(2023-01) Haiti - First Review Under the Staff-Monitored Program

The IMF completed the first review of Haiti's Staff-Monitored Program (SMP) in December 2022, aimed at helping the country restore macroeconomic stability and reduce inflation, which particularly burdens the poor. The program emphasizes governance reforms including stronger public finance management, revenue administration, transparency, and anti-corruption measures. Haiti faces multiple challenges that have been exacerbated by higher food and fuel prices from Russia's war in Ukraine, which increased the economy's fragility. The external shocks and deteriorating security situation have resulted in a worse macroeconomic outlook than anticipated when the program was approved in June 2022. Political uncertainty persists with Prime Minister Henry facing widespread protests, while violence has escalated with internal displacement of thousands. Despite difficult conditions, the authorities have shown meaningful efforts to address the country's challenges. They adopted a budget for FY2023 consistent with SMP targets, implemented measures to protect vulnerable households, and made progress on structural reforms including adopting a new tax code and customs administration reforms. The program implementation has been broadly satisfactory and instrumental in catalyzing external financing. Real GDP likely contracted for the fourth consecutive year in FY2022 by about 1.5 percent, with year-on-year inflation reaching 38.7 percent in September 2022. The fiscal deficit expanded slightly to 2.2 percent of GDP, primarily due to petroleum product subsidies. The SMP serves as an important anchor for policymakers despite one of the most challenging economic environments in many years.