Press Release No. 98/58

The International Monetary Fund (IMF) today approved Haiti’s request for emergency financial assistance related to natural disasters. The assistance, equivalent to SDR 15.2 million (about US$21 million), will support the government’s economic recovery program and associated relief and rehabilitation efforts in the aftermath of Hurricane Georges.

In late September Hurricane Georges struck Haiti, causing extensive damage. An estimated 240 people died and tens of thousands were left homeless. The main destruction occurred in rural areas, as heavy flooding and high winds caused substantial damage to crops and livestock, as well as economic and social infrastructure, including bridges, roads, irrigation systems, hospitals, and schools. The slow rehabilitation of the infrastructure and the lack of such agricultural inputs as seeds threaten a quick recovery of agricultural production. Preliminary World Bank estimates put the total direct economic losses at about US$80 million, or 1.9 percent of GDP.

The implementation of Haiti’s economic program for 1997/98, which was monitored by IMF staff, was satisfactory despite difficult circumstances. A prudent fiscal policy was put in place, credit policy was tightened, and structural reforms covering the civil service and the financial system were undertaken.

In FY 1998/99, the authorities plan to maintain prudent macroeconomic policies and make further progress in the structural area, while dealing with the damage caused by Hurricane Georges. The FY 1998/99 program, also being monitored by IMF staff, is predicated on 2 percent output growth and aims at maintaining inflation at about 8 percent and keeping an adequate level of official international reserves, while incorporating 0.8 percent of GDP of public spending for hurricane relief and reconstruction.

The authorities are committed to implementing their fiscal program, which would provide for urgent reconstruction expenditures while maintaining fiscal discipline. On the revenue side, they are committed to taking steps to strengthen tax and customs administration and tighten the administration of tax exemptions. On the expenditure side, to help make room for hurricane reconstruction expenditures, the authorities intend to limit government spending to revenue collection and programmed financing, restrict the use of ministerial discretionary accounts, phase in civil service wage increases consistent with donor-backed sectoral policy reforms, tighten hiringprocedures for hiring government employees, and restrict low-priority, non-hurricane-related capital outlays.

Haiti joined the IMF on September 8, 1953, and its quota¹ is SDR 60.7 million (about US$84 million). Haiti's outstanding use of IMF financing currently totals SDR 28 million (about US$38 million).

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¹ A member's quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its share in the allocation of SDRs.