Washington, DC:
Management of the International Monetary Fund (IMF) approved on December
21, 2022 the first review of Haiti’s Staff-Monitored Program (SMP).
Discussions for the review took place during October-December, 2022
[1]
. The SMP takes into account Haiti’s fragility and capacity constraints. It
was designed to support the authorities’ economic policy objectives and
build a track record of reform implementation.
Haiti is mid-way through a SMP that has been an important anchor for
Haitian policymakers, despite one of the most challenging economic
environments in many years. Haiti is faced with many difficulties, which
have been worsened by higher food and fuel prices stemming the war in
Ukraine, which have increased its economy’s fragility. The external shocks
and deterioration of the security situation have resulted in a
macroeconomic outlook worse than at the time of the program’s approval by
IMF management in June 2022.
Despite the more difficult macroeconomic conditions and downside risks,
recent data and progress on structural reforms suggest that the authorities
are making meaningful efforts to ease the country’s multiple challenges. In
this difficult context, the authorities have committed to continue
implementing policies that would begin to restore macroeconomic stability
and growth, strengthen governance, and to provide relief to the most
vulnerable households. The SMP has been instrumental in catalyzing
forthcoming external financing and its implementation has been broadly
satisfactory, despite obstacles in meeting quantitative targets due to a
less favorable environment than initially anticipated.
The Haitian authorities have adopted a budget for FY2023 that is consistent
with agreed targets under the SMP and in the context of a medium-term
budget. They ensured that a meaningful budget allocation is used to protect
the most vulnerable and are implementing public financial management
systems to monitor the use of public funds. The authorities are committed
to reduce central bank financing of the deficit to levels consistent with
low inflation and limit foreign exchange intervention to smoothing excess
volatility.
In line with the reforms under the SMP, the authorities took measures aimed
at raising domestic revenues, approving in December a new tax code and
following through with the adoption of the customs and tax administration
reforms. In particular, the tax code—a primer in the country’s
history—entails the rationalization and simplification of the personal
income tax and corporate income tax, including through the broadening of
the tax base and elimination of many exemptions.
Progress on governance is key to ensure inclusive growth. The authorities
have taken steps to strengthen accountability in the collection and use of
public resources and have boosted the transparency of public procurement
for emergency resources. They are working to bring AML/CFT laws up to
international standards supported by Fund’s capacity development.
IMF staff will continue to work closely with the authorities to support
implementation of their program and help them build public support. Indeed,
most elements of the authorities’ program are underpinned by ongoing IMF
technical assistance. The Fund will also continue to coordinate closely
with Haiti’s other development partners to leverage efforts in support of
common objectives. SMP are only subject to formal IMF management review.
[1]
The SMP was approved on June 17, 2022 and runs through May 31,
2023. SMPs are arrangements between country authorities and the IMF
to monitor the implementation of the authorities’ economic program
but are not accompanied by financial assistance.
