IMF Staff Concludes Visit to Haiti

IMF News, June 20, 2018

Source details

Mission dates: June 3 to 15, 2018.
Purpose: conduct the 2018 Article IV consultation and hold discussions on the first review of Haiti under its Staff Monitored Program (SMP).
Mission leader: Mr. Chris Walker.
Press Release No.: 18/246.

GDP growth has accelerated slightly to reach about 2 percent for the current fiscal year ending in September.
Annual average inflation remains below 15 percent.
Current account deficit is expected to be contained at a relatively high level of 4 percent of GDP this fiscal year amid investment-related imports and higher world prices for petroleum products and grains.

The performance of the authorities’ program was satisfactory in the first quarter of 2018.
Budget deficit was below 2.2 percent of GDP for the fiscal year to date, after adjusting for expenditures on recovery from Hurricane Matthew.
All structural benchmarks for end-March 2018 were met, one with a delay.
All performance criteria were met, except for the floor of the fuel stabilization fund, which was missed due to higher-than-expected global oil prices.
Solid economic policies implemented under the SMP are expected to catalyze external resources provided by Haiti’s technical and financial partners.

The IMF team and the Haitian authorities agreed on fiscal policy measures for fiscal year 2018 to achieve the program's objectives.
Objectives of the measures:
- Create fiscal space needed to improve social programs and increase public investment, particularly in health, education, and social services.
- Contain the budget deficit at a sustainable level, thereby limiting the need for central bank financing of the central government.
Agreed need to improve domestic resource mobilization to create fiscal space for priority expenditures.
Mission welcomes the government's intention to eliminate fuel price subsidies.
Importance of implementing key social measures to mitigate the impact of the subsidy reform on the most vulnerable segments of the population.

Authorities were congratulated for measures to reform the electricity sector and to contain fiscal losses linked to the operations of the public electricity utility (EDH).
- Measures aim to reduce losses due to EDH’s operations, ensure sustainable medium-term growth of the electricity sector, and improve the environment for private investment.
Team commended progress towards greater transparency of the financial and public accounts sectors.
Agreed need to accelerate the pace of structural reforms essential for sustaining private sector-led growth, boosting economic growth, and reducing poverty more broadly.
Mission encouraged reforms aimed at streamlining taxation and strengthening tax administration.
Agreement that higher levels of both public and foreign direct investment would help Haiti achieve higher growth over the long term.

Medium-term outlook is generally positive, linked to Haiti’s potential for more rapid growth following envisaged implementation of structural reforms, but downside risks are significant.
Economic activity is expected to accelerate in 2019 on the back of both public and private investment.
Reduction of the public-sector deficit should:
- Allow the private sector to benefit from new financing opportunities.
- Limit monetary financing, which in turn should reduce inflationary pressures.
Noted significant risks, including externally in the form of climate risks and those related to changes in global oil prices.

The IMF mission was hosted by Mr. Jude Salomon, Minister of Economy and Finance and Mr. Jean Baden Dubois, Governor of the Bank of the Republic of Haiti.
The mission held discussions with other ministers (including the Minister of Planning and External Cooperation, the Minister of Labor and Social Affairs, and the Minister of Agriculture), members of Parliament, other senior public officials, and representatives of the private sector and civil society.

Press Release No. 18/246 — June 20, 2018.