP at end-FY2025. ### Social spending and Food Shock Window (FSW) - Social spending (quantitative target, QT) rose 41.4 percent. - Of the USD 105 million (15.6 billion gourdes) received under the 2023 IMF Food Shock Window (FSW): - About 91 percent (14.1 billion gourdes) had been executed by September; - The remainder (about 1.45 billion gourdes) was carried over into the FY2026 budget. - Selected September 2025 executions: - 0.5 billion gourdes for the distribution of textbooks to students. - 0.3 billion gourdes for school infrastructure improvement. - Ministry of Social Affairs and Labor executed 3.4 billion gourdes to strengthen support for vulnerable groups, including cash transfers, food kits, hot meals, and water containers. ### External position, remittances, and reserves - Current account (CA) recorded a moderate surplus in FY2025, following a deficit of 0.6 percent of GDP in FY2024. - Net remittances increased by about 24 percent (October-August) relative to the same period in FY2024, supporting a recovery in imports from mid-2024 through mid-2025. - Text Table A (cumulative, October-June/July/August): - Exports (October-June): FY20-24 average 731; FY24 574; FY25 520; percent changes: 3.6, 2.3, 1.6; FY25 vs. FY20-24: -28.9; FY25 vs FY24: -9.4. - Imports (October-July): FY20-24 average 3,618; FY24 3,553; FY25 3,858; percent changes: 18.0, 14.1, 11.9; FY25 vs. FY20-24: 6.6; FY25 vs FY24: 8.6. - Net Remittances (October-August): FY20-24 average 2,859; FY24 3,065; FY25 3,786; percent changes: 14.3, 12.1, 11.7; FY25 vs. FY20-24: 32.4; FY25 vs FY24: 23.5. - Latest available monthly figures: - Exports (June): FY25 61 (FY25 vs FY24: -16.5; FY25 vs FY20-24: -25.8). - Imports (July): FY25 377 (FY25 vs FY24: -2.7; FY25 vs FY20-24: 2.2). - Net Remittances (August): FY25 346 (FY25 vs FY24: 20.5; FY25 vs FY20-24: 27.3). - International reserves and NIR: - The Bank of the Republic of Haiti (BRH) accumulated NIR (QT) of US$567 million by end-June—well above the QT target of US$100 million. - Gross international reserves exceeded US$3.1 billion (over 7 months of prospective imports) as of end-July. - Nominal exchange rate remained stable at around 130 gourdes per dollar throughout the FY. - The real exchange rate is estimated to have appreciated over 30 percent during FY2025. - Net International Reserves (2024 SMP definition, selected values in millions of US dollars): - Gross International Reserves: Mar 2024 2,425.3; Jun 2025 3,105.1; Jul 2025 3,120.4. - Reserve Related Liabilities: Mar 2024 488.4; Jun 2025 235.9; Jul 2025 235.2. - FX Denominated Liabilities to Residents: Mar 2024 1,296.6; Jun 2025 1,364.7; Jul 2025 1,362.4. - Net International Reserves (A - B - C - D): Mar 2024 622.5; Jun 2025 1,483.0; Jul 2025 1,484.4. ### Program implementation under the SMP and structural benchmarks - Quantitative and Indicative Targets (June): - BRH exceeded the end-June target for NIRs (QT). - All June QT/ITs on the NFPS primary balance, social spending, and central government fiscal revenue were met. - The June ceiling on net central bank credit to the public sector (QT) was met, keeping monetary financing at zero. - Authorities confirmed no domestic or external arrears had been accumulated and no plans to contract non-concessional loans (QT). - Structural benchmark (SB) progress: - Six of eleven SBs met; two additional SBs (SB4 and SB9) delivered albeit with some delay. - SB1: Governance Diagnostic Report published in February 2025 (met). - SB2: Procurement contracts published on CNMP and MEF websites—publication experienced some delays (continuous SB, not met). - SB3: FSW monthly execution reports regularly published on MEF and DGB websites (met). - SB4: Quarterly internal expenditure audits generally provided on time; end-September audit delayed by two weeks (continuous SB, not met but implemented with delay). - SB5: CSCCA financial and operational compliance audit of FSW spending for FY2022-23 published; March 2025 target missed for FY2023-24 (end-March target, not met). - SB6: Quarterly reports on FAES published on MEF’s website (continuous SB, met). - SB7: Administrative and technical cooperation protocol between DGI and AGD for IT interconnection signed and published in June (met). - SB8: Digitalization of tax declaration and payments through all commercial banks for large taxpayers not completed due to technical challenges (end-September 2025 target, not met; proposed reset to end-March 2026). - SB9: BRH audit report and audited financial statements for FY2023 completed and published but delayed (end-August 2025 target, not met but implemented with delay). - SB10: BRH Board approved new reserve management framework and strategic asset allocation (end September 2025 target, met). - SB11: BRH consistently provided full balance sheet to IMF staff on time using standardized reporting form (continuous SB, met). ### Outlook and risks - Growth and inflation projections: - Real GDP projected to decline by 1.2 percent in FY2026—down from the 1.0 percent increase expected in the 1st Review. - Conditional on steady security improvements, real GDP expected to grow by 0.5 percent in FY2027 and to gradually converge to 1.5 percent over the medium term. - Inflation projected to reach single digits by FY2029 as supply shocks ease, provided macroeconomic policies remain sound and credible. - Fiscal projections: - Domestic revenue (excluding grants) expected to reach 4.7 percent of GDP in FY2026 and to gradually rise to 6.0 percent by FY2030. - Total expenditure projected to increase from 5.5 percent to 7.6 percent of GDP over the same period. - Deficit expected to widen from 0.2 percent of GDP in FY2026 to 1.5 percent in FY2030. - Public debt projected to remain at about 11 percent of GDP over the medium term. - External sector outlook: - Staff assesses Haiti’s external position in FY2024 as broadly in line with fundamentals; CA gap estimated at -0.9 percent of GDP. - Over the medium term, CA projected to stabilize at around -2.0 percent of GDP. - Remittances projected to decline by about 3 percent of GDP in FY2026—down from 12.8 percent of GDP in FY2025—due to the termination of the TPS program in February 2026 and introduction of a one-percent tax on certain types of cash remittances. - Remittances projected to fall to 7 percent of GDP over FY2027-30. - International reserve coverage expected to remain adequate at about 8 months of prospective imports by 2030. - Risk scenarios: - Downside risks include a rise in gang-related disruptions, escalation of violence and social unrest, tightening of US trade and migration policies, reduced external financing, and political instability. - A materialized external shock scenario could increase the current account deficit by 1.4 percentage points and lower real GDP growth by 0.9 percentage points in FY2026 relative to the baseline, generating additional external financing needs of about $568 million, equivalent to 1.4 percent of GDP—38 percent of NIRs. - Specific shocks and impacts: - Preliminary staff estimates as of end-October suggest Hurricane Melissa could potentially reduce real GDP growth in FY2026 by around 0.2 to 0.4 percentage points. - Non-renewal of the HOPE/HELP act (expired September 2025) will remove preferential trade access for Haitian textile and apparel exports to the U.S.; Haiti’s textile and apparel exports to the U.S. account for about 77 percent of total goods exports and generate over 27,000 formal jobs. - Preliminary assessments indicate the fiscal response to Hurricane Melissa could further heighten liquidity risks; the 1.45 billion gourdes carried over from the 2023 IMF FSW could be used to address food insecurity in the aftermath. ### Policy discussions and priorities - Fiscal policy priorities: - Strengthen domestic revenue mobilization and improve execution and quality of spending, focusing on high-quality investment (schools, health, infrastructure) that supports employment and growth. - Maintain zero monetary financing of the deficit. - Improve budget execution, particularly in sectors critical for recovery and social development. - Revenue mobilization measures and reforms: - New tax code implementation postponed to October 2026 to complete administrative and legal tasks and ensure private-sector engagement. - High-impact measures underway to boost revenue collection, particularly through digitalization of tax and customs administration. - Planned measures include: - Digitalization of tax declarations and payments through commercial banks for all large taxpayers (SB8—proposed reset to end-March 2026). - Interconnection of the Tax Administration System and customs automation system (SB12; TA). - Operationalization of the AGD reform to strengthen governance and integrity, focusing on human capital, revenue mobilization and controls, technology upgrades, border security, and stakeholder engagement. *Sources: Ministry of Economy and Finance (MEF) and IMF staff estimates.* ### 20. Staff welcomes the authorities’ plan to implement budget execution reforms aimed at ### 20. Staff welcomes the authorities’ plan to implement budget execution reforms aimed at ### Budget execution reforms: findings and planned measures - Budget execution is complex—procurement, cash management, internal controls, compliance, and administrative procedures—and requires strong institutional capacity and robust governance frameworks as captured by the SMP’s SBs (e.g., SB 2 to 6). - Staff commends authorities’ efforts to: - curb large end-of-year transfers to ministries; - expand the use of executing agencies to accelerate capital spending; - streamline procurement procedures in the security and defense sectors; - strengthen treasury cash management and advance integration into the Treasury Single Account (TSA) through closure of provincial accounts and piloting donor-financed project accounts. - Expected impacts: enhanced treasury operations, reduced fragmentation, improved fiscal transparency. - TA support is noted for these measures. ### Remaining challenges and required actions on execution - Further efforts needed to consolidate progress and address remaining budget execution challenges, including: - ensuring timely and well-targeted social and security spending to reach vulnerable groups and support essential security activities; - enhancing investment practices by prioritizing completion of ongoing projects and ensuring rigorous appraisal before inclusion in the budget (as recommended by the 2022 Public Investment Management Assessment (PIMA)). - Follow-up PIMA TA mission will focus on project appraisal, selection, and multiyear investment planning (¶22). - Ensure public-private partnerships (PPPs) comply with transparent and competitive procurement procedures. ### Medium-term fiscal framework and investment planning - Anchoring fiscal policy in a medium-term framework will: - enhance resource allocation and planning; - reinforce fiscal discipline, transparency, and accountability; - improve spending quality and calibrate the pace for development spending. - Required steps include: - adopting a budgetary control guide; - updating the expenditure execution manual; - refining investment planning tools; - strengthening medium-term fiscal planning and investment management by refining the fiscal framework, publishing multi-year fiscal goals, and developing a prioritized three-year public investment plan supported by stronger project appraisal and selection tools. - Authorities agreed on reform importance but noted challenges from security conditions, capacity constraints, and procurement delays. ### Social assistance: scale, execution, and targeting - Social spending reached 1.2 percent of GDP (52.0 billion gourdes) in FY2025—a 41.4 percent increase from FY2024. - About 9.3 percent of the total FSW funds (1.45 billion gourdes) remain unexecuted due to administrative bottlenecks and security constraints; these resources are included in the FY2026 budget. - The CSCCA has published the audit for FY2022–23 but not yet for FY2023–24 (SB5, end March 2025); the FY2024–25 audit is proposed to be conducted by end March 2026 (proposed new SB, ¶39). - IMF disbursement under the FSW: SDR 81.9 million (about USD 105 million) in 2023. - Targeting gaps and technical constraints: - SIMAST database covers 0.8 million households—3.3 million individuals across 92 communes, about 30 percent of the population—insufficient versus 5.7 million Haitians living in poverty. - Constraints: security conditions, unstable internet connectivity, reliance on two telecom providers (Digicel, Natcom), limited digital and mobile coverage in rural areas, insufficient IT equipment and local maintenance, non-interoperable systems, and weak civil registration and identification systems. - FY2026 plans: - expand SIMAST to 11 additional communes, covering around 60,000 new households; - introduce community-based targeting in areas where door-to-door surveys are not feasible; - review vulnerability assessment methodology and identify alternative data collection techniques in collaboration with development partners. - Authorities note administrative capacity constraints and security-related restrictions will make FY2026 targets difficult to achieve. ### Food Shock Window spending priorities (Table 1 summary, amounts in millions of gourdes) - Total original allocation: 15,600 - Spent (FY2023): 3,089 - Spent (FY2024): 6,782 - Spending up to August 2025 (FY2025): 1,668 - Selected line items (Original allocation / Spent FY2023 / Spent FY2024 / FY2025 up to August): - Reactivation of community restaurants and mobile canteens: 2,000 / - / 115 / 713 - Distribution of food to vulnerable households (paniers de solidarité): 500 / 1,134 / 310 / 373 - Cash transfer to vulnerable households: 2,500 / - / 588 / - - Cash to workers in subcontracting industries: 1,500 / 1,113 / 614 / - - Ministry of National Education and Vocational Training (Support to parents): 7,500 / 442 / 5,155 / - - Support plan for internally displaced persons: - / - / - / 345 - Strengthening MAST reception centers: - / - / - / 16 - Support for Micro, Small and Medium sized enterprises: - / - / - / 47 - Ministry of Women's Affairs and Women's Rights (Feeding Women in Detention): - / - / - / 50 - Ministry of Public Works (Implementation of High Labor Intensity Works - HIMO): - / - / - / 124 - Source: Ministry of Economy and Finance. Notes: 1/ Allocated under the FY23 budget. 2/ Spending up to August 2025. ### Fiscal risks and contingency planning - Market-based fuel pricing: - Establishing a market-based retail fuel pricing system that adjusts and smooths retail prices in response to changes in international oil prices and the exchange rate is planned to mitigate fiscal risks. - Reform objectives: protect the budget, strengthen public financial management, promote efficient fuel use, and support medium-term fiscal sustainability (TA). - Staff emphasize need for clear communication and establishment of a regulatory framework for the petroleum-products sector and strengthening related regulatory institutions. - Deportations and TPS expiration risks: - Authorities prepared a two-phased response for TPS expiration in February 2026: emergency phase (February-April 2026) and stabilization and reintegration phase (May-July 2026). - Staff estimates the plan would cost about 0.2 percent of GDP (8.3 billion gourdes) if fully implemented. - National Office for Migration to lead implementation; financing to draw on the emergency fund (Fonds d’Urgence) and a digital registration and tracking system for returnees is being prepared. - Disaster contingency: - Emergency fund about 0.07 percent of GDP (3.1 billion gourdes) with limited operational effectiveness due to weak allocation, monitoring, and execution protocols. - Haiti relies on multilateral support: World Bank’s Contingency Emergency Response Component (CERC) and catastrophe risk insurance via CCRIF. - Authorities committed to maintaining CCRIF coverage and exploring options to secure timely and sustainable premium payments, building on past partner support such as the Caribbean Development Bank. ### Enhancing governance and transparency - Governance and anti-corruption reforms are essential to reduce leakages, improve external assistance impact, enhance revenue mobilization, and build institutional foundations for sound fiscal management. - Recent steps and recommendations: - Initiation of operationalization of the anti-corruption task force; - Enhanced coordination among oversight institutions; - Advancement of a comprehensive long-term anti-corruption strategy. - GDR priority recommendations to adopt: - reinforce transparency and accountability in public financial management; - reduce corruption risks in revenue administration; - ensure accountability for serious corruption, organized crime, and money laundering. - GDR recommends establishing an Anti-Corruption Pole to enable prosecution of high-level corruption, money-laundering, and organized crime (stronger than current task force). ### Strengthening public financial management (recommended measures) - Limit unspecified budget allocations to 3-5 percent of spending. - Reinstate the financial controller’s authority over public investment spending. - Adopt and implement a revised expenditure execution manual. - Revise the procurement law to streamline controls and enhance competitiveness and transparency. - Strengthen internal and external audits, including annual public reporting by the Inspectorate General of Finance and the CSCCA. - Improve accounting and fiscal reporting by revising the accounting decree and integrating off-budget accounts into the TSA. ### Governance of foreign reserves and SDR use - BRH actions: - Aligning governance, foreign reserves management, and investment policy with international practices. - Board approved revised investment framework: new strategic asset allocation, updated investment policy and guidelines, and a high-level transition plan to improve portfolio composition. - Fund TA supported liquidity profile assessment and transition to a sound asset allocation framework and governance structure. - Staff recommendations: - Strengthen guidelines and formalize necessary internal controls (delegation protocols, escalation procedures, committee charters). - Continue implementing measures to enhance safeguards (new SB, ¶39), including recommendations from the 2024 safeguards monitoring mission. - SDRs: - A portion of the SDR allocation was converted into US dollars to service external obligations; SDR holdings have been used to meet IMF obligations. - Transfers from the BRH to the government are made in gourde equivalent and governed by a memorandum of understanding for retrocession agreement. - Authorities committed to transparent and accountable use of SDRs; staff recommended minimizing gaps between SDR holdings and allocations and publishing conversions of SDRs into freely usable currencies on BRH or MEF websites. ### Monetary and exchange rate policy framework - Monetary financing: - BRH policy credibility improved with elimination of monetary financing for a second consecutive year; this has helped contain inflation. - Price pressures remain elevated, driven by security conditions and supply-side constraints. - Real exchange rate and interest/credit environment: - Real exchange rate continues to appreciate given stable nominal exchange rate. - Despite a negative real interest rate (-11 percent in FY2025 on average), credit growth remains subdued. - Authorities committed to maintaining the zero ceiling on credit to the NFPS to preserve macroeconomic stability. - FX intervention: - FX intervention is warranted for reserve accumulation and to preserve exchange rate stability, provided reserve adequacy is maintained. - FX interventions must be consistent with Haiti’s obligations under the IMF’s Article VIII on multiple currency practices (MCPs). - Authorities reported no changes in the foreign exchange system since the 1st Review that would give rise to new MCPs or exchange restrictions on payments and transfers for international transactions. ### Financial sector stability and supervision - Banking sector vulnerabilities: - High gross NPL ratios reflect deteriorating credit quality (¶6). - Capital adequacy ratios (CAR) remain above the 12 percent regulatory minimum but are uneven across institutions. - Some banks may need to strengthen buffers if substandard loans deteriorate further. - Citigroup’s exit (announced July 2024 and now complete, pending surrender of its license to the BRH) reduces international banking presence; it accounted for 2 percent of banking sector assets as of June 2024. - Regulatory and supervisory reforms: - BRH adopted and published revised regulations on credit risk concentration and plans to publish the final version on credit risk classification and provisioning by end-November 2025, following an internal review. - Advanced risk-based supervision by testing new risk assessment grids and rating matrices on three banks, with two more underway. - In collaboration with Fund staff, BRH is assessing banks’ risk profiles. - Importance of continuing and expanding off-site supervision and the annual on-site inspection program emphasized. - Risk assessment grid framework should be integrated into the BRH Banking Supervision Software. - Authorities concurred on the importance of strengthening BRH’s bank-wide IT security (proposed new SB, ¶39). - AML/CFT: - Board of UCREF expected to be appointed by February 2026 to enable full implementation of the 2023 decree aligning UCREF’s governance with international financial compliance standards. - Finalizing the National Risk Assessment (NRA) expected by December 2025 is critical to understanding ML/TF risks, including laundering of proceeds of serious crimes and cross-border illicit financial flows. - Authorities intend to assign supervisory responsibility for DNFBPs to UCREF; staff emphasized UCREF must be adequately resourced. *Italic: Source—content unit: 1htiea2025003-source-pdf - 20. Staff welcomes the authorities’ plan to implement budget execution reforms aimed at* ### 37. The reliability and transparency of BRH’s data hinges, in part, on the timely and regular ### The reliability and transparency of BRH’s data hinges, in part, on the timely and regular publication of its annual audited financial statements ### Audits, data reliability, and internal controls - FY2023 audit finalized and published (SB9, end-August); required reconstituting and validating data lost during the 2023 cyber incident. - Staff encourages authorities to promptly remedy the auditor’s qualified opinion on certain balances ahead of the FY2024 audit. - Staff recommends continuously strengthening internal controls to prevent similar reservations for subsequent audits. - Authorities committed to initiating the FY2024 audit report without further delay and to publication by mid-2026 (proposed new SB, ¶39). - Banks: The banking system will now be composed of 7 banks (2 public and 5 private). The two largest private banks hold over 60 percent of the banking system’s assets. ### Monetary, financial, and external sector statistics - Authorities report monetary and financial statistics (MFS) monthly to IMF staff through standardized report forms. - Data provision has improved, supported by ongoing TA, but challenges remain. - Authorities committed to maintaining timeliness of MFS data provision and strengthening compilation of external sector statistics in line with TA recommendations. - Recent TA on International Reserves and Foreign Currency Liquidity (IRFCL) was proactively incorporated into the MFS; authorities concurred on urgency of compiling and reporting IRFCL data to the IMF. - Staff encourages alignment of financial soundness indicator (FSI) reporting with international standards. - Authorities committed to improving government accounts statistics by integrating extra-budgetary units with central government accounts, with support from IMF TA. - BRH continues to deliver its full balance sheet to IMF staff in standardized format and is working to further improve reporting of monetary statistics and the IRFCL template. ### SMP extension, structural benchmarks (SBs), and program monitoring - Staff supports the authorities’ request for a nine-month extension of the SMP through September 19, 2026. - Rationale: support macroeconomic stability, preserve reform momentum amid worsening security conditions and heightened political uncertainty, facilitate full structural reform agenda, and assess impact of international initiatives (including the GSF and the OAS Haitian Led Roadmap for Recovery and Peace). - Extension implications: - Maintains current trajectories for the quantitative targets (Table 1b). - Modifies and reschedules some SBs (Table 2a). - Introduces three new SBs to consolidate progress on key SMP objectives (Table 2b). - Specific SB changes and additions: - Modify SB5: publish the FSW expenditure audit report for FY2025 by end March 2026. - Reschedule SB8: launch and implementation of digital tax declarations and payments rescheduled to end March 2026. - Introduce SB12 (end March 2026): interconnect the Tax Administration System and SYDONIA; DGI and AGD to issue a joint communiqué committing to publish an aggregate analysis of results on the MEF website; supported with TA. - Introduce SB13 (end June 2026): adopt a framework and governance structure to strengthen BRH’s bank-wide IT security and business continuity arrangements. - Introduce SB14 (end June 2026): publish the BRH’s external audit report and audited financial statements for FY2024. - Review schedule: - Third review will assess SBs 2 to 6, SB8, SBs11 to 12 (Tables 2a, 2b, and 2c), and end-December 2025 QTs, and will be completed by end April 2026. - End-June 2026 QTs and SBs will be assessed during the fourth review, to be completed before the program end date (September 19, 2026). - Program monitoring: authorities remain actively engaged with IMF staff through the bi-weekly high-level Program Monitoring Committee. ### Macroeconomic outlook, risks, and recent shocks - Real GDP estimated to have contracted amid high inflation. - External and policy shocks: - Expiration of the TPS for Haitians in the US in February 2026. - Non-renewal of the HOPE/HELP preferential trade agreement which ended in September 2025. - These developments will weigh on the Haitian economy, which is expected to contract in FY2026. - Risks to the outlook are tilted to the downside due to escalating gang violence and social unrest, political instability, reduced external financing, and further tightening of US trade and immigration policies. - Potential upside: the newly created multinational GSF could mark a turning point toward restoring security and enabling a sustainable recovery. ### Program implementation outcomes and fiscal stance - Program implementation broadly satisfactory despite challenging conditions. - All QT/IT targets for the end-June test date have been met: - Monetary financing of the fiscal deficit was kept at zero. - Social spending reached program’s targets. - Revenue performance stayed on track. - Reserve accumulation exceeded expectations. - Reform progress: 6 out of the 11 SBs met: - Publication of the GDR (SB1). - Publication of monthly reports of FSW execution (SB3). - Publication of quarterly FAES operations reports (SB6). - A protocol between the DGI and the AGD for the interconnection of their IT systems (SB7). - Approval of a new BRH investment strategy (SB10). - Monthly provision of the BRH’s full balance sheet to the IMF (SB11). - Two additional SBs were completed with delay: - Publication of the BRH audit (SB9). - Reporting quarterly FSW internal audits across all ministries to the CSCCA (SB4). ### Revenue mobilization, spending efficiency, and public financial management - FY2025 nominal revenue performance improved, yet it declined as percentage of GDP. - Authorities reallocated resources toward security and social priorities; budget execution remained weak, particularly for capital expenditure, due to security constraints and administrative bottlenecks. - FY2026 budget anchored in SMP core priorities: fiscal discipline, enhanced revenue mobilization, and protection of key social and investment spending. - Staff recommendations and observations: - Strengthen domestic revenue mobilization with targeted measures (e.g., enhancing risk-based audits for large taxpayers and digitalizing tax filing and payment systems). - Swift implementation of the new tax code, improved coordination between tax and customs agencies, and expansion of the taxpayer base. - Improve budget transparency and align investment practices with international standards. - Strengthen cash and procurement management, advance TSA integration, and align public investment practices with PIMA recommendations (supported by TA). - PPPs should follow transparent and competitive procurement processes to safeguard fiscal integrity and contain risks. ### Contingency planning, social protection, and disaster preparedness - Staff welcomes authorities’ efforts to strengthen contingency planning given multiple fiscal risks. - Recommendations: - Continued gradual implementation of fuel price reforms, accompanied by clear communication and targeted support for vulnerable groups. - Timely adoption of a response plan to address humanitarian needs arising from arrivals of Haitian nationals living abroad. - Insurance and contingency instruments: - Continued access to the Caribbean Catastrophe Risk Insurance Facility (CCRIF). - Continued access to the World Bank’s Contingency Emergency Response Component (CERC). ### Exchange rate, reserves, and monetary policy stance - Exchange rate stability has served as a nominal anchor amid heightened uncertainty and supply-chain disruptions linked to gang-related violence. - Guidance: - Foreign exchange interventions should focus on preserving exchange rate stability, conditional on maintaining an adequate level of international reserves. - Continued commitment to zero monetary financing and gradual normalization of security conditions are key for containing inflationary pressures. ### Financial sector oversight and AML/CFT - BRH progress in supervisory reforms: - Adoption of a new chart of accounts. - Enhanced risk-based supervision. - Improved regulatory oversight for microfinance institutions. - Staff encourages BRH to conduct regular bank risk assessments to assess resilience to security and economic conditions and potential shocks. - AML/CFT framework: - Remaining gaps should be addressed; completion of the NRA for money laundering and terrorist financing is critical. - Assigning supervisory responsibility for DNFBPs to UCREF will require ensuring UCREF is provided with appropriate resources. ### Governance, anti-corruption, and restoring trust - Authorities have taken steps to advance governance reforms, though further efforts needed to effectively combat corruption. - Potential role of anti-corruption task force: once fully operational, could serve as a platform for driving structural reforms enabling the establishment of an Anti-Corruption Pole, in line with GDR recommendations. - Reforms may include strengthening the judiciary by enhancing capacity to investigate and prosecute corruption and organized crime. - Restoring trust is essential to mobilizing development financing, including increased donor support and sustained foreign direct investment inflows. ### Staff appraisal and support - The objectives of the SMP remain achievable but deteriorating domestic and external conditions could make sustaining progress difficult. - Staff will continue to support the authorities in maintaining macroeconomic stability, strengthening governance, and establishing a track record that could pave the way for financial assistance under the upper credit tranche (UCT). - Staff supports the authorities’ request for a nine-month extension of the SMP to advance revenue mobilization, governance, and the AML/CFT framework, consolidate macroeconomic gains, finalize key reform measures to increase accountability and strengthen governance, and advance reforms to boost domestic mobilization and enhance safeguards. - IMF TA and coordination with Haiti’s development partners, in line with the IMF Strategy for Fragile and Conflict-Affected States, continue to be instrumental in supporting the SMP and advancing reforms. *Source: IMF country report content (Haiti) — canonical source: https://www.imf.org/-/media/files/publications/cr/2025/english/1htiea2025003-source-pdf.pdf* ### 53. Staff supports the completion of the second review and commends the authorities’ ### 1htiea2025003-source-pdf - 53. Staff supports the completion of the second review and commends the authorities’ ### Staff assessment and program milestones - Staff supports the completion of the second review and commends the authorities’ commitment to strengthening macroeconomic stability and institutional building amid very difficult circumstances. - Risks to implementation: - Haiti’s fragile security environment. - Political risks. - Institutional capacity constraints. - Vulnerability to external shocks affecting remittances, trade, and official aid. - Mitigation needs: - Continued political commitment. - Enhanced coordination across government agencies. - Timely support from development partners to mitigate risks and safeguard program objectives. - Review schedule: - Third review will be completed by end-April 2026. - Fourth review will be completed by September 19, 2026 (program end-date). ### Program performance and quantitative targets (selected indicators) - Net international reserves (NIR) of the central bank (in millions of U.S. dollars)—floor: - Adjusted target end-December 2024: 60; Actual: 60 — Met. - Adjusted target end-March 2025: 80; Actual: 379 — Met. - Target end-June 2025: 100; Adjusted target: 98; Actual: 567 — Met. - Primary balance of the nonfinancial public sector (NFPS, in millions of gourdes)—floor: - Adjusted target end-December 2024: -239; Actual: 7,625 — Met. - Adjusted target end-March 2025: -479; Actual: 21,560 — Met. - Adjusted target end-June 2025: -718; Adjusted Actual: -1,037; Actual: 20,654 — Met. - Net central bank credit to the nonfinancial public sector (in millions of gourdes)—ceiling: - Adjusted target end-December 2024: 239,850; Adjusted target end-December 2024: 0; Actual: 3,000; Adjusted Actual: -5,901; Status: Met. - Adjusted target end-March 2025: 0; Actual: 9,266; Adjusted Actual: -465 — Met. - Adjusted target end-June 2025: 0; Actual: 9,508; Adjusted Actual: 4,073 — Met. - Budget allocations for social expenditure (in millions of gourdes)—floor: - Adjusted target end-December 2024: 11,000; Actual: 11,884 — Met. - Adjusted target end-March 2025: 19,810; Actual: 20,687 — Met. - Adjusted target end-June 2025: 29,714; Actual: 34,081 — Met. - Continuous quantitative targets (selected): accumulation of domestic arrears by the central government — ceiling: 0; Status across monitoring dates: Met. - Indicative target: Central government fiscal revenue, excluding grants (in millions of gourdes)—floor: - Adjusted floor end-December 2024: 40,000; Actual: 48,003 — Met. - Adjusted floor end-March 2025: 90,000; Actual: 97,792 — Met. - Adjusted floor end-June 2025: 140,000; Actual: 143,723 — Met. - Memorandum items (selected): - Gross international reserves (in millions of U.S. dollars): reported values across monitoring dates include 2,522; 2,719; 2,924; 3,105. - Gross international reserves (in months of imports of goods and services of the following fiscal year): 6.3; 6.9; 6.8; 7.3. ### Proposed targets through June 2026 (selected) - Net international reserves (NIR) of the central bank (in millions of U.S. dollars)—floor: - end-December 2025: 140 - end-March 2026: 160 - end-June 2026: 180 - Primary balance of the NFPS (in millions of gourdes)—floor: - end-December 2025: -470 - end-March 2026: -939 - end-June 2026: -1,409 - Budget allocations for social expenditure (in millions of gourdes)—floor: - end-December 2025: 12,625 - end-March 2026: 25,250 - end-June 2026: 37,875 - Indicative target: Central government fiscal revenue, excluding grants (in millions of gourdes)—floor: - end-December 2025: 50,000 - end-March 2026: 100,000 - end-June 2026: 163,800 ### Structural benchmarks (selected, under the 2024 SMP) - Governance, Public Financial Management (selected measures and status): - Publish MEF report on the Governance Diagnostic Assessment and associated action plan: Target date End February 2025 — Met. - Publish all new public procurement contracts (CNMP and MEF websites) with beneficial ownership info monthly starting from December 2024: Monthly starting from December 2024 — Not met. - Publish monthly reports on execution of fiscal expenditure through Haiti Food Shock Window account (MEF and DGB websites) starting from December 2024: Monthly starting from December 2024 — Met. - Conduct quarterly internal expenditure audits of ministries using Haiti Food Shock Window account and report to CSCCA quarterly starting end-December 2024: Quarterly starting from end December 2024 — Not met (implemented with delay). - CSCCA financial and operational compliance audit of all expenditure related to the Rapid Credit Facility Food Shock Window for fiscal years 2022-23, 2023-24 and 2024-25 and publish the audit report: Target date End March 2025 (Proposed to be modified. New target date March 2026) — Not met. - Publish quarterly reports on FAES operations and financial status on the MEF website starting end-December 2024: Quarterly starting from end December 2024 — Met. - Sign and publish administrative and technical cooperation protocol between DGI and AGD for IT interconnection: Target date End June 2025 — Met. - Launch digitalization of tax declarations and payments through commercial banks for large taxpayers: Target date End September 2025 (Proposed to be rescheduled for end March 2026) — Not met. - Governance and safeguards (selected): - Publish on BRH website the BRH audit report and audited financial statements for FY2023: Target date End August 2025 — Not met (implemented with delay). - Approval by BRH Board of: medium-term plan for investment portfolio composition; new strategic asset allocation; updated investment policy; updated investment guidelines: Target date End September 2025 — Met. - Governance, data provision, transparency: - Provide IMF staff full BRH balance sheet according to SRF-1SR (including detailed government deposit accounts) with two-month lag from reference period, starting from end-December 2024 (to be provided by end-February 2025): Monthly periodicity and two-month lag, starting to be provided to IMF staff by end February 2025 — Met. - Proposed additional structural benchmarks with extension (selected): - Interconnect Tax Administration System and SYDONIA and publish commitments/analysis by end March 2026 — Target date End March 2026. - Adoption by BRH of framework to strengthen bank-wide IT security and business continuity arrangements — Target date End June 2026. - Publish BRH audit report and audited financial statements for FY2024 on BRH website — Target date End June 2026. ### Key macroeconomic facts and selected projections - Headline indicators: - Nominal GDP (2025, est.): US$32.3 billion - GDP per capita (2025): US$2,936 - Population (2025, est.): 11.9 million - Percent of population below poverty line (2021): 52.3 - Selected real sector and price dynamics (FY observations and projections as presented): - GDP at constant prices: FY2025: 0.5 - Consumer prices (period average): FY2025: 19.7 - Consumer prices (end-of-period): FY2025: 18.6 - External sector (selected percent changes and projections): - Exports (goods, valued in U.S. dollars, f.o.b.) FY2025: 10.0 - Imports (goods, valued in U.S. dollars, f.o.b.) FY2025: 11.0 - Remittances (valued in U.S. dollars) FY2025: 5.0 - Money and credit (valued in gourdes; selected): - Credit to private sector FY2025: 15.9 - Base money FY2025: 11.8 - Broad money FY2025: 12.7 - Public finances (selected percent of GDP): - Domestic revenue FY2025: 4.9 - Grants FY2025: 1.1 - Expenditures FY2025: 6.1 - Primary Balance of the nonfinancial public sector FY2025: 0.0 - External public debt (medium and long-term, eop) FY2025: 1.4 (percent of GDP) - Reserves and external metrics (selected): - Net international reserves (memorandum) FY2025: 1,225 (in millions of U.S. dollars) - Gross international reserves FY2025: 2,651 (in millions of U.S. dollars) - Gross international reserves (in months of imports of the following year) FY2025: 5.7 ### Fiscal operations and public sector balances (selected aggregates) - Non-Financial Public Sector Operations (FY figures, in millions of gourdes): - Total Revenue and Grants FY2024: 407,371 - Domestic revenue FY2024: 176,461 - Grants FY2024: 230,910 - Total Expenditure FY2024: 175,138 - Capital expenditure FY2024: 42,339 - Central government balance incl. grants FY2024: 232,233 - Central government balance excluding grants and externally financed projects FY2024: 26,394 - FY2025 program and projections (selected): - Total Revenue and Grants FY2025 (Prog.): 259,314 - Domestic revenue FY2025 (Prog.): 210,413 - Total Expenditure FY2025 (Prog.): 261,969 - Capital expenditure FY2025 (Prog.): 83,323 - Central government balance incl. grants FY2025 (Prog.): -2,655 - Primary Balance of NFPS, incl. grants and other transfers to EDH FY2025 (Prog.): -958 ### Financing, external flows, and balance of payments (selected) - Balance of Payments (FY, in millions of U.S. dollars; selected): - Current account FY2024: -145 - Secondary income (net) FY2024: 3,771 - Net remittances (personal transfers, net) FY2024: 3,341 - Financial account FY2024: 2,482 - Reserve assets change FY2024: 172 - External financing requirements and sources (selected): - FY2024 Requirements: 2,837 (in millions of U.S. dollars) - FY2024 Sources: Official current transfers FY2024: 190; Official capital transfers FY2024: 1,854; Debt forgiveness FY2024: 1,805; Special drawing rights FY2021: 223 (reported in sources table context). - Adverse scenario assumptions for FY2026: (a) 10 percent drop in exports, (b) 10 percent drop in net personal transfers, and (c) 50 percent drop in project grants. ### Banking sector and financial stability (selected) - Banking system summary (selected levels, in millions of gourdes): - Net Foreign Assets FY2024: 265,436 - Net Domestic Assets FY2024: -8,558 - Base Money FY2024: 256,878 - Broad Money FY2024: 667,363 - Credit to the private sector FY2024: 133,484 - Indicators and trends noted: - Private sector credit contracted significantly since late 2022 due to security deterioration. - FX deposits have remained broadly stable; loan dollarization has shown gradual increase. - Structural liquidity in the banking system is rising. *Source: IMF staff report content as presented in the supplied PDF chapter/section.* ### Annex I. Spillover Impact to Haiti from External Policy Shifts ### Annex I. Spillover Impact to Haiti from External Policy Shifts ### Overview - The US accounts for 85 percent of Haiti’s exports and over 2.2 billion in annual remittances since 2020. - Staff estimates that US policy changes—including (i) tighter immigration measures (suspension of TPS), (ii) the one percent tax on cash remittances, and (iii) the expiration of HOPE-HELP trade preferences—could reduce foreign inflows to Haiti by up to USD 106 million in FY2026 (about 3 percent of projected gross international reserves). - This impact may be compounded by cuts in US foreign aid. ### Deportations - Baseline scenario: continuous decline in remittances of about USD 6 million per year (0.4 percent of current net international reserves) starting in FY2026, due to external policy shifts. - Assumptions: - An additional 3,000 Haitian nationals currently residing in the US would return to Haiti every year. - Each removal is expected to lead to an annual loss in remittances of USD 2,000 per person. - Additional contextual figures: - Between 500,000 to 700,000 Haitians currently live in the Dominican Republic; remittances from the Dominican Republic represent less than 3 percent of total remittances to Haiti. - Deportations from the Dominican Republic reached 207,000 over 2025 resulting in an estimated loss of about one percent of total remittances to Haiti and a humanitarian fiscal cost of about 0.13 percent of GDP. - Note: Although average per capita remittances to Haiti from the US are about USD 2,700 per year, survey-based studies suggest the average may be skewed by a small number of high-income earners, who may be less likely to face removal. ### Cash Remittance Tax - The new US one percent tax on cash remittances, introduced in July, could reduce formal inflows to Haiti by up to USD 40 million in FY2026 (1.3 percent of gross international reserves). - The tax applies to transfers via cash, money orders, and cashier’s checks. - Caveat: These estimates may be an upper bound, as some flows may shift to informal or non-cash channels. - About 10 percent of remittances currently sent through commercial banks would remain unaffected. ### Combined Remittances and Reserves Impact - Combined remittances losses from US immigration and tax policies could undermine Haiti’s international reserves accumulation. - While net international reserves (NIR) targets have been comfortably met, a sharp drop in remittances could: - create an urgent and immediate balance of payments need, either by reducing private consumption or compromising reserves; - require additional fiscal spending to provide appropriate safety nets if deportations are sustained, further straining macroeconomic stability. ### HOPE/HELP Acts Expiration - The HOPE and HELP Acts, and the Earned Import Allowance Program, provided preferential tariff arrangements including duty-free access for eligible Haitian textile and apparel exports. - These initiatives were not extended by US Congress in September 2025; Haiti lost preferential access to the US market for its textile and apparel sectors in September. - Trade exposure: - The US accounts for about 85 percent of Haiti’s exports, nearly 90 percent of which are textiles and apparel. - Staff estimate under assumptions of a 13 percentage points tariff increase and a unitary import demand elasticity for textiles: - A permanent USD 66 million export loss starting in FY2026. - Impact on employment and investment: - Over 27,000 Haitians employed in the sector; a sharp drop in exports would further strain household incomes and economic activity. - The impact on investment is hard to quantify given prevailing security conditions, though long-term commitments to these programs are cited as critical for foreign direct investment, infrastructure, and training. ### Foreign Aid - Reductions in foreign aid could add to Haiti’s instability. - In March 2025, US authorities announced the cancellation of several programs by USAID, reducing support by an estimated USD 160 million for FY2024-FY2025. ### Link to External Sector Assessment and Risks - The adverse external policy shifts are highlighted as part of broader external vulnerabilities for FY2026 (see Annex II and Annex III). - Key transmission channels include declines in remittances, export losses (textiles), and reductions in official grants, which together can generate balance of payments needs and negative GDP impacts (see adverse scenario in Annex III). *International Monetary Fund* ### 1.4 percent of GDP relative to their baseline levels, the CA deficit would widen to 1.8 percent in ### Haiti: Illustrative Quantification of Downside Risks, Risk Assessment, Revenue-Boosting Measures, and Letter of Intent Highlights ### Illustrative Quantification of Downside Risks from Global Developments (Annex III — Table 1) - Scenario summary: If remittances, international aid, and exports decline by specified shocks, the combined impact would widen the current account (CA) deficit to 1.8 percent in FY2026, that is, 1.4 percent below the baseline projection of 0.4 percent. - Public debt and risk context: - Public debt estimated at 11.7 percent of GDP at end-FY2025. - Scenario would significantly heighten liquidity and solvency risks given narrow export and revenue bases under the baseline. - Policy implications highlighted: strengthen revenue collection, preserve reserve buffers, and advance governance reform agenda. - Shock magnitudes (Percent declines relative to baseline): - Fall in Remittances: -10 - Note: Intensified deportations of undocumented Haitians. - Decline in International Aids: - 50 - Note: Reduction in international financial assistance. - Fall in Export: - 10 - Note: Rising trade barriers with trade partners. - Combined impact on shocked variables (In percent of GDP; baseline and post-shock): - Remittances - Baseline: 12.8 (FY2025), 9.7 (FY2026) - + shock: -1.0 - Grants - Baseline: 0.9 (FY2025), 0.5 (FY2026) - + shock: -0.3 - Exports of goods and services - Baseline: 2.4 (FY2025), 1.6 (FY2026) - + shock: -0.2 - Combined impact of shocks on macro variables: - Real GDP Growth - Baseline: -3.1 (FY2025), -1.2 (FY2026) - + shock: -0.9 total - -0.5 remittances - -0.2 grants - -0.2 exports - Current Account 1/ - Baseline: 0.7 (FY2025), -0.4 (FY2026) - + shock: -1.4 total - -1.0 remittances - -0.3 grants - -0.2 exports - External Finance Needs - + shock: -1.4 total - -1.0 remittances - -0.3 grants - -0.2 exports - Footnote: - 1/ Staff estimates assume no impact on imports, as current import levels are already severely compressed. ### Risk Assessment Matrix (Annex IV) - Global Risks (Source and Relative Likelihood; Impact; Policy Response): - Commodity price volatility - Relative Likelihood: High - Impact: High ST/MT — 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. - Rising social discontent - Relative Likelihood: Medium - Impact: High ST/MT — Reversal of migration policies lower remittances, adverse spillovers to the economy; worsening fiscal and external balances. - Policy Response: Protect the vulnerable through targeted fiscal measures. Monitor financial risks closely and strengthen banking supervision. - Geopolitical Tensions - Relative Likelihood: High - Impact: High ST/MT — Reversal of migration policies lowering remittances; reduced exports, FDI, and supply chain integration, especially in textiles/agriculture; higher input costs and inflation. - Policy Response: Work with banks and money transfer operators to keep remittance flows affordable and accessible. Protect the vulnerable through targeted fiscal measures. Expand targeted cash transfers or food assistance using existing delivery systems. Monitor financial risks closely and strengthen banking supervision. - Decline in International Aid - Relative Likelihood: High - Impact: High ST/MT — Increased pressure on fiscal resources; persistence of security challenges; worsening humanitarian crisis. - Policy Response: Intensify outreach to donors. Increase international communication on financing needs. - Escalating Trade Measures and Prolonged Uncertainty - Relative Likelihood: High - Impact: High ST/MT — Reduced exports, FDI, and supply chain integration; higher input costs and inflation; U.S. dollar appreciation making imports more expensive. - Policy Response: Engage actively with U.S. policymakers and industry stakeholders to restore HOPE/HELP access for textiles. Simplify customs procedures, reduce port delays, and provide basic support services for exporters. - Cyberthreats - Relative Likelihood: High - Impact: High ST/MT — Loss of reserves and deposits; loss of critical data. - Policy Response: Establish clear protocols for cyber incident prevention, detection, and response involving government, private sector, and international partners. - Climate change - Relative Likelihood: Medium - Impact: High MT/LT — 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. - New Trade Agreements - Relative Likelihood: Low - Impact: High MT/LT — Sustains apparel exports and employment; improves external stability by securing the FX inflow source. - Policy Response: Enhance international communication to increase chance of restoring the HOPE/HELP agreement, and build reserves during export windfalls. - Domestic Risks: - Worsening security and political instability - Relative Likelihood: High - Impact: High ST/MT — Further displacements, supply chain disruption (including fuel shortages), lower FDI inflows and long-term growth. - Policy Response: Continue coordination with development partners; intensify requests for international support to enhance security. Prioritize government spending, ensure sound financial institutions, strengthen governance including AML/CFT, publish timely and accurate data. - Natural disasters - Relative Likelihood: High - Impact: High ST/MT — Disruption in economic activity; adds fiscal pressure. - Policy Response: Put in place contingency plans (e.g., insurance through CCRIF). Seek donor financing to build structural resilience. - Infectious diseases - Relative Likelihood: High - Impact: High ST/MT — Disruption of economic activities; increased pressure on public health and fiscal spending. - Policy Response: Increase health spending targeted at infectious diseases. Seek international donor support. - Service/infrastructure collapse - Relative Likelihood: High - Impact: High ST/MT — Intensified humanitarian needs, disease outbreaks, deepened food insecurity, displacement, and social instability. - Policy Response: Prioritize protection and rapid repair of critical health, water, and education infrastructure. Seek urgent donor funding and technical support for emergency repairs and basic service delivery. ### Boosting Revenues (Annex V — IMF 2023 TA mission recommendations) - Overall priority: Boost revenues to support development needs and enhance well-targeted spending; support implementation of the new tax code (Decree of the new tax code) and strengthen customs valuation. Effectiveness depends on improved security, implementation of the new tax code, and continued fiscal reforms. - Short-term high-impact priorities (policy measures marked with a ★ were suggested to be prioritized): 1. Revenue Enhancement - Clearing of tax arrears (★): Identify, classify, and recover old tax debts stored in the legacy Tax Solution system before migrating to the Revenue Management System (RMS). - Risk assessment of large taxpayers (★): Conduct a risk-based compliance assessment of large taxpayers to develop targeted audit and enforcement strategies. - Prioritization of high-impact objectives: Focus administrative resources on reforms and actions that yield immediate and significant revenue gains. 2. Digitalization of the Tax and Customs Administration - Rollout of RMS (★): Complete deployment of the RMS to all 27 remaining tax offices. - IT system interconnection between tax and customs (★): Establish automatic data exchange between DGI’s RMS and Customs’ SYDONIA system. - Digitalization of customs clearance procedures (★): Implement fully paperless customs clearance at all major customs offices. - Implementation of e-filing and e-payment: Develop and launch secure digital platforms for taxpayers to file returns and pay taxes online or via mobile. 3. Taxpayers Compliance - Publication of updated taxpayer registry (★): Clean the taxpayer database and publish a list of active and inactive taxpayers. - Monthly meetings with professional associations: Launch regular dialogue between the tax authority (DGI) and business associations to support rollout of the new tax code. - Awareness campaign around the new tax code: Design and implement outreach activities to educate the public before its entry into force. 4. Organizational Reform and Capacity Building - Adoption of the tax authority’s new legal framework: Finalize and approve the new organic decree defining DGI’s updated organizational structure. - Development of an organizational manual: Draft and adopt a manual detailing roles, responsibilities, and procedures for central and regional tax offices. - Activation of a tax collection network with public accountants: Establish an operational framework linking DGI, the Treasury, and the BRH. - Strengthening of internal audit and ethics functions: Reinforce internal audit and inspection units within the tax authority to ensure accountability and fight corruption. ### Appendix I — Letter of Intent: Key Program and Implementation Highlights (Port-au-Prince, Haïti; November 13, 2025) - Program commitment and context: - Government reaffirms strong commitment to the Staff Monitored Program (SMP) approved in December 2024. - SMP objectives: strengthening macroeconomic stability, improving governance, and protecting social spending. - Challenges: worsening security situation and global landscape have intensified economic, social, and humanitarian difficulties and deepened structural weaknesses. - Past IMF support and technical assistance: - SDR 81.9 million (50 percent of Haiti’s quota at the IMF) provided under the Food Shock Window (FSW) of the Rapid Credit Facility (RCF) in January 2023. - IMF technical assistance and capacity development have been critical; the new IMF Strategy for Fragile and Conflict-Affected States is highlighted as valuable. - Macroeconomic outlook and program performance: - Economic growth for fiscal year 2024-25 projected to be negative for the seventh consecutive year, due primarily to worsening security conditions. - At end June, all quantitative and indicative targets were met. Net international reserve accumulation exceeded the target by a large margin. Treasury received no monetary financing from the central bank. Social spending remained above program goals. Revenue collection stayed on track but later fell short by a small margin as of September 2025. - Progress on structural benchmarks (SB): improvements in public financial management transparency (SB3 and SB6); protocol signed to interconnect DGI and Customs IT systems (SB7). Delays noted in SBs 2, 4, 5, 8, and 9 due to capacity constraints and security disruptions. - BRH reforms: reserve management framework reformed to incorporate safety and liquidity principles (SB10); audit report and financial statements for fiscal year 2023 finalized (SB9); BRH submits full balance sheet data monthly (SB11). - Request and rationale: - Government requests a nine-month extension of the SMP through September 19, 2026, due to deteriorating security and political instability. - Rationale: transition to Gang Suppression Force and new UN Support Office signals turning point, but tangible security improvements will take time. Extension aims to lock in institutional progress, advance governance and social protection efforts, and support prudent execution of FY2026 budget and steps toward a potential Upper Credit Tranche arrangement. - Monitoring and transparency: - Attached Memorandum of Economic and Financial Policies (MEFP) provides updated QTs, ITs, and SBs for the SMP extension. - Government commits to timely provision of data and to consult IMF staff on policy revisions. Government consents to IMF publication of the SMP staff report, this Letter of Intent, and attachments. *Source: Ministry of Finance and Economy and Fund staff estimates and projections; Annexes III–V and Appendix I of the IMF Haiti report excerpt provided.* ### 9. In the name of the Government of Haiti, please accept, Madam Managing Director, the ### 1htiea2025003-source-pdf - 9. In the name of the Government of Haiti, please accept, Madam Managing Director, the ### Attachment I. Memorandum of Economic and Financial Policies — Purpose and Priorities - This MEFP complements and updates the macroeconomic framework signed on April 15, 2025, and incorporates proposed adjustments to reflect the new timeline of the SMP through September 19, 2026. - Objectives: - Further strengthen economic resilience, governance, accountability, and social protection; - Enhance economic stability and lay the groundwork for inclusive and sustainable economic growth; - Reduce poverty and improve living conditions for all Haitian citizens. ### Recent Macroeconomic Developments and Medium-Term Outlook - FY2024-25 macroeconomic performance: - Real GDP growth was negative for the seventh consecutive year. - Inflation remained elevated. - FY2024-25 nonfinancial public sector (NFPS) budget was close to balance. - 91 percent of the total Food Shock Window (FSW) has been spent. - Domestic revenues are expected at 4.7 percent of GDP in FY2024-25, down from 5.3 percent in FY2023-24. - Gross international reserves (GIR) reached US$3.1 billion at end July 2025 (about 7 months of imports) up from US$2.5 billion in September 2024. - Banking sector: rising nonperforming loans; capital adequacy ratio remains above the regulatory minimum. - Outlook and risks: - Real GDP expected to improve only gradually over the medium term, conditional on sustained improvements in security and political stability. - Inflation anticipated to remain elevated short to medium term, expected to moderate as supply-side pressures ease. - Fiscal space constrained by weak revenue mobilization and budget execution challenges; social and infrastructure spending needs expected to rise. - External position vulnerable to changes in global migration and trade policies, particularly in the United States and the Dominican Republic. - Policy anchors emphasized: - Maintain zero monetary financing; - Safeguard international reserves; - Advance governance and structural reforms. ### A. Results Achieved Under the Staff Monitored Program (SMP) - Overall performance since the First Review: - All quantitative and indicative targets for end June 2025 have been met (assessment of end-September targets pending data). - Six out of eleven structural benchmarks were met. - Quantitative and indicative targets (QTs/ITs) met: - Net international reserve accumulation target met by a large margin. - Ceiling on net central bank credit to the NFPS met. - Target for the primary balance of the NFPS met. - Budget allocations for social expenditures met. - Central government revenue target met. - Two continuous QTs met: non-accumulation of domestic and external arrears; no contracting or guaranteeing by the public sector of non-concessional external debt. - Structural benchmarks (SB) — summary of status: - SB1: Governance Diagnostic Report published as scheduled last February (met). - SB2: Procurement contract publication on CNMP and MEF websites — not met (publication faced delays). - SB3: Food Shock Window (FSW) monthly execution reports regularly prepared and published (met). - SB4: Quarterly internal expenditure audit published but September SB delivered with two week delay (not met). - SB5: CSCCA financial and operational compliance audit of FSW spending for FY2022-23 conducted and published; FY2023-24 in process; March 2025 target missed; proposed modification to publish audit report for FY2024-25 by end-March 2026 (not met, proposed to be modified). - SB6: Quarterly reports on FAES operations and financial status published on MEF website (met). - SB7: Administrative and technical cooperation protocol between DGI and AGD for IT interconnection signed and published in June (met). - SB8: Digitalization of tax declaration and payments through all commercial banks for large taxpayers ongoing but missed due to technical challenges; proposed reschedule for completion by end March 2026 (not met, proposed to be rescheduled). - SB9: BRH audit report and audited financial statements for FY2023 finalized and published in October (not met). - SB10: BRH Board approved new strategic asset allocation and updated investment policy and guidelines (met). - SB11: Provision of the full balance sheet of the central bank to IMF staff using the standardized reporting form done on schedule (met). ### B. Fiscal Policy: Plans, Targets, and Measures - FY2025-26 budget anchors: - Maintain zero monetary financing of the deficit (QT). - Strengthen domestic revenue mobilization (QT). - Improve efficiency and timeliness of public investment execution. - Safeguard critical social spending (QT). - FY2026 budget targets and allocations: - Domestic revenue target: about 250.4 billion gourdes (4.7 percent of GDP). - Public expenditures: about 328.5 billion gourdes (6.2 percent of GDP). - Capital expenditures: about 115.0 billion gourdes (2.2 percent of GDP). - Capital expenditure execution rate in FY2025: 37.5 percent. - Overall fiscal balance in FY2026 projected at -0.3 percent of GDP. - Government commitment: keep domestic and external arrears at zero (QT); avoid contracting or guaranteeing new non-concessional external debt (QT). - Revenue mobilization priorities and actions: - Commitment to making the new tax code effective by October 2026. - DGI and AGD signed and published IT interconnection protocol (SB7, June 2025). - Digitalization of tax declarations and payments through all commercial banks for large taxpayers missed; proposed reschedule for end March 2026 (SB8). - Proposed new measures supported by IMF TA: - Interconnect Tax Administration System and SYDONIA; publish joint communiqué confirming operationalization; produce a report by end December 2026 analyzing matched declarations and discrepancies over July-September 2026 and corrective actions; produce and publish a short aggregated analysis of that report on the MEF website by end December 2026 (proposed new SB12, end March 2026). - Operationalize during the first half of FY2025-26 the AGD reform to strengthen governance and integrity, invest in human capital, enhance revenue mobilization and controls, upgrade technology, reinforce border security and coordination, and engage stakeholders. - Budget execution and public investment management: - Past constraints: capacity constraints, procurement bottlenecks, security challenges limited capital projects and social transfers. - Planned reforms: strengthen project appraisal, selection, multi-year programming per 2022 IMF Public Investment Management Assessment; introduce budget execution reforms to curb large end-of-year transfers; expand use of executing agencies; streamline procurement in security and defense sectors. - Treasury Single Account (TSA) integration: proceed through closure of provincial accounts and piloting donor-financed project accounts. - Social safety nets and FSW execution: - Expand SIMAST coverage (currently reaches more than a third of the population). - Vulnerability assessments underway to enhance targeting. - Scale up cash transfers, food rations, school feeding programs, community restaurants; steps to eliminate selected school fees. - Unexecuted balance under IMF FSW in FY2024-25: about 1.45 billion gourdes — to be fully executed in FY2025-26 through accelerated implementation. - Execution and targeting of social expenditure by MAST, Education, Health, and Agriculture to be closely monitored (QT). - Fuel subsidy reform: - Gradual rollout envisaged to manage social repercussions. - Next steps: introduce a simple mechanism to adjust and smooth prices in response to changes in international oil prices and the exchange rate; establish regulatory framework for petroleum products sector; strengthen regulatory institutions; implement targeted communication strategy. - Disaster response capacity: - Reforms to the emergency fund (Fonds d’Urgence) to improve allocation procedures, monitoring, and execution. - Ensure adequate insurance coverage under Caribbean Catastrophe Risk Insurance Facility (CCRIF). - Explore options to secure timely and sustainable premium payments, building on past support from partners such as the Caribbean Development Bank (CDB). ### C. Monetary, Exchange Rate, and Financial Policies - Monetary policy stance and inflation: - Monetary policy to focus on containing inflation while preserving financial stability. - Inflation projected to gradually decline to 24.1 percent in FY2025-26, assuming gradual improvement in the security environment. - Monetary policy anchored on zero monetary financing to the government. - Reserve accumulation and FX operations: - BRH net purchases of foreign exchange of USD 573 million between end September 2024 and September 25, 2025. - GIR reached USD 3.1 billion; NIR have amply exceeded program’s target (QT). - BRH committed to meeting QTs and ITs on NIR and to publishing reserve template monthly. - FX interventions to pursue reserve accumulation and exchange rate stability, provided reserve buffers remain comfortably above program targets. - BRH will explore improvements to the FX allocation mechanism to enhance transparency and efficiency. - Revision of net open position limits for commercial banks advanced but implementation contingent on macro stabilization. - External transactions and currency practices: - Government will refrain from imposing or intensifying restrictions on current international transactions, and from introducing or modifying multiple currency practices. - No payments or currency practices inconsistent with Article VIII of the IMF’s Articles of Agreement will be undertaken without prior IMF approval. - Financial sector supervision and AML/CFT: - BRH strengthening systemic risk prevention: new regulations on credit risk concentration adopted; revised regulation on credit risk classification and provisioning expected to be finalized by end of this calendar year. - With IMF support, BRH implementing a risk-based banking supervision framework with new risk assessment tools and procedures. - AML/CFT framework strengthening: - With World Bank support, authorities expect to complete a national risk assessment (NRA) for ML/TF by end of the 2025 calendar year. - NRA will inform measures to strengthen AML frameworks and develop strategies based on findings. - CNLBA considering assigning UCREF responsibility for supervision of DNFBPs; government will ensure appropriate resources for UCREF. - UCREF board expected to be appointed in 2026. *Attachment I. Memorandum of Economic and Financial Policies* ### 17. The government is taking steps to follow up and implement the recommendations of ### 17. The government is taking steps to follow up and implement the recommendations of the Governance Diagnostic Report (GDR) ### Governance, anti-corruption, and institutional reforms - Authorities committed to strengthening the Anti-Corruption task force to enable operationalization of the Anti-Corruption pole for prosecuting and investigating the most significant corruption, organized crime, and money laundering cases. - Judicial appointments are underway and an ad-hoc mechanism is in place to coordinate efforts between the General Inspectorate of Finance (IGF), the Anti-Corruption Unit (ULCC), the Central Financial Intelligence Unit (UCREF), the National Commission for Public Procurement (CNMP), and the border police, following the December 2024 protocol. - The IGF is developing a triennial action plan for the task force, including awareness campaigns, joint missions, and capacity-building programs, with a calendar expected by end November 2025. - The ULCC is spearheading a new ten-year strategy supported by a draft law on whistleblower and witness protection. ### Central Bank safeguards, governance, and transparency - IMF conducted a targeted safeguards monitoring mission to support the BRH in 2024, complementing the 2019 Safeguard Assessment. - BRH proposes a new SB to publish the external audit for FY2023-24 by end-June 2026 (proposed new SB14, end June 2026). - BRH proposes a new SB to adopt a framework and governance structure to strengthen bank-wide IT security and business continuity arrangements (proposed new SB13, end June 2026). - BRH continues strengthening monetary data provision, including the transition to International Financial Reporting Standards. - BRH remains committed to developing a medium-term plan to phase out BRH involvement in development finance activities. ### Data provision and statistical reporting - BRH has consistently met the requirement to deliver the full balance sheet of the central bank to IMF staff in the standardized reporting form (SRF-1SR) within the pre-established two-month window. - BRH will take steps to shorten the timeframe for provision of monetary data (SRF-1SR and 2SR). - BRH will begin reporting data according to the International Reserves and Foreign Currency Liquidity template by end March 2026. - BRH will continue strengthening external sector statistics in line with IMF technical assistance recommendations. - Government will request Technical Assistance (TA) from the IMF to improve integration of extra-budgetary units with central government accounts. ### Use and transparency of SDR assets - Prudent use and transparent reporting of Haiti’s SDR assets continue to guide the use of Haiti’s SDR allocation. - Any future conversions of the SDR allocation into freely usable currencies will be published on the websites of the BRH or the MEF. - Institutional frameworks governing fiscal use of the SDR allocation—including repayment terms between the MEF and the BRH—will be maintained, along with transparency measures for SDR-related expenditures. ### Program monitoring, reviews, and institutional arrangements - Monitoring of the program will be based on QTs (Appendix I. Table 1) and SBs (Appendix I. Table 2) as defined in the TMU; authorities will submit statistical data and information in accordance with the TMU. - The third review will be completed by end-April 2026 and the fourth review by September 19, 2026—program end date (Table 2c). - A high-level committee comprising representatives from the MEF and the BRH is in place to monitor the program; it will meet at least quarterly with the MEF and the Governor of the BRH to report on SMP implementation. - Authorities undertake to publish this Memorandum and the accompanying IMF Staff Report on the websites of the MEF and the BRH as soon as the extension of the SMP is approved by IMF Management. ### Key Quantitative Targets and Indicative Targets (selected figures as presented) - Net international reserves (NIR) of the central bank (in millions of U.S. dollars)—floor: 140160180 - Primary balance of the nonfinancial public sector (NFPS, in millions of gourdes)—floor: -470-939-1,409 - Net central bank credit to the nonfinancial public sector (in millions of gourdes)—ceiling: 000 - Central government: 000 - Other nonfinancial public sector entities: 000 - Budget allocations for social expenditure (in millions of gourdes)—floor: 12,62525,25037,875 - Indicative target — Central government fiscal revenue, excluding grants (in millions of gourdes)—floor: 50,000100,000163,800 - Continuous quantitative targets (ceilings): - Accumulation of domestic arrears by the central government (in millions of gourdes): 000 - Accumulation of external arrears by the public sector (in millions of U.S. dollars): 000 - Contracting or guaranteeing by the public sector of new nonconcessional external debt (in millions of U.S. dollars): 000 - Memorandum items listed (no numeric values shown in the excerpt for some items); note: EU budget support (€19.5 million) to be included in the end April 2025 data. - Program exchange rate for monitoring purposes for the period September 2024 to September 2026: SDR 0.737261 per U.S. dollar (exchange rate as of September 30, 2024). ### Structural Benchmarks (SBs) under the 2024 SMP — selected measures, purposes, target dates, and status - 1: Publish on the MEF website the report on the Governance Diagnostic Assessment and an associated action plan agreed by the authorities. Purpose: Enhance governance. Target date: End February 2025. Status: Met - 2: Publish on the CNMP and MEF websites all new public procurement contracts, including beneficial ownership information, within 45 days after award, starting from monthly report for 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 - 3: Publish on MEF and DGB websites all monthly reports on execution of fiscal expenditure through Haiti Food Shock Window account from its first disbursement by February 2025; for future disbursements no later than 45 days after end of reference period, starting from December 2024 report (due by mid-February 2025). Purpose: Increase transparency of public spending. Target date: Monthly starting from December 2024. Status: Met - 4: Through the General Finance Inspectorate, conduct and complete quarterly internal expenditure audits of all ministries involved in Haiti Food Shock Window account and report to the CSCCA within three months from 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 a financial and operational compliance audit of all expenditure related to the Rapid Credit Facility Food Shock Window for fiscal years 2022-23, 2023-24 and 2024-25, and publish the audit report on CSCCA, MEF, and DGB websites. Purpose: Improve accountability and increase transparency of public spending. Target date: End March 2025 (Proposed to be modified. New target date March 2026). Status: Not met - 6: Publish on MEF website quarterly reports (with one quarter lag) on operations and financial status of FAES, including quarterly board meeting reports, from July-September quarter (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: Met - 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 September 2025 (Proposed to be rescheduled for end March 2026). Status: Not met - 9: Publish on BRH website the BRH audit report and audited financial statements for FY2023 (ending September 2023) conducted by an independent international audit firm. Purpose: Enhance transparency of Central Bank's operations. Target date: End August 2025. Status: Not met (implemented with delay) - 10: Approval by BRH Board of: (i) a medium-term plan for improving composition of 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 reserve management framework with sound governance arrangements and safety and liquidity principles. Target date: End September 2025. Status: Met - Proposed SBs for the extension (selected): - 12: Interconnect the Tax Administration System and SYDONIA, and publish joint communiqué confirming operationalization and reporting commitments. Purpose: Strengthen revenue mobilization. Target date: End March 2026. - 13: Adoption by BRH of a framework and governance structure to strengthen bank-wide IT security and business continuity arrangements. Purpose: Enhance safeguards. Target date: End June 2026. - 14: Publish on BRH website the BRH audit report and audited financial statements for FY2024 (ending in September 2025) conducted by an independent international audit firm. Purpose: Enhance transparency of central bank operations. Target date: End June 2026. ### Schedule of reviews (Table 2c) - December 20, 2024: Approval of SMP - February 1, 2025: First review and assessment of end-December 2024 performance/continuous criteria - August 1, 2025: Second review and assessment of end-June 2025 performance/continuous criteria - April 1, 2026: Third review and assessment of end-December 2025 performance/continuous criteria - September 1, 2026: Fourth review and assessment of end-June 2026 performance/continuous criteria *Source: IMF staff report excerpt (Appendix I and related text in the provided PDF content).* ### 11. Program exchange rates. For the purposes of the program, all assets, liabilities, and flows ### 11. Program exchange rates. For the purposes of the program, all assets, liabilities, and flows ### Program exchange rates - All assets, liabilities, and flows denominated in foreign currency (U.S. dollar excluded) will be valued “at the program exchange rates,” with the exception of elements that affect the government’s budgetary accounts, which will be evaluated at current exchange rates. - Assets, liabilities, and flows denominated in U.S. dollar will be valued in U.S. dollar, the currency used to measure net international reserves. - For the purposes of the program, the following exchange rates are agreed: - 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 published by the IMF on its website) ### Net central bank credit to the Nonfinancial Public Sector (NFPS) - Definition: Net central bank credit to the NFPS is the difference between BRH assets and liabilities vis‑à‑vis the NFPS (net claims on the public sector) reported by the BRH to the IMF. It includes net BRH credit to central government and net BRH credit vis‑à‑vis other NFPS entities. - The BRH liabilities toward the central government include a provisional account of HTG 9.2 billion for government expenses contracted in FY2024 but not yet disbursed by end‑September 2024. - Net BRH credit to the NFPS (Table 1, In millions of gourdes): - Net central bank credit to the nonfinancial public sector: 240,020.9; 240,212.4; 239,850.3; 233,949.7; 239,385.4; 243,923.5 (columns: September 2024 Provisional, SMP Approval, September 2024 Revised 1st review, September 2024 Revised 2nd review December 2024, Revised 2nd review March 2025, June 2025) - Net credit on central government: 245,097.0; 245,284.3; 244,922.3; 239,655.6; 245,420.3; 251,313.5 - Claims on central government: 349,591.2; 349,543.6; 349,543.6; 331,057.5; 337,557.7; 344,579.2 - Holdings of government debt securities: 221,360.5; 221,360.5; 221,360.5; 221,360.5; 221,360.5; 221,360.5 - Loans and advances to the central government: 128,230.7; 128,183.1; 128,183.1; 109,697.0; 116,197.2; 123,218.7 - Liabilities to central government: 104,494.1; 104,259.4; 104,621.4; 91,401.9; 92,137.3; 93,265.6 - Gourde Demand Deposits of central government: 63,710.2; 63,475.4; 63,345.1; 52,225.5; 56,522.8; 61,643.0 - Gourde Other Deposits of central government: 1,230.6; 1,230.6; 1,230.6; 1,230.6; 7,430.6; 1,230.6 - Other gourde liabilities to central government (provision for FY2024 expenses): 9,200.0; 9,200.0; 9,200.0; 6,200.0; 0.0; 0.0 - FX demand deposits of central government: 27,021.9; 27,021.9; 27,514.2; 28,414.9; 24,919.0; 27,127.0 - FX other deposits of central government: 3,076.2; 3,076.2; 3,076.2; 3,076.2; 3,010.5; 3,010.5 - Net claims on other nonfinancial public sector entities (Table 1, In millions of gourdes): - Net claims on other nonfinancial public sector entities: -5,076.1; -5,071.9; -5,072.0; -5,705.9; -6,035.0; -7,390.1 - Liabilities to other nonfinancial public sector entities (sum of listed subitems): 5,076.1; 5,071.9; 5,072.0; 5,705.9; 6,035.0; 7,390.1 - Other deposits of public non-financial corporations (Gourde): 4,314.4; 4,314.4; 4,314.4; 4,495.3; 4,884.1; 5,472.1 - Source data: BRH, IFS and IMF staff calculations. - Footnote: 1/ Public treasury fiduciary in FIDEICOMMI. ### Adjustors to net central bank credit to the NFPS - To prevent unwarranted constraints on NFPS spending, the net central bank credit indicator will be subject to the following adjustors: i. Adjust upward by disbursements made after September 30, 2024 related to central government expenses contracted in FY2024, up to the provisioned amount of HTG 9.2 billion (shown in “other gourde liabilities to central government” in Table 1). ii. Adjust upward by disbursements made after September 30, 2024 of remaining resources related to support from the 2023 Food Shock Window (FSW) and debt relief from the Catastrophe Containment and Relief Trust (CCRT). The FSW resources held in the central bank but not yet transferred to the Treasury Single Account, and the remaining CCRT resources, are shown under “FX other deposits of central government” in Table 1. iii. Adjust upward by the amount of the increase in central government liabilities caused by exchange rate differences in central bank account 172160 (“Avance difference de change FMI”), which is part of “loans and advances to the central government” in Table 1. ### Net International Reserves (NIR) — definitions and calculations - Gross international reserves: external assets readily available to and controlled by monetary authorities for balance of payments financing needs, exchange market intervention, and related purposes. 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, holdings of SDRs, and IMF reserve position. For program purposes, holdings of SDRs and IMF reserve position are calculated based on IMF Finance Department data. - Net international reserves (program definition) are gross international reserves of the central bank minus: - Reserves related liabilities (liabilities to non-residents in foreign currency, including all Haiti liabilities to the IMF based on IMF Finance Department data); - Liabilities to residents denominated in foreign currency (e.g., foreign currency deposits of commercial banks at the BRH; 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 (e.g., foreign currency special accounts, foreign currency project accounts, central bank off‑balance sheet foreign currency liabilities). ### Program calculation of reserves (Attachment II. Table 2, In millions of U.S. dollars) - A. Gross International Reserves: - A (gross): 2,525.2; 2,525.2; 2,522.2; 2,718.6; 2,924.5; 3,105.1 (September 2024 Provisional; SMP Approval; Revised 1st review; Revised 2nd review December 2024; Revised 2nd review March 2025; June 2025) - Monetary gold (component): 153.1; 153.1; 153.1; 151.9; 181.3; 191.4 - Holdings of foreign currency (component): 37.5; 36.7; 37.4; 34.4; 55.6; 53.9 - Demand deposits abroad (component): 444.2; 444.1; 443.7; 694.2; 681.9; 781.4 - Investments abroad 1/: 1,769.3; 1,769.3; 1,765.9; 1,723.4; 1,892.7; 1,972.2 - SDR holdings 2/: 93.2; 94.2; 94.2; 86.9; 85.2; 78.5 - Reserve Position in the Fund 2/: 27.9; 27.9; 27.9; 27.9; 27.9; 27.9 - B. Reserve Related Liabilities: - B (total): 306.6; 306.6; 306.9; 242.4; 241.7; 235.9 - Liabilities to the IMF 2/ 3/: 245.1; 245.1; 245.1; 239.8; 239.8; 234.7 - Short-term loans from private non-residents: 60.2; 60.2; 60.2; 0.0; 0.0; 0.0 - Liabilities to IFIs: 1.3; 1.3; 1.3; 2.4; 1.7; 1.0 - Certified checks in FX: 0.3; 0.3; 0.3; 0.3; 0.3; 0.3 - C. Liabilities to Residents Denominated in Foreign Currency: - C (total): 1,263.4; 1,263.4; 1,263.7; 1,286.9; 1,353.5; 1,364.7 - Financial sector FX deposits in the central bank: 1,231.0; 1,231.0; 1,231.0; 1,254.2; 1,320.8; 1,333.0 - Swaps with financial institutions: 32.4; 32.4; 32.7; 32.7; 32.7; 31.7 - D. Other Liabilities Denominated in Foreign Currency: - D (total): 35.2; 35.2; 35.2; 33.9; 34.0; 21.6 - Off-balance sheet FX liabilities: 15.0; 15.0; 15.0; 15.0; 15.0; 15.0 - Project accounts: 20.2; 20.2; 20.2; 18.8; 19.0; 6.5 - Special accounts: 0.1; 0.1; 0.1; 0.1; 0.1; 0.1 - E. Net International Reserves, 2024 SMP definition (A - B - C - D): - E (NIR): 919.9; 919.9; 916.3; 1,155.5; 1,295.2; 1,483.0 - Memorandum items (not included in program NIR calculation): - Miscellaneous central bank FX liabilities (including values for adjustment): 25.0; 23.4; 23.4; 25.0; 18.2; 2.9 - Central government FX deposits in the central bank: 228.9; 228.9; 228.9; 239.5; 212.4; 229.2 - Short-term central government FX liabilities (next 12 months): 27.4; 26.7; 31.1; 29.4; 32.4; 27.4 - Notes: - 1/ Following IMF technical assistance in July 2025, some assets were reclassified in line with international best practices. - 2/ Based on IMF books. For the purposes of the 2024 SMP, between December 2024 and September 2026, 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). - 3/ 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. ### Adjustor to Net International Reserves - If budgetary grants are lower than expected the floor on net international reserves will be adjusted downwards by the amount of the difference. Conversely, the floor will not be adjusted upwards by budgetary grants exceeding expected levels. - Attachment II. Table 3. Haiti: Projected Budgetary Grants (In millions of US dollars) — Cumulative Flows since end-September 2024: - September 2024; March 2025; June 2025; September 2025; December 2025; March 2026; June 2026: 0; 0; 19; 39; 39; 39; 39 ### Primary balance of the Nonfinancial Public Sector (NFPS) - Domestic arrears of the central government: expenditure accepted by the Treasury and unpaid after 90 days, despite delivery of corresponding goods and services. Domestic arrears do not include unpaid off-budget government commitments. - Unpaid off-budget central government commitments: liabilities incurred outside the budgetary process (from ministries or other public bodies) that may give rise to contingent claims against central government resources. - Net domestic financing of the NFPS: sum of (i) net central bank credit to the NFPS; (ii) net credit from domestic commercial banks to the NFPS (as reported in Standardized Report Form 2SR), which includes changes in NFPS deposits and net issuance of Treasury bills and other NFPS securities to commercial banks; and (iii) net nonbank credit to the NFPS, which includes net issuance of Treasury bills and other NFPS securities to nonbank institutions, the change in the net position of the NFPS vis‑à‑vis the electricity sector (including independent power producers), and net change in suppliers’ credit and domestic arrears of central government. - Net external financing of the NFPS: sum of (i) new external loan disbursements (excluding IMF loans) and (ii) net change in external arrears minus external loan amortizations. - For program purposes, the primary balance of the NFPS corresponds to the sum of net domestic financing of the NFPS and net external financing of the NFPS, after deducting interest payments on public debt. - Adjustor to primary balance of the NFPS: If budgetary grants are in deficit relative to expected levels, 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 - Definition: For the purposes of the program, social spending is defined as execution of budgetary allocations to the Ministry of Social Affairs and Labor (MAST), Ministry of Education, Ministry of Agriculture, and Ministry of Public Health, as specified in the budget decree. - The floor on the QT applies to cumulative budget execution (actual spending) during the fiscal year for MAST, Ministry of Education, Ministry of Agriculture, and Ministry of Public Health measured at each test date. - Assessment schedule: - QTs are assessed at end-December 2024, end-June 2025, end-December 2025, and end-June 2026. - ITs are assessed at end-March 2025, end-September 2025, and end-March 2026. - Provisional appropriations (expenditures underway before actual budget appropriation), if any, will be included. ### New contracting or guaranteeing by the public sector of non-concessional external debt - Debt definition: As per paragraph 8 of the Guidelines on Public Debt Conditionality in Fund Arrangements, “debt” means a current (not contingent) liability created under a contractual arrangement through provision of value in the form of assets or services, requiring future payments in assets or services to discharge principal and/or interest. Forms include: i. Loans (including deposits, bonds, debentures, commercial loans, buyers’ credits), and temporary exchanges of assets equivalent to fully collateralized loans (e.g., repurchase agreements, official swap arrangements). ii. Suppliers’ credits (deferral of payments after goods/services delivered). iii. Leases (debt equals PV at inception of lease of all lease payments expected during the agreement period excluding payments that cover operation, repair, or maintenance). - Public sector coverage: For the debt limit ceiling, public sector debt covers public and publicly guaranteed debt. Public sector is defined in paragraph 8 of this TMU. - Debt guarantees: For program purposes, a debt guarantee by the public sector means 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). - Concessional debt: For program purposes, debt is concessional if it includes a grant element of at least 35 percent. Calculation: - Grant element = difference between PV of debt and its nominal value, expressed as a percentage of nominal value. - PV at contracting is calculated by discounting future debt service payments. - For debts with grant element equal or below zero, PV is set equal to nominal value. - Discount rate used: the unified discount rate of 5 percent set forth in Executive Board Decision No. 15462-(13/97). - Note: Calculation of concessionality takes into account all aspects of the debt agreement, including maturity, grace period, payment schedule, upfront commissions, and management fees. *Source: BRH, IFS, and IMF staff calculations (Attachment II: Tables 1–3 and accompanying text).* ### 29. External debt. For the purposes of the ceiling on the contracting or guaranteeing of new ### 29. External debt ### Definition and ceiling on new non-concessional external debt - External debt for the purposes of the ceiling on the contracting or guaranteeing of new non-concessional external debt is any debt contracted or guaranteed by the public sector on non-concessional terms with non-residents or denominated in foreign currency, i.e., currency other than Haiti’s currency. - It includes, where applicable, debt issued domestically by the government and held by non-residents. - The public sector undertakes not to contract or guarantee any new non-concessional external debt. - The commitment also applies to any private debt guaranteed by the public sector that constitutes a contingent liability. - Exclusions from the ceiling: - Short-term (with a maturity of less than one year) import-related credits - Rescheduling arrangements - Borrowing from the IMF - Non-resident purchases of treasury bills - Gourde-denominated BRH bills that are indexed to the exchange rate - Monitoring and reporting: - This quantitative target (QT) will be monitored continuously by the authorities and any non-observance will be immediately reported to the Fund. ### Public sector external arrears accumulation - Definition: - 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 that are due to non-residents but not paid on the due date as set out in the loan contract. - They exclude those arising from obligations being renegotiated with external creditors and (or) those that are litigious. - For the purpose of assessing the QT on the non-accumulation of new external debt arrears by the public sector, arrears resulting from non-payment of debt service due to international sanctions preventing payments to the creditor are excluded. - Monitoring and reporting: - This QT will be monitored continuously by the authorities, and any non-observance will be immediately reported to the Fund. ### Domestic arrears accumulation of the central government - Definition: - 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. - Monitoring and reporting: - The QT on domestic arrears accumulation will be monitored continuously by the authorities, and any non-observance will be immediately report to the Fund. ### Reporting of data for program monitoring (obligations and timelines) - The government will provide IMF staff with the information set out in the summary table; any data revisions will be promptly communicated to IMF staff. - The authorities will inform IMF staff in writing at least 10 working days (excluding public holidays in Haiti) before any change in economic and financial policies that may affect the outcome of the program. - With respect to continuous QTs, the authorities will report any non-observance to the IMF promptly. ### Selected data series, periodicity, and timeliness (highlights from Attachment II Table 4) - Real Sector: - National accounts: Annual — Three months - Quarterly economic indicators (economic cycle): Quarterly — Two months - Consumer price index (including breakdowns): Monthly — Three weeks - Public Finances (selection): - 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 - Stock of unpaid off-budget central government liabilities: Monthly — One month - Details of the stock of all government borrowing and debt securities (interest rate, maturity, creditor if known): Annual — Three months - 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 - Monetary and Financial Data (selection): - 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 and outflows of foreign exchange reserves; volume of foreign exchange transactions; gross and net international reserves; net BRH credit to central government and the non-financial public sector; stocks and interest rates of BRH bills): Monthly — One week - Audited financial statements of the BRH: Annual — Three months - Balance of Payments and IIP: - Balance of payments (first version): Quarterly — Six weeks - Revised balance of payments: Quarterly — Three months after the first reporting - International Investment Position (IIP): Annual — Three months - External Debt: - External debt report prepared by the BRH showing monthly disbursements; debt service, debt forgiveness and rescheduling, arrears, and debt stocks: Monthly — One month - Details of any external public debt and debt guaranteed by the State: Monthly — One month - Data on stocks, accumulation, and repayment of external arrears: Monthly — Six weeks - Table of complete amortization of external debt: Annual — Three months ### Debt sustainability assessment (Joint Bank-Fund DSA summary) - Risk ratings and overall conclusion: - Risk of external debt distress: High - Overall risk of debt distress: High - Granularity in the risk rating: Debt is sustainable - Application of judgment: No - Key findings: - The DSA updates the 2024 Article IV consultation assessment; the overall conclusion remains: (i) the risk of debt distress is “high”, but (ii) public debt is sustainable, supported by the Venezuelan debt relief, which has significantly improved key debt indicators. - Under the baseline scenario, the risk of external debt distress rating is high, due to breaches in export-related external debt thresholds. - Public debt is assessed as sustainable, underpinned by gradual security improvement and reforms to boost revenue collection and spending efficiency. - Risks are tilted downward due to natural disaster-related shocks, and potential declines in official grants, remittances, and FDI inflows. - On the upside, security improvements may follow from the United Nation’s Gang Suppression Force. - Debt sustainability hinges on the authorities’ ability to maintain sound macroeconomic and fiscal management, and securing donor financing. - Composite indicator and capacity: - The current composite indicator (CI) is estimated at 2.611 and is based on the World Bank’s 2024 Country Policy and Institutional Assessment (CPIA) and the April 2025 World Economic Outlook (WEO). - Haiti’s debt-carrying capacity is downgraded to “weak” from “medium” in the previous DSA. - Breaches occur earlier than in the 2024 Article IV DSA, mainly due to Haiti's downgrade from medium to weak debt carrying capacity, reflecting weaker economic fundamentals and institutional strength per the CPIA. - Approval and preparation: - Approved By Dora Iakova and Jay Peiris (IMF); Manuela Francisco and Oscar Calvo-Gonzalez (IDA World Bank). - Prepared by staff of the International Monetary Fund and International Development Association. - Document date: December 1, 2025 ### Public debt coverage and background (selected points) - Coverage: - Gross public debt used for this DSA covers the central government, local governments, extrabudgetary autonomous organisms, the state-owned electricity company Electricité d’Haiti (EDH), and advances by the central bank—Banque de la République d’Haiti (BRH)—to the government. - External debt data come from the BRH and include debt to multilateral and bilateral creditors, including foreign oil companies, as well as an estimate of contingent liabilities. - External debt is defined on a residency basis. - No data are available on guaranteed debt, including to other state-owned enterprises (SOEs), and non-guaranteed SOE debt. - Gross domestic public debt components: - Sum of: (i) claims of the overall banking sector (including the BRH) to the non-financial public sector (NFPS); (ii) suppliers’ credits; and (iii) domestic arrears as reported by the authorities. - Data on claims of the banking sector come from the Fund’s Standardized Report Forms 1SR and 2SR Tables reported by the BRH to the Fund. - The accounts of PROSGATE, Pension civile and ONA are consolidated with the rest of the NFPS. - In the absence of data, calculation of domestic public debt does not include treasury bills and bonds held outside the banking sector, which are understood to be negligible. - Debt transparency and recent developments: - The government remains committed to expanding debt coverage, including to SOEs, and improving debt data collection. - The government contracted no new external public or publicly guaranteed (PPG) non-concessional debt in FY2022 or FY2023. - Note: Non-concessional borrowing occurred in FY2024: the authorities contracted a short-term loan of US$240 million in January 2024 to facilitate the lump-sum payment of US$500 million required as part of the debt cancellation agreement with Venezuela; the loan was repaid in less than a year, through four installments. - Historical and contextual background: - Haiti received debt relief of about US$1.0 billion from international creditors following the 2010 earthquake, including US$268 million from the Fund under the Post-Catastrophe Debt Relief Trust Fund (PCDR) and US$36 million from the World Bank. - External public debt fell from 19 percent of GDP at end-FY2009 to under 9 percent in FY2011 (based on old GDP series). - Debt levels rose until FY2020, driven by PetroCaribe-related disbursements from Venezuela and unremunerated advances from the BRH. - Notable financing: US$123 million from domestic non-financial companies in FY2018; US$150 million loan with Taiwan Province of China in January 2019; IMF disbursement of US$111.6 million (SDR 81.9 million) under the Rapid Credit Facility (RCF) in April 2020; US$22.6 million (SDR 15.21 million) in debt relief under CCRT in April 2021; SDR allocation of US$224 million (SDR 157 million) in August 2021 (half on-lent by the central bank to the government); about US$110 million under the Food Shock Window (FSW) of the RCF in January 2023. - Central bank financing: - Government debt to the BRH was 10.3 percent of GDP in FY2024 and is not serviced. - The July 2022 MoU between the BRH and MEF imputed accrued interest payment on non-negotiable government debt securities held by the BRH, increasing the stock of the BRH’s net claims on central government starting with the October 2021 balance sheet. - The MoU recommended converting most of these liabilities into negotiable securities bearing an annual interest rate of 7.57 percent and payable over a fifty-year period with a grace period of 10 years. - Over FY2024-25, monetary financing of public sector spending remained at zero (quantitative target of the 2024 SMP), down from an average of 2 percent of GDP during FY2020-23. - National accounts revision and revenue implications: - The 2020 rebasing of national accounts increased nominal GDP for FY2019 by 65 percent. - Public debt fell from a projected 51.9 percent in the 2020 DSA under the RCF to 22.7 percent of GDP after rebasing. - Domestic revenue ratios were reduced: FY2019 domestic revenue fell from 10.7 percent (old GDP series) to 6.4 percent (rebased GDP); revenues declined to 5.9 percent of GDP in FY2021 and to 4.7 percent of GDP in FY2025. - Authorities are implementing reforms to boost domestic revenues under the Staff-Monitored Program (SMP). *Prepared by staff of the International Monetary Fund and International Development Association.* ### 7. The export-to-GDP ratio was also significantly revised downward following the 2020 ### 7. The export-to-GDP ratio was also significantly revised downward following the 2020 ### Export-to-GDP revisions and recent export performance - In FY2019, foreign exchange receipts from exports of goods and services fell from 18.2 percent of GDP under the old GDP series to 11.7 percent using the rebased GDP series—partly due to the expanded GDP base. - Under the revised GDP series: - Exports declined to 5.6 percent of GDP in FY2023. - Exports declined to 2.4 percent of GDP in FY2025, reflecting the impact of the ongoing security situation. ### Public debt levels, composition, and recent changes - At the end of FY2024: - Total public debt: US$3.8 billion (15.1 percent of GDP). - External public debt: 14.6 percent of total public debt (2.2 percent of GDP), mostly concessional loans from multilateral creditors including OPEC, IFAD, and the IMF. - Haiti’s outstanding debt to Venezuela: US$28.2 million (compared to US$2.2 billion at end FY2023), all owed to the Banco de Desarrollo Económico y Social de Venezuela (BANDES). - Total external “technical arrears” due to Venezuela: US$10.0 million (compared to US$642.1 million at end FY2023). - Domestic public debt: US$3.3 billion in FY2024 (up from US$3.2 billion in FY2023). - About 80 percent of domestic debt consisted of central bank advances to the government. - Government debt to the BRH: 10.5 percent of GDP in FY2024 (down from 12.3 percent in FY2023). - Monetary financing of public spending (quantitative target of the SMP) was kept at zero in FY2024, down from an average of 2 percent of GDP during FY2020-23. - Text Table 2 (selected entries, end-2024, US$ millions; percent of GDP where provided): - Total External Debt: 558.0 — 14.6 — 2.2 - Multilateral creditors: 313.1 — 8.2 — 1.2 - o/w IMF: 245.1 — 6.4 — 1.0 - o/w OPEC: 32.3 — 0.8 — 0.1 - o/w IFAD: 35.7 — 0.9 — 0.1 - o/w IDA: 0.0 — 0.0 — 0.0 - Bilateral creditors: 184.9 — 4.8 — 0.7 - Venezuela 1/: 28.2 — 0.7 — 0.1 - o/w PetroCaribe: 0.0 — 0.0 — 0.0 - o/w BANDES: 28.2 — 0.7 — 0.1 - Taiwan, Province of China: 156.7 — 4.1 — 0.6 - Commercial creditors: 60.0 — 1.6 — 0.2 - Total Domestic Debt: 3,266.7 — 85.4 — 12.9 - BRH: 2,658.6 — 69.5 — 10.5 - Other creditors: 608.1 — 15.9 — 2.4 - Total Debt: 3,824.7 — 100.0 — 15.1 - Note: At end-2024, technical arrears to Venezuela had been paid down to US$10.0 million. Footnote: "Technical Arrears" due to Venezuela were estimated at about US$ 642.1 million at end-September 2023, of which US$ 242.45 million represented unpaid interest. ### Debt restructuring with Venezuela - January 2024 agreement: - Haiti paid a lump sum of US$500 million to Venezuela (as a portion of external “technical arrears” due). - In exchange, Haiti received US$1.69 billion in debt forgiveness. - Payment processing challenges arose due to international sanctions on Venezuela; the Haitian government deposited debt service payments into an escrow account at the BRH. - The lump sum payment of US$500 million was executed by the BRH through a combination of increased short-term liabilities and a drawdown of foreign reserves and did not affect the government’s gross financing requirements. - Impact on debt ratios: - Public debt fell from 27.6 percent of GDP in FY2023 to 16.0 percent of GDP in FY2024. - External debt fell from 12.9 percent of GDP in FY2023 to 2.2 percent of GDP in FY2024. - The agreement generates annual savings of US$95 million (12.5 billion gourdes) over 2025-35. ### Macroeconomic forecasts, baseline scenario, and key assumptions - FY2025 outcomes and near-term outlook: - Real GDP contracted by 3.1 percent in FY2025 (revised down from 1.0 percent growth projected in the previous DSA). - Index of economic activity (ICAE) fell by 2.4 percent over the first three quarters of FY2025 (October to June). - Supply chain disruptions contributed to inflation at 31.5 percent in FY2025. - FY2026 assumptions: - Expiration of the HOPE/HELP Act in September 2025 is expected to negatively impact the economy. - Baseline assumes a 1.2 percent contraction in real GDP for FY2026 (revised down from 1.5 percent growth projected in the previous DSA). - Medium and long term: - Conditional on steady improvements in security, growth expected to turn positive (0.5 percent) in FY2027. - Over the medium-term, growth projected to gradually converge to 1.5 percent. - Inflation projected to reach single digits by FY2029, conditional on easing supply shocks and sound macroeconomic policies (including commitment to zero monetary financing of the budget). - Fiscal projections: - Primary balance of the NFPS: surplus of 0.2 percent of GDP in FY2025, mainly reflecting under-execution of spending. - Primary fiscal balance projected to be zero in FY2026. - Primary deficit expected to widen and reach about one percent of GDP by FY2030 as public investment and social spending are scaled up. - Domestic revenue projected to strengthen to 10 percent of GDP by 2035, supported by reforms including digitalizing tax declarations and payments, and enhancing transparency, accountability, and audit capacity. - Current account and remittances: - Current account balance: surplus of 0.7 percent of GDP in FY2025 (up from a deficit of 0.6 percent of GDP in FY2024), reflecting a sharp increase in net remittances. - Remittances estimated at 12.8 percent of GDP for FY2025. - Remittances projected to decline by 3.1 percent of GDP in FY2026—down from 12.8 percent of GDP in FY2025—due to the termination of the TPS program in February 2026 and the imposition of one percent tax on certain types of cash remittances. - Remittances projected to remain at about 8-7 percent of GDP over FY2027-30. - Financing assumptions: - Funding of gross financing needs assumed to prioritize external sources in the medium term to lengthen maturities and reduce rollover risk. - Multilateral concessional debt financing assumed to resume in FY2027 following implementation of reforms under the SMP. - During FY2027-30, external financing projected to dominate; from FY2032, the share of domestic financing expected to increase as the government securities market deepens. - Treasury bills expected to account for the bulk of domestic financing in the short and medium term, with medium-term Treasury bonds (three to five years) phased in. - Central bank financing (monetary financing) expected to remain suspended over the projection period. ### Debt-carrying capacity, realism checks, and stress tests - Debt-carrying capacity: - Downgraded from “medium” to “weak” in the current DSA. - Composite Indicator (CI) declined to 2.611 in the current DSA from 2.642 in the previous DSA. - Deterioration driven mainly by the CPIA index (2.433 vs. 2.687 in the previous DSA) and a weaker growth outlook. - Improvements in reserve adequacy coverage (53.1 percent of imports vs. 40.5 percent in the previous DSA) and remittances (13.3 percent of GDP versus 11.5 percent of GDP in the previous DSA) partially offset worsening macro conditions but were insufficient to avoid the downgrade. - Natural disaster (one-off major) scenario: - Shock assumes damage equivalent to 25 percent of GDP. - Under this shock: - PV of external PPG debt-to-GDP ratio rises from 1.6 percent of GDP in FY2025 to 20.4 percent of GDP by FY2030, then stabilizes around 18 percent of GDP by FY2043—compared to 7.5 percent of GDP in FY2045 under the baseline. - PV of public debt rises from 11.8 percent of GDP in FY2025 to 28.1 percent in FY2045, compared to 18.4 percent under the baseline. - Realism checks: - The projected fiscal adjustment of -7.8 percentage points of GDP in the primary fiscal balance between FY2024 and FY2027 appears large relative to historical LIC adjustments but is considered realistic given that the FY2024 NFPS primary surplus of 7.2 percent of GDP was driven by a one-off capital transfer related to debt relief from Venezuela. - The FY2025 growth outturn falls below levels implied by multiplier scenarios, reflecting that the downward adjustment to the fiscal balance between FY2024 and FY2027 is driven by the one-off capital transfer, and that FY2025 security deterioration adversely affected growth. ### Debt sustainability projections and risks - External debt projections: - External debt projected to rise starting in FY2027, reflecting resumption of concessional borrowing. - External debt expected to reach 10.7 percent of GDP in FY2035, up from 1.1 percent in FY2026. - The non-interest current account deficit is the main driver of external debt dynamics, reflecting increased imports of foodstuffs and capital and intermediate goods for recovery-related investment. - Projected breaches (baseline): - Some export-related external debt indicators are projected to breach their indicative thresholds. For example: - The PV of external PPG debt-to-GDP ratio is projected to increase from 1.6 percent in FY2025 to higher levels under stress scenarios (see natural disaster shock figures above). *Source: Excerpt from IMF staff report (chapter content provided).* ### 7.5 percent in FY2045—remaining well below the distress threshold, due to continued ### 7.5 percent in FY2045—remaining well below the distress threshold, due to continued ### External debt dynamics and key projections - The PV of external debt-to-exports ratio is projected to rise from 68.4 percent in FY2025 to 142.2 percent in FY2028, when it breaches the 140 threshold. The threshold is breached through 2037, but without exhibiting an explosive trajectory. - The external debt-service-to-exports ratio is projected to increase from 4.8 percent in FY2025 to 10.9 percent in FY2028, thus breaching the 10 percent threshold. - The external debt-service-to-exports ratio then rises to about 14 percent by FY2030, after which it declines and remains below the threshold. - The decline in debt servicing after FY2030 reflects a gradual recovery of the export-to-GDP ratio, which increases from 2.2 percent in FY2031 to 5.3 percent in FY2035 driven by structural reforms aimed at enhancing governance and competitiveness. - The external debt-service-to-revenue ratio is projected to remain well below the indicative threshold of 14 percent until the end of the projection horizon in FY2045, supported by improved revenue collection under the authorities’ reform agenda. ### Context on exports and recent history - As a reference, the export-to-GDP ratio hovered around 6 percent during FY2021-23 before declining to 2.4 percent in FY2025 due to the security crisis. ### Debt carrying capacity, thresholds, and diagnostic indices - Country: Haiti; Country Code: 263 - Debt Carrying Capacity: Weak - Applicable external debt burden thresholds for Haiti (Weak classification): - PV of debt in % of Exports: 140 - PV of total public debt in percent of GDP: 35 - Debt service in % of Exports: 10 - Debt service in % of Revenue: 14 - CI Score components and calculation (New framework): - CPIA coefficient: 0.385; 10-year average value: 2.433; CI Score component: 0.943 (36% contribution) - Real growth rate (in percent) coefficient: 2.719; 10-year average value: -0.839; CI component: -0.02 (-1% contribution) - Import coverage of reserves (in percent) coefficient: 4.052; 10-year average value: 53.138; CI component: 2.158 (82% contribution) - Import coverage of reserves^2 (in percent) coefficient: -3.990; 10-year average value: 28.237; CI component: -1.13 (-43% contribution) - Remittances (in percent) coefficient: 2.022; 10-year average value: 13.283; CI component: 0.271 (10% contribution) - World economic growth (in percent) coefficient: 13.520; 10-year average value: 2.973; CI component: 0.401 (15% contribution) - CI Score: 2.611 (100%); CI rating: Weak - Cut-off values: - Weak: CI < 2.69 - Medium: 2.69 ≤ CI ≤ 3.05 - Strong: CI > 3.05 ### Stress test scenarios and shocks - Stress tests confirm vulnerability of external debt to natural disasters and declines in remittances, official grants, or FDI inflows. - A natural disaster shock would raise the PV of PPG external debt-to-exports above the 140 percent threshold as early as in FY2026. - Under one-standard deviation shocks to non-debt-creating flows (reductions in remittances, official grants, or FDI inflows) and to the primary balance, the PV of PPG external debt-to-exports breaches the indicative threshold in FY2026. - Under a one-standard deviation shock to exports, the PV of PPG external debt-to-exports breaches in FY2027—a year earlier than under the baseline—highlighting vulnerability from Haiti’s narrow exports base. ### Public sector debt sustainability (baseline and stress) - Total public debt (nominal) projected path under baseline: - Declines from 11.7 percent of GDP in FY2025 to 8.9 percent in FY2027 and then gradually picks up, reaching 20.8 percent in FY2045. - PV terms: - PV of public debt increases from 11.8 percent of GDP in FY2025 to 18.4 percent of GDP in FY2045, remaining below the indicative benchmark of 35 percent. - Debt profile support: - Favorable due to long maturities of multilateral debt and a focus on productive investment. - Debt service drivers and gross financing needs (GFNs): - Debt service is projected to be driven by repayments of domestic debt, particularly short-term domestic debt (mainly treasury bills) which have larger share in total debt stock as of end FY2025 and higher associated interest rates and shorter maturities. - GFNs are expected to rise from 0.1 percent of GDP projected in FY2025 to about 2 percent of GDP by FY2030, and to reach 3.6 percent in 2045. - In FY2026, GFNs are expected to be met through domestic borrowing. - During FY2027-30, GFNs beyond domestic debt servicing are projected to be met through concessional external borrowing to mitigate liquidity risks and allow time for government securities market to deepen. - Revenue outlook: - Improved tax collection contributes to a steady increase in the revenue-to-GDP ratio which stabilizes around 10 percent of GDP beyond 2035 (compared to 4.7 percent in FY2025). - As a result, the public debt service-to-revenue ratio remains below 30 percent through the projection horizon, despite increased borrowing to support recovery and development efforts. - Vulnerability under stress: - While the PV of public debt-to-GDP ratio remains below its benchmark for all stress test scenarios, it is highly vulnerable to natural disasters. - A natural disaster shock would raise the PV of public debt-to-GDP ratio from 11.8 percent in FY2025 to 30.7 percent in FY2026, before stabilizing around 29 percent by the end of the projection period. ### Risk rating, vulnerabilities, and policy implications - Haiti’s external and overall risk of debt distress rating remains “high” while debt is assessed as sustainable. - The high risk of external debt distress rating stems from breaches in both export-related external debt indicators in the baseline scenario; because these breaches occur within the 10-year projection horizon, the mechanical rating points to a high risk of debt distress. - Key drivers of risk: - Continued erosion of Haiti's production and export base exacerbated by the ongoing security crisis. - High sensitivity of external debt service capacity to declines in official grants, remittances, and FDI. - Policy priorities to safeguard sustainability: - Maintain a steadfast commitment to a sound macroeconomic framework. - Implement reforms to boost revenue and enhance governance. - Secure continued donor support to obtain grants and concessional financing. - Additional vulnerability note: - A drop in official grants, remittances, FDI, or a natural disaster comparable to Hurricane Matthew could push debt ratios back to pre-Petrocaribe relief levels and materially increase external debt-service pressures. *International Monetary Fund* ### 23. The authorities agreed with the staff's assessment of an external and overall high risk ### 1htiea2025003-source-pdf - 23. The authorities agreed with the staff's assessment of an external and overall high risk ### Summary assessment and authorities' policy stance - The authorities agreed with staff that there is an external and overall high risk of debt distress and unsustainable debt. - Commitments by the authorities: - Implement sound macroeconomic policies, including a prudent fiscal policy. - Adopt a debt strategy prioritizing concessional external financing in the short and medium term to safeguard debt sustainability. - Pursue ongoing efforts to improve public debt management and promote greater transparency. - Restore security urgently to enable resumption of economic activity and revival of exports, given the country's narrow export base and debt vulnerabilities. - Authorities’ concern: limited availability of concessional external financing, judged insufficient to meet the country’s huge investment and development needs. ### Public debt structure (selected figures, fiscal-year basis) - Total public debt (US$ millions): 3,824.7 - External debt (US$ millions): 558.0 - Multilateral creditors: 313.1 - IMF: 245.1 - OPEC: 32.3 - IFAD: 35.7 - IDA: 0.0 - Bilateral creditors: 184.9 - Non-Paris Club: 184.9 - Venezuela: 28.2 - BANDES: 28.2 - Taiwan, Province of China: 156.7 - Commercial creditors: 60.0 - Domestic debt (US$ millions): 3,266.7 - Held by residents (total): 3,266.7 - BRH: 2,658.6 - Other creditors (incl. T-Bills): 608.1 - External arrears (US$ millions): 10.0 ### Key external debt-sustainability indicators and financing needs (selected values) - Gross external financing need (Million of U.S. dollars) (selected years): 625.0; 812.5; 269.6; -120.4; 227.1; 491.4; 820.6; 1102.9; 1277.8; 1083.4; 3024.5 - PV of PPG external debt-to-GDP ratio (selected years): 2.1; 1.6; 1.2; 1.5; 2.0; 2.7; 3.7; 7.7; 7.5 (values appear across projection horizon) - PV of PPG external debt-to-exports ratio (selected years): 61.5; 68.4; 71.8; 105.3; 142.2; 182.5; 233.7; 144.3; 106.3 - PPG debt service-to-exports ratio (selected historical and projection points): 8.3; 11.8; 13.7; 4.8; 10.0; 9.2; 10.9; 13.1; 13.6; 6.1; 8.7 - PPG debt service-to-revenue ratio (selected points): 10.7; 10.4; 8.8; 2.4; 3.5; 2.7; 2.9; 3.5; 3.6; 3.2; 5.7 - PV of external debt (Million of US dollars) (selected projection): 530.4; 520.7; 479.9; 705.2; 986.1; 1315.4; 1760.3; 4450.4; 7367.8 ### Public sector debt dynamics and indicators (selected values) - Public sector debt (percent of GDP): 29.2; 27.3; 15.1; 11.7; 9.4; 8.9; 8.9; 9.7; 10.9; 16.2; 20.8; 24.4 - Change in public sector debt (percent of GDP): 0.7; -1.9; -12.2; -3.4; -2.2; -0.5; 0.0; 0.8; 1.2; 1.1; 0.4 - Identified debt‑creating flows (percent of GDP): -2.3; -6.0; -11.6; -3.4; -2.1; -0.5; 0.0; 0.7; 1.0; 0.9; 0.2 - Primary deficit (percent of GDP): 1.5; -1.1; -7.2; -0.2; 0.0; 0.6; 0.7; 0.9; 1.2; 1.2; 0.5; 0.4; 0.9 - Revenue and grants (percent of GDP): 6.6; 7.2; 12.2; 5.7; 5.3; 5.4; 5.5; 5.8; 6.1; 10.1; 10.7; 9.0; 7.0 - PV of public debt-to-GDP ratio (selected points): 15.0; 11.8; 9.6; 8.7; 8.4; 8.9; 9.6; 13.3; 18.4 - Debt service-to-revenue and grants ratio (percent): 12.0; 12.0; 5.5; 6.3; 6.8; 10.3; 10.9; 12.2; 14.7; 12.9; 29.0 - Gross financing need (percent of GDP): 2.2; -0.2; -6.5; 0.1; 0.4; 1.2; 1.3; 1.7; 2.1; 2.6; 3.6 ### Key macroeconomic assumptions (selected series) - Real GDP growth (in percent): -1.7; -1.9; -4.2; -3.1; -1.2; 0.5; 1.2; 1.3; 1.5; 1.5; 1.5; -0.6; 0.7 - GDP deflator in US dollar terms (change in percent): -4.1; 0.8; 34.6; 32.1; 26.7; 12.6; 4.3; -2.3; -2.4; 2.9; 3.7; 7.2; 7.6 - Effective interest rate (percent): 0.7; 0.9; 0.5; -8.4; 3.9; 4.2; 3.2; 2.7; 2.4; 2.0; 1.8; 0.8; 1.7 - Growth of exports of G&S (US dollar terms, in percent): 6.6; -19.2; -21.2; -11.8; -12.1; 0.1; 3.6; 3.9; 4.5; 27.3; 5.5; -4.5; 14.1 - Growth of imports of G&S (US dollar terms, in percent): 8.0; -2.7; -9.8; 7.4; -0.1; -0.1; 0.9; 1.2; 1.4; 13.7; 5.5; 0.7; 4.9 - Grant element of new public sector borrowing (in percent) (selected projection years): 28.5; 27.2; 26.2; 26.1; 25.6; 23.6; 26.2 (series partially reported) - Government revenues (excluding grants, in percent of GDP): 5.3; 6.3; 5.3; 4.7; 4.7; 5.0; 5.3; 5.7; 6.0; 10.1; 10.7; 6.7; 6.8 ### Stress tests, scenarios, and vulnerabilities (high-level points) - Stress tests and tailored tests presented in figures and tables include: historical scenario, commodity price shock (magnitude based on IMF research department outlook), natural disasters, combined contingent liabilities, market financing, and combinations of macro shocks. - Most extreme stress tests across indicators cited: natural disaster is often identified as the most extreme shock in the projection period. - Sensitivity analysis (Table 5 and Table 6) documents breaches of thresholds and benchmarks across multiple scenarios (e.g., real GDP growth shocks, primary balance shocks, export shocks, depreciation, combination shocks, and tailored natural disaster scenarios), with bold values indicating breaches of thresholds/benchmarks. ### Policy implications highlighted by content - Priority to secure concessional external financing to preserve debt sustainability given constrained concessional financing availability. - Need to strengthen public debt management and transparency to better manage vulnerabilities. - Security restoration is essential to recover economic activity and exports, which is critical to reducing debt vulnerabilities given Haiti’s narrow export base. *Italic: Sources—Haitian authorities; and Fund staff estimates and projections, as presented in the cited IMF DSA material.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1htiea2025003-source-pdf.pdf_