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### Context and shocks
- Haiti characterized as a small, open, fragile, and shock-prone economy, highly dependent on remittances and experiencing considerable social, political, and economic stress.
- Key shocks and constraints:
  - Protracted political crisis beginning in 2015, including the assassination of the President in 2021.
  - Civil unrest with repeated country lockdowns (peyi-lok), increasing gang violence and control, COVID-19-related lockdowns, a hurricane, and an earthquake.
  - Pre-existing vulnerabilities: high informality and poverty, exposure to climate-related natural disasters and earthquakes, dependence on volatile and declining foreign financial assistance, and governance challenges.
- Protracted crisis and fragility impeded FDI inflows, capital deepening, and the authorities’ ability to respond to shocks; administrative and institutional capacity eroded.

### The August–October 2020 exchange rate episode
- Gourde/U.S. dollar rate appreciated by 50 percent in nominal terms from about 124 gourdes to 62 gourdes per U.S. dollar (August–October 2020).
- Coinciding BRH policy actions:
  - Introduction of foreign exchange (forex) regulations on banks and currency traders.
  - Forex sales.
  - Dollar liability issuances to commercial banks.
  - Enhanced communications including moral suasion of financial institutions.
- Concurrent macro developments:
  - Surge in remittances from the U.S.
  - Reduced imports related to the domestic crisis.

### Main sources of foreign exchange and 2021 magnitudes
- Private transfers and textiles exports are the main forex revenues.
- In 2021:
  - Private transfers: about $4.7 billion, equivalent to about 22 percent of GDP.
  - Remittances from abroad: $4.2 billion (part of the $4.7 billion).
  - Apparel exports: about $1.2 billion in export revenues, equivalent to 5.1 percent of 2021 GDP, constituting about 94 percent of Haiti’s goods exports.

### Foreign exchange outflows and balance of payments (2021)
- Haiti imported about $4.6 billion of imported goods (about 22 percent of Haiti’s 2021 GDP).
- Of imported goods, about $850 million (4 percent of GDP) were fossil fuels.
- Gross public sector and bank outflows amounted to about $200 million (1 percent of GDP).
- Selected entries from Table 1. Haiti: Balance of Payments, 2021 (est.) (USD millions, % 2021 GDP):
  - Current account: 98$ 0.5%
  - Receipts: 6,113$ 29.1%
    - o/w remittances: 4,196$ 20.0%
    - o/w goods exports: 1,130$ 5.4%
  - Expenditures: (5,890)$ -28.0%
    - o/w fossil fuel imports: (643)$ -3.1%
    - o/w food imports: (815)$ -3.9%
  - Capital and financial account (non-reserve): (72)$ -0.34%
  - Overall balance: (4)$ -0.02%

### Forex market structure, instruments, and BRH role
- Market participants: eight commercial banks and several non-deposit taking money transfer operators.
- Prior to August 2020:
  - Banks quoted bid and offer prices, settled in a BRH-operated clearinghouse.
  - No restrictions on current account transactions; residents could hold forex accounts with licensed commercial banks.
  - Exporters and remittance-receiving households could hold forex accounts credited with export receipts and transfers.
- Degree of dollarization: forex deposits account for about two thirds of total banking sector deposits.
- No forex futures market in Haiti.
- BRH involvement and prudential limits:
  - BRH set forex-related macroprudential requirements, intervened in the market, and served as fiscal agent for the MEF for certain transactions.
  - Bank lending in forex could not exceed 50 percent of total forex liabilities.
  - Reserve requirements on U.S. dollar deposits: 50 percent for commercial banks and 40 percent for savings and housing banks.
  - Net open positions (NOP) in forex limited to 0.5 percent of equity for banks and money transfer companies.
  - BRH periodically directly bought and sold forex with licensed banks.

### Dual exchange rates, reference rate, and liquidity
- Two exchange rates emerged since the 2020 episode:
  - Bank (interbank) rate: banks and non-deposit taking money changers transact at this rate.
  - Informal rate: reflects supply and demand in the informal economy; BRH reports and parallel market surveys provide informal measures.
- BRH daily reference forex rate (taux de référence) = 60 percent bank rate + 40 percent informal rate.
- Spread between bank and informal rates since late-2020 ranged from 5 to 25 percent.
- Forex market turnover averaged about $400 million per month since 2015 (equivalent to about 3 percent of 2020 nominal GDP).
- Liquidity indicators:
  - Proportional bid-offer spreads rose from about 35 to 65 basis points in 2020.
  - Forex liquidity in both official and parallel markets declined in 2020.

### Policy measures used to affect the exchange rate (August 2020 onward)
- Forex regulations (surrender requirements):
  - Transfer-receiving financial institutions required to surrender 30 percent of their forex receipts to the BRH in exchange for gourdes at the daily BRH reference rate.
  - Circular 114-3 (September 5, 2022) relaxed some rules; circular 118-1 increased reporting requirements (impact not yet assessed at time of publication).
- Announced and actual BRH forex sales:
  - Authorities announced plans to intervene by up to $150 million in August 2020.
  - From August 2020 through end-December 2021, authorities sold about $100 million in forex, including direct sales to corporate clients.
- Enhanced communications and moral suasion:
  - August 2020 sanctions levied on two commercial banks totaling about $14 million for forex regulation violations.
  - Banks reportedly encouraged to provide dollars only for essential reasons.

### Empirical modeling and key econometric findings
- VECM and VAR specifications used to model spot exchange rate; explanatory variables included:
  - Differential between growth in broad money in the U.S. and Haiti.
  - Differential in real GDP growth in the U.S. and Haiti.
  - Differential in short-term interest rates.
  - Remittances as percent of GDP.
  - Level of forex intervention by the BRH.
  - Dummy for new forex regulations effective October 2020 (DUM2020Q4).
- Long-run FMOLS (2008Q1–2021Q1, 54 observations) long-run coefficients:
  - LNGDPDIFF: 0.013235; Std. Error: 0.006633; t-Statistic: 1.995240; Prob.: 0.0516
  - LNMONDIFF: -0.831893; Std. Error: 0.126117; t-Statistic: -6.596220; Prob.: 0.0000
  - LNINTDIFF: -2.442655; Std. Error: 0.687944; t-Statistic: -3.550663; Prob.: 0.0009
  - C: 10.11123; Std. Error: 1.340895; t-Statistic: 7.540663; Prob.: 0.0000
  - DUM2020Q4: -0.337897; Std. Error: 0.154827; t-Statistic: -2.182422; Prob.: 0.0339
  - Long-run fit: R-squared: 0.866033; Adjusted R-squared: 0.855097
- Short-run VECM (Annex I – Table 2) selected coefficients:
  - D(LNINTDIFF): -0.868672; Std. Error: 0.229474; t-Statistic: -3.785492; Prob.: 0.0005
  - RES13(-1): -0.344654; Std. Error: 0.143299; t-Statistic: -2.405131; Prob.: 0.0203
  - DUM2020Q2: 0.140581; Std. Error: 0.067483; t-Statistic: 2.083202; Prob.: 0.0429
  - CBFXINT (BRH intervention) short-run coefficient: -0.007011; Std. Error: 0.032138; t-Statistic: -0.218143; Prob.: 0.8283
  - Short-run fit: R-squared: 0.459885; Adjusted R-squared: 0.375867
- Interpretation of econometric results:
  - Forex regulations effective Q4 2020 led to a statistically significant and relatively long-lasting appreciation of the gourde.
  - Central bank forex intervention did not appear to significantly affect the exchange rate over the sample period.
  - A rise in U.S. interest rates relative to Haiti led to an appreciation of the gourde (both long- and short-run); effects statistically significant—potentially reflecting a shallow financial system and impeded monetary transmission.

### Volatility analysis (Annex II: GARCH(1,1))
- Data: BRH Gourde reference rate, daily observations from May 2, 2014 through June 30, 2022; dummy SR = 1 from September 1, 2020 onward.
- GARCH(1,1) variance equation estimated coefficients:
  - C: 2.81E-06; Std. Error: 1.38E-07; Prob.: 0
  - RESID(-1)^2: 0.389933; Std. Error: 0.025856; Prob.: 0
  - GARCH(-1): 0.373933; Std. Error: 0.03046; Prob.: 0
  - DUMMY: 3.26E-05; Std. Error: 1.72E-06; Prob.: 0
- Diagnostics: Included observations: 1702 after adjustments; R-squared: 0.024821; Durbin-Watson stat: 1.976078.
- Key volatility finding:
  - The DUMMY (surrender requirements from Circular 114-2) is positive and statistically significant (3.26E-05; Prob.: 0), indicating surrender requirements increased variance in daily returns of the nominal exchange rate.
  - Sum of variance coefficients implies mean-reverting variance process.
  - Standardized residuals pass GARCH robustness checks.

### Exchange rate pass-through to inflation (Annex III)
- Pass-through estimates:
  - About -0.45 over January 1995 to September 2021.
  - About -0.64 over January 2009 to September 2021.
  - VECM estimates yield pass-through estimates in the range of -0.66 to -0.74.
- Impact magnitude:
  - A one-unit shock to the NEER (an appreciation) has a cumulative (negative) impact on CPI of about 0.25 percentage points after one year (VECM).
  - Long-run VECM pass-through declines slowly from around -0.75 after twelve months to around -0.66 after 20 months.
- Comparative regional entries (2009M1-2021M9) include:
  - Haiti -0.44511995M1-2021M9-0.6389
  - Regional Average-0.4450-0.3811
- Policy implications:
  - High exchange rate pass-through reduces effectiveness of monetary policy tools and strengthens the potential role of the nominal exchange rate as an anchor for price stability.
  - Exchange rate volatility contributes to inflation volatility, complicating inflation expectations and monetary policy.

### Distributional effects, external sustainability, and fiscal implications
- Distributional effects of the rapid nominal appreciation in H2 2020:
  - Adversely affected remittance-dependent households, savers, and financial institutions.
  - Benefited the government and large importers with access to credit and the forex market.
- External and fiscal outcomes:
  - Nominal exchange rate appreciation helped explain the decline in headline inflation in 2020-2021.
  - Appreciation reduced fuel subsidy costs initially: overall deficit (after grants) fell from 3.2 percent of GDP in FY2020 to 2.4 percent of GDP in FY2021 (ending September 30).
  - Transfers to EDH and direct fuel subsidies declined from 1.4 percent to 1.1 percent of GDP.
  - Near-term fuel subsidy savings worth about 0.3 percent of GDP due to appreciation; fuel subsidy costs rose by an estimated 0.5 percent of GDP in FY2022 due to higher world prices and gradual depreciation.
  - Exchange rate appreciation in FY2021 helped lower debt service costs, with external amortization costs falling by 0.2 percentage points of GDP compared to FY2020.
  - Haiti’s debt-to-GDP ratio decreased from about 26 percent in FY2019 to about 21 percent in FY2020 (partly reflecting appreciation and a GDP rebasing in October 2020).
- External buffers and sustainability:
  - Gross international reserves coverage remained steady in FY2021, adequate to finance more than five months of imports (benchmarked against three-month import coverage and ARA-CC metric).
  - Net external buffers declined steadily during the episode, increasing exposure to external sustainability risks if reserve-related liabilities could not be rolled over.
  - Efforts to defend the nominal gourde (including accumulation of reserve-related liabilities) could have heightened vulnerabilities given limited buffers and the absence of a strong export sector.

### Policy considerations and recommendations
- Fragility-related constraints on policy:
  - State fragility changes composition and magnitude of shocks, limits countercyclical capacity, shortens policy horizons, and increases temptation for short-term expediency.
  - Fiscal dominance risks significant: central bank credit to the government and base money creation coincided with recent rises in inflation.
- Recommended exchange rate and monetary framework directions:
  - Consider adopting a relatively flexible exchange rate regime complemented by strengthened liquidity management, development of financial and forex markets, containment of fiscal dominance, and structural reforms to enhance competitiveness and promote expenditure-switching.
  - Use reserve money (RM) programming as a rule-based, non-discretionary monetary policy framework to anchor inflation expectations and limit excessive base money creation when financial markets are embryonic and banks rely heavily on central bank funding.
  - More stringent controls on base money creation can be an important tool to anchor inflation expectations and contain fiscal dominance in Haiti.
- Streamlining 2020 measures could include:
  1) Reducing forex surrender requirements and limits on banks’ NOPs to reduce forex volatility and increase market depth.
  2) Refraining from forex intervention, given issues related to external sustainability and the low empirical impact of forex sales on the exchange rate level.
  3) Continuing structural policies to improve functioning of the forex market.
- Expected benefits of streamlining:
  - Better management of limited net external buffers.
  - Unification of official and parallel exchange rates.
  - Improved forex availability to the private sector to facilitate capital deepening and structural transformation.
- Transition options:
  - Complement a nominal exchange rate anchor with RM programming to anchor inflation expectations and manage forex reserves.
  - RM programming has been used by many FCS as part of exit strategies from poverty, fragility, and conflict.

### Conclusions and key empirical findings
- BRH actions (intervention announcements, regulations, moral suasion) during August–October 2020 were highly effective at halting the gourde/U.S. dollar slide and produced a rapid appreciation of about 50 percent.
- Appreciation coincided with rising balance of payments receipts (especially remittances from the U.S.) and a contraction in imports related to COVID-19 and the political/security crisis.
- Key drivers of the 2020 appreciation:
  - Forex regulations and their impact on money supply growth contributed more to the gourde’s strengthening in H2 2020 than did forex intervention.
  - Relative money supply growth differentials (U.S. vs Haiti) played a role, with higher annual money supply growth in the U.S. relative to Haiti.
- Spillovers and distributional effects:
  - Appreciation contributed to a decline in headline inflation in 2020-2021, later unwound in 2021-2022 as oil prices rebounded and the exchange rate reverted.
  - Forex surrender requirements decreased liquidity, increased exchange rate volatility, and contributed to a sharp widening of the parallel forex market premium (estimated 25 percent in March 2021 before falling to about 10 percent by June 2022).
  - Policies contributed to a worsening of external sustainability.
- Recommended approach:
  - Adopt a more cautious exchange rate management strategy suited to Haiti’s shock-prone nature, streamline regulations, and potentially complement exchange rate management with an RM framework to allow market-based allocation of scarce foreign exchange, reduce parallel market premia, fiscal dominance, and barriers to structural transformation.

*Source: IMF Working Paper — Lessons from Haiti’s Recent Exchange Rate Developments (wpiea2022225-print-pdf).*

### Introduction ...........................................................................................................

### Introduction

### Context and shocks
- Haiti is described as a small, open, fragile, and shock-prone economy, highly dependent on remittances and experiencing considerable social, political, and economic stress.
- Key shocks and constraints highlighted:
  - Protracted political crisis beginning in 2015, including the assassination of the President in 2021.
  - Civil unrest with repeated country lockdowns (peyi-lok), increasing gang violence and control, COVID-19-related lockdowns, a hurricane, and an earthquake.
  - Pre-existing vulnerabilities: high informality and poverty, exposure to climate-related natural disasters and earthquakes, dependence on volatile and declining foreign financial assistance, and governance challenges.
- The protracted crisis and fragility have impeded FDI inflows, capital deepening, and the authorities’ ability to respond to shocks; administrative and institutional capacity has eroded.

### The 2020 exchange rate episode (August–October 2020)
- From August–October 2020, the gourde/U.S. dollar rate appreciated by 50 percent in nominal terms from about 124 gourdes to 62 gourdes per U.S. dollar.
- This appreciation coincided with several BRH policy actions:
  - Introduction of foreign exchange (forex) regulations on banks and currency traders.
  - Forex sales.
  - Dollar liability issuances to commercial banks.
  - Enhanced communications including moral suasion of financial institutions.
- The appreciation period also coincided with a surge in remittances from the U.S. and reduced imports related to the domestic crisis.

### Main sources of foreign exchange and 2021 magnitudes
- Private transfers and textiles exports are the main forex revenues.
- In 2021:
  - Private transfers: about $4.7 billion, equivalent to about 22 percent of GDP.
  - Remittances from abroad: $4.2 billion (part of the $4.7 billion).
  - Apparel exports: about $1.2 billion in export revenues, equivalent to 5.1 percent of 2021 GDP, constituting about 94 percent of Haiti’s goods exports.

### Key findings on effects and transmission
- Distributional effects of the rapid nominal appreciation in H2 2020:
  - Adversely affected remittance-dependent households, savers, and financial institutions.
  - Benefited the government and large importers with access to credit and the forex market.
- Empirical findings:
  - Haiti’s net remittance flows are highly sensitive to movements in the real effective exchange rate (REER) in both the short- and long-run; real exchange rate appreciation adversely affects remittance-dependent households.
  - Forex regulations in the form of surrender requirements led to a decline in forex liquidity and increased volatility in the forex market, impeding efficient market functioning and price discovery and complicating determination of the nominal exchange rate equilibrium.
  - Surrender requirements had a statistically significant impact on the nominal exchange rate in the long run.
  - Forex intervention did not have a statistically significant impact on the nominal exchange rate, even in the short run.
  - Estimated inflation pass-through from the exchange rate indicates exchange rate volatility contributes to price level volatility, complicating monetary policy implementation.

### Policy considerations and monetary-policy framework implications
- Fragility-related constraints on policy:
  - State fragility changes the composition and magnitude of shocks, limits countercyclical capacity, and shortens policy horizons, increasing temptation for short-term expediency.
  - Fiscal dominance risks are significant: central bank credit to the government and base money creation coincided with recent rises in inflation.
- Recommended/observed policy directions discussed:
  - Consider adopting a relatively flexible exchange rate regime complemented by strengthened liquidity management, development of financial and forex markets, containment of fiscal dominance, and structural reforms to enhance competitiveness and promote expenditure-switching.
  - Use of reserve money (RM) programming as a rule-based, non-discretionary monetary policy framework to anchor inflation expectations and limit excessive base money creation in contexts of fiscal dominance and embryonic financial markets. RM programming is noted as particularly suitable when financial markets are embryonic and banks rely heavily on central bank funding.
  - More stringent controls on base money creation can be an important tool to anchor inflation expectations and contain fiscal dominance in Haiti.

### Structure and empirical annexes (scope of analysis)
- The study focuses primarily on policy actions and related developments from August 2020 through mid-2021; empirical work uses data available through mid-2021.
- Annexes I–IV provide empirical analyses on:
  - Factors driving the sharp appreciation of the nominal exchange rate in late 2020 (Annex I).
  - Impact of forex regulations on forex market volatility (Annex II).
  - Pass-through of exchange rate movements to CPI inflation (Annex III).
  - Sensitivity of exports, imports, and net remittance flows to exchange rate movements (Annex IV).

*wpiea2022225-print-pdf - Introduction*

### 14. Haiti’s main forex outflows are for

### 14. Haiti’s main forex outflows are for

### Foreign exchange outflows and balance of payments (2021)
- Haiti imported about $4.6 billion of imported goods (worth about 22 percent of Haiti’s 2021 GDP).
- Of imported goods, about $850 million (4 percent of GDP) were fossil fuels.
- Gross public sector and bank outflows (net external debt payments from both the public and private sectors were not major contributors) amounted to about $200 million (1 percent of GDP).

- Table 1. Haiti: Balance of Payments, 2021 (est.) (USD millions, % 2021 GDP)
  - Current account: 98$ 0.5%
  - Receipts: 6,113$ 29.1%
    - o/w remittances: 4,196$ 20.0%
    - o/w goods exports: 1,130$ 5.4%
  - Expenditures: (5,890)$ -28.0%
    - o/w fossil fuel imports: (643)$ -3.1%
    - o/w food imports: (815)$ -3.9%
  - Capital and financial account (non-reserve): (72)$ -0.34%
  - Overall balance: (4)$ -0.02%

### Forex market structure and participants
- Market participants: eight commercial banks and several non-deposit taking money transfer operators.
- Prior to August 2020:
  - Commercial banks quoted bid and offer prices for clients, settled in a BRH-operated clearinghouse.
  - No restrictions on current account transactions; residents permitted to hold forex accounts with Haiti’s eight licensed commercial banks.
  - Exporters and remittance-receiving households could hold forex accounts credited with export receipts and transfers from money transfer operators.
- Degree of dollarization:
  - Forex deposits account for about two thirds of total banking sector deposits.
- Market instruments:
  - There is no forex futures market in Haiti.

### BRH role, regulations, and prudential limits
- BRH involvement:
  - Set forex-related macroprudential requirements, intervened in the market, and served as fiscal agent for the Ministry of Economy and Finance (MEF) for certain transactions, including with IFIs.
- Prudential limits and requirements:
  - Bank lending in forex could not exceed 50 percent of total forex liabilities.
  - Reserve requirements on U.S. dollar deposits: 50 percent for commercial banks and 40 percent for savings and housing banks.
  - Net open positions (NOP) in forex limited to 0.5 percent of equity for banks and money transfer companies.
- BRH interventions:
  - Periodic direct buying and selling of forex with licensed banks.
  - Prior to late-2021, government had a fuel import monopoly and made international payments via an MEF-designated account at the BRH.

### Dual exchange rates and reference rate methodology
- Since the 2020 appreciation episode, two exchange rates emerged:
  - Bank (interbank) rate: banks and non-deposit taking money changers transact at this rate.
  - Informal rate: reflects supply and demand in the informal economy; two informal measures exist (BRH-reported and parallel market surveys).
- BRH daily reference forex rate (taux de référence) = 60 percent bank rate + 40 percent informal rate.
- Spread between bank and informal rates since late-2020 ranged from 5 to 25 percent.

### Forex turnover and liquidity
- Forex market turnover averaged about $400 million per month since 2015 (equivalent to about 3 percent of 2020 nominal GDP).
- Liquidity indicators:
  - Proportional bid-offer spreads rose from about 35 to 65 basis points in 2020.
  - Forex liquidity in both official and parallel markets declined in 2020.

### The 2020 appreciation episode and subsequent depreciation
- Depreciation prior to August 2020:
  - Gourde/U.S. dollar rate depreciated in 2019 and first half of 2020 due to inflationary financing of the deficit, supply shortages from social unrest and gang activity (peyi-loks), and COVID-19 containment measures.
- August–October 2020 appreciation:
  - Gourde/U.S. dollar rate appreciated by nearly 50 percent through October 2020.
  - Nominal effective exchange rate (NEER) appreciated by about 50 percent; REER appreciated by 78 percent over this period.
  - Contributing factors: compressed domestic expenditures, imports fell from about 31 percent of GDP in FY2019 to 26 percent in FY2020, and surging remittance inflows.
- Post-peak depreciation:
  - Between October 2020 peak and end-April 2022, gourde depreciated steadily.
  - NEER depreciated about 20 percent and REER depreciated about 33 percent from their October 2020 highs.
  - IMF staff assessments:
    - As of November 2020, Haiti’s REER was assessed as overvalued by about 40 percent (2020 EBA-Lite).
    - A subsequent review in April 2022 found the gap narrowed to about 5 percent.

### Policy measures used to affect the exchange rate (August 2020 onward)
- Forex regulations (surrender requirements):
  - Transfer-receiving financial institutions required to surrender 30 percent of their forex receipts to the BRH in exchange for gourdes at the daily BRH reference rate.
  - Circular 114-3 (September 5, 2022) relaxed some rules; circular 118-1 increased reporting requirements (impact not yet assessed at time of publication).
- Announced and actual BRH forex sales:
  - Authorities announced plans to intervene by up to $150 million in August 2020.
  - From August 2020 through end-December 2021, authorities sold about $100 million in forex, including direct sales to corporate clients.
- Enhanced communications and moral suasion:
  - August 2020 sanctions levied on two commercial banks totaling about $14 million for forex regulation violations.
  - Banks reportedly encouraged to provide dollars only for essential reasons; announcements likely anchored expectations.

### Empirical findings and drivers of exchange rate movements
- Modeling approach:
  - Spot exchange rate modeled via a vector error correction model (VECM); key explanatory variables included:
    - Differential between growth in broad money in the U.S. and Haiti.
    - Differential in real GDP growth in the U.S. and Haiti.
    - Differential in short-term interest rates.
    - Remittances as percent of GDP.
    - Level of forex intervention by the BRH.
    - Dummy variable for new forex regulations effective October 2020.
- Key empirical results:
  - A rise in U.S. GDP relative to Haiti tends to depreciate the gourde over the long run.
  - A rise in U.S. money supply relative to Haiti had the opposite effect (appreciation).
  - A rise in U.S. interest rates relative to Haiti led to an appreciation of the gourde (both long- and short-run); effects of interest rate differentials are statistically significant.
    - Possible explanation: shallow financial system impeding fund intermediation and monetary transmission.
  - Short-run analysis for the second half of 2020 found GDP and money supply differentials did not significantly drive the sharp appreciation.
  - Forex regulations introduced in Q4 2020 led to a statistically significant and relatively long-lasting appreciation of the gourde.
  - Central bank forex intervention (actual sales) did not appear to significantly affect the exchange rate over the sample period; signaling effects of announcements and loss of reserves may have reduced intervention effectiveness.
  - GARCH model results indicate surrender requirements increased nominal exchange rate volatility (dummy positive and statistically significant).

### Implications of exchange rate developments
- Liquidity and volatility:
  - Liquidity declined following the introduction of forex regulations and BRH forex sales; proportional bid-ask spreads rose.
  - Surrender requirements and limits on NOPs reduced market participants’ ability to hold forex stocks and make two-way markets, contributing to reduced liquidity.
  - Surrender requirements increased nominal exchange rate volatility despite being adopted in part to smooth volatility.
- Parallel market premium:
  - Actions coincided with widening of the parallel forex market premium to an estimated 25 percent in March 2021 before falling to about 10 percent by June 2022.
  - Sharp rise in parallel premium implies supply-demand imbalance and mispricing of the official exchange rate.
- Inflation pass-through:
  - Nominal exchange rate appreciation in 2020 helps explain the decline in headline inflation in 2020-2021.
  - Exchange rate pass-through to CPI inflation in Haiti is relatively high compared to other Caribbean and Central American countries (estimated via bivariate ARDL and VECM models).
  - Higher exchange rate volatility can feed through to higher inflation volatility, complicating inflation expectations and monetary policy objectives.
- Fiscal and debt implications:
  - Appreciation reduced fuel subsidy costs initially: overall deficit (after grants) fell from 3.2 percent of GDP in FY2020 to 2.4 percent of GDP in FY2021 (ending September 30).
  - Transfers to the state electricity company EDH and direct fuel subsidies to oil companies declined from 1.4 percent to 1.1 percent of GDP.
  - Near-term fuel subsidy savings worth about 0.3 percent of GDP due to appreciation; however, fuel subsidy costs rose by an estimated 0.5 percent of GDP in FY2022 due to higher world prices and gradual depreciation, suggesting fiscal savings were temporary.
  - Exchange rate appreciation in FY2021 helped lower debt service costs, with external amortization costs falling by 0.2 percentage points of GDP compared to FY2020.
  - Haiti’s debt-to-GDP ratio decreased from about 26 percent in FY2019 to about 21 percent in FY2020, partly reflecting exchange rate appreciation (and a GDP rebasing in October 2020).

*Source: BRH; IMF Working Papers — Lessons from Haiti’s Recent Exchange Rate Developments.*

### 28. By contrast, remittance-dependent households and exporters saw their purchasing power in

### 28. By contrast, remittance-dependent households and exporters saw their purchasing power in

### Impact on remittances, exports, and purchasing power
- Net private transfers (remittances) increased in nominal U.S. dollar terms but declined as a share of U.S. dollar GDP from 20.0 percent to 16.7 percent from FY2020 to FY2021.
- Exports of goods increased in nominal U.S. dollar terms but declined as a share of U.S. dollar GDP from 6.1 percent to 5.4 percent from FY2020 to FY2021.
- Equations of exports, imports, and net remittance inflows were estimated using the Engle-Granger approach with annual data over the period 1996 to 2020.
- Empirical findings:
  - Exports of goods are mostly affected by output growth in key trading partner countries and are not sensitive to movements in the REER, either in the short or long run.
  - Haiti’s imports of goods are not sensitive to movements in the REER.
  - Net remittance inflows are strongly and positively correlated with economic activity in partner trading countries.
  - Net remittance inflows are highly sensitive to movements in the REER; specifically, a depreciation of the REER is associated with an increase in net remittance inflows, both in the short run and in the long run.

### Forex regulations and their mechanics (Box 1 summary)
- Authorities introduced new regulations in mid-2020 governing international money transfers and instituted several forex regulations targeted at banks and money transfer agencies engaged in international transfers.
- Circular 114-2 (announced in September 2020) mandated:
  - Banks and money transfer companies exchange dollar remittances into gourdes for persons not holding U.S. dollar bank accounts.
  - Convert all dollar remittances into gourdes at the BRH reference rate (less favorable than the parallel exchange rate).
  - Sell 30 percent of the forex received from remittance inflows to the BRH at the reference rate.
  - Sell 40 percent to banks (which are not allowed to keep a net open forex position above 0.5 percent of equity).
- Several measures introduced in 2020 were reversed in the latter half of 2022 (impact of relaxation beyond scope of paper).

### Effects on the domestic financial system
- Limits on banks’ NOPs in forex at 0.5 percent:
  - Reduced banks’ dollar inventory, making it difficult to meet customers’ forex needs.
  - Likely hampered development of the interbank forex market by limiting banks’ ability to absorb liquidity shocks.
- Increase in commercial bank forex deposits at the central bank (from Circular 114-2 and related measures):
  - Potential operational risk if banks faced restrictions on dollar redemptions from the BRH.
  - BRH interest rate on banks’ deposits was lower than the risk-adjusted return available in the open market.

### External sustainability and macroeconomic outcomes
- The 2020 exchange rate appreciation contributed to adverse external sustainability outcomes:
  - Haiti’s total exports declined about 42 percent year-over-year in 2020.
  - Textile exports declined about 27 percent over the same period.
  - IMF staff analysis in 2020 concluded the REER was about 40 percent overvalued.
- Since 2020 the REER gap narrowed after the nominal exchange rate entered a long depreciating path.
- Gross international reserves coverage remained steady in FY2021, adequate to finance more than five months of imports, implying gross reserve adequacy when benchmarked against the three-month import coverage rule of thumb and the model-based ARA-CC metric.
- Net external buffers declined steadily during the episode, implying increased exposure to external sustainability risks if reserve-related liabilities could not be rolled over.
- Efforts to defend the nominal gourde (including accumulation of reserve-related liabilities) could have heightened vulnerabilities given limited buffers and the absence of a strong export sector.

### Policy considerations and recommendations
- A gradual move toward a more flexible exchange rate regime may be appropriate given:
  - Haiti’s lack of fiscal policy space.
  - Absence of alternative instruments for absorbing shocks.
  - Structural impediments to effective expenditure-switching measures.
- Priority reforms (medium term):
  - Growth-promoting structural reforms.
  - Further domestic revenue mobilization.
  - Public expenditure rationalization and controls to address fiscal dominance.
- Monetary policy priorities:
  - Strengthen monetary policy transmission mechanism.
  - Develop effective monetary policy instruments (money supply- or interest rate-based).
  - Strengthen the central bank’s capacity for liquidity management and forecasting.
  - Facilitate development and deepening of domestic financial and forex markets to:
    - Allow BRH to pursue more independent monetary policy with primary objective of containing inflationary pressures and inflation expectations.
    - Facilitate gradual shift towards a more flexible exchange rate regime so the exchange rate can better act as a shock absorber without major repercussions for price stability.
- Transition options:
  - Complement a nominal exchange rate anchor with reserve money programming (RM) to anchor inflation expectations and manage forex reserves.
  - RM programming has been used by many FCS as part of exit strategies from poverty, fragility, and conflict.
  - Given high rates of inflation pass-through, an exchange rate nominal anchor complemented by an RM framework could contain inflationary pressures and expectations.
- Streamlining 2020 measures could include:
  1) Reducing forex surrender requirements and limits on banks’ NOPs to reduce forex volatility and increase market depth.
  2) Refraining from forex intervention, given issues related to external sustainability and the low empirical impact of forex sales on the exchange rate level.
  3) Continuing structural policies to improve functioning of the forex market.
- Expected benefits of streamlining:
  - Better management of limited net external buffers.
  - Unification of official and parallel exchange rates.
  - Improved forex availability to the private sector to facilitate capital deepening and structural transformation.

### Conclusions and key empirical findings
- BRH actions (intervention announcements, regulations, moral suasion) during August–October 2020 were highly effective at halting the gourde/U.S. dollar slide and produced a rapid appreciation of about 50 percent.
- The appreciation coincided with rising balance of payments receipts (especially remittances from the U.S.) and a contraction in imports related to COVID-19 and political/security crisis.
- Key drivers of the 2020 appreciation:
  - Forex regulations and their impact on money supply growth contributed more to the gourde’s strengthening in the second half of 2020 than did forex intervention.
  - Relative money supply growth differentials (U.S. vs Haiti) played a role, with higher annual money supply growth in the U.S. relative to Haiti.
- Spillovers and distributional effects:
  - Nominal exchange rate appreciation contributed to a decline in headline inflation in 2020-2021, which was later unwound in 2021-2022 as oil prices rebounded and the nominal exchange rate reverted to pre-2020 levels.
  - Forex intervention reduced external buffers and led to a broadly misaligned exchange rate inconsistent with macroeconomic fundamentals; the appreciation was subsequently and gradually reversed.
  - Remittance-dependent households, savers, and financial institutions were adversely affected; the government and importers with access to the forex market benefitted.
  - Forex surrender requirements decreased liquidity in forex markets, increased exchange rate volatility, and contributed to greater inflation volatility and a sharp widening of the parallel forex market premium.
  - Policies contributed to a worsening of external sustainability.
- Recommended approach:
  - A more cautious exchange rate management strategy suited to Haiti’s shock-prone nature, including streamlining regulations and potentially complementing with an RM framework, to allow market-based allocation of scarce foreign exchange and reduce parallel market premia, fiscal dominance, and barriers to structural transformation.

### Annex I — Exchange rate model (calibrated for Haiti) key points
- A VECM of Haiti’s nominal exchange rate was estimated using quarterly data; data sources included IMF WEO, Federal Reserve Bank of St. Louis, and Haver.
- Variables found to be I(1) (non-stationary):
  - LNEXRPA: log of Haiti’s nominal exchange rate (Haitian gourdes per U.S. dollar, period average).
  - LNGDPDIFF: differential between log of U.S. real output and log of Haitian real output (Haiti quarterly output interpolated from annual data via Chow-Lin).
  - LNMONDIFF: differential between log of U.S. money supply and log of Haitian money supply.
  - LNINTDIFF: differential in short-term interest rates = Log (1 + U.S. three-month T-bill rate) – Log (1 + Haiti’s three-month T-bill rate).
  - LNHTIREMS: log of net inflows of remittances to Haiti as a percent of GDP (seasonally adjusted); remittances were borderline for unit root and not included in the long-run cointegrating vector, but first difference included in short-run VECM.
- Stationary variable:
  - CBFXINT: volume of BRH intervention in forex market (net purchases of forex by the BRH in percent of GDP).
- Dummy variables:
  - DUM2020Q4 = 0 prior to 2020Q4, = 1 thereafter (captures long-run impact of forex regulations effective October 2020).
  - DUM2020Q2 = 1 in 2020Q2, = 0 otherwise (captures immediate temporary COVID-19 shock).
- Johansen-Juselius tests indicate LNEXRPA, LNGDPDIFF, LNMONDIFF, and LNINTDIFF are cointegrated, supporting VECM use.
- Long-run FMOLS estimation (2008Q1–2021Q1, 54 observations) results:
  - GDP growth differentials, money supply differentials, and short-term interest rate differentials significantly affect the exchange rate over the long run.
  - A rise in U.S. GDP relative to Haiti tends to depreciate the gourde over the long run.
  - A rise in relative money supplies in the U.S. and Haiti has the opposite effect (implying relative money supply dynamics influence exchange rate direction).
  - Forex regulations effective 2020Q4 led to a statistically significant and long-lasting appreciation of the gourde.
  - Surprisingly, a rise in relative interest rates in the U.S. leads to an appreciation (rather than depreciation) of the Haitian gourde relative to the U.S. dollar in the long-run; effects are statistically significant—possibly reflecting Haiti’s financial system structure and impeded monetary policy transmission.
  - Forex intervention does not appear to impact the exchange rate, even in the short run, possibly due to signaling effects that run counter to intervention goals.

*Source: IMF Working Paper — Lessons from Haiti’s Recent Exchange Rate Developments.*

### Annex I – Table 1: Haiti: Long-run Determinants of Haiti’s Nominal Exchange Rate

### Annex I – Table 1: Haiti: Long-run Determinants of Haiti’s Nominal Exchange Rate

### Short-Run Dynamics
- Short-run specification uses first differences D(x) to account for non-stationarity.
- Among key variables, only changes in the interest rate differential are statistically significant in the short run, with a puzzling sign indicating higher U.S. interest rates are associated with appreciation of the Haitian gourde.
- Movements in net remittance inflows (percent of GDP) and BRH forex intervention do not have a significant short-run impact on exchange rate movements.
- The coefficient on the lagged residuals from the long-run equation, RES13, is statistically significant and implies that about a third of any disequilibrium in the forex market is corrected each quarter — i.e., it takes about three quarters for the exchange rate to move to its long-run equilibrium level following a disturbance.

- Short-run regression (Annex I – Table 2) key coefficients and statistics:
  - Dependent Variable: D(LNEXRPA)
  - Method: Least Squares
  - Sample (adjusted): 2008Q2 2021Q2
  - Included observations: 53 after adjustments
  - Coefficients:
    - C: -0.012647; Std. Error: 0.014741; t-Statistic: -0.857956; Prob.: 0.3955
    - D(LNGDPDIFF): 0.001950; Std. Error: 0.005976; t-Statistic: 0.326246; Prob.: 0.7458
    - D(LNMONDIFF): -0.305731; Std. Error: 0.276300; t-Statistic: -1.106518; Prob.: 0.2744
    - D(LNINTDIFF): -0.868672; Std. Error: 0.229474; t-Statistic: -3.785492; Prob.: 0.0005
    - DLNHTIREMS: 0.006328; Std. Error: 0.004769; t-Statistic: 1.326872; Prob.: 0.1912
    - CBFXINT: -0.007011; Std. Error: 0.032138; t-Statistic: -0.218143; Prob.: 0.8283
    - RES13(-1): -0.344654; Std. Error: 0.143299; t-Statistic: -2.405131; Prob.: 0.0203
    - DUM2020Q2: 0.140581; Std. Error: 0.067483; t-Statistic: 2.083202; Prob.: 0.0429
  - Goodness of fit and diagnostics:
    - R-squared: 0.459885
    - Adjusted R-squared: 0.375867
    - Mean dependent var: 0.015860
    - S.D. dependent var: 0.080363
    - S.E. of regression: 0.063489
    - Sum squared resid: 0.181387
    - Log likelihood: 75.24779
    - F-statistic: 5.473647; Prob(F-statistic): 0.000136
    - Durbin-Watson stat: 2.079737
    - Wald F-statistic: 42.29437; Prob(Wald F-statistic): 0.000000

### Long-Run Determinants (FMOLS estimates, Annex I – Table 1)
- Dependent Variable: LNEXRPA
- Method: Fully Modified Least Squares (FMOLS)
- Date: 07/21/22 Time: 11:53
- Sample (adjusted): 2008Q1 2021Q2
- Included observations: 54 after adjustments
- Cointegrating equation deterministics: C DUM2020Q4
- Long-run covariance estimate (Bartlett kernel, Newey-West fixed bandwidth = 4.0000)
- Estimated coefficients (Long-run equation):
  - LNGDPDIFF: 0.013235; Std. Error: 0.006633; t-Statistic: 1.995240; Prob.: 0.0516
  - LNMONDIFF: -0.831893; Std. Error: 0.126117; t-Statistic: -6.596220; Prob.: 0.0000
  - LNINTDIFF: -2.442655; Std. Error: 0.687944; t-Statistic: -3.550663; Prob.: 0.0009
  - C: 10.11123; Std. Error: 1.340895; t-Statistic: 7.540663; Prob.: 0.0000
  - DUM2020Q4: -0.337897; Std. Error: 0.154827; t-Statistic: -2.182422; Prob.: 0.0339
- Goodness of fit and diagnostics:
  - R-squared: 0.866033
  - Adjusted R-squared: 0.855097
  - Mean dependent var: 3.981585
  - S.D. dependent var: 0.310064
  - S.E. of regression: 0.118029
  - Sum squared resid: 0.682617
  - Long-run variance: 0.021948

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### Annex II – Modeling the Volatility of Haiti’s Nominal Exchange Rate (GARCH(1,1))

### Model design and data
- Objective: estimate impact of forex surrender requirements on volatility of Haiti’s nominal exchange rate.
- Data: BRH’s Gourde reference rate (60 percent/40 percent weighted average of the prevailing official and informal market, respectively), daily observations from May 2, 2014 through June 30, 2022; daily returns constructed using logs.
- Evidence of ARCH effects: first- and second-order autocorrelations reported as 0.034 and 0.331 respectively, gradually declining to 0.03 after twenty-two lags; small p-values reject “no ARCH” effects.
- Mean equation (autoregressive) omitted external shocks to focus on surrender requirements’ impact on volatility.
- Dummy SR (denoted SR or DUMMY) equals 1 from September 1, 2020 onward (introduction of Circular 114-2) and 0 otherwise.
- GARCH(1,1) variance equation constraints: ω>0; α≥0; β≥0; (α+β)<1. Sum α+β indicates speed of mean reversion of variance.

### Results (Annex II – Table 2)
- Dependent Variable: DLR
- Method: ML - ARCH
- Sample (adjusted): 5/15/2014 6/30/2022
- Included observations: 1702 after adjustments
- Convergence achieved after 29 iterations
- Presample variance: backcast (parameter = 0.7)
- GARCH specification: C(2) + C(3)*RESID(-1)^2 + C(4)*GARCH(-1) + C(5)*DUMMY
- Mean equation:
  - AR(9): 0.069638; Std. Error: 0.017906; Prob.: 0.0001
- Variance equation coefficients:
  - C: 2.81E-06; Std. Error: 1.38E-07; Prob.: 0
  - RESID(-1)^2: 0.389933; Std. Error: 0.025856; Prob.: 0
  - GARCH(-1): 0.373933; Std. Error: 0.03046; Prob.: 0
  - DUMMY: 3.26E-05; Std. Error: 1.72E-06; Prob.: 0
- Diagnostics:
  - R-squared: 0.024821
  - Mean dependent var: 0.000396
  - S.D. dependent var: 0.006107
  - S.E. of regression: 0.00603
  - Sum squared resid: 0.06182
  - Log likelihood: 7247.707
  - Durbin-Watson stat: 1.976078

### Key findings from GARCH results and discussion
- The coefficient on the DUMMY (representing the surrender requirements announced via Circular 114-2 on September 18, 2020) is positive and statistically significant (3.26E-05; Prob.: 0), indicating that the surrender requirements increased the variance in daily returns of the nominal exchange rate.
- The sum of the variance equation coefficients (RESID(-1)^2 + GARCH(-1) + DUMMY?) is less than 1, implying a mean-reverting variance process.
- Standardized residuals pass GARCH robustness checks: standardized residuals show no autocorrelation (large p-values in Annex II – Table 3).
- Possible channels for increased volatility after surrender requirements:
  - Concurrent BRH actions (forex sales, sanctions on financial institutions, policy communications) may have contributed.
  - Surrender requirements reduced market liquidity for dollars as financial institutions pulled back, evidenced by higher bid-offer spreads in bank and informal forex markets, which may have increased volatility.

### Autocorrelations (Annex II – Table 1) highlights
- Autocorrelation (AC) and Partial AC (PAC) for lags 1 and 2:
  - Lag 1: AC 0.034; PAC 0.034; Q-Stat 2.0068; Prob 0.157
  - Lag 2: AC 0.331; PAC 0.33; Q-Stat 189.86; Prob 0
- Autocorrelations generally remain statistically significant across many lags (Q-Stat Prob reported as 0 for numerous lags up to lag 25).

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### Annex III – Estimating Exchange Rate Pass-Through to Inflation in Haiti and Regional Peers

### Main findings
- The exchange rate pass-through coefficient in Haiti has increased over the past decade:
  - About -0.45 over January 1995 to September 2021.
  - About -0.64 over January 2009 to September 2021.
- VECM estimates, which incorporate a monetary policy reaction function and transmission mechanism, yield pass-through estimates in the range of -0.66 to -0.74.
- A one-unit shock to the nominal effective exchange rate (an appreciation) has a cumulative (negative) impact on the CPI price level of about 0.25 percentage points after one year.
- Pass-through estimates in the more recent period place Haiti among the highest in the Caribbean and Central America and much higher than the regional average.
- High exchange rate pass-through implies:
  - More difficulty controlling inflation through interest rates or monetary aggregates.
  - The nominal exchange rate may be a potentially more effective nominal anchor for price stability.
  - Exchange rate volatility contributes to volatility in price levels and inflation rates, complicating monetary policy.

### Model 1: ARDL (Annex III – Table 1) key details and coefficients
- Dependent Variable: DLNHTICPI
- Method: Least Squares
- Date: 12/13/21 Time: 20:09
- Sample: 2009M01 2021M09
- Included observations: 153
- Huber-White-Hinkley (HC1) heteroskedasticity consistent standard errors
- Selected coefficients (lags 0–12 for DLNHTINEER and DLNHTICPI lags 1–12):
  - C: 0.1204; Std. Error: 0.104644; t-Statistic: 1.150568; Prob.: 0.2521
  - DLNHTICPI(-1): 0.341949; Std. Error: 0.262584; t-Statistic: 1.302245; Prob.: 0.1952
  - DLNHTICPI(-2): 0.292682; Std. Error: 0.110212; t-Statistic: 2.655627; Prob.: 0.0089
  - DLNHTINEER: -0.061956; Std. Error: 0.021015; t-Statistic: -2.948202; Prob.: 0.0038
  - DLNHTINEER(-6): -0.026187; Std. Error: 0.010111; t-Statistic: -2.590077; Prob.: 0.0107
  - DLNHTINEER(-8): -0.029663; Std. Error: 0.008631; t-Statistic: -3.436724; Prob.: 0.0008
  - DLNHTINEER(-12): -1.16E-05; Std. Error: 0.011077; t-Statistic: -0.001047; Prob.: 0.9992
- Model fit and diagnostics:
  - R-squared: 0.580277
  - Adjusted R-squared: 0.497654
  - Mean dependent var: 0.70589
  - S.D. dependent var: 0.742436
  - S.E. of regression: 0.526212
  - Sum squared resid: 35.16613
  - Log likelihood: -104.6155
  - F-statistic: 7.023223; Prob(F-statistic): 0
  - Wald F-statistic: 21.59655; Prob(Wald F-statistic): 0
  - Durbin-Watson stat: 2.241059

### Model 2: VECM estimation (summary)
- Variables tested and found I(1): LNCPI (log CPI), LNNEER (log nominal effective exchange rate), LNBRMNY (log broad money).
- TBILLRATE91 (1 + three-month treasury bill rate) stationary on borderline at 5 percent significance.
- Johansen-Juselius trace and maximum eigenvalue co-integration tests indicate cointegration among variables; VECM appropriate.
- Estimation period: January 2009 to October 2020; 142 monthly observations.
- Lag length chosen: one lag (based on LR statistic).
- VECM result: one-unit shock to NEER (appreciation) has cumulative negative impact on CPI of around 0.25 percentage points after 12 months.
- Long-run pass-through coefficient from VECM declines slowly from around -0.75 after twelve months to around -0.66 after 20 months.

### Policy-relevant implications (as discussed)
- High exchange rate pass-through reduces the effectiveness of monetary policy tools (interest rates, monetary aggregates) for controlling inflation.
- A high pass-through strengthens the role of the nominal exchange rate as a potential anchor for price stability.
- Strengthening the interest rate channel of monetary policy and anchoring inflation expectations (e.g., via central bank credibility) can reduce pass-through over time, as seen in other countries.
- Exchange rate volatility translates into inflation volatility, complicating monetary policy.

*IMF Working Paper — Annex I–III tables and figures from "Lessons from Haiti’s Recent Exchange Rate Developments"*

### Annex III – Table 2: Estimated Exchange Rate Pass-Through to Inflation

### Annex III – Table 2: Estimated Exchange Rate Pass-Through to Inflation

### Central America and the Caribbean: 2009M1-2021M9 — Estimated pass-through entries
- Guyana-0.38981995M1-2021M9-0.5508
- Haiti -0.44511995M1-2021M9-0.6389
- Bahamas-0.08271995M1-2021M9-0.7705
- Jamaica-0.82001995M1-2021M9-0.4221
- Trinidad and Tobago-0.46461995M1-2021M9-0.2549
- Barbados0.37931995M1-2021M9-0.4534
- Dominican Republic-0.64411995M1-2021M9-0.4509
- Costa Rica-0.55771996M1-2021M9-0.1431
- Panama-0.22771995M1-2021M9-0.1133
- Guatemala-0.20711995M1-2021M9-0.0109
- El Salvador-0.92681995M1-2021M9-0.5904
- Nicaragua-0.94251995M1-2021M9-0.4100
- Honduras-0.61052001M9-2021M9-0.3628
- Dominica -0.31811995M1-2021M9-0.1815
- Suriname-0.62531995M1-2021M9-0.5336
- Antigua and Barbuda-0.13991996M1-2021M9-0.1338
- Grenada-0.42931995M1-2021M9-0.3967
- St. Kitts and Nevis-0.35251995M1-2021M9-0.2399
- St Vincent and the Grenadines-0.65161995M1-2021M9-0.5829

### Regional summary
- Regional Average-0.4450-0.3811

### Table caption
- Table 2: Estimated exchange rate pass-through to inflation

*Source: IMF Working Paper — Lessons from Haiti’s Recent Exchange Rate Developments (Annex III – Table 2).*

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