## _cr06440 ## Source details **Canonical URL:** [_cr06440](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06440.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06440.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06440.pdf.json) --- ### Qualification for Enhanced HIPC Assistance and Decision Point Assessment - Haiti meets preliminary HIPC determination criteria: PRGF-eligible and IDA-only; NPV of debt-to-exports ratio above the HIPC indicative threshold after traditional debt relief; satisfactory performance under EPCA programs (October 2004–September 2006) and IDA-supported EGRO I (since January 2005). - Directors agreed Haiti could reach its Decision Point before end-2006 conditional on: - Remaining on track with EPCA-supported macroeconomic program. - Agreement on completion point triggers. - Finalization of the Interim Poverty Reduction Strategy Paper (I-PRSP). - Total estimated HIPC Enhanced Assistance (NPV terms, end-September 2005): US$140.3 million. - IDA: US$52.8 million (includes US$33.1 million from concessional rescheduling of arrears). - IMF: US$3.120 million (NPV terms). - Aggregate HIPC assistance (nominal): US$212.9 million. - Multilateral creditors contribution (nominal): US$110.9 million. - Bilateral creditors contribution (nominal): US$102.0 million. - Interim debt relief estimated at US$19.8 million: - US$13.3 million in FY2007. - US$6.5 million in FY2008. - IMF interim assistance: deposited at expected decision point in November 2006 to cover PRGF interest obligations between December 2006 and December 2011; most IMF grant assistance assumed disbursed at completion point in September 2008. ### Debt Indicators, Structure and Proposed Relief Modalities - External debt (end-September 2005, nominal): US$1,336.31 million (100.0 percent). - Multilateral: US$1,097.88 million (82.2 percent). - IDA: US$507.13 million (37.9 percent). - IDB Group: US$533.94 million (40.0 percent). - Bilateral: US$238.5 million (17.8 percent). - NPV of debt after traditional debt relief (end-September 2005): 928.3 (mem. item). - NPV of debt-to-exports ratio (end-September 2005): 176.7 percent. - Reduction required to reach HIPC 150 percent target (NPV terms): US$140.3 million; implied common reduction factor: 15.1 percent. - Proportional burden sharing (NPV terms): Multilateral US$120.0 million; Bilateral US$20.4 million. - Paris Club treatment: assumed flow rescheduling on Cologne terms (90 percent NPV reduction) at decision point with remaining delivery at completion point; comparable treatment assumed for non-Paris Club bilaterals. - MDRI (IDA) at completion point (if completion by end-September 2008): - MDRI nominal: US$464.4 million; MDRI NPV: US$243.3 million. - IDA MDRI expected in NPV terms: US$243 million (document highlights similar figure earlier). - Haiti not expected to have eligible IMF debt for MDRI relief. ### Debt Sustainability Analysis (DSA) — Baseline Projections and Risks - Baseline macro assumptions: - Annual real GDP growth average FY2006–25: 4.2 percent. - CPI inflation decline from 12.4 percent in FY2006 to 5.0 percent by FY2011. - Investment ratio to increase by over 4.0 percentage points of GDP in the long term. - Public investment rise from 5.0 percent of GDP in 2006 to about 7.6 percent of GDP in FY2009. - Central Government revenues from 10.2 percent of GDP in 2006 to about 16.0 percent of GDP by FY2025. - External current account deficit (excluding grants) decline from average 8.2 percent over FY2006–2015 to 5.2 percent by FY2025. - NPV of debt-to-exports ratio trajectories: - Expected gradual fall from 150 percent (end-September 2005 baseline after HIPC) to approximately 99 percent by 2025 under baseline with unconditional HIPC delivery. - At completion point (after HIPC and MDRI) NPV expected to fall to 91.2 percent (from an estimated 153.5 percent at end-FY2007). - Projected range after completion point: about 91–102 percent over projection period. - Debt service examples (selected, millions of US dollars): - Before traditional debt relief: 2005/06: 60.5; 2006/07: 92.4; 2007/08: 63.9. - After HIPC assistance: 2006/07: 76.3. - After HIPC and MDRI assistance: 2007/08: 54.5; 2008/09 debt service-to-exports ratio: 4.8 percent. - Public sector debt sustainability: - Public sector debt expected to remain broadly constant under baseline. - Domestic debt expected to rise from about 2.0 percent of GDP (medium term) to 7.4 percent of GDP by FY2026. - Haiti’s risk of debt distress classified as high; NPV of debt-to-exports remains above LIC DSA threshold (100 percent) until FY2021 under baseline including HIPC assistance. - PetroCaribe impacts: - Transfers related to PetroCaribe amount to 0.8 percent of GDP during FY2007–11; from FY2012 transfers become negative. - PetroCaribe-related debt service payments peak at about 1 percent of exports in FY2013. ### Sensitivity Analyses — Scenarios and Outcomes (after full HIPC delivery) - Scenario 1 — Less favorable concessionality on new borrowing (interest rates 100 basis points higher): - NPV of debt-to-exports ratio reaches about 115.7 percent in FY2025 (deterioration of 17.2 percentage points by FY2025 relative to baseline). - Scenario 2 — Lower exports growth (exports grow at 5.0 percent): - NPV of debt-to-exports breaches HIPC threshold in FY2011 and reaches 171.7 percent in FY2025 (deterioration up to about 73.2 percentage points by FY2025 relative to baseline). - Conclusion: exports performance is pivotal to debt-servicing capacity. - Scenario 3 — Lower GDP growth (2.0 percentage points lower on average): - NPV of debt-to-exports declines slowly until FY2012 (131.8 percent) then increases to 161.8 percent by FY2025 (increase up to 63.2 percentage points relative to baseline). - Sensitivity analysis takeaway: - Robust external debt position contingent on vigorous real GDP growth, improved export performance, grant-heavy donor assistance, and prudent debt management. ### Macroeconomic Performance and Projections (selected indicators) - Annual GDP growth (selected): - FY2003: 0.4; 2004: -3.5; FY2005: 1.8; FY2006 (Prel.): 2.5. - Real GDP per capita (selected percent changes): - 2003: -1.7; 2004: -5.4; 2005: -0.2; 2006 (Prel.): 0.8. - End-of-period consumer prices (selected): - FY2003: 37.8; 2004: 21.7; 2005: 14.8; 2006 (Prel.): 12.4. - Central government overall balance (including grants, percent of GDP, selected): - FY2003: -3.5; 2004: -2.4; 2005: -0.7; 2006 (Prel.): -1.4. - Monetary and reserves (selected): - Net international reserves (millions of U.S. dollars): 2003: 38.8; 2004: 54.5; 2005: 70.6; 2006 (Prel.): 125.7. - Liquid gross reserves (millions of U.S. dollars): 2003: 157.1; 2004: 207.4; 2005: 228.5; 2006 (Prel.): 330.8. - Import coverage (months): 2003: 1.2; 2004: 1.4; 2005: 1.4; 2006 (Prel.): 1.8. ### Poverty, Social Conditions and Service Delivery (key findings) - Poverty incidence (2001 data): - About 54 percent of population below US$1 a day; 78 percent below US$2 a day. - Rural poverty: 69 percent below US$1 a day; 86 percent below US$2 a day. - Regional and inequality indicators: - Poverty by region: Ouest 34 percent (lowest); Nord-Est 81 percent (highest). - Income distribution: nearly half of national income goes to the richest 10 percent. - Human development and education: - 2005 UN Human Development Index rank: 153rd out of 177 countries. - Adult illiteracy: 60 percent in 1990 to 52 percent in 2003; adult literacy ratio (2003): 51.9 percent. - Primary school net enrollment ratio (2001): 55 percent (rural: 23 percent). - 90 percent of primary schools non-public, charging fees averaging 20 percent of incomes of the poorest quintile. - 70 percent of schools lack accreditation; 60 percent of teachers unqualified. - Health indicators (selected): - Access to health facilities: 28 percent of the population. - Infant mortality rate (2003): 76 per thousand. - Child mortality rate (2002): 118 per thousand. - Maternal mortality rate (2000): 680 per 100,000 live births. - HIV/AIDS prevalence (2003, age 15–49): 5.6 percent. - Service delivery and public sector capacity: - Majority of basic social services provided by non-public sector (health: 70 percent non-public). - Government normative and regulatory role weak; plans to introduce measures to address social problems and pursue MDG-related strategies. - With sustained external assistance (including HIPC and MDRI relief) Haiti could reach some MDGs, notably Goal 2 (universal primary education) and Goal 7 (combat HIV/AIDS, malaria and other diseases). ### PRSP / I-PRSP Framework, Completion Point Triggers and Use of HIPC Savings - I-PRSP completed September 2006; outlines interventions to reduce poverty and steps to prepare full PRSP. - Full PRSP expected to present a macroeconomic framework, policy matrices, expenditure and financing frameworks, and a monitoring and evaluation mechanism. - Completion point triggers (selected, to be met and validated): - Preparation of a full PRSP through participatory process and satisfactory implementation for at least one year (Annual Progress Report). - Maintenance of macroeconomic stability under PRGF-supported program. - Public finance and governance actions, including: - Adoption of an automated mechanism to track poverty-reducing public expenditures and publication of quarterly reports for at least six months preceding completion point. - Alignment of public spending priorities with I-PRSP/PRSP. - Up-to-date Government accounts prepared by MEF and annual audit by CSCCA; submission to Parliament and publication. - Adoption and satisfactory implementation of new public procurement law; independent audit of contracts above US$1m equivalent and random sample of others for six months preceding audit. - Adoption and implementation of asset declaration law with monitoring and annual compliance reports. - Structural measures: strengthened customs and tax administration (installation of ASYCUDA in specified ports; extending central taxpayer file coverage). - Social sector triggers: - Education: public financing mechanism to help poor families pay non-public school fees to enroll additional 50,000 out-of-school primary children; recurrent education expenditures at least 21 percent of actual total recurrent Government spending with at least 50 percent on primary education over 12 months preceding completion point; training of 2,500 new primary teachers; two annual school inspections per primary school on average. - Health: increase immunization rates by at least 10 percentage points for DPT3, BCG and measles; approval of National Policy, Strategic Plan and Scale up Operational Plan for HIV/AIDS prevention and treatment. - Debt management: centralization of all public external and domestic foreign currency debt in a single database; publication of two consecutive up-to-date quarterly external debt reports with maximum 3 month lag before completion point. - Intended use of HIPC-related savings: - Focus largely on health, education, water and environment within I-PRSP priorities; poverty-related programs included in FY2007 budget and to be included in subsequent budgets. - Monitoring: MEF periodic budget execution reports and CSCCA audits to provide validation; institutionalized PRSP monitoring and evaluation mechanisms envisaged. ### Governance Actions, Transparency and Planned Capacity Strengthening - Recently completed actions (selected): - Creation of Anti-Corruption Unit (ULCC) in 2004. - Completion in 2006 of diagnostic survey on governance and corruption perceptions. - Financial audits and accounting rehabilitation of key public enterprises (EDH, TELECO, APN). - Strengthening of CSCCA via 2006 decree. - Creation of National Commission for Public Procurement (CNMP) and passage of new Procurement Decree; publication of government contracts and supplier database. - Significant reduction of discretionary spending through ministerial comptes courants (from 62 percent of non-salary current public expenditure during Oct.2003–Mar.2004 to less than 10 percent since Sept.2004). - Planned actions / Completion Point triggers (selected in bold in source): - Participatory PRS preparation. - Adoption of automated mechanism to track public expenditures for poverty reduction. - Adoption and satisfactory implementation of public financing mechanism to help poor families pay non-public primary school fees for enrollment of additional 50,000 children. - Adoption of Asset Declaration Law with sanctions and ULCC monitoring responsibilities. - Adoption and satisfactory implementation of Anti-Corruption Strategy. - Up-to-date preparation and audit of Government accounts by CSCCA and submission to Parliament. - Up-to-date annual audit of key public enterprises and implementation of audit recommendations. - Adoption and satisfactory implementation of a new procurement law aligned with international best practice. - Debt management capacity and recommendations: - BRH and MEF jointly responsible for debt management; BRH uses DMFAS version 5.2 and updates database every payment cycle. - Recommended actions: clarify legal responsibilities between BRH and MEF; improve information sharing and reconciliation; shorten debt service payment procedures; improve tracking of disbursements; acquire modern debt reporting system; provide staff training; strengthen capacity to produce DSAs. ### Donor Support, Program Participation and Fiscal/Program Context - Donor support and program participation (selected): - IMF EPCA disbursements: January and October 2005 totaling US$30.3 million. - IDA arrears clearance: US$52.3 million cleared January 2005; subsequent IDA support: EGRO US$61.0 million; two EGTAG grants of US$2.0 million each. - At July 2006 conference donors pledged about US$750 million for July 2006–September 2007. - ICF presented July 2004 and extended to September 2007. - Fiscal policy orientation and projections: - Central Government overall deficit expected to average about 2.0 percent of GDP over long-term projection period while increasing pro-poor spending and public investment financed mainly by concessional external financing. - Revenues projected to increase gradually to about 16.0 percent of GDP by FY2025 (from about 9.6 percent over FY2004–06). - Rebuilding social and economic infrastructure central to public investment program; flexible petroleum price-setting mechanism to reduce budget vulnerability recommended. *Source: _cr06440 - IMF/IDA joint documents, I-PRSP and Decision Point DSA excerpts.* ### 1. Selected Poverty and Social Indicators..........................................................................7 ### _cr06440 - 1. Selected Poverty and Social Indicators..........................................................................7 ### Introduction and Purpose - Paper assesses Haiti’s qualification for assistance under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. - Executive Boards of the IMF and IDA discussed the Preliminary HIPC document for Haiti on September 6 and 7, 2006. - Preliminary determination criteria cited: - PRGF-eligible and IDA-only country status. - NPV of debt-to-exports ratio above the HIPC Initiative indicative threshold after traditional debt relief. - Satisfactory performance under two EPCA programs (October 2004–September 2006) and IDA-supported EGRO I (since January 2005), with achievements in macroeconomic stabilization and structural reforms. - Directors agreed Haiti could reach its Decision Point before end-2006, conditional on: - Remaining on track with its macroeconomic program supported by EPCA. - Agreement on appropriate completion point triggers. - Finalization of the Interim Poverty Reduction Strategy Paper (I-PRSP). ### Debt Indicators and Potential Relief - Haiti’s NPV of debt-to-exports ratio as of end-September 2005, after full application of traditional debt relief mechanisms: 176.7 percent. - Possible HIPC debt relief (end-September 2005 NPV terms): US$140.3 million (common reduction factor of 15.1 percent). - Relief associated with the Multilateral Debt Relief Initiative (MDRI), in NPV terms: about US$243 million. - MDRI debt relief from IDA expected to be US$243 million in NPV terms. - Haiti is not expected to have any eligible IMF debt for MDRI relief. ### PRGF and IDA Status - Haiti is an IDA-only country, with a nominal per capita GNI of about US$450 in 2005 (World Bank Atlas methodology). - A PRGF arrangement is scheduled to be discussed by the IMF Board in parallel with this document. - Haiti will continue to need substantial concessional assistance and is likely to remain IDA-only and eligible for PRGF resources for the foreseeable future. - Note: In October 2005, the IMF Executive Board approved SDR10.25 million (about US$14.7 million) in EPCA to Haiti, adding to SDR10.23 million (about US$15.6 million) provided under EPCA in January 2005. ### Dimensions of Poverty and Social Conditions - Key challenges: political and economic instability, recurrent deterioration in security, low growth, and high inequality and poverty. - Real income per capita declined on average by 2 percent annually over the past twenty years. - Haiti described as the poorest country in the Latin America and Caribbean region and among the poorest in the world. - 2005 UN Human Development Index rank: 153rd out of 177 countries. - Poverty incidence (2001 data): - About 54 percent of Haiti’s population lives below the US$1 a day poverty line. - 78 percent below US$2 a day. - Rural poverty: - Incidence in rural areas: 69 percent for the US$1 a day poverty line and 86 percent for the US$2 a day poverty line. - Overwhelming share of rural population lives in poverty. - Regional disparities: - Poverty lowest in the Ouest region (34 percent) and highest in the Nord-Est region (81 percent). - Income inequality: - Nearly half of national income goes to the richest 10 percent of the population. - Education and literacy: - Adult illiteracy decreased from 60 percent in 1990 to 52 percent in 2003. - Adult literacy ratio (2003): 51.9 percent. - Primary school net enrollment ratio (2001): 55 percent; rural enrollment: 23 percent. - 90 percent of primary schools are non-public and charge fees averaging 20 percent of incomes of the poorest quintile. - 70 percent of schools lack accreditation; 60 percent of teachers are unqualified. - Health and HIV/AIDS: - Access to health facilities: 28 percent of the population. - Infant mortality rate (2003): 76 per thousand. - Child mortality rate (2002): 118 per thousand. - Maternal mortality rate (2000): 680 per 100,000 live births. - Prevalence of HIV/AIDS (2003, persons age 15-49): 5.6 percent. - UNAIDS reports HIV/AIDS prevalence has not increased significantly in the last decade and may have declined. ### Selected Poverty and Social Indicators (Table highlights) - Population (million, 2002): 8.3 (Haiti); LAC: 540; LIC: 2,615. - Of which rural (percent): Haiti 62.5; LAC 23.3; LIC 69.8. - Annual population growth (2003-15): Haiti 1.4; LAC 1.3; LIC 1.6. - Life expectancy at birth (Years, 2003): Haiti 51.6; LAC 71.9; LIC 58.4. - GNI per capita (2005 for Haiti, 2004 for LAC and LIC): Haiti 450; LAC 3,576; LIC 507. - Incidence of Poverty (percent below the US$1 a day poverty line, 2001 data for Haiti): Haiti 53.9; LAC 8.9. - Adult literacy ratio (percent age 15 and above, 2003): Haiti 51.9; LAC 89.6; LIC 60.8. - Infant mortality rate (per thousand, 2003): Haiti 76; LAC 27; LIC 80. - Child mortality rate (per thousand, 2002): Haiti 118; LAC 32; LIC 124. - Maternal mortality rate (per 100,000 live births, 2000): Haiti 680; LAC 194; LIC 682. - Access to improved water source (percent of population, 2002): Haiti 71; LAC 89; LIC 77. - Prevalence of HIV/AIDS (percent of persons age 15-49, 2003): Haiti 5.6; LAC 0.7; LIC 2. ### Service Delivery and Public Sector Capacity - Public sector contribution to basic social services has been very limited; majority of services provided by non-public sector. - Health services: 70 percent provided by non-public institutions; quality generally poor. - Water and sanitation: mostly non-publicly provided. - Government normative and regulatory role is weak. - Government plans to introduce measures to address immediate social problems and to develop strategies to progress toward MDGs. - With continued external financial assistance (including HIPC and MDRI relief) Haiti could reach some MDGs, notably: - Goal 2: achieve universal primary education. - Goal 7: combat HIV/AIDS, malaria and other diseases. *Source: _cr06440 - 1. Selected Poverty and Social Indicators (IMF/IDA preliminary HIPC document for Haiti, sections I–II).* ### 9. Following the insurrection that quickly evolved into a widespread violent conflict ### 9. Following the insurrection that quickly evolved into a widespread violent conflict ### Political transition and security - President Aristide resigned and left the country following the early 2004 insurrection that evolved into widespread violent conflict. - A Transition Government was established, mandated to organize elections and undertake measures in security, development, and creating the ground for a new national dialogue. - The Political Transition Agreement established the political framework for the Transition Government. - The United Nations Security Council authorized deployment of a Multinational Interim Force, later replaced by the United Nations Stabilization Mission in Haiti (MINUSTAH), with the mandate to help reestablish security and stability required for advancement of the constitutional and political process. - While security has improved since 2004, outbursts of violence are still occurring. - Recent presidential and parliamentary elections led to formation of a coalition Government, which received almost unanimous approval in Parliament. - The coalition Government aims to: improve access and quality of basic social services; modernize the state; pursue and deepen governance reform; wage a war against corruption; and promote private sector investment. - The security situation remains fragile, especially in Port-au-Prince. The July 2006 International Conference for Haiti’s Economic and Social Development emphasized the need for coordinated action to reestablish a climate of security. - The Government launched a disarmament and community reinsertion program for armed groups and intends to continue reforms of the police and the judiciary. ### Donor support and program participation - Since mid-2004, recovery and structural reforms have been supported by donors under the Interim Cooperation Framework (ICF). - The ICF, presented in July 2004, was extended by the current Government to September 2007. - IMF engagement: - Initial macroeconomic framework under the Fund’s staff-monitored program (SMP) covering April–September 2004. - Followed by support through the IMF’s EPCA, with disbursements in January and October 2005 totaling US$30.3 million. - World Bank/IDA support following clearance of arrears to IDA (US$52.3 million) in early 2005: - Economic Governance Reform Operation (EGRO) of US$61.0 million. - Two Economic Governance Technical Assistance grants of US$2.0 million each. - At the July 2006 conference, donors pledged about US$750 million for the period July 2006–September 2007. - The IDB, the EU and bilateral donors have also provided significant financial and technical assistance. ### Macroeconomic performance (selected indicators and outcomes) - Annual GDP growth: - FY2003: 0.4 - 2004: -3.5 - FY2005: 1.8 - FY2006 (Prel.): 2.5 - Real GDP per capita: - 2003: -1.7 - 2004: -5.4 - 2005: -0.2 - 2006 (Prel.): 0.8 - Consumer prices (end-of-period): - FY2003: 37.8 - 2004: 21.7 - 2005: 14.8 - 2006 (Prel.): 12.4 - Central government overall balance (including grants), percent of GDP: - FY2003: -3.5 - 2004: -2.4 - 2005: -0.7 - 2006 (Prel.): -1.4 - Broad money (including foreign currency deposits), percent change: - FY2003: 39.8 - 2004: 9.1 - 2005: 20.3 - 2006 (Prel.): 9.1 - Net international reserves (in millions of U.S. dollars) 1/: - 2003: 38.8 - 2004: 54.5 - 2005: 70.6 - 2006 (Prel.): 125.7 - Liquid gross reserves (in millions of U.S. dollars) 2/: - 2003: 157.1 - 2004: 207.4 - 2005: 228.5 - 2006 (Prel.): 330.8 - Import coverage (in months of imports of the following year): - 2003: 1.2 - 2004: 1.4 - 2005: 1.4 - 2006 (Prel.): 1.8 - Key observations: - Annual GDP growth expected to increase to 2.5 percent in FY2006 from 1.8 percent in FY2005. - Central Government overall deficit (including grants) reduced from 3.5 percent of GDP in FY2003 to 1.4 percent in FY2006. - End-of-period inflation fell from 37.8 percent in FY2003 to 12.4 percent in FY2006. - Import coverage increased from 1¼ months in FY2003 to an estimated 1.8 months in FY2006. - The authorities’ program supported by the EPCA remains on track and preliminary data indicate key end-September 2006 quantitative targets have been met. - Sources for the table: Ministry of Economy and Finance; Bank of the Republic of Haiti; and Fund staff estimates. - Footnotes in table: - 1/ Excludes commercial banks' foreign currency deposits with the BRH. - 2/ Gross reserves excluding capital contributions to international organizations. - Fiscal year ending September 30. - Note: The Haitian fiscal year runs from October 1 to September 30. ### Structural and economic governance reforms — progress and remaining gaps - Context: As of early 2004, significant weaknesses in economic governance impeded efficient use of domestic and external financing. - Main weaknesses identified: (i) budget formulation, execution and reporting; (ii) public procurement; (iii) public enterprise management and road maintenance; (iv) human resource management; and (v) the financial sector. - Budget formulation, execution and reporting — recent measures: - Passage of a new Organic Budget Law and adoption of a new budget classification and chart of accounts. - Approval of the budgets for FY2005 and FY2006 before the start of the fiscal year and regular public dissemination of key budget allocations and execution information. - Preparation of the FY2006 budget according to the new budget classification and expansion of the automated system for budget management (SYSDEP) from 5 ministries and units to 17. - Drastic reduction of discretionary spending through ministerial comptes courants. - Strengthening external audit with a decree on the organization and functioning of the Cour Supérieure des Comptes et Du Contentieux Administrative (CSCCA), which is catching up on Government accounts audits. - Remaining shortcomings: - Mechanism for monitoring budgetary transfers to the electricity sector established but not yet effective and independent audit of transfers has not taken place. - Survey of domestic payment arrears completed but not fully verified and strategy to address them not yet formulated. - Note: The percentage of non-salary current public expenditures disbursed through comptes courants was reduced from 62 percent during October 2003–March 2004 to less than 10 percent in FY2005–06. - Public procurement: - Prior framework: 1989 decree with flaws; sole-source contracts and unadvertised bidding common. - Reforms since 2004: - Passage of a new Procurement Decree and creation of the National Commission for Public Procurement (CNMP) in 2004. - Preparation of standard bidding documents and publication of lists of Government contracts and a supplier database. - Hiring of an international procurement consulting firm to assist CNMP capacity building. - Anti-corruption and oversight: - 2004 creation of an Anti-Corruption Unit (ULCC) as an autonomous entity under the MEF. - ULCC conducting a comprehensive diagnostic survey of governance and corruption perceptions; draft law for public sector employees’ asset declaration prepared. - Diagnostic survey completed in March 2006; final report expected by end 2006. - Public enterprises and road maintenance: - Public enterprises historically suffered inadequate financial and operating practices and lack of managerial accountability; poor governance pronounced in EDH, TELECO, and APN. - In 2006, financial audits of APN, TELECO and EDH and an accounting rehabilitation of TELECO and EDH were completed. - Road Maintenance Fund (FER), created in 2003, gained basic institutional capacity with key staff recruitment and operational procedures defined. - Public expenditure management (PEM): - An Assessment and Action Plan (AAP) to strengthen capacity to track poverty-reducing public spending was prepared jointly by IDA and IMF staffs in June 2006. - The 2006 AAP confirms improvements in PEM performance compared to an informal IMF assessment in September 2004. - Further requirements include: aligning procedures and practices with the legal framework; setting mechanisms to better target public resources; improving the quality of monthly fiscal data; and empowering citizens to improve transparency and accountability. - Civil society monitoring: - In 2005 the Government introduced a mechanism for civil society to monitor economic governance reforms; it became operational in early 2006 after capacity building. - A summary of monitoring reports by civil society organizations was published on the MEF website. - A workshop in June 2006 reviewed implementation experience and identified measures to improve effectiveness. - Human resources and civil service reform: - Public sector employment in 2004 corresponded to 0.7 percent of the population, compared with 2.0 percent in Africa and 7.7 percent among developed market economies. - A new Civil Service Decree was enacted in 2004. - A Coordination Unit in the Prime Minister’s Office assumed human resource functions; a census of employment in selected ministries was completed. - Financial sector and Central Bank (BRH): - Financial sector stability maintained, but weaknesses identified in monetary management mechanisms, financial audit and controls of the BRH; BRH experienced operational losses. - Authorities preparing a plan to address weaknesses with IMF technical assistance. - A draft new banking law expected to be finalized and submitted to Parliament later in the year. - BRH financial statements for FY2004 were published with a one-year delay; FY2005 financial statements not yet published. - BRH was subject to a safeguards assessment in relation to EPCA drawings; identified vulnerabilities are being addressed and BRH has strengthened surveillance of credit cooperatives. ### Challenges, risks and the role of HIPC and donors - Major challenges to economic recovery: - Restored security is critical for economic recovery; sustained security improvement depends on quick and visible improvements in living conditions. - Strengthened public institutions and improved economic governance are required for inclusive and sustained growth. - Financial and technical support from donors will be critical to help the Government address challenges. - HIPC Initiative: - Provision of HIPC debt relief is expected to contribute to creating fiscal space for poverty-related expenditures and encourage reforms in public expenditure management. - Overall assessment: - Significant progress has been made in macroeconomic, structural and governance reforms, but substantial work remains to set Haiti on a sustainable recovery path given security fragility and institutional capacity gaps. ### PRSP formulation and next steps - In September 2006 the Government completed the I-PRSP, initially drafted in late 2005 and revised to reflect development priorities. - The I-PRSP outlines main intervention areas to reduce poverty and steps for preparing the full PRSP. - Government development priorities: consolidate macroeconomic stability; enhance physical infrastructure; expand access to social services; improve economic governance; and strengthen public institutions. - The I-PRSP continues the strategic axes of the 2004 ICF with increased emphasis on national development including all departments and communes and interventions targeting disadvantaged and conflict-prone areas. - Preparation of the full PRSP has begun with plans to broaden and deepen participation through consultations with Parliament, civil society organizations, affected stakeholders, and the donor community, including meetings in communes and departments to target the poor. - The I-PRSP describes the process for developing a monitoring and evaluation mechanism for the PRSP. - A joint IDA-IMF Staff Advisory Note indicates the I-PRSP provides an appropriate framework for poverty reduction and use of resources that could become available under the HIPC Initiative. *Source: _cr06440 - 9. Following the insurrection that quickly evolved into a widespread violent conflict* ### 18. The full PRSP would be expected to build on the I-PRSP by (i) presenting a ### _cr06440 - 18. The full PRSP would be expected to build on the I-PRSP by (i) presenting a ### A. Macroeconomic Framework — objectives, projections, and fiscal stance - Objective: achieve robust and sustainable real economic growth. - Real output growth projections: - Average 4.2 percent over the period FY2006–25. - Short-term: strengthen from 1.8 percent in FY2005 to 4.0 percent in FY2007, assuming significant improvements in security conditions, continued strong external support, and increased public investment. - Long-term (FY2015–2025): expected to average 4.5 percent. - Conditions for projected growth: maintaining security, sustained political and macroeconomic stability, progress on economic governance, and improvements in social and economic infrastructure to raise private investment, including FDI. - Inflation: - End-of-period inflation declined from 37.8 percent in FY2003 to an estimated 12.4 percent in FY2006 following substantial fiscal adjustment. - Inflation is expected to decline gradually to 5.0 percent by FY2011, building on fiscal discipline and changes in monetary policy conduct. - Macroeconomic projection scope: - Projections cover the next 20 years and were prepared in consultation with the authorities. - The projection is more conservative than the HIPC Preliminary Document (which assumed average annual growth of 4.7 percent) due to a more gradual reduction in binding constraints and a lower assessed long-term growth potential (reduced from 5.0 percent to 4.5 percent for FY2015–25). - Investment and growth linkage: - Haiti’s level of investment must increase markedly—by more than 4.0 percentage points of GDP over the projection horizon—for long-term growth to materialize. - Initially, higher investment will come from higher public investment, especially in public infrastructure. - Investment reported in national accounts may overestimate true investment; investment was reported at 27.4 percent of GDP in FY2005. - External sector and reserves: - External current account deficit (excluding grants) expected to decline from 7.5 percent of GDP in FY2006 to about 5.2 percent of GDP at end of projection period, largely due to improvements in net exports. - Import-to-GDP ratio projected to decline by 2.4 percentage points of GDP in the long term due to lower aid flows and increases in local production. - Rising exports expected to contribute by 2.0 percentage points of GDP. - International reserves expected to increase from 1.6 months of imports of goods and services in FY2005 to over three months from FY2011. ### B. Fiscal policy and public finance projections - Fiscal prudence expected to support macroeconomic stability: - Central Government overall deficit expected to average about 2.0 percent of GDP over the projection period. - Government expected to increase revenues and seek concessional external financing to allow for increased pro-poor spending, higher investment and institutional development while maintaining debt sustainability after delivery of HIPC Initiative assistance. - Revenues and expenditures: - Fiscal revenues projected to increase gradually to about 16.0 percent of GDP by FY2025, compared to about 9.6 percent over FY2004–06. - Government measures to boost revenues include strengthening customs control in the provinces, enhanced computerization of tax and customs administration offices, and reinforcing the tax audit mechanism. - Government expenditures expected to be re-oriented toward strengthening institutional capacity and increasing spending in key areas such as security, health and education. - Rebuilding social and economic infrastructure is expected to be the core of the public investment program, expected to be financed largely by external donors. - Framework assumes the share of pro-poor spending in overall outlays will increase to assist in poverty reduction and meeting the MDGs. - Budget vulnerability mitigation: - Continue implementation of a flexible price-setting mechanism for petroleum prices to reduce budget vulnerability to external shocks. ### C. Reform Agenda — structural, governance, and sectoral reforms - Overall intent: - I-PRSP (presented to IDA and IMF in September 2006) reflects commitment to maintaining macroeconomic stability, deepening structural and economic governance reforms, and fighting corruption. - Emphasis on cross-cutting governance initiatives and strengthening security as prerequisites for high, sustained, and shared economic growth. - Public expenditure management reforms: - Align public spending with I-PRSP/PRSP priorities emphasizing pro-poor growth. - Introduce a medium term framework with budget projections consistent with PRSP expenditure priorities. - Adopt an automated mechanism to track poverty-reducing public expenditure and publicly disseminate quarterly expenditure reports. - Ensure accountability and oversight of accounts in strict observance of prevailing legal framework. - Strengthen procurement by adopting and implementing a new law in line with international best practice and ensure compliance by all Government purchasing agencies; continue to publish Government contracts awarded. - IMF and IDA staff to assist authorities in evaluating public finance management systems and identifying further reforms and technical assistance needs. - Public enterprises, roads, and utilities: - Modernize public enterprises to increase efficiency and profitability, with emphasis on governance and transparency. - Enforce annual audits of key public enterprises and ensure audit recommendations are addressed. - In the electricity sector: monitor and independently verify all Government transfers to EDH; introduce competitive bidding for petroleum purchases for the sector. - Improve institutional capacity of the road maintenance agency (FER) to ensure transparency and accountability. - Anti-corruption and accountability: - Adopt and implement a law on asset declaration with sanctions for non-compliance to increase public sector employee accountability. - Anti-Corruption Unit (ULCC) to submit in 2007 a multi-sectoral strategy to fight corruption. - Continue to support civil society mechanisms to monitor economic governance reforms. - Monetary and financial sector reforms: - Improve monetary policy framework and instruments to reduce inflation: auction mechanism for central bank bonds, recapitalization of the central bank, cessation of non-core activities, and submission of a new central bank law to Parliament. - Financial statements of the BRH to be subject to annual audits with published results. - Government to submit a new banking law and issue implementing regulations. - Additional measures may follow a Financial Sector Assessment by IMF and IDA in early 2007. - Revenue mobilization measures: - Establish customs control at all ports of entry and borders, reinforce and restructure tax collection agencies, increase accountability of collection agents, and enhance computerization of tax and customs administration offices. - Private sector and agriculture: - Promote private sector development via improved security and stability, enhanced infrastructure, protection of property rights, establishment of one facilitation center for investors, and medium-term revision of investment and tax laws. - Agricultural priorities: increase smallholder access to credit and inputs; rehabilitate agricultural infrastructure; improve land tenure rights; increase extension activities and promote new seed varieties. - Note: 62.5 percent of the Haitian population live in rural areas. - Public administration and decentralization: - Modernize and strengthen Central Government by determining number, mission, and function of ministries and autonomous entities; rationalize employment and salary policy. - Update the public sector employee database and use it regularly; define recruitment and promotion procedures based on performance. - Implement decentralization through a medium-term plan requiring significant institutional capacity strengthening for local Government functioning. - Education sector (NETP and I-PRSP actions): - Increase public resources to education for improved access and quality. - Strengthen Government planning, coordination and normative responsibilities. - Establish National Education Partnership Office (NEPO) and National Partnership Fund (NPF) to promote policy dialogue, coordination, supervision and evaluation of non-public schools, and provide financing to help poor families pay school fees in non-public schools. - NEPO expected governance: eight-member Board of Directors including representatives from non-public providers, parents’ associations, teachers’ unions, Ministry of Finance and Ministry of Education. - Health sector (NSPRHS and I-PRSP actions): - Increase public resources to improve access and quality of health care. - Strengthen Government planning, coordination and normative responsibilities. - Promote policy dialogue and operational coordination between public and non-public sectors. - Enhance preventive measures including mass immunization campaigns for infants and school children. - Increase the number of health units at the commune level able to provide a minimum service package. - Expand availability of essential drugs. - Introduce a transparent and accountable mechanism to provide free access to health services to the poorest Haitians. - HIV/AIDS strategy: - Prepare a strategy in consultation with civil society and donors, defining institutional framework for planning, coordination and monitoring; continue efforts to improve care and raise awareness and prevention. - Water, sanitation, and other sectors: - Reorganize public institutions of the water sector; improve and protect water sources; ensure regular collection of solid residues. - I-PRSP introduces broad lines for environment, infrastructure, manufacturing and tourism strategies. - Given weak institutional capacity, reform impacts expected to be incremental with medium to long term horizon. ### IV. Debt Sustainability Analysis (DSA) and enhanced HIPC assistance — reconciliation and debt structure - Debt reconciliation: - DSA prepared jointly by authorities and IDA/IMF staffs based on loan-by-loan data as of end-September 2005. - Reconciliation process completed in September 2006, with 100 percent of multilateral and bilateral debt reconciled. - Compared to the preliminary document, inclusion of bilateral loans administered by IDA increases outstanding debt at end-September 2005 by approximately US$4 million (US$1.5 million in NPV terms). - A loan administered by the IDB for the Venezuelan Trust Fund reclassified from multilateral to bilateral. - Small revision to the NPV of multilateral debt: concessionality included in the arrears clearance operation of IDA revised from US$32.8 million to US$33.1 million in NPV terms; IDB Group estimate unchanged. - Structure of external debt (as of end-September 2005): - Public and publicly guaranteed external debt estimated at US$1.3 billion in nominal terms, equivalent to US$932.9 million in NPV terms. - Multilateral creditors accounted for 82.2 percent of the total; IDA and the IDB representing 37.9 percent and 40.0 percent of total claims, respectively. - Bilateral creditors accounted for 17.8 percent of external debt, with Paris Club creditors accounting for 14.4 percent. - Note on debt service presentation: - Estimates are based on scheduled debt service of current maturities and do not reflect simulation of full delivery of traditional debt relief. *Source: IMF/IDA joint documents, I-PRSP and Decision Point DSA excerpts.* ### 40. Bilateral creditors have indicated their willingness to reschedule arrears and debt ### 40. Bilateral creditors have indicated their willingness to reschedule arrears and debt ### Bilateral creditor stance and arrears - Italy, France, and Spain are the largest bilateral creditors, with 5.2 percent, 4.8 percent and 2.9 percent of total claims, respectively. - Claims by these creditors include approximately US$35.4 million in arrears. - Haiti has obtained an informal deferral on debt service payments from Italy, France, and Spain during the program supported by the EPCA. - Paris Club bilateral creditors are assumed to provide a flow rescheduling on Cologne terms—i.e., a 90 percent NPV reduction—after Haiti reaches the decision point, with delivery of the remaining required assistance at the completion point through a stock-of-debt operation. The rescheduling on Cologne terms is expected to translate into US$14.9 million in NPV terms. - Comparable treatment would be provided by non-Paris Club official bilateral creditors. ### External debt position (end-September 2005) - Total: US$1,336.31 million (Percentage of total: 100.0) - Multilateral: US$1,097.88 million (Percentage of total: 82.2) - IDA: US$507.13 million (Percentage of total: 37.9) - IDB Group: US$533.94 million (Percentage of total: 40.0) - Other: US$56.8 million (Percentage of total: 4.2) - Bilateral: US$238.5 million (Percentage of total: 17.8) - Memorandum item: - NPV of debt after traditional debt relief: 928.3 - percentage of exports: 176.7 - Sources: Haitian authorities and staff estimates ### Arrears clearance to multilateral creditors - Arrears to all multilateral creditors have been cleared. - In 2004, Haiti cleared about US$1 million in arrears to IFAD and the OPEC Fund for Development. - Concessional arrears clearance operations approved by IDB and IDA: - Haiti cleared US$30.9 million in arrears to the IDB in July 2003. - Haiti cleared US$52.3 million to IDA in January 2005. - The NPV reduction contained in these operations is estimated at: - US$33.1 million for IDA - US$9.7 million for the IDB Group - The NPV of Haiti’s external debt (as of end-September 2005) includes the NPV reduction contained in the arrears clearance operations of the IDB and IDA. ### HIPC Initiative assistance: eligibility and requirements - Haiti’s debt in NPV terms, after full application of traditional debt relief mechanisms, is estimated at US$928.3 million (as of end-September 2005). This is equivalent to 176.7 percent of exports of goods and services. - Haiti qualifies for debt relief under the HIPC Initiative’s export window, having an NPV of debt-to-exports ratio above the 150 percent threshold. - Reduction required to reach 150 percent: US$140.3 million (in NPV terms). - Common reduction factor implied: 15.1 percent. - Proportional burden sharing: - Multilateral assistance: US$120.0 million (in NPV terms) - Bilateral assistance: US$20.4 million (in NPV terms) ### Assumptions on modalities and timing of delivery (post-decision point) - IDA: - Total assistance amounting to US$52.8 million in NPV terms, including US$33.1 million already provided through concessional rescheduling of arrears. - Remaining assistance: US$19.7 million in NPV terms to be provided as debt-service reduction on debt outstanding and disbursed as of end-September 2005, beginning immediately following Boards’ approval. - IMF: - Assistance estimated at US$3.1 million in NPV terms. - IMF will extend interim assistance in the form of debt-service reduction immediately following approval of the decision point—provided necessary financing assurances are in place. - Following approval of the prospective PRGF arrangement, Haiti is expected to repurchase the amounts outstanding under the EPCA with more concessional PRGF resources; most IMF HIPC assistance expected to be disbursed after the completion point. - IDB: - Assistance will amount to US$60.4 million in NPV terms, including US$9.7 million already provided through concessional rescheduling of arrears. - Remaining IDB assistance: US$50.7 million in NPV terms expected to be delivered through a reduction in debt service. - All other multilateral creditors: - Assumed to provide debt-service reduction starting at the decision point or the completion point until their contributions meet HIPC requirements. - Paris Club and non-Paris Club bilateral creditors: - Paris Club: flow rescheduling on Cologne terms (90 percent NPV reduction) at decision point, remaining delivery at completion point. - Non-Paris Club: comparable treatment assumed. ### Aggregate HIPC assistance and interim timing - HIPC Initiative would provide debt relief totaling US$212.9 million (in nominal terms) over time. - Multilateral creditors contribution: US$110.9 million (nominal) - Bilateral creditors contribution: US$102.0 million (nominal) - Interim debt relief estimated to amount to US$19.8 million: - US$13.3 million in FY2007 - US$6.5 million in FY2008 ### Status of creditor participation - IDA, IMF, IDB, IFAD, and Paris Club creditors have indicated their willingness to provide HIPC Initiative debt relief to Haiti. - These creditors account for 95.7 percent of total HIPC Initiative relief. - IDB and IFAD have agreed, in principle, to provide HIPC debt relief to Haiti. ### Debt sustainability projections (under baseline macroeconomic framework and unconditional HIPC delivery) - Haiti’s NPV of debt-to-exports ratio is expected to fall gradually from 150 percent as of end-September 2005 to approximately 99 percent by 2025. - The NPV of debt-to-exports ratio is expected to remain consistently below the HIPC threshold of 150 percent throughout the projection period. - External debt service as a ratio of exports is also expected to decline gradually. ### MDRI and possible additional bilateral assistance - Haiti would qualify for MDRI debt relief from IDA upon reaching the completion point. - At completion point Haiti is not expected to have eligible debt for MDRI relief from the IMF. - MDRI from IDA would cover all outstanding debt disbursed prior to end-December 2003 (not already subject to HIPC relief) and would start at the beginning of the quarter following the completion point. - MDRI amounts: - Could amount to US$464.4 million in nominal terms (US$243.3 million in NPV terms), assuming completion point by end-September 2008. - Possible HIPC Initiative assistance: US$212.9 million (US$140.3 million in NPV terms). - Forgone debt relief in the event of a one year delay in reaching completion point: US$18.6 million. - After conditional delivery of HIPC assistance and MDRI: - Haiti’s NPV of debt-to-exports ratio expected to fall to 91.2 percent at completion point, from an estimated 153.5 percent at the end of FY2007. - Expected to remain within the 91–102 percent range over the projection period. - Possible bilateral assistance beyond HIPC: - Would further reduce the NPV of debt-to-exports ratio to about 94.1 percent by FY2025, compared with 98.6 percent under HIPC alone. - Estimated amount of possible additional bilateral assistance: about US$118.1 million in nominal terms. ### Key macroeconomic assumptions underlying the DSA (Box 1) - Annual real GDP growth averages 4.2 percent over the projection period (FY2006–25). - CPI inflation projected to decelerate from 12.4 percent in FY2006 to 5.0 percent in the long term. - Investment ratio projected to increase by over 4.0 percentage points of GDP in the long term. - Public investment expected to increase from 5.0 percent of GDP in 2006 to about 7.6 percent of GDP in FY2009. - Central Government revenues expected to increase gradually from 10.2 percent of GDP in 2006 to about 16.0 percent of GDP by FY2025. - Expenditures expected to increase to almost 21 percent of GDP in the long term. - Central Government overall deficit and external financing requirements, before HIPC assistance, projected to average 2.0 percent of GDP over the projection period. - Official loan financing (excluding the IMF) assumed concessional; IMF loans on PRGF terms. - Resulting grant element for new disbursements estimated at about 45 percent. - External grants expected to decline from 5.6 percent of GDP in FY2007 to 2.9 percent by FY2025. - External current account deficit (excluding external grants) projected to decline from an average of 8.2 percent over FY2006–2015 to 5.2 percent by FY2025. ### Sensitivity analysis scenarios and outcomes (after full HIPC delivery) - Scenario 1: Less favorable concessionality on new borrowing (interest rates 100 basis points higher) - Haiti’s NPV of debt-to-exports ratio deteriorates relative to baseline, reaching about 115.7 percent in FY2025 (deterioration of 17.2 percentage points by FY2025). - Scenario 2: Lower exports growth (exports grow at 5.0 percent) - NPV of debt-to-exports breaches the HIPC threshold in FY2011 and reaches 171.7 percent in FY2025. - Deterioration compared to baseline: approximately 0.4 percentage points in FY2006, increasing to almost 73.2 percentage points by FY2025. - Scenario 3: Lower GDP growth (2.0 percentage points lower on average) - NPV of debt-to-exports declines slowly until FY2012, reaching 131.8 percent, then increases to 161.8 percent by FY2025. - Increase compared to baseline: about 0.4 percentage points in FY2006, increasing to 63.2 percentage points by FY2025. - The sensitivity analysis concludes: - Haiti’s exports performance is pivotal to its ability to service external debt after HIPC assistance. - Robust external debt position contingent on vigorous real GDP growth and the composition and terms of external assistance. - Importance of strong and sustained government efforts to: (i) re-establish security; (ii) provide a conducive environment for private investment through infrastructure improvement and strengthening state institutions to develop exportable production; and (iii) implement a prudent debt management strategy. - Donors will need to ensure that external assistance is heavily weighted toward grants. *Source: _cr06440 - 40. Bilateral creditors have indicated their willingness to reschedule arrears and debt* ### 1. PRSP: Preparation of a full PRSP through a participatory process and satisfactory implementation of its ### 1. PRSP: Preparation of a full PRSP through a participatory process and satisfactory implementation of its ### Preconditions and triggers for completion point (summary of required actions) - PRSP - Preparation of a full PRSP through a participatory process and satisfactory implementation of its recommended actions for at least one year, as evidenced by an Annual Progress Report submitted by the Government to satisfaction of IDA and the IMF. - Macroeconomic Stability - Maintenance of macroeconomic stability as evidenced by satisfactory performance under the PRGF-supported program. - Public Finance Management and Governance - (a) Adoption of an automated mechanism to track public expenditures for poverty reduction on the basis of existing expenditure classification, publication of quarterly reports on these expenditures executed over a period of at least six months preceding completion point; - (b) Alignment of public spending priorities with the I-PRSP, and, when completed, the PRSP, reflecting emphasis on pro-poor growth; - (c) Up-to-date preparation of Government accounts by the MEF and their annual audit by the CSCCA, submission to Parliament and publication of audited Government accounts following generally accepted audit standards and legally mandated timetable; - (d) Adoption and satisfactory implementation of a new public procurement law, in line with international best practice. Compliance by all Government purchasing agencies evidenced by independent audit of contracts above US$1m equivalent and also of a representative random sample of all other Government contracts, awarded during the 6 months preceding the audit; - (e) Adoption of a law on asset declaration and submission to the CSCCA and to the Parliamentary ethics and anti-corruption commissions of at least one annual compliance report on the monitoring of the asset declarations covering the preceding year. - Structural Reforms - Strengthen tax administration and policy by: - (a) reinforcing and establishing customs control in Cap Haïtien, Gonaives, Saint Marc, Miragoane, Malpasse, Ouanaminthe and Belladere, including by installing ASYCUDA; - (b) extending use of the central taxpayer file to all taxpayers in the Port-au-Prince metropolitan zone and registering in it all the taxpayers identified in the tax centers of Cayes, Miragoane, Saint Marc, Port de Paix, Cap Haïtien and Fort Liberté. - Social sectors: Education and Health - Education: - (a) Adoption and satisfactory implementation of a public financing mechanism to help poor families pay for costs of school fees in non-public schools to allow enrollment of an additional 50,000 out-of-school children in primary school as evidenced by the results of an independent audit of schools receiving public transfers; - (b) Actual recurrent expenditures for education reach at least 21 percent of actual total recurrent Government spending, of which at least 50 percent is spent on primary education, over the 12 months preceding completion point, enabling inter alia the training of 2,500 new primary teachers (at least 1 year) and on average two visits per year of all primary schools by MENJS inspectors. - Health and HIV/AIDS: - Increase by at least 10 percentage points immunization rates for DPT3, BCG and measles; - Approval by the Government of National Policy, Strategic Plan and Scale up Operational Plan for HIV/AIDS prevention and treatment. - Debt management - (a) Centralization of all information on public external and domestic foreign currency debt in a single database; - (b) publication of two consecutive up-to-date quarterly reports on external debt data with a maximum 3 month lag in the period immediately before the completion point. ### Notes on the asset-declaration law (excerpt) - The law would: - 1) require, at a minimum, that the individuals formally identified by the Constitution and public officials designated as comptables des deniers publics declare annually i) all assets they, their spouses, and dependent children own or have the beneficial use of, (ii) all income received from whatever source; - 2) sanction all individuals who either do not submit a declaration or submit a false one; - 3) assign to the ULCC the responsibility to ensure the monitoring of the evolution of the assets of the aforementioned individuals and to present to the CSCCA and the Parliamentary ethics and anti-corruption commissions the results of its monitoring through annual compliance reports. ### Administrative footnote - The process of identification of entities and projects is ongoing. IDA staff will be assessing progress in early November 2006. --- ### The Use and Monitoring of Enhanced HIPC Initiative Assistance (paragraphs 57–61) - Purpose and commitment - The Government is committed to ensuring that assistance under the HIPC Initiative is used to enhance poverty related spending. - Securing the effective use of debt relief assistance for poverty reduction and the capacity to implement and monitor a shift in the composition of expenditure toward poverty-related objectives is a key element of the HIPC Initiative. - The authorities will continue efforts to strengthen programming, management and control of public expenditures, and to improve service delivery in key sectors. - Technical assistance from IDA, IMF, IDB and other donors will be important to establish adequate budget management capacity. - Current budget classification and monitoring capacity - Haiti does not have a budget classification by program or a fully functional budget classification, but mechanisms exist to adequately monitor the use of HIPC resources. - The June 2006 joint IMF and IDA Assessment and Action Plan (AAP) concluded that the recently introduced budget and accounting classifications allow monitoring of budget allocations and expenditures following two dimensions: - (i) administrative (ministries, central and regional departments) including development projects; and - (ii) economic (expenditure types). - The budget is also presented in the annexes of the budget law following a functional classification with 10 broad categories (such as education and health). The functional classification is prepared from broad estimates from the administrative classification. - In the absence of a program budget, projects are individually coded within the administrative classification allowing recording and reporting on projects’ expenditures. - Monitoring approach prior to completion point - Use of resources made available by the HIPC Initiative prior to completion point will be monitored at the entity (e.g., ministries, public institutions, and executing agencies) and the project levels. - Entities coded in the budget classification will be identified according to their core mandate in relation with poverty reduction. - The same process will be followed to identify individual projects contributing to poverty reduction as defined in the I-PRSP. - Existing mechanisms to record expenditures according to their destinations will allow monitoring both budget allocations and expenditures for the entities and projects identified as contributing to poverty reduction. - Intended use of HIPC-related savings - The Government intends to use HIPC related savings to fund activities identified in the I-PRSP and which will be included in the PRSP. - The relatively limited resources from HIPC initiative assistance would focus largely on health, education, water and environment while other areas, such as major infrastructure programs, would be financed by other external resources. - The poverty-related programs and projects to be financed within the interim assistance have been included in the FY2007 budget and would need to be included in subsequent budgets. - IDA’s ongoing Economic Governance Technical Assistance Grant II (EGTAG II) and a follow-on Economic Governance Reform Operation II (EGRO II) currently under preparation will provide resources to strengthen and modernize the public procurement system with the above mentioned adoption and implementation of a new procurement law promoting transparency and competition in line with international best practices. - Monitoring and external validation - Periodic budget execution reports published by the MEF on its web page provide a tool to monitor and publicly disseminate the use of resources made available by the HIPC Initiative in-year. - Measures are being taken to become current with the audit of the annual Government accounts by the CSCCA to provide external and independent validation of the budget execution reports. - The Government intends to institutionalize monitoring and evaluation mechanisms in the context of the PRSP to provide oversight on the allocation of resources for poverty reduction, notably savings from debt relief. ### Expenditure priorities for the use of Enhanced HIPC Assistance (Box 3) - Education - Education for All (EFA) program. - Training of new primary level teachers - Provision of textbooks, teaching material and uniforms. - School feeding program. - Health - Improving the availability of drugs, immunization programs (including in remote areas using mobile brigades), prevention campaigns against malaria, parasite control in schools. - Surveys on the prevalence of iodine and micronutrient deficiencies and programs to address these deficiencies. - Equipment and supplies for maternity wards of health centers and hospitals. - HIV/AIDS prevention and general health education activities. - Strengthening epidemiology services. - Water Supply and Sanitation - Improving access to potable water and sanitation for poor urban and rural households. - Environment - Environmental protection and natural disaster prevention activities. --- ### Views of the authorities (summary) - The authorities emphasized that Haiti’s external debt burden and debt service are unsustainably high and could delay economic and social reform programs. - Haiti is described as the poorest country in the Western Hemisphere and one of the poorest in the world, with a significant share of the population lacking access to basic services such as education, health and safe water. - Authorities noted that violence and political instability aggravated poverty, especially in urban slums. - Debt relief under the HIPC Initiative would help free resources to finance critical social and infrastructure programs and improve access to primary education, preventive health care and the fight against HIV/AIDS. - The authorities expect resulting improvements in social conditions to help reverse violence and political instability. *Source: _cr06440 - 1. PRSP: Preparation of a full PRSP through a participatory process and satisfactory implementation of its* ### 63. This paper presents a decision point assessment of Haiti’s qualification for ### _cr06440 - 63. This paper presents a decision point assessment of Haiti’s qualification for ### Decision point assessment and Executive Directors' questions - Do Directors agree that Haiti qualifies for assistance under the HIPC Initiative, and do they recommend approval of a decision point? - Do Directors agree that the IMF and IDA should provide interim assistance between the decision and completion points, in line with existing guidelines? - Do Executive Directors agree that the floating completion point will be reached when the triggers in Box 2 have been met? - Debt relief will be provided unconditionally only when: - the completion point triggers have been met, and - satisfactory assurances have been received of other creditors' participation under the enhanced HIPC Initiative for Haiti. ### Amount and delivery of HIPC assistance (NPV terms, end-September 2005) - Total estimated HIPC Enhanced Assistance: US$140.3 million in NPV terms (Table A2). - Breakdown of total estimated assistance in NPV terms: - IDA: US$52.8 million (including an estimated US$33.1 million related to the concessional rescheduling of arrears in early 2005). - IMF: US$3.1 million. - Staff and management recommend that IDA and the IMF provide interim assistance in line with existing guidelines. - IMF assistance delivery specifics (Table A9 / narrative): - Total IMF assistance under the enhanced HIPC Initiative is US$ 3.120 million in NPV terms (calculated on the basis of data available at the decision point). - Interim assistance deposited at the expected decision point in November 2006 to cover PRGF interest obligations between December 2006 and December 2011. - Most of the IMF's grant HIPC assistance assumed to be disbursed into Haiti's account at the assumed completion point in September 2008. - Estimated interest earnings projected to rise to 5 percent in 2011 (used toward repayment obligations as specified). ### Composition of external debt (end-September 2005, nominal stock: $1.336 million) - Creditor group shares (Figure 1A): - World Bank Group: 38% - IMF: 2% - IADB Group: 40% - Other multilaterals: 3% - Paris Club: 14% - Other Official Bilaterals: 3% - Estimated HIPC assistance by creditor group (Total Estimated HIPC Enhanced Assistance: $140 million, end-September 2005 NPV terms; Figure 1B): - World Bank Group: 38% - IMF: 2% - IADB Group: 42% - Other multilaterals: 3% - Paris Club: 11% - Other Official Bilaterals: 4% ### NPV of debt and target ratios (selected figures) - NPV of debt-to-exports target (in percent): 150 (Table A2 heading). - Memorandum items (Table A2): - NPV of debt: 928.3 - Paris Club creditors: 98.4 - Of which: pre-cutoff date non-ODA debt: 50.4 - Non-Paris Club creditors: 36.4 - Three-year average of exports: 525.3 - Current-year exports: 597.3 - NPV of debt-to-exports ratio: 176.7 ### Debt sustainability indicators and projections (Figures and Tables) - Figure 2 / Figure 3: present NPV of Debt to Exports and Debt Service to Exports trajectories, 2005-25, under baseline and alternative scenarios (graphs provided in source). - Table A4: External Debt Service, 2006–2025 (selected annual values and averages, in millions of U.S. dollars unless otherwise indicated) - Before traditional debt relief — Total debt service examples: - 2005/06: 60.5 - 2006/07: 92.4 - 2007/08: 63.9 - 2008/09: 66.1 - 2014/15: 103.8 - 2024/25: 123.8 - Average 2005/06-2014/15: 76.7 - Average 2015/16-2024/25: 107.6 - Debt service to exports ratio examples (Before traditional debt relief): - 2005/06: 9.6 - 2006/07: 13.4 - 2007/08: 8.4 - 2008/09: 8.0 - 2024/25: 4.9 - Averages: 2005/06-2014/15: 8.5; 2015/16-2024/25: 6.0 - Table A4: After traditional debt relief (selected) - Total debt service examples: - 2005/06: 57.6 - 2006/07: 89.6 - Debt service to exports ratio examples: - 2005/06: 9.1 - 2006/07: 13.0 - Table A4: After HIPC assistance (selected) - Total debt service examples: - 2005/06: 58.5 - 2006/07: 76.3 - Debt service to exports ratio after HIPC assistance: - 2005/06: 9.3 - 2006/07: 11.0 - Average 2005/06-2014/15: 7.3; 2015/16-2024/25: 5.6 - Table A4: After HIPC and MDRI assistance (selected) - Total debt service examples: - 2005/06: 58.5 - 2007/08: 54.5 - Debt service to exports ratio after HIPC and MDRI assistance: - 2005/06: 9.3 - 2008/09: 4.8 - Averages: 2005/06-2014/15: 6.2; 2015/16-2024/25: 4.4 - Table A5: Net Present Value of External Debt, 2005-2025 (selected snapshots, in millions of U.S. dollars) - After traditional debt-relief — NPV of total debt: - 2004/05: 885.5 - 2005/06: 914.6 - 2014/15: 1,473.1 - 2024/25: 2,349.9 - Averages: 2004/05-2014/15: 1,155.8; 2015/16-2024/25: 1,959.1 - After unconditional delivery of enhanced HIPC assistance — NPV of total debt: - 2004/05: 787.9 - 2005/06: 798.4 - 2014/15: 1,388.8 - 2024/25: 2,296.5 - Averages: 2004/05-2014/15: 1,062.0; 2015/16-2024/25: 1,888.0 - Memorandum: NPV of debt-to-exports ratio (percent) — Total debt, after unconditional enhanced HIPC: - 2004/05: 175.3 - 2005/06: 158.9 - 2006/07: 153.5 - Target: 150.0 (noted elsewhere) - Table A6 & A7: External Debt Indicators and Sensitivity Analysis (selected ratios, in percent) - Before traditional debt relief — NPV of debt-to-exports ratio examples: - 2004/05: 177.6 - 2005/06: 165.6 - 2006/07: 157.0 - Averages: 2004/05-2013/14: 147.9; 2014/15-2024/25: 116.5 - After unconditional delivery of enhanced HIPC assistance — NPV of debt-to-exports ratio: - 2004/05: 150.0 - 2005/06: 137.8 - 2006/07: 133.9 - Averages: 2004/05-2013/14: 130.1; 2014/15-2024/25: 111.0 - Sensitivity scenarios (Table A7) show deviations under: - Less concessional new borrowing scenario (NPV of debt-to-exports ratio examples: 2006/07: 137.8; 2014/15: 135.1). - Lower export growth (assumes on average 3 percentage points lower export growth 2006-26): NPV of debt-to-exports ratio examples showing large increases over time (e.g., 2014/15: 155.0). - Lower GDP growth (assumes 2 percentage points lower GDP growth 2006-26): NPV of debt-to-exports ratio examples rising over time (e.g., 2024/25: 161.8). ### Debt stock by creditor group (Table A1, end-September 2005, in millions of U.S. dollars unless otherwise specified) - Total nominal debt stock: 1,336.3 - Multilateral total: 1,097.8 (82.2 percent of total) - World Bank: 507.1 (37.9 percent of total) - IMF: 21.4 (1.6 percent) - IADB Group: 533.9 (40.0 percent) - IFAD: 31.7 (2.4 percent) - OPEC: 3.7 (0.3 percent) - Bilateral and commercial total: 238.5 (17.8 percent) - Paris Club: 192.7 (14.4 percent) - Other Official Bilateral: 45.8 (3.4 percent) - Examples of bilateral exposures: France 64.1; Italy 68.9; Spain 38.6; United States 15.1; Taiwan, PRC 45.7. ### Macroeconomic and long-term assumptions (Table A11, selected) - Real GDP growth (percent, annual): - 2005: 1.8 - 2006: 2.5 - 2007-2012: 4.0 (2007-2010) then 4.0 continuing in projections with later years 4.5 from 2015 onward - Averages: 2006-15: 3.7; 2016-25: 4.5 - GDP deflator (percent): - 2005: 17.6 - 2006: 13.9 - 2007: 8.1 - Long-run assumption: 5.0 (from 2012 onward) - Consumer prices (end of period, percent): - 2005: 14.8 - 2006: 12.4 - 2007: 8.0 - Long-run: 5.0 (from 2011 onward) - Exports of goods and non-factor services (growth, percent): - 2005: 17.1 - 2006: 5.7 - 2007: 9.5 - Long-run trend rising gradually to 7.6 by 2025 - Central government revenue (percent of GDP, excluding grants): - 2005: 30.5 - 2006: 23.7 - Projected to reach 16.0-16.8 percent of GDP in medium term and 14.6 long-run average - Central government overall balance (including grants, percent of GDP): - 2005: -0.7 - 2006: -1.4 - Projected long-run central government overall balance (including grants): around -2.0 percent of GDP ### Creditor burden-sharing and Paris Club delivery (summary points) - Proportional burden-sharing approach applied to estimate creditor-specific NPV reductions (Table A2 / Table A3 notes). - Table A12 summarizes Paris Club creditors' delivery modalities (flow vs stock; percentage reductions), noting many creditors provide 100 percent cancellation for HIPCs on ODA claims and varying treatment for non-ODA claims and pre-/post-cutoff debts. - Paris Club cutoff date: October 1, 1993 (memorandum item in Table A3). ### Key operational assumptions and notes - Debt indicators refer to public and publicly guaranteed (PPG) debt; fiscal year ends in September. - NPV of debt-to-exports ratios use a three-year export average (backward-looking average, e.g., 2005-03 for some calculations). - MDRI assistance applies only to the World Bank and starts after the completion point (assumed September 2008) and is assumed to have no impact on Haiti’s new borrowing over the projection period. - Tables include assumptions of a hypothetical stock-of-debt operation on Naples terms at end-September 2005 and comparable treatment by other official bilateral creditors where indicated. - New borrowing projections include repurchase with PRGF resources of SDR amounts previously drawn under the Fund's EPCA (examples referenced: SDR 10.23 million and SDR 20.5 million in specific notes). *Source: IMF staff document: decision point assessment for Haiti’s qualification for assistance under the HIPC Initiative (end-September 2005 data and related tables and figures).* ### APPENDIX I—GOVERNANCE ACTIONS AND POLICIES ### APPENDIX I—GOVERNANCE ACTIONS AND POLICIES ### Participation - Preparation of Extended Interim Cooperation Framework presented at July 2006 conference attended by civil society representatives and donors. - Participatory process for preparation of Poverty Reduction Strategy (PRS). - Creation of National Partnership Office (NEPO) and National Partnership Fund to promote policy dialogue and coordination between key education sector stakeholders (including non-public education service providers, parents’ associations, teachers unions, government), and accountability and transparency in use of public education funds. - Mechanism in place for monitoring/evaluation of PRSP implementation. - Adoption and satisfactory implementation of public financing mechanism to help poor families pay for fees in non-public primary schools for enrollment of additional 50,000 out-of-school children. - Oversight of public financing mechanism for non-public school transfers by NEPO Board and by independent audit of schools receiving public transfers; information on per-capita allocations to schools available to parents. ### Accountability/Oversight - Completion in 2006 of diagnostic survey of state of governance and perception of corruption in Haiti as input to design of national anti-corruption strategy under preparation. - Creation of Anti-Corruption Unit (ULCC) in 2004. - Financial audits of EDH (electricity), TELECO (telecoms) and APN (ports authority) completed; account rehabilitation of EDH and TELECO completed. - Strengthening of supreme audit institution (CSCCA) with 2006 decree on its organization and functioning. - Consultative committee and executive secretariat of the monitoring group of civil society organizations established. - Creation of National Commission for Public Procurement in 2004 and 2005 new procurement decree; preparation of standard bidding documents; publication of Government contracts and supplier database. - Adoption of Asset Declaration Law applying to people identified by Constitution and public resource managers, with sanctions for non compliance. - Definition of system, applicability and procedures for new civil service recruitments and promotions. - Adoption and satisfactory implementation of Anti-Corruption Strategy. - Up-to-date preparation of Government accounts, their annual audit by CSCCA and their submission to Parliament; preparation and implementation of action plan to address key audit findings. - Up-to-date annual audit of key public enterprises’ financial statements; preparation and satisfactory implementation of action plan to address key audit recommendations. - Adoption and satisfactory implementation of a new procurement law, promoting transparency and competition in line with international best practice. ### Transparency - Regular public dissemination of key budget allocations and execution information. - Dissemination of summary of progress reports on economic governance reforms prepared by civil society organizations. - Dissemination of PRS annual progress reports. - Publication of quarterly reports on public expenditures for poverty reduction based on automated tracking mechanism. - Publication of audited Government accounts. ### Recently completed actions - Preparation of Extended Interim Cooperation Framework presented at July 2006 conference attended by civil society representatives and donors. - Completion in 2006 of diagnostic survey of state of governance and perception of corruption in Haiti as input to design of national anti-corruption strategy under preparation. - Creation of Anti-Corruption Unit (ULCC) in 2004. - Financial audits of EDH (electricity), TELECO (telecoms) and APN (ports authority) completed; account rehabilitation of EDH and TELECO completed. - Strengthening of supreme audit institution (CSCCA) with 2006 decree on its organization and functioning. - Consultative committee and executive secretariat of the monitoring group of civil society organizations established. - Regular public dissemination of key budget allocations and execution information. - Significant reduction of discretionary spending through ministerial comptes courants (from 62 percent of non-salary current public expenditure during Oct.2003-March 2004 to less than 10 percent since Sept. 2004). - Dissemination of summary of progress reports on economic governance reforms prepared by civil society organizations. - Creation of National Commission for Public Procurement in 2004 and 2005 new procurement decree; preparation of standard bidding documents; publication of Government contracts and supplier database. ### Planned actions (HIPC Completion Point Triggers in bold) - **Participatory process for preparation of Poverty Reduction Strategy (PRS).** - **Adoption of automated mechanism to track public expenditures for poverty reduction.** - **Adoption and satisfactory implementation of public financing mechanism to help poor families pay for fees in non-public primary schools for enrollment of additional 50,000 out-of-school children.** - Accountability for financing mechanism at school level through school management committees including parents’ representatives. - **Adoption of Asset Declaration Law applying to people identified by Constitution and public resource managers, with sanctions for non compliance.** - **Definition of system, applicability and procedures for new civil service recruitments and promotions.** - **Adoption and satisfactory implementation of Anti-Corruption Strategy.** - **Up-to-date preparation of Government accounts, their annual audit by CSCCA and their submission to Parliament; preparation and implementation of action plan to address key audit findings.** - **Up-to-date annual audit of key public enterprises’ financial statements; preparation and satisfactory implementation of action plan to address key audit recommendations.** - Dissemination of PRS annual progress reports. - Publication of quarterly reports on public expenditures for poverty reduction based on automated tracking mechanism. - Oversight of public financing mechanism for non-public school transfers by NEPO Board and by independent audit of schools receiving public transfers; information on per-capita allocations to schools available to parents. - Adoption and satisfactory implementation of a new procurement law, promoting transparency and competition in line with international best practice. - Publication of audited Government accounts. *Source: APPENDIX I—GOVERNANCE ACTIONS AND POLICIES (from the provided document).* ### 0.8 percent of GDP during FY2007–11. ### _cr06440 - 0.8 percent of GDP during FY2007–11. ### PetroCaribe impacts on external debt service and exports - Transfers related to PetroCaribe amount to 0.8 percent of GDP during FY2007–11. - From FY2012, transfers become negative. - Debt service payments related to PetroCaribe would peak at about 1 percent of exports in FY2013. - The increase in external debt service payments reflects the authorities' plan to use resources from PetroCaribe to finance investment projects. - It will be important to ensure that the returns to these projects, which can be expected to materialize in the long run, are adequate to amortize the accumulated debt. ### Public sector debt sustainability (baseline and projections) - Under the baseline scenario, Haiti’s public debt (including domestic debt) is expected to remain broadly constant. - Short run reliance on external financing, especially external grants, together with high revenue efforts and a slow expansion of the public sector, should contain debt-creating financing of the budget. - A relatively low initial public debt burden and the positive outlook for revenue performance and growth would allow the country to run a primary deficit of on average 1.2 percent of GDP over the long run without threatening long-term sustainability. - Projected slowdown in external grant financing is expected to be counterbalanced by higher internal revenues and a gradual increase of domestic borrowing. - Domestic debt is expected to increase from about 2.0 percent of GDP in the medium term to 7.4 percent of GDP by FY2026. - The expected increase in domestic debt is anticipated to contribute to the development of the domestic financial market. - The evolution of public debt remains robust under alternative scenarios and bound tests; however, low growth (scenario B1) could lead to an increase of 11 percentage points in the NPV of debt-to-GDP ratio between FY2006 and FY2026. ### Debt distress classification, vulnerabilities, and indicators - Haiti’s risk of debt distress is high. - Under the baseline scenario—which includes HIPC Initiative assistance—the NPV of debt-to-exports ratio remains above the LIC DSA threshold (100 percent) until FY2021. - Other debt indicators remain below their respective thresholds over the projection period. - Sensitivity analysis highlights that Haiti’s external debt situation is vulnerable to shocks. - Public sector domestic debt is not projected to add significant risk to the debt outlook. - Increased revenue efforts and a slow expansion of the public sector will help to maintain fiscal sustainability in the medium and long run. ### Key statistics and projections (selected figures from staff simulations and tables) - Debt service-to-exports ratio (in percent) historical/projection series (selected): 7.9, 8.7, 7.9, 8.7, 9.1, 8.5, 9.3, 11.0, 7.0, 5.8, 6.0, 6.7, 7.0, 5.0. - NPV of PPG external debt in percent of exports (selected): 149.9, 147.1, 137.1, 117.6, 118.7, 117.9, 116.7, 107.1, 88.3. - Nominal GDP (millions of US dollars) (selected): 3953.8, 3596.4, 3472.2, 2960.3, 3537.7, 4310.3, 4733.9, 5250.4, 5725.7, 6055.3, 6430.9, 6829.8, 9236.3, 17385.3. - Public sector debt (in percent of GDP) (selected): 47.6, 40.8, 32.8, 32.0, 29.2, 27.3, 27.6, 28.0, 28.2, 29.5, 29.8. - NPV of public sector debt (selected): 24.1, 23.6, 21.3, 18.4, 18.3, 18.4, 18.3, 19.3, 21.0. - NPV of public sector debt-to-revenue ratio (in percent) (selected): 182.9, 173.9, 137.6, 117.7, 114.3, 112.7, 108.9, 109.7, 110.2. - Debt service-to-revenue ratio (in percent) (selected): 19.2, 16.0, 10.9, 15.1, 11.5, 10.0, 9.1, 8.5, 7.6, 7.9, 9.0. - Key macro assumptions (selected): Real GDP growth (in percent) series includes 0.9, -1.0, -0.3, 0.4, -3.5, 1.8, 1.0, 2.2, 2.5, 4.0, 4.0, 4.0, 4.0, 4.0, 3.7, 4.5, 4.5, 4.4. - Effective interest rate (percent) (selected): 1.2, 1.0, 1.2, 1.2, 1.4, 1.3, 1.2, 0.2, 1.5, 1.1, 1.3, 1.1, 1.1, 1.2, 1.2, 1.2, 1.1, 1.1. - Growth of exports of G&S (US dollar terms, in percent) (selected): -4.8, -12.0, -1.3, 7.2, 8.9, 17.1, 11.2, 16.3, 5.7, 9.5, 10.5, 8.0, 9.2, 7.7, 8.4, 6.8, 7.6, 7.0. - Growth of imports of G&S (US dollar terms, in percent) (selected): 8.0, -4.0, -4.8, 14.4, 9.2, 13.7, 8.6, 8.7, 14.0, 13.2, 5.4, 6.2, 7.8, 5.2, 8.6, 6.2, 5.9, 6.0. ### Debt management capacity and recommended actions - Current institutional responsibilities: the Central Bank of the Republic of Haiti (Banque Centrale de la République d’Haïti, BRH) and the Ministry of Economy and Finances (Ministère de l’Économie et des Finances, MEF) are jointly responsible for debt management. - BRH has a relatively complete debt database; the MEF archives were devastated by a fire in 2002 and are being rebuilt with BRH support. - Coverage of public debt (external and domestic) is appropriate. - The BRH updates its database at every payment cycle and produces monthly, quarterly and annual reports covering transactions, stock of debt, and accumulation of arrears; data are available to the public upon request within one month after the reference period and are subsequently published with some additional delay. - BRH currently uses UNCTAD’s DMFAS, version 5.2; both BRH and MEF are considering acquiring an updated version of DMFAS, contingent on donor financing and an assessment by a UNCTAD mission. - UNCTAD would also provide training to BRH and MEF staff. Recommended capacity-strengthening actions (as specified) - Clarify by law the debt management responsibility of the BRH and the MEF. - Improve information sharing, including frequent debt reconciliation exercises, between the BRH and the MEF. - Shorten the procedures for debt service payments. - Improve the tracking of disbursements. - Acquire a modern debt reporting system. - Provide training of staff. - Improve the capacity to produce debt sustainability analyses. *Source: Staff simulations and projections contained in the IMF staff report excerpt.* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06440.pdf_