Kad Patnèrya Peyi pou Ayiti pou Peryòd Ane Fiskal 2025-2029

Public Disclosure Authorized Document of The World Bank Group FOR OFFICIAL USE ONLY Report No: 181213-HT Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR HAITI Public Disclosure Authorized FOR THE PERIOD FISCAL YEAR 2025 –2029 January 31, 2025 Haiti Country Management Unit Latin America and Caribbean Region Public Disclosure Authorized The International Finance Corporation Latin America and the Caribbean Region Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. i International Development Association International Finance Corporation Multilateral Investment Guarantee Agency Vice President: Director: Task Team Leaders: Carlos Felipe Jaramillo Lilia Burunciuc Anne-Lucie Lefebvre Alfonso Garcia Mora Elizabeth Ann Marcano Ronke Ogunsulire Ethiopis Tafara Sebnem Erol Madan Persephone Economou i The date of the last Performance and Learning Review was May 31, 2018 (Report No. 124812-HT) CURRENCY EQUIVALENTS (Exchange rate as of January 22, 2025) 1 US Dollar = 130.61 Haitian Gourdes FISCAL YEAR October 1 – September 30 ABBREVIATIONS AND ACRONYMS ACLED Armed Conflict Location and Event Data Project M&E Monitoring and Evaluation ASA Advisory services and analytics MCH Maternal and Child Health BINUH United Nations Integrated Office in Haiti MIGA Multilateral Investment Guarantee Agency CAS Country Assistance Strategy MSPP Ministry of Public Health and Population CCPC Commune-Level Civil Protection Committee (Comité Com munal de Protection Civile) MSSM Multinational Security Support Mission CE Citizen Engagement MTPTC Ministry of Public Works, Transport and Communication CERC Contingent Emergency Response Component NGO Non-Governmental Organization CLR Completion and Learning Review PAHO Pan-American Health Organization CPF Country Partnership Framework PBA Performance-Based Allocation CPIA Country Policy and Institutional Assessment PDNA Post-Disaster Needs Assessment CRW Crisis Response Window PFM Public financial management CTF Clean Technology Fund PIU Project Implementation Unit DGPC General Civil Protection Directorate PLR Performance and Learning Review DINEPA Water and Sanitation Utility (Direction Nationale de l’Eau Potable et de l’Assainissement) PNH Police Nationale d’Haïti DPO Development Policy Operation PPP Public Private Partnership DRM Disaster Risk Management PSW Private sector window E&S Environmental and social QAS Quality Assurance System EDH Public Electricity Company (Electricité d’Haïti) RBF Result Based Financing EMIS Education Management Information System RCIA Rapid Crisis Impact Assessment ESW Economic and Sector Work RE Renewable Energy EU European Union RECA Remaining Engaged during Conflict Allocation FCS Fragile and Conflict Affected States RF Results Framework FCV Fragility, conflict, and violence RRA Risk and Resilience Assessment FY Fiscal year SCD Systematic Country Diagnostic GBV Gender-based violence SMEs Small and Medium Enterprises GDP Gross Domestic Product SMP Staff-Monitored Program GOH Government of Haiti SREP Scaling up Renewable Energy Program HRITF Health Results Innovation Trust Fund TA Technical Assistance IADB Inter-American Development Bank TSA Treasury Single Account ICR Implementation Completion Report UN United Nations ICRR / Implementation Completion and Results Report UNICEF United Nations Children’s Fund ICT Information and Communication Technology US United States IDA International Development Association USAID United States Agency for International Development IFC International Finance Corporation W&S Water and Sanitation IHSI Haitian National Institute of Statistics and Information WB World Bank IMF International Monetary Fund WBG World Bank Group IPF Investment Project Financing WFP World Food Program ISN Interim Strategy Note WMO World Meteorological Organization ISR Implementation Status and Results Report ZMPP Metropolitan Area of Port-au-Prince LAC Latin America and the Caribbean ii Table of Contents ABBREVIATIONS AND ACRONYMS ..........................................................................................................................ii I. INTRODUCTION..................................................................................................................................................1 II. COUNTRY CONTEXT AND DEVELOPMENT .........................................................................................................2 Poverty, Inequality, Fragility, Conflict and Violence....................................................................................2 Recent Economic Developments and Outlook............................................................................................3 Main Development Priority Areas...............................................................................................................7 Government Transition Roadmap...............................................................................................................8 III. WORLD BANK GROUP PARTNERSHIP FRAMEWORK..........................................................................................8 Lessons from CPF Completion Report and Consultations...........................................................................8 Overview of WBG Partnership Framework ...............................................................................................11 Implementing the CPF ...............................................................................................................................17 IV. MANAGING RISKS TO THE CPF PROGRAM.......................................................................................................19 Annex 1: Country Partnership Framework Results Matrix ...................................................................................22 Annex 2: Completion and Learning Review..........................................................................................................30 Annex 3: Selected Indicators of Bank Portfolio Performance and Management.................................................76 Annex 4: Operations Portfolio (IBRD/IDA and Grants) .........................................................................................77 Annex 5: Statement of IFC's Held and Disbursed Portfolio ..................................................................................78 Annex 6. Country Context: Poverty, Inequality, Fragility, Conflict and Violence .................................................80 Annex 7. CPF Implementation Model...................................................................................................................88 Annex 8. RECA: Preserving Institutions and Human Capital.................................................................................91 Annex 9. List of Projects Implemented by UN Agencies (as of December 23, 2024) ...........................................95 iii List of Tables Table 1. Haiti: Selected Economic Indicators............................................................................................................. 4 Table 2. Main World Bank Group Knowledge Services............................................................................................16 Table 3. Haiti Indicative International Development Agency (IDA) Lending Program According to Fiscal Year......17 Table 4. Risks to the Haiti Country Partnership Framework Program .....................................................................20 List of Figures Figure 1. Share of Population Living Below................................................................................................................ 3 Figure 2. Inflation, Annual Percentage Change.......................................................................................................... 4 Figure 3. Change in Nighttime Light Intensity, 2018-24................................................................................................ 5 Figure 4. Overview of Haiti 2025–29 CPF.................................................................................................................13 List of Boxes Box 1. Strengthening Public Governance................................................................................................................... 7 Box 2. External Shocks and the World Bank Response .............................................................................................. 9 Box 3. Stakeholder Perceptions of the World Bank Group (WBG)...........................................................................10 Box 4. International Development Aid .....................................................................................................................11 Box 5. Selectivity Filters, Flow, and Identified CPF Objectives and High-Level Outcomes............................................12 iv FISCAL YEAR 2025–29 COUNTRY PARTNERSHIP FRAMEWORK FOR HAITI HAITI: Preserving Hope, Restoring Growth I. INTRODUCTION 1. This Country Partnership Framework (CPF) sets out the World Bank Group’s (WBG) priorities in helping Haiti restore governance, sustain essential public services, and resume growth. The CPF covers the period from fiscal year (FY) 2025 to 2029 and responds to priorities that the government identified in the Political Agreement for a Peaceful and Orderly Transition of April 3, 2024.1It supports the government’s roadmaps and subsequent response strategies to exogenous and man-made shocks, including the COVID-19 pandemic, the 2021 earthquake, and the surge in gang violence. It also reflects the WBG 2021 Country Private Sector Diagnostic and the 2022 Systematic Country Diagnostic (SCD) update.2Lessons from the Completion and Learning Review (CLR) and the 2024 Risk and Resilience Assessment Update inform the CPF. The WBG Board of Executive Directors discussed the FY2016–19 CPF on August 27, 20153 and the 2018 Performance and Learning Review (PLR)4 extended it to FY2021. 2. Haiti is navigating a deepening crisis–fragility trap. A combination of political crises, escalating social violence, successive earthquakes, hurricanes, and disease outbreaks (COVID-19 pandemic and resurgence of cholera) over the past decade have deepened poverty and fragility. This was exacerbated by weak institutions, widespread corruption, and extreme inequality. Since 2021, Haiti has witnessed a significant surge in violence committed by armed gangs, as well as conflicts between gangs and the police, affecting all sectors of society and the economy. While these challenges are daunting, Haiti exhibits several resilience factors to its complex internal and external shocks such as a vibrant civil society, an active diaspora, and institutional resilience in key sectors. 3. A framework for crisis resolution and stabilization emerged in the second quarter of 2024, although uncertainty and risks remain high. Major changes have occurred in Haiti since Prime Minister Ariel Henry’s resignation in March 2024. The installation of the transitional presidential council in April initially stabilized political decision- making and was followed by the designation of a prime minister and a new government in June. The April 2024 agreements on an orderly political transition (see section II) provide an opportunity to escape the crisis– fragility trap. Deployment of the United Nations–mandated Multinational Security Support Mission (MSSM) initially helped secure key government institutions and supported several National Police-led operations in Port-au-Prince. However, the political agreement became fragile in the autumn of 2024, leading to another change of government in November 2024, accompanied by a surge in violence that led to the closure of the international airport, paralyzed the movement of goods, and caused further deterioration in socioeconomic conditions. With gangs controlling all major transportation routes, Port-au-Prince experiences periods of quasi-isolation from the rest of the country. 4. In this context, the overarching goal of this CPF is to build resilience by preserving essential institutions and human capital while laying a foundation for economic recovery. Exercising selectivity and focus, the CPF will employ lending, analytics, and partnerships with other development institutions to support a single high-level outcome: build the resilience of the poor. It will focus on preserving development gains and livelihoods for poor and crisis-affected populations by strengthening economic governance, creating job opportunities, maintaining institutional capacity to support delivery of basic services, preserving human capital, and strengthening resilience to natural disasters and man-made shocks. With these objectives, the CPF supports all six of the eight World Bank Global Challenge Programs.5 1 Various political parties and civil society organizations signed the April 3, 2024, Political Agreement for a Peaceful and Orderly Transition, which outlines the provisions and modalities for decision-making processes during the transition period. 2 Report No. 172801-HT. 3Report No. 98132-HT. 4 Report No. 124812-HT. 5 The eight global challenge programs are climate change adaptation and mitigation, fragility and conflict, pandemic prevention and preparedness, energy 1 5. The World Bank will continue to leverage all relevant International Development Association (IDA) resources to support government efforts to restore security, political stability, and economic growth. In addition to IDA’s Crisis Response Window (CRW), which has been used effectively in Haiti, the CPF seeks eligibility to access the IDA’s Remaining Engaged during Conflict Allocation (RECA) to help preserve institutional capacity and human capital. While focusing predominantly on areas outside of the capital, wherever security conditions allow, the WBG program will be expanded within the Port-au-Prince's metropolitan area and the Artibonite Region to support recovery. The CPF will seek opportunities to use the blended finance funds of the IDA Private Sector Window (PSW) to help derisk and make private sector projects more bankable. 6. As Haiti meets the IDA20 RECA eligibility criteria, the CPF proposes a portfolio that has the preservation of institutional capacities and human capital among its central objectives. The recent escalation in violence has led the number of fatalities per 100,000 population to surge to 13.4,6 and emigration of skilled personnel from the public service precipitated the decline of the CPIA score to 2.2 in 2023. Amid such conditions, preservation of national and local institutions is crucial for the country’s recovery and state-building. Accordingly, the strategic objectives of the CPF and the WBG portfolio are aligned with the RECA’s strategic objectives (Annex 8). Two of the three CPF objectives are dedicated to supporting essential institutional capacities to support basic services delivery and strengthening resilience to shocks. The government’s roadmap (“Feuille de Route”) for the transition period until the elections provides an entry point for the WBG and development partners to collaborate closely with key ministries. II. COUNTRY CONTEXT AND DEVELOPMENT Poverty, Inequality, Fragility, Conflict and Violence 7. Haiti is undergoing one of the most challenging periods in its recent history. Its development has been constrained by a crisis–fragility trap driven by political instability, conflict, and violence, including gang proliferation and governance failures. Various shocks exacerbated the political and economic environment, including the assassination of President Jovenel Moïse in July 2021, a devastating earthquake, and a destructive flood in August 2021. The severe political, economic, and institutional crises precipitated a significant increase in the levels of conflict and violence, with a high number of violent events and fatalities. The resignation of former Prime Minister Ariel Henry in April 2024 marked the beginning of a new period of escalating violence, particularly in the metropolitan area of Port-au-Prince in the Ouest Department, the economic hub of the country. Gangs have expanded influence throughout the region and control key infrastructure or the access to it in more than 80 percent of the metropolitan area (according to the United Nations), disrupting transportation and limiting access to humanitarian aid. The escalation of violence has displaced more than one million people in 2024, further exacerbating the already significant levels of poverty and food insecurity. 8. In 2024, the United Nations Security Council authorized the deployment of the MSSM to support the Haitian National Police to re-establish security and create conditions for free and fair elections. Political factions agreed on a transition process, resulting in the Kingston Declaration and the April 3 Political Agreement for a Peaceful and Orderly Transition. The transitional Presidential Council, established in April 2024, aims to conclude the transition by February 2026 with the support of international development partners. However, significant improvements in security and governance are required to ensure successful elections and to improve the livelihoods of violence-affected populations. International support is crucial for investments in restoring Haiti's social, economic, and physical infrastructure in areas liberated from gangs to generate confidence in the transition process. access, food and nutrition security, water security and access, enabling digitalization, and protecting biodiversity and nature. See Development Committee. 2023. “Ending Poverty on a Livable Planet: Report to Governors on World Bank Evolution.” World Bank, Washington, DC. https://www.devcommittee.org/content/dam/sites/devcommittee/doc/documents/2023/Final%20Updated%20Evolution%20Paper%20DC2023- 0003.pdf. 6 For comparison, the fatalities per 100,000 are 9.3 in South America and 12.7 for the Caribbean regions. See UNODC Global Study on Homicide 2023: Hom icide and Organized Crime in Latin America and the Caribbean; UN Office of Drugs and Crime, 2023. 2 9. Despite such a challenging set of conflict drivers, Haiti has factors of resilience, including a vibrant civil society, an active diaspora, and institutional resilience in key sectors (see Annex 6). While the private sector has shown some resilience, especially in energy and water sectors, and the development of digital financial Figure 1. Share of Population Living Below Lower-Middle-Income (US$3.65) and International (US$2.15) Poverty Lines 70 60 services, the continuous six years of economic contraction did lead to losses of productivity and jobs, as well as significant brain drain. In the first eight months of 2024 almost a quarter million Haitians immigrated to the United States.7 The garment sector, for example, (representing about 90 percent of manufactured exports) lost approximately 30,000 jobs in 2024. Leveraging these sources of resilience while improving security, governance, and economic conditions remain vital for breaking out of the crisis– fragility trap and protecting the fragile social and economic capital. Percent 50 40 30 20 3.65 USD 2017 PPP 2.15 USD 2017 PPP 10. Haiti has one of the highest poverty rates in the world. The official poverty rate was last estimated at 58.5 percent (2012), with 24 percent living in extreme poverty. Recent crises, including political instability, violence, economic deterioration, COVID-19, the 2021 earthquake, and Hurricane Grace, as well as the high food price inflation, have reversed previous poverty reduction gains. Living standards are estimated to have deteriorated, with 36.4 percent of Haitians living in extreme poverty in 2024 (less than US$2.15/day based on 2017 purchasing power parity), up from 29.9 percent in 2020 (Figure 1). The economy is predominantly informal(86 percent of the labor force), exhibiting significant urban-rural disparity. The high inequality (Gini coefficient of 0.61), and gender inequalities have worsened. Access to basic services like water, sanitation, and electricity have been limited, particularly for the poor. The conspicuous geographic disparities in poverty are striking in rural areas which are significantly poorer than urban areas. The economic contraction since 2019 has further affected livelihoods, with many households experiencing income losses due also to reduced remittances(See Annex 6). 11. The confluence of global and domestic challenges further aggravated Haiti’s crisis-fragility trap. Haiti's geographic location makes it highly susceptible to climatic shocks. Climate change and natural hazards, such as hurricanes, earthquakes, and droughts, disproportionately affect poor and vulnerable populations. Environmental challenges constrain agricultural productivity, worsen food insecurity, and increase health risks from diseases like cholera and malaria. The impacts of natural disasters amplify social grievances, worsens displacement, loss of livelihoods, and increases the demand for scarce resources. Haiti will need an estimated US$22 billion by 2030 to enhance resilience through climate adaptation measures in agriculture, water resources, and infrastructure. Recent Economic Developments and Outlook 12. Haiti’s economy has contracted by an estimated 8.5 percent over the past decade as longstanding structural challenges have increased its vulnerability to shocks. Structural challenges include state capture by vested interests, a non-enabling business environment, underinvestment in human capital, and deficient infrastructure. Underdeveloped financial markets and limited market contestability have contributed to a large informal economy, limiting domestic resource mobilization and fiscal space. The disaster risk management (DRM) and response systems are inadequate to address the vulnerability to natural hazards and climate change. In this context, Haiti has been highly vulnerable to a series of significant shocks since 2018, including the COVID-19 pandemic, a surge in international commodity prices after Russia’s invasion of Ukraine, earthquakes and storms, and most recently, escalation of violence and political instability. 13. The business environment has deteriorated progressively since 2018 and then sharply in 2021 due to a series of sociopolitical disturbances, creating a challenging operating environment for enterprises. Both 2018 and 2019 were characterized by social unrest and waves of violence, including several episodes of complete paralysis 7 National Foundation for American Policy. 3 of the economy. In 2020, the COVID-19 pandemic introduced shocks that led to economic contraction and layoffs. The increase in gang-related violence in 2021 disrupted domestic supply chains, including fuel and food distribution. Partial or permanent closure of production sites and firms, highersecurity costs, staff resignations because of emigration, and pillaging and vandalism resulting in losses and damage to capital stock (physical and human) led to a decrease in productive activities and profits. 14. The combined effect of multiple domestic and exogenous crises has resulted in a protracted economic contraction, fiscal imbalances, and persistent inflation. Real GDP declined for the fifth consecutive year in 2023 (Table 1) hampered by rising prices of imported commodities, a sharp decline in investments, and contraction of private consumption. Since 2015, declining donor aid, reliance on imported fuels, public subsidies, a failing state power utility needing large budget transfers, and weak domestic revenue collection have reduced fiscal space. Table 1. Haiti: Selected Economic Indicators (annual % change unless otherwise indicated) 2022 2023e 2024f 2025f 2026f 2027f 2028f -1.7 -1.9 -4.2 0.5 1.5 2.1 2.6 -0.7 0.1 -0.3 0.4 1.0 0.9 0.8 17.6 3.3 -15.1 57.6 9.2 14.8 17.2 -9.9 -17.6 -31.5 -74.8 52.9 25.9 19.0 2.4 -9.6 -4.4 2.0 2.5 2.0 2.5 4.9 -0.4 -3.1 6.0 5.5 6.0 6.5 -1.8 -3.6 -4.2 0.5 1.5 2.1 2.6 -4.5 -5.6 -4.5 1.0 2.5 2.0 2.0 -0.4 -3.7 -4.0 1.5 2.0 3.0 2.2 -1.6 -3.0 -4.2 -0.2 1.0 1.8 2.9 27.6 44.2 26.1 30.6 14.7 11.0 9.4 -2.4 -3.3 -0.2 -1.0 -3.1 -4.8 -5.0 -0.2 -0.1 -0.2 -0.2 -0.2 -0.1 -0.1 -3.2 -2.3 -0.6 -2.5 -1.9 -1.5 -1.5 27.6 24.2 15.2 16.5 17.1 16.0 14.8 -2.9 -2.0 -0.3 -2.2 -1.6 -1.2 -1.2 2029f Real GDP growth, at constant market prices 2.4 Private consumption 1.0 Government consumption 14.3 Grossfixed capital investment 17.1 Exports of goods and services 2.7 Imports of goods and services 6.7 Real GDP growth, at constant factor prices 2.4 Agriculture 2.0 Industry 2.5 Services 2.4 Inflation (Consumer Price Index) 7.5 Current account balance (% of GDP) -6.1 Net foreign direct investment (% of GDP) -0.1 Fiscal balance (% of GDP) -1.1 General Government Debt (% of GDP) 14.1 Primary balance (% of GDP) -0.9 Sources: Institut Haïtien de Statistique et d'Informatique and staff calculations. e = estimate; f = forecast 15. Inflation accelerated in 2020 and surged in 2022 as Haiti navigated shocks and logistical disruptions. The sharp Figure 2. Inflation, Annual Percentage Change70 CPI depreciation of the Haitian gourde in 2020 led to higher import 60 prices in local currency terms. Central Bank interventions 50 slowed inflation briefly in 2021, before a commodity price 40 shock led to monetization of the deficit, weakening the 30 gourde. Inflation accelerated in late 2022 and early 2023 as 20 food and fuel prices surged, following disruptions at the port 10 due to gang violence, peaking at 49.3 percent. In 2024 0 headline inflation trended downward (26.6 percent in November 2024), however food inflation remained high, affecting poor households the most (Figure 2). Although inflation has eased from its peak in 2023, past monetization of CPI - Local Products CPI - Imported Products the deficit and global price pressures, such as those affecting food and fuel, have contributed to persistent inflationary pressure. 4 16. Changes in nighttime light intensity reflect Haiti’s prolonged economic contraction, illustrating the particularly severe impact of insecurity on Port-au Prince. Nighttime light intensity is strongly correlated with economic activity and is often used to assess the gross domestic product (GDP).8 Nighttime light intensity Figure 3. Change in Nighttime Light Intensity, 2018-243 Nigh me ight Intensity 2 Port a u Prince 1 in Haiti is highest in the urban centers of Port-au-Prince and Cap Haïtien, where economic activity is concentrated. Figure 3 illustrates the substantial, 0 persistent decline in nighttime light intensity in Port-au Prince—an estimated 45.9 percent from January 2018 to August 2024.9 Cap Ha en Autre 2018 2019 2020 2021 2022 2023 202 Note: CPI, Consumer Price Index 17. Haiti’s trade deficit has widened since 2019, led by a decline in exports. As in other countries, the COVID 19 pandemic dampened demand for exports in 2020, particularly for apparel. Exports continued to decline in US dollar terms in 2023 and 2024 amid widespread insecurity and disruptions to port operations. Imports also decreased during the pandemic but rapidly increased in value terms as global commodity prices rose in 2021 and 2022. Persistent economic contraction and depreciation of the gourde have limited demand for imports. Remittance inflows, which increased with more workers leaving the country, have been an important external source of stability, helping finance an increasing trade deficit. The current account balance has oscillated as a result of changes in the trade balance and remittances, moving from deficit in 2019 to surplus in 2020 as imports contracted and back into deficit as international commodity prices surged in 2022 and 2023, resulting in an increase in the import bill. Higher remittance inflows are estimated to have contributed to a narrowing of the current account deficit to 0.2 percent of GDP in 2024. 18. Fiscal and monetary underperformance reflect the challenging economic, political, and security context. Revenues and expenditures have declined as a percentage of GDP since 2015. As Haiti collects more than 50 percent of its tax revenues at the border, the contraction in trade has compressed government revenues. The fiscal deficit widened substantially during and after the pandemic. Part of the deficit was monetized, contributing to inflationary pressures and leading to a depreciation of the currency. Subdued economic activity and weakened administrative capacity have reduced sales tax revenues. Revenue collection strengthened moderately in 2023 following administrative reforms in Customs and an increase in fuel tax revenue, whereas an increase in violence impaired implementation of capital projects in 2024. As a result, the deficit has narrowed, and for the first time in many years, monetary financing remained within statutory limits of 20 percent of the previous fiscal year’s tax revenues. Despite low tax revenues, the fiscal deficit is projected to narrow from 2.3 percent of GDP in FY2023 to 0.6 percent of GDP in FY2024 owing to retrenchment of capital expenditures, containment of non-priority expenditures, and lower debt service. 19. The security crisis has also reduced institutional capacities and amplified deficiencies in essential functions of human resource management. Public sector employment fell by almost 8 percent, from 112,631 in September 2021 to 104,029 in June 2024.10 More than half of the departing civil servants were technical staff. This situation has also greatly affected the personnel of local administrations in affected areas, where dozens of employees have left. Municipal offices have been closed and abandoned in some places, such as Gressier. 20. Climate change compounds policy and institutional weaknesses because of Haiti’s vulnerability to natural disasters and climate events. Its geographic location makes it vulnerable to climatic anomalies, with more than 93 percent of its surface area and 96 percent of its population at risk from hazards including hurricanes, floods, 8 Beyer, R., Y. Hu, and J. Yao. 2022. “Measuring Quarterly Economic Growth from Outer Space.” Policy Research Working Paper 9893, World Bank, Washington, DC; Henderson, J. V., A. Storeygard, and D. N. Weil. 2012. “Measuring Economic Growth from Outer Space.” American Economic Review 102 (2): 994–1028.; Morris, S. D., and J. Zhang. 2019. “Validating China’s Output Data Using Satellite Observations.” Macroeconomic Dynamics 23 (8): 3327–54. 9 Nighttime light intensity as measured by a moving average of daily mean nano-watts using NASA VNP46A2 data. 10 Based on data published by the Direction Général du Budget, https://budget.gouv.ht/. 5 earthquakes, landslides, and droughts. In 2017, the Maplecroft Index (Climate Change Vulnerability Index) included Haiti among the three most-vulnerable countries to climate change in the world. Such environmental contingencies present pronounced fiscal and operational challenges, impeding Haiti’s development. The 2010 earthquake destroyed the equivalent of 120 percent of its GDP, Hurricane Matthew in 2016 caused losses amounting to 32 percent of GDP, and the 2021 earthquake caused more than 2,000 deaths, with damages estimated at 11 percent of GDP. 21. If security were restored, services, construction, export-oriented textiles and garments, and agriculture could drive growth. Projected growth over the CPF implementation period reflects conservative estimates based on a modest recovery. Security costs, forced worker absenteeism, disruptions in supply chains, limited logistical infrastructure, and an unreliable electricity supply have affected the garment sector.11 An improvement in security conditions would substantially benefit the services, construction, and manufacturing sectors substantially, although a revival of private investment would take time.12 Haiti has the potential to significantly increase production and exports of high-value crops (e.g., coffee, cocoa), select niche products (e.g., castor oil, vetiver), and fruits (e.g., mango, papaya). To accelerate growth, the agricultural sector must overcome longstanding challenges such as market fragmentation, lack of infrastructure maintenance, inadequate automation leading to low productivity, limited access to finance, constrained competition, ineffective tax policies, and reliance on food imports. 22. A series of International Monetary Fund (IMF) Staff-Monitored Programs (SMP) have strengthened the fiscal and monetary policy framework to support growth. A SMP that began in June 2022 helped build capacity, supported efforts to reduce inflation and increase growth, addressed governance weaknesses, combated corruption, and strengthened social assistance. A second SMP (June 2023 to March 2023, extended to September 2024) supported the implementation of reforms to enhance economic resilience and governance; reforms focused on implementing the new tax code to mobilize additional revenues and on continuing to enhance public financial management (PFM). The IMF approved a new SMP on December 20, 2024, covering the period through December 2025. This new SMP is expected to strengthen macroeconomic stability and enhance economic resilience and governance, macroeconomic priorities for the year ahead. The IMF’s capacity development assistance supports the SMP, in line with the IMF’s Strategy for Fragile and Conflict-Affected States. The 2024 Article IV consultation was presented to the IMF Executive Board on November 20, 2024, including an updated joint World Bank–IMF debt sustainability analysis. 23. Although Haiti’s public debt remains sustainable, the overall risk of debt distress is assessed as high. Public debt increased in the years after debt relief from the 2010 earthquake, when Haiti received debt relief of approximately US$1.0 billion, including US$268 million from the Post-Catastrophe Debt Relief Trust Fund and US$36 million from the World Bank.13 Debt rose steadily until FY2020, driven by external disbursements from Venezuela’s PetroCaribe program and domestic monetary financing. Haitian and Venezuelan authorities finalized an agreement on debt restructuring in January 2024 in which US$1.7 billion in debt forgiveness was provided after a US$500 million lump sum payment. Although debt indicators improved, the most recent debt sustainability analysis found a high risk of overall and external debt distress. This results from a steady upward trend of the public debt service-to-revenue ratio, and the high risk of external debt distress results from a gradual resumption of external financing amid weak export growth. External general government debt was US$2.35 billion in FY2023 (11.3 percent of GDP).14 24. Haiti is exposed to a range of downside risks, and its medium-term prospects remain uncertain. Such risks include uncertainty about the government’s capacity to hold elections (local, legislative, presidential) within the set timeline and whether gang violence can be sufficiently curbed to hold these elections on time. Other potential sources of social tension are implementation of a fuel price adjustment mechanism in a context of rising oil prices, 11 Haiti Country Private Sector Diagnostic, 2021. Available at: https://www.ifc.org/en/insights-reports/2021/cpsd-haiti. 12 Improving management of public industrial parks and promoting fair competition between public and private industrial sectors by optimizing geographic allocation of public investment would support the country’s efforts to attract foreign investment (Haiti CPSD 2021). 13 The World Bank also provided US$508 million in grant financing from the IDA CRW to support Haiti’sreconstruction and long-term restoration of capacity. 14 All outstanding external debt is concessional, including the debt arranged with Venezuela through the Petrocaribe agreement, which accounts for 78.4 percent of total external public debt. 6 high unemployment, and food insecurity. Continuing deterioration of governance, endemic corruption, political instability, social unrest, risk of new natural disasters, and sanitary crises are also downside risks to the outlook. Main Development Priority Areas 25. Mistrust in government actions and the government’s limited capacity to design and engage in comprehensive reforms limit the ability to address current macro-fiscal imbalances and deep-seated structural challenges. Political instability, high government turnover, insecurity, environmental disasters, and emigration of public servants have paralyzed political decision making.15 In this context, Haiti’s GDP growth has remained weak and constrained by negative total factor productivity growth. Political instability and vested economic interests are significant obstacles to private sector development and competitiveness, exacerbating preexisting challenges in access to finance and the business environment. Illicit trade in drugs and weapons underminesthe stability and integrity of the banking sector and, thereby, financial development. 26. Given the high likelihood of continued political instability in the near future, Haiti needs to increase the resilience of critical state institutions, systems, and capacities in the short term while establishing foundations for longer-term transformational reforms. Lack of transparency and accountability in public resource management weakensservice delivery outcomes, erodes citizen trust in government, and fuels social and political grievances, contestation, and violence. This trend is particularly challenging given the current tight fiscal situation in which the state’s ability to mobilize and use resources and increase public investment in key sectors remains weak.16 Over the past decade, in collaboration with the donor community, the government has focused on strengthening institutions and governance systems by implementing a series of initiatives (Box 1). Box 1. Strengthening Public Governance Central and local state institutions remain weak and impede effective, inclusive service delivery to citizens. Although results have been limited, the government has implemented measures to strengthen its regulatory and operating public financial management (PFM) framework. The government has undertaken efforts to enhance the credibility of the budget and make it a more effective instrument of public resource management through promulgation of the 2016 Law on the Preparation and Execution of the Budget Laws, which introduced provisions for stronger linkages between public policies, their objectives, and allocated resources. Other key reforms include launch of the Single Treasury Account for greater control of state cash resources, ongoing development of the integrated PFM system for transparency and accountability, and implementation of the recently approved General Tax Code and Customs Procedures Code. Development partners (European Union, Organization of American States, U.S. Agency for International Development, World Bank, International Monetary Fund) are helping the government strengthen accountability of institutions to address the widespread corruption and impunity. Donors helped improve existing institutional anti-corruption systems and processes, including reviewing and implementing the Anti-Corruption Unit Organic Law, strengthening the public procurement management framework by reviewing the Public Procurement Code, and establishing a price reference system for public procurement. The World Bank has launched initiatives to increase the technical capacity of internal and external control institutions and supports the National Risk Assessment to combat money laundering and terrorist financing. Donors such as the Swiss Agency for Development and Cooperation and Canada have designed interventions to strengthen local governance in 18 municipalities of the Great South according to the priorities of the Ministry of Interior and Territorial Communities. 27. Access to the IDA RECA funds will support the government’s priorities in the current context of FCV. The RECA will be used to fund operations designed to preserve state capacities and sustain critical social services. To ensure that the RECA-financed program is aligned with WBG strategic priorities, the eligibility note is integrated into this CPF. When political, security, and administrative conditions permit, the team may also present an eligibility note for the Prevention and Resilience Allocation under the 21st IDA cycle to enhance the dialogue with the government on a relevant reform plan and increase coordination with development partners. 15 Intensive policy dialogue resulted in a significant one-time adjustment of fuel prices in May 2017 under the newly elected government. 16 Poorly performing tax and customs administrations remain major challenges facing Haitian authorities. While the economic crisis and the weight of tax expenditures limit revenue collection, the tax system is weak, with institutional loopholes that have facilitated tax fraud and evasion. 7 Government Transition Roadmap 28. In accordance with the provisions of the Political Agreement of April 3, 2024 for a peaceful and orderly transition—reiterated by the government on December 4—the Government Transition Roadmap17 sets five main priorities: (i) public security and national security; (ii) economic recovery, infrastructure rehabilitation, food and health security; (iii) national conference and constitutional questions; (iv) rule of law and justice; and (v) elections for the renewal of political staff. The roadmap also sets additional priorities for increasing growth and resilience. Economic recovery will be supported by deploying an emergency economic plan, assessing sector needs, mobilizing resources through public-private partnerships (PPPs), rebuilding critical infrastructure, and increasing energy access. Infrastructure rehabilitation focuses on rebuilding critical facilities, such as police stations, schools, health care centers, and transportation hubs. Food security will be sought through increasing agricultural production and prioritizing local food sourcing. Health security initiatives are designed to strengthen health care regulations, emergency preparedness, and surveillance systems. The roadmap also identifies urgent quick-impact actions, such as organizing a national security roundtable, creating temporary jobs, initiating a youth support program, and launching consumer protection mechanisms. III. WORLD BANK GROUP PARTNERSHIP FRAMEWORK Lessons from CPF Completion Report and Consultations 29. The CPF builds on lessons learned from the FY2016-21 CPF program and the two gap years of FY2022 and FY2023 documented in the Completion and Learning Review (CLR). The C R confirmed that the WBG’s main value proposition in Haiti is sustaining country engagement to address fragility drivers and building flexibility and adaptability in interventions for effective implementation. The CLR highlighted measurement difficulties when using complex indicators in an FCV environment. In such settings, indicators should be tailored to the capacity of the country, combining output- and outcome-based indicators. Four key lessons are highlighted: Lesson 1. A risk-informed, adaptive approach at the portfolio and project levels is necessary to sustain results under uncertainty. Leaving the outer years of the CPF unprogrammed provided flexibility for course correction and adjustments to respond to changing needs and priorities as the government’s political will for meaningful reforms waned. For instance, the Rebuilding Energy Infrastructure and Access Project (P127203) shifted from reforming the electricity utility, Electricité d’Haïti, to increasing access to on- and off-grid renewable energy and private capital mobilization. It also mobilized support for institutional reforms where these were possible, and amplified results (including in education, health care, social protection, transportation, and water) in those areas. Lesson 2. Investments in protecting government capacity for delivery has high payoffs. The government’s capacity constraints in recent decades have significantly limited the implementation of the World Bank program in Haiti. Removing these constraints by strengthening institutions at the national level was an investment in ensuring successful program implementation. For instance, more than two decades of steady WBG support for DRM efforts, in collaboration with other development partners, paved the way for the adoption of the national DRM system and the creation in 2020 of the Directorate of Civil Protection under the Disaster Risk Management and Reconstruction Project (P126346). With an institutional mandate and greater capacity, the Directorate ofCivil Protection has been able to respond more effectively to recent disasters, including the 2021 earthquake. Similar results at the central and local levels in the agricultural, education, health care, and transportation sectors have been achieved with capacity building. Lesson 3. Stronger complementarity across sectors and instruments leads to better results and greater development effectiveness. Coordination across sectors and instruments in targeted geographic areas using a territorial approach has been effective. Examples include the Improving Maternal and Child Health through Integrated Social Services Project (P123706) and the Sustainable Rural and Small Towns Water and Sanitation 17 “Éléments de la feuille de route du Gouvernement de Transition”. 8 Project (P148970) which worked together to control cholera. The Disaster Risk Management and Reconstruction Project (P126346) and Promoting a More Equitable, Sustainable, and Safer Education Project (P174707) also collaborated to rehabilitate schools and use them as shelters in emergencies and to provide DRM training. Advisory services and analytics (ASAs) have been critical in identifying strategic entry points for complementarities among ongoing and new operations. Box 2. External Shocks and the World Bank Response After the earthquake of August 14, 2021, the WBG provided a comprehensive package of technical and financial support for resilient recovery as a contribution to the government’s Plan de Relèvement Intégré de la Péninsule Sud. Its phased approach included: • US$40 million payment under the Caribbean Catastrophe Risk Insurance Facility to the government within 10 days of the quake. • US$38 million for rapid support under ongoing operations through contract amendments to transportation, agricultural, health care, education, social protection, and disaster risk management (DRM) projects. • US$60 million reallocated through the triggering of Contingency Emergency Response Components (CERC) across various projects. • A global disaster damage estimation within a week of the earthquake, followed by a post disaster needs assessment with support from the United Nations (UN), European Union (EU), and Inter-American Development Bank (IADB). Based on the post disaster needs assessment, damage and losses in Haiti were estimated to be US$1.62 billion and needs to be US$1.98 billion. • For the longer-term recovery and reconstruction phase, US$150 million was mobilized from IDA’s CRW (IDA19), including US$60 million for replenishing the CERCs and US$90 million for topping up operations under preparation in transportation, agriculture, food security, and education. Lesson 4. The proliferation of projects and program fragmentation in a country with deteriorating operating conditions do not necessarily lead to greater effectiveness. The Performance and Learning Review (PLR) of May 31, 2018 (Report No: 124812-HT) initiated consolidation of the large legacy portfolio by re-focusing resources from non-performing interventions (e.g., on-grid electricity access) toward operations which were delivering results. These consolidation efforts were sustained during the gap years despite a significant increase in funding to support government’s reconstruction priorities after the August 2021 earthquake (Box 2). For instance, the territorial focus and use of additional financing helped keep the number of investment projects stable. Many of the innovative operational arrangements introduced during the COVID-19 pandemic (e.g. remote work and supervision) remained effective and demonstrated resilience during the gap years. Stakeholder Consultations 30. A series of consultations with stakeholders from the government, development partners, private sector, professional organizations, and women’s groups informed the proposed CPF. Consultations with the government helped secure valuable feedback on the program selection, prioritization, and design. The governm