(2022-07) Haiti Staff-Monitored Program - Press Release and Staff Report
Summary — The IMF approved a Staff-Monitored Program for Haiti running from June 2022 to May 2023 to help restore macroeconomic stability and reduce inflation. The program focuses on governance reforms, revenue mobilization, and building administrative capacity.
Key Findings
- Haiti has experienced multiple crises since 2018 including political instability, gang violence, and economic contraction.
- Central bank financing of the fiscal deficit has fueled inflation, creating a vicious circle of higher costs and further monetary financing.
- Fuel subsidies absorb at least one-third of domestic revenues and are highly inequitable, with over 90% of benefits going to the top 10-20% of income earners.
- Domestic revenues have collapsed under social unrest, collection problems, and security crisis.
- After three years of economic contraction, IMF staff expect growth to turn positive in FY 2022 and reach 1.4% the following year.
Full Description
The International Monetary Fund approved a Staff-Monitored Program (SMP) for Haiti covering the period from June 17, 2022 to May 31, 2023. This program was designed to address Haiti's multiple crises including political instability, gang violence, economic contraction, and high inflation that have severely impacted the country since 2018.
The SMP aims to restore macroeconomic stability with a strong focus on reducing inflation, which has placed a heavy burden on the poor. Key elements include enhancing governance in the public sector, mobilizing domestic revenues, building administrative capacity, and boosting social spending. The program comprises realistic measures suited to Haiti's fragility and capacity constraints.
Major policy recommendations include adopting a budget consistent with agreed targets, reducing central bank financing of the deficit, limiting foreign exchange interventions, mobilizing revenues through tax reforms, and strengthening public finance management. The program also addresses fuel subsidies which absorb one-third of domestic revenues and are highly inequitable.
Successful implementation could establish a track record that might pave the way for an upper credit tranche IMF-supported program. The first review is expected in September 2022, with IMF staff working closely with authorities and coordinating with other development partners.