(2025-05) Haïti : Première revue du programme suivi par le personnel — Communiqué de presse ; et rapport du personnel

© 20 25 International Monetary Fund IMF Country Report No. 25 / 113 HAITI FIRST REVIEW UNDER THE STAFF - MONITOR ED PROGRAM — PRESS RELEASE; AND STAFF REPORT In the context of the First Review Under the Staff - Monitored Program (SMP), the following documents have been released and are included in the package: • A Press Release • The Staff Report prepared by a staff team of the IMF for the Executive Board’s information following discussions that ended on March 1 9 , 2025, with the officials of Haiti on economic developments and policies underpinning the Staff - Monitored Program. Based on information available at the time of these discussions, the staff report was completed on April 2 8 , 202 5 . The documents listed below have been or will be separately released. Letter of Intent send to the IMF by the authorities of Haiti * Memorandum of Economic and Financial Policies by the authorities of Haiti* *Also include in Staff Report The IMF’s t ransparency policy allows for the deletion of market - sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents . Copies of this report are available to the public from International Monetary Fund • Publication Services PO Box 92780 • Washington, D.C. 20090 Telephone: (202) 623 - 7430 • Fax : (202) 623 - 7201 E - mail: publications@imf.org Web : http://www.imf.org Price: $18.00 per printed copy International Monetary Fund Washington, D.C. May 202 5 PR 25 / 126 IMF Management Approves the First Review New Staff Monitored - Program with Haiti FOR IMMEDIATE RELEASE Staff Monitored Programs (SMPs) are informal arrangements between national authorities and IMF staff to monitor the authorities’ economic program. As such, they do not entail endorsement by the IMF Executive Board. SMP Staff reports are issued to the Board for information. • Management of the International Monetary Fund (IMF) has approved the First Review of the Staff - Monitored Program (SMP) with Haiti. • The SMP takes into account Haiti’s fragility and capacity constraints, linked to security. It is designed to support the authorities’ economic policy objectives and build a track record of reform implementation. • Fund management welcomes the authorities’ publication of the Governance Diagnostic Report. Washington, DC – April 30, 2025 : Management of the International Monetary Fund (IMF) approved on April 15, 2025 the first review of Haiti’s Staff - Monitored Program (SMP). SMPs are arrangements between country authorities and the IMF to monitor the implementation of the authorities’ econom ic program and to establish a track record of policy implementation that could pave the way for financial assistance from the Fund under the Upper Credit Tranche (UCT). Haiti faces a multidimensional crisis with a challenging outlook which is highly uncertain. The country is affected by both global and country - specific shocks, which have worsened its fragility, since the negotiation of the SMP. Risks to the outlook are ti lted to the downside and include worsening insecurity that would constrain further activity and the ability to implement reforms and attract aid and the foreign direct investment. The supply - side shock caused by the security crisis will continue to suppres s growth and feed inflation unless the security outlook improves. Therefore, restoration of security is the priority. Despite domestic and global difficulties, the authorities are firmly committed to implement this SMP and have managed to contain the impact of the various shocks, thereby averting even worse economic outcomes. Net international reserves were valued at over US$1.1 billion at the end of December 2024. Despite the political transition and insecurity both the Ministry of Finance and the Bank of the Republic of Haiti (the Central Bank) have remained continuously engaged. They have consistently attempted to adopt feasible measures to limit macroeconomic imbalances and have been able to demonstrate full ownership and support 2 for the SMP through the high - level Program Monitoring Committee which meets with IMF staff on a continuous basis. Implementation under the SMP has been broadly satisfactory and its objectives remain achievable. All quantitative targets have been met, with a comfortable margin. Of the seven structural benchmarks assessed under this review, six were implemented and one is expected to be met by June (due to constraints related to insecurity). The SMP is an important anchor for signaling the authorities’ commitment to continue making progress toward macroeconomic stabilization and strengthen governance, and locking in macroeconomic gains accumulated over recent years, despite the many headwinds. An urgent government priority is re - starting the mobilization of revenue to support the country’s massive development needs and boost well - targeted spending. The measures under the SMP should help achieve these goals. Continued strengthening of the social safety net is essential to cushion the impact of the shocks on the population and alleviate widespread poverty. The spending commitments previously indicated by the authorities using Food Shock Window resources should be audited in line with SMP commitment s. The fiscal and monetary authorities’ commitment to keeping monetary financing of the deficit at zero is commendable and should continue. The FY2023 financial audit of the BRH is urgent and its eventual publication by August 2025 would be important for demo nstrating transparency. In addition to addressing insecurity, advancing governance reforms is paramount to help Haiti exit from fragility, ensure macroeconomic stability and build trust with the private sector and development partners. In this vein, the authorities’ publication o f the Governance Diagnostic Report and action plan is commendable. The report should provide a road map for reforms to enhance governance and will require capacity development support not only from the Fund but also from development partners. A government - led strategy to continue to strengthen the economy’s resilience to multiple shocks requires the financial support of the international community. This assistance is indispensable to allow quality spending, over the short, medium, and long term . Without it, Haiti will continue to suffer large import compression. External assistance should take the form of grants. The authorities should avoid contracting non - concessional loans, to ensure consistency with the SMP commitments. Non - concessional loan s would not only be against SMP commitment. It would also undermine debt sustainability. In line with the Fund Strategy for Fragile and Conflict - Affected States , IMF staff will also continue to coordinate closely with Haiti’s main development partners, particularly on governance and capacity development. HAITI FIRST REVIEW UNDER THE STAFF - MONITOR ED PROGRAM EXECUTIVE SUMMARY Recent Developments . Haiti is facing exceptional humanitarian, economic, social, and political challenges while the security situation remains dire, and has further deteriorated. The Kenya - led Multinational Security Support Mission (MSS) has struggled to contain gang violenc e because of understaffing and lack of financing. This has led to the recent accelerated deployment of additional personnel from the Caribbean and Central America. The United States has also reconfirmed its support for the MSS. The Temporary Protected Stat us for Haitian migrants in the United States is set to expire on August 3, 2025, unless extended. Program Implementation . Implementation under the SMP has been broadly satisfactory and its objectives remain achievable. Nonetheless, uncertainty about future aid flows poses substantial risks. All quantitative targets have been met, with a comfortable margin. Of the seven structural benchmarks assessed under this review, four were met on time, two were implemented with a small delay, and one was not met owing to capacity constraints (but it is expected to be met by June). Policies, supported by the SMP, have moved in the right direction, with monetary financing held at zero and revenue surprising on the upside in recent months, thanks to enhanced revenue administration. The authorities continue to be deeply engaged with staff through the high - level SMP Program Monitoring Committee. Policy Recommendations . • Advance governance and anti - corruption reforms, in line with the recently published governance diagnostic report. • Adopt measures to strengthen revenue collection, expenditure management and increase budget allocations for social spending to protect the most vulnerable. • Implement the supplementary budget in line with SMP objectives. • Strengthen public finance reporting, transparency, and accountability in the use of public funds. • Implement risk - based foreign exchange interventions . • Complete , with no further delay , and publish the audit of the Central Bank for FY2023 by August 2025 ; and • Continue to provide timely data to the Fund building on strong progress and enhance data transparency through timely publication of core economic data April 2 8 , 2025 HAITI 2 INTERNATIONAL MONETARY FUND Approved By Dora Iakova (WHD) and Jay Peiris (SPR) Policy discussions were conducted remotely during March 10 - 19, 2025. The team comprised Ms. Tumbarello (Head), Messrs. Huertas, Kaho, Passadore, Ms. Sun (all WHD), Messrs. Chociay (SPR), Barseghyan (STA), Sung, (FAD) and Messrs. Duvalsaint and Wata (Port - a u - Prince office). Ms. Ojo provided excellent research assistance. Ms. Coquillat coordinated all work related to mission scheduling and document preparations. The mission met with Minister of Economy and Finance (MEF) Alfred Fils Métellus, Governor of the B ank of the Republic of Haiti (BRH) Ronald Gabriel, Minister of Minister of Planning and External Cooperation Ketleen Florestal, Minister of Social Affairs and Labor (MAST) Georges Wilbert Franck, Ms. Vanette Vincent (MEF), Mr. Edwige Jean (BRH), other seni or government officials, development partners, and representatives of the private sector. Ms. Ludmilla Buteau Allien (Advisor to the Executive Director) participated to all policy and technical discussions. Mr. André Roncaglia (Executive Director) and Mr. Felipe Antunes (Alternate Executive Director) joined the opening and concluding meetings. CONTENTS CONTEXT AND RECENT DEVELOPMENTS ________________________________ ______________________ 4 OUTLOOK AND RISKS ________________________________ ________________________________ ___________ 7 PROGRAM IMPLEMENTATION UNDER THE SMP ________________________________ ______________ 8 REACHING THE OBJECTIVES OF THE SMP ________________________________ ______________________ 9 A. Fiscal Policy ________________________________ ________________________________ ___________________ 10 B. Social Assistance ________________________________ ________________________________ ______________ 14 C. Enhancing Governance and Transparency ________________________________ _____________________ 15 D. Monetary and Exchange Rate Policy ________________________________ __________________________ 16 E. Financial Sector ________________________________ ________________________________ ________________ 17 STAFF APPRAISAL ________________________________ ________________________________ _____________ 19 FIGURES 1. Monitoring Economic Activity Through Satellite Data ________________________________ __________ 6 2. Revenue Performance, FY2021 – 25 ________________________________ _____________________________ 13 3. Real Sector Developments, 2018 – 24 ________________________________ __________________________ 36 4. Fiscal Sector Developments, 2018 – 24 ________________________________ _________________________ 37 HAITI INTERNATIONAL MONETARY FUND 3 5. Monetary and Financial Sectors Developments, 2019 – 24 ________________________________ ______ 38 6. External Sector Developments, 2018 – 24 ________________________________ _______________________ 39 TABLES 1. Food Shock Window Spending Priorities Indicated by the Authorities ________________________ 12 2. Selected Economic and Financial Indicators, 2021 – 29 ________________________________ _________ 28 3a. Non - Financial Public Sector Operations, 2021 – 29 (In millions of gourdes) ___________________ 29 3b. Non - Financial Public Sector Operations, 2021 – 29 (In percent of GDP) _______________________ 30 4a. Balance of Payments, 2021 – 29 (In millions of US dollars) ________________________________ ____ 31 4b. Balance of Payments, 2021 – 29 (In percent of GDP) ________________________________ __________ 32 5. Summary Accounts of the Banking System, 2021 – 29 ________________________________ __________ 33 6. External Financing Requirements and Sources, 2021 – 29 ________________________________ ______ 34 7. Financial Soundness Indicators, March 2022 – September 2024 ________________________________ 35 ANNEXES I. Nowcasting Real GDP and Revenue Using Big Data ________________________________ ____________ 22 II. Strengthening Governance to Ensure Macro - Stability ________________________________ _________ 26 III. Risk Assessment Matrix ________________________________ ________________________________ _______ 40 APPENDI X I. Letter of Intent ________________________________ ________________________________ _________________ 42 Attachment I. Memorandum of Economic and Financial Policies ____________________________ 44 Attachment II. Technical Memorandum of Understanding ________________________________ __ 52 HAITI 4 INTERNATIONAL MONETARY FUND CONTEXT AND RECENT DEVELOPMENTS 1. The security situation in Haiti remains dire, and gang violence has further escalated . The presence of the Multi - Country Security Support (MSS) mission, led by Kenya and backed by the United Nations, has recently doubled its size (including with personnel from the Caribbean and Central America regions) and more support may be forthcoming i n the near future. But the government has struggled to curb the expanded power of the gangs over the capital, owing to MSS slow deployment and still substantial lack of fu nding and personnel. The United States has reconfirmed financial support for the MSS operation, and signed waivers to continue disbursing aid flows previously channeled through USAID. 1 If the current security crisis does not improve, elections are unlikely to take place by February 2026. On a positive note, a report by a bipartisan working group, tasked in July 2024 with preparing constitutional reforms to facilitate general elections, has recently been finalized. But it has yet to be published on the official gazette by the Transitional Presidential Council, making the next step (a referendum on constitutional reform ahead of elections) unlikely any time soon. In the interim, Haiti is facing a humanitarian crisis, and food insecurity is pervasive, as confirmed by the World Food Program ( WFP ). The capital’s main port is subject to periodic episodes of gang control. In January 2025, the government was able to open a new port in the south (Saint - Louis du Sud International Port), a 25 - year - long project, and it could, in the future, reduce the re gion's reliance on gang - controlled areas. 2. Economic conditions remain challenging . Haiti’s economy has contracted for six consecutive years. In FY2024 (ending September), growth was negative 4.2 percent, reflecting disruptions in the production and distribution of goods and services in local markets. Staff estimates that, since the pan demic, scarring from multiple crises has caused Haiti’s potential GDP growth to fall by an average of 2 percent a year owing to crime, the 2021 earthquake, and deteriorating public health (Box 1, 2024 Article IV Staff report ). The supply - side shock caused by the security crisis has fueled inflation, which stood at 28.4 percent in February 2025 (well above an average of 5½ percent in other Caribbean countries). The current account deficit narrowed in FY2024 to 0.6 percent of GDP as a result of import compression and strong remittances. In the first months of FY2025 (starting in October 2024), export growth continued to deteriorate while imports remained stable, and remittances grew fast (text table). Balance of payment figures for the past two years (FY2023 - 24) report large errors and omissions (about 3 percent of GDP). The authorities indicated that imports of goods and outward remittances (from 1 Haiti was among the top 15 recipients of USAID, with total disbursements in 2024 equivalent to US$340 million or 1.2 percent of GDP. Period FY20-24 average FY24 FY25 FY25 vs. FY20-24 average FY25 vs FY24 Fiscal year to date Exports October-January 316 260 221 -30 -15 Imports October-February 1,716 1,830 1,824 6 0 Net Remittances October-February 1,209 1,364 1,626 35 19 Latest available month Exports January 58 46 36 -38 -22 Imports February 343 320 327 -5 2 Net Remittances February 224 241 316 42 31 Sources: BRH and Fund staff estimates. Haiti: Trade and Remittances Data Amount (in millions of US dollar) Percentage change HAITI INTERNATIONAL MONETARY FUND 5 Haiti to other countries) may have been overstated. F uture data revision s could lead to a higher current account balance (and lower errors and omissions) . 3. Despite these setbacks, the macro framework has remained well anchored . Reserve buffers have been rebuilt to a comfortable level, the nominal exchange rate has been remarkably stable, monetary financing of the budget has been reduced to zero, and public debt is low. Net international reserves (NIR) exceeded US$1 billion (US$1.159 billion) in December (up from US$920 million in September ), and gross international reserves were US$2. 7 billion (about seven months of imports). The increase in reserves was supported by remittances and by the central bank’s continued intervention in the FX market, with net purchases of about US$ 300 million during October 2024 - February 202 5 . The nominal exchange rate vis - à - vis the US dollar remained at about 132 gourdes per dollar over the last year and has even appreciated slightly in recent weeks. The combined effect of a stable nominal exchange rate and high domestic inflation resulted in a strong appreciation of the real eff ective exchange rate (REER) — 28 percent in FY2024 and about 60 percent during FY 202 2 - 24. After averaging 2 percent of GDP a year during FY2020 - 23, monetary financing of the budget declined and was reduced to zero in FY2024, thanks to the prospective SMP engagement. Public debt is low at 14 .6 percent of GDP (at end September 2024) , the lowest in the Latin America and Caribbean region, mostly owing to the settlement of Petrocaribe debt in January 2024 of about 6 ½ percent of G DP . Cumulative Net Foreign Exchange Purchases by the Central Bank (In millions of US dollars) -60 40 140 240 340 440 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Haiti: Cumulative Net Foreign Exchange Purchases by the Central Bank (In millions of US dollars) FY21 FY22 FY23 FY24 FY25 Sources: BRH and IMF staff calculations. Inflation (In per cent) 0 10 20 30 40 50 60 Feb-20 Jul-20 Dec-20 May-21 Oct-21 Mar-22 Aug-22 Jan-23 Jun-23 Nov-23 Apr-24 Sep-24 Feb-25 Overall CPI (year on year) Food CPI (year on year) Sources: Haitian Institute of Statistics and Informatics (IHSI), and Bank of the Republic of Haiti. Inflation (Percent) Gen eral Government Gross Debt, 2024 (Percent of GDP ) 0 20 40 60 80 100 120 HTI GUY KNA TTO BLZ JAM ATG LCA GRD ABW BHS SUR VCT DMA BRB CAR EMDE EMDA SDS LA7 General Government Gross Debt, 2024 (Percent of GDP) Sources: World Economic Outlook and IMF staff calculations. Note: Aggregates refer to simple averages. CAR=The Caribbean (excl. Guyana and Haiti); EMDA=Emerging and Developing Asia; SDS=Small Developing States (excluding Caribbean); LA7=Brazil, Chile, Colombia, Mexico, Peru, Paraguay and Uruguay; EMDE=Emerging and Developing Europe. Monetary Financing of the B udget (Percent of GDP ) -1 0 1 2 3 4 2020 2021 2022 2023 2024 2025 1/ Monetary Financing of the Budget (In percent of GDP) Sources: Ministry of Finance (Tableau des Operations Financières de l’Etat — TOFE) and IMF staff estimates. 1/ All data on a fiscal - year basis; 2025 refers to October 2024 - February 2025, annualized. HAITI 6 INTERNATIONAL MONETARY FUND Figure 1. Haiti: Monitoring Economic Activity Through Satellite Data Satellite data clearly indicated in real time that activity fell dramatically beginning in March 2024, as inferred by the collapse in the number of oil tankers and cargo ships… … and it has not normalized yet. Sources: IMF Portwatch (daily data). Sep 2023 Dec 2023 Mar 2024 Jun 2024 Sep 2024 Oct 2024 Nov 2024 Dec 2024 A. Gross International Reserves 2,352.7 2,587.4 2,428.7 2,450.7 2,525.2 2,560.5 2,613.6 2,722.0 Monetary gold 108.9 121.0 128.9 135.7 153.1 159.2 154.3 151.9 Holdings of foreign currency 23.8 42.2 27.4 44.5 36.7 67.3 62.0 34.4 Demand deposits abroad 377.6 542.4 475.2 470.9 444.1 477.6 525.6 694.2 Investments abroad 1,705.6 1,749.6 1,668.7 1,679.3 1,769.3 1,734.5 1,756.5 1,726.8 SDR holdings 1/ 109.7 104.6 101.2 93.3 94.2 94.2 87.1 86.9 Reserve Position in the Fund 1/ 27.0 27.6 27.2 27.0 27.9 27.9 27.9 27.9 B. Reserve Related Liabilities 251.1 249.7 488.1 453.1 306.6 306.7 242.4 242.2 Liabilities to the IMF 1/ 2/ 248.4 248.0 244.7 237.7 245.1 245.1 240.0 239.8 Short-term loans from private non-residents 3/ 0.0 0.0 242.9 213.4 60.2 60.6 0.0 0.0 Liabilities to IFIs 2.3 1.7 0.5 2.0 1.3 1.1 2.4 2.4 Certified checks in FX 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 C. FX Denominated Liabilities to Residents 1,814.2 1,744.1 1,296.6 1,327.0 1,263.4 1,262.0 1,292.0 1,286.9 Financial sector FX deposits in the central bank 1,266.0 1,196.0 1,263.7 1,294.5 1,231.0 1,229.6 1,259.6 1,254.2 Government FX deposit in transitory account (Venezuela debt) 515.2 515.2 0.0 0.0 0.0 0.0 0.0 0.0 Swaps with financial institutions 32.9 32.9 32.9 32.4 32.4 32.4 32.4 32.7 D. Other FX Liabilities 33.7 33.4 17.8 18.1 35.2 34.1 33.9 33.9 Off-balance sheet FX liabilities 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Project accounts 17.5 18.3 2.7 3.0 20.2 19.0 18.9 18.8 Special accounts 1.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 E. Net International Reserves, 2024 SMP definition (A - B - C - D) 253.8 560.1 626.2 652.5 919.9 957.7 1,045.2 1,159.2 3/ This refers to a credit line used to facilitate the payment of the Venezuela debt operation in January 2024. Sources: BRH, IFS, and IMF staff calculations. Haiti: Net International Reserves - 2024 SMP Definition (In millions of US dollars, unless otherwise noted) 1/ Based on IMF data. For the purposes of the 2024 SMP, between December 2024 and September 2025, the amounts in SDR will be converted to U.S. dollars using the exchange rate as of September 30, 2024 (1 USD = 0.737261 SDR). 2/ For program purposes, all outstanding Haiti liabilities to the IMF are considered, including the January 2023 Rapid Credit Facility (Food Shock Window), disbursed at a government account in the BRH, for an amount of SDR 81.9 million. HAITI INTERNATIONAL MONETARY FUND 7 OUTLOOK AND RISKS 4. Haiti’s macroeconomic outlook remains uncertain, with risks tilted to the downside . The channels through which the impact of the US economy and policies will materialize in the baseline scenario (and risks) are lower remittances and a prospective 10 percent increase in tariffs which will both have a negative BOP impact, while Haiti will benefit from lower oil prices. The recent tightening of US migration policies (e.g., the termination of the Temporary Protected Status for Haitian migrants, affecting half a million Haitians, by August 3, 2025, unless extended, and the termination of parole processes , involving about 200,000 Haitians ) would substantially reduce remittances starting in 2026, although remittances could rise in the short term. Haiti has little short - term capacity to reabsorb the former migrants and this could worsen the current crisis, including with possible spillovers to the Caribbean region. Possible change in tariffs and trade and lower aid flows would also have negative consequences, including worsening the current account, reducing foreign reserves, putting pressure on the exchange rate, and lowering consumption and investment. The expiration of the HOPE/HELP (duty free) preferential trade preferences for Haitian textiles (expected by September 2025, if not renewed) would reduce exports and FDI. Haiti is vulnerable to changes in remittance flows — which strongly suppor t consumption — and to reduced external financing from development partners. These risks were already largely incorporated in the SMP at the time of the negotiation. Remittances are projected to lower to 8.7 by 2029 (from 12.7 in 2024). 5. Growth (including downward scenario) and inflation . With security still unsettled, together with other global uncertainties, staff has revised GDP growth down by 1½ percent to negative 1 for FY2025, relative to ½ percent projected at the time of the negotiation of the SMP in December 2024 (Table 2). 2 This revision reflects recent data. Staff projections on remittances are conservative for FY2025 as they point to a 4.5 percent increase year - on - year (y/y), from US$3.3 billion to US$3.5 billion. This implies that, if the security situation improves beginning mid - FY 2025 and for the remainder of the year, remittances would revert to historical levels. Medium - term growth is estimated at 1½ percent, but further social and political turmoil, without sizable extern al aid, could lower growth. Inflation is projected to ease in the medium term, assuming adequate macroeconomic policies and improvement on the security front, while in the short term, inflation continues to be driven by supply - side security shocks (as anal yzed in the recent Article IV Staff report). Staff also used 2 To incorporate the security outlook into the 2025 growth projection, we built upon the model developed in Box 1 o n the potential output analysis from the November 2024 Article IV c onsultation. In th at model, the elasticity of total factor productivity ( TFP ) with respect to the log of the homicide rate is - 0.3. Accordingly, we constructed four alternative scenarios for securit y , each with distinct homicide rate trajectories that influence growth through this elasticity. By assigning probabilities to these scenarios, we derived an expected growth value for 2025 of negative 1 percent, which also assumes an improved security outlook in the second half of the year. 0 50 100 150 200 250 300 350 400 450 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep FY2020-24 range FY2024 FY2025 FY2020-24 average FY2025 projection In millions of US dollars Sources: Bank of the Republic of Haiti and IMF staff calculations . Net Remittances HAITI 8 INTERNATIONAL MONETARY FUND nowcasting models that do not assume an improvement of security (downward scenario) nor, as a consequence, the implementation of reforms which point to a possible recession, on average across models, of 2 percent (with negative 4.3 percent being the most a dverse forecast, Annex I). Under this scenario, the authorities would need to cut spending further and suffer even larger import compression than in the baseline. 6. Current account and fiscal outlook . The current account balance for FY2025 is now expected to improve (to a surplus of 0.2 percent of GDP) as preliminary data for October - December point to imports being lower than anticipated at the approval of the SMP. The fiscal deficit of the non - financ ial public sector (NFPS) is projected at about zero in FY2025, but if social and political risks were to worsen, substantial monetary financing of the budget could resume, undermining macroeconomic stability. 7. The risks include intensified political instability, deteriorating gang - related economic and institutional disruption, a prolonged drop in aid flows, and a worsening food crisis (Annex III). The debt sustainability analysis risk rating (both external and overall) remains high, unchanged from the 2024 December debt sustainability analysis. However, the debt outlook has worsened given the downward revisions of macroeconomic projecti ons. Normalization of the security situation could improve the short - and medi um - term outlook but will require additional external financing, in addition to sound domestic policies. Official transfers could rise if countries in the region support the Kenya - led MSS operation with additional financing and if Haiti receives added international support for reconstruction — although this upside risk is limited . PROGRAM IMPLEMENTATION UNDER THE SMP 8. Program performance has been broadly satisfactory . Policies, supported by the SMP, have moved in the right direction, with monetary financing held at zero also in the supplementary budget, which was approved by the council of ministries in mid - April 2025, and revenue mobilization supported by the resumpt ion of work at the Directorate of General Taxes after a three month - long strike and enhanced customs verification. Despite the worsening security situation, the authorities continue to be deeply engaged with staff through the high - level SMP Program Monitoring Committee, which meets biweekly. 9. Quantitative and indicative targets . The authorities fully met all QTs and indicative targets by a large margin for December 2024 (Appendix I. Table 2 ) . The mission sought the latest updates with regard to financing from the Afreximbank (with which Haiti signed a protocol of agreement in September 2024), given that the ceiling on the public sector’s contracting non - concessional external debt is zero. The authorities have informed staff that no additional external debt has been contracted (as of end - February ) and that they do not plan to contract any non - concessional loans. The indicative targets (ITs) for March 2025 and September 2025 and QTs for June 2025 will be assessed at the time of the second review. HAITI INTERNATIONAL MONETARY FUND 9 10. Structural benchmarks are supported by capacity development assistance (Appendix I. Table 1 ) . Of the seven structural benchmarks assessed under this review, four were met on time (publication of the governance diagnostic, publication of the quarterly report of FAES, all monthly reports on execution of fiscal expenditure through Haiti Food Shock Wi ndow account, and more granular central bank balance sheet data); two implemented with a small delay (the publication of all new public procurement contracts, incl uding beneficial ownership information; reporting the internal audits of Food Shock Window spending to the Superior Court of Accounts, but in January, not in December) and one (having the supreme court conduct a financial and operational compliance audit o f all expenditure in connection with the RCF (FSW) for 2023/24 fiscal year and publish it) was not met yet due to capacity constraints, and its implementation is expected by end - June 2025. Of the nine benchmarks to be assessed during the second review, two are proposed to be reset from June to September, and one (audit of the central bank for the fiscal year ending September 2023) from June 2025 to August 2025 due to slower - than - expected implementation capacity, due to insecurity. Staff also stressed the im portance of initiating the central bank’s audit also for the FY2024 (although this is not a structural benchmark). Should an extended SMP be necessary, pending election timeline, additional QTs (and possibly structural benchmarks) would need to be proposed at the time of the Second Review. 11. Data and reserve management . Provision of timely data for program monitoring has improved greatly. The team emphasized that efforts should continue. The team followed up on the ongoing work to revise data sources and methodology of GDP data and steps needed to implement the reserve template. Improving the timeliness and quality of monetary and reserve data is essential to establish a track record. The Fund will provide further TA on the revision of national accounts, improvement of external sector and monetary statistics, and compilation of reserve template, and on central bank reserve management. REACHING THE OBJECTIVES OF THE SMP 12. The objectives of the SMP remain achievable but uncertain ty about the future US financial support poses some risks . Discussion focus ed on how to support program implementation, despite worsening prospects for external support . First, discussions focus ed on the need for enhanced revenue mobilization in order to reach revenue targets and expand assistance to vulnerable households. Second, staff highlight ed the need to avoid any monetary financing of government spending. Third, staff stress ed that the accumula tion of NIR should align with program objectives, while limiting other FX interventions to specific instances of liquidity provision. Fourth, technical assistance should focus on increasing the transparency of public spending and central bank operations. F inally, implementing the recommendations of the governance diagnostic report (Annex II) would improve the efficiency and quality of public spending and permit better accounting for aid flows, which will strengthen the trust of development partners. HAITI 10 INTERNATIONAL MONETARY FUND A. Fiscal Policy Revenue mobilization remains an urgent government priority to support large development needs and boost well - targeted spending. Although social spending has grown in recent months, tax revenue performance has been still weak until very recently and it is still at 5 percent of GDP . I ncreasing the cooperation between tax and custom s administration (DGI and AGD) , and digitalizing core tax and customs procedures is critical for strengthening revenue mobilization. Enhancing the transparency of public spending is essential to attract donor support and rebuild trust in public institutions. That said, the r estoration of security is a precondition for re - starting economic activity , especially for raising taxes and implementing targeted spending. 13. Revenue . After a weak performance in the first two months of FY2025 (beginning in October) , r evenue has rebounded during December - February, reaching a 35 percent (y/y) increase in February (or 50 percent relative to FY2021 - 24 average). This positive outcome reflected resumption of Directorate of General Taxes (DGI) ’s operation , after a strike which had disrupted collections during September - November 2024 as well as improvements of customs administration (e.g., enhanced control and verification through digit alization , in line with SMP commitments ) . 14. Spending . Lockdowns triggered by gang violence hampered the authorities’ spending ability in FY2024. 3 But public spending rebounded sharply during December 2024 - February 2025 rising on average by 9 percent y /y . Social spending was equivalent to 0.38 percent of GDP during October 2024 - February 2025, slightly lower than the previous year. FY2024 supplementary budget (approved in August) allocated 9.2 billion gourdes for the projects to be supported by FSW resources as indicated by the authorities in their spending priority/commitments, with actual spending (amounting to 6.8 billion gourdes executed in October 2024, which is permissible ( période complémentaire ). By the end of February 2025, 10.2 billio n gourdes had been spent since January 2023 (see Table 1) , leaving 5.3 billion gourdes (or US$39.7 million) still available to be spent. The authorities allocated 5.7 billion gourdes for FSW in the recently adopted FY2025 supplementary budget, 4.8 billion gourdes more than the initial FY2025 budget . 3 Executing social spending (including through hot meals) was hampered due to school s’ (and sometimes hospital) closures , weak IT connectivity , and limited mobility. Ministry In percent of GDP In millions of gourdes In percent of GDP In millions of gourdes In percent of GDP In millions of gourdes In percent of GDP In millions of gourdes Agriculture 0.07 2,031 0.05 1,882 0.02 659 0.02 774 Education 0.90 25,151 0.74 25,779 0.31 10,691 0.27 12,043 Health 0.26 7,327 0.21 7,217 0.08 2,839 0.07 3,158 MAST 1/ 0.12 3,301 0.06 1,937 0.02 754 0.02 908 Total 1.35 37,810 1.06 36,815 0.43 14,943 0.38 16,884 Sources: Ministry of Economy and Finance (MEF) and Fund staff estimates. 1/ MAST is the Ministry of Social Affairs and Labor. FY2023 FY2024 Haiti: Execution of Social Spending Oct. 2023-Feb. 2024 Oct. 2024-Feb. 2025 HAITI INTERNATIONAL MONETARY FUND 11 15. FY2025 budget and supplementary budget . The FY2025 budget is balanced, and the fiscal balance is in line with staff projections (although staff’s projections are more conservative on the revenue side and spending more contained). It is consistent with the SMP’s goal of maintaining monetary financing at zero while effectively executing social spending for the country’s vulnerable households. The authorities committed to reducing capital expenditures with the least impact on the poor , should revenues fall sho rt. The authorities have passed, in mid - April 2025, the FY2025 supplementary budget to reflect €19.5 million of budget support approved by the EU (to be disbursed later in April 2025) and to support police forces in combating gang violence and restore security . The 2025 supplementary budget would be closely aligned with the SMP (including in the more realistic revenue projections). The authorities have indicated they will continue to have zero monetary financing. The y also indicated they are preparing for the implementation of the new tax code possibly in October 2025, including communication with the private sector and finalizing necessary provisions , pending the improvement of the security outlook . 4 16. Policy priorities to enhance revenues . The authorities should sustain their recent efforts to mobilize domestic revenue (structural benchmarks 7 and 8 in Attachment 1, Table 1 ). In particular, they should: • establish an administrative and technical cooperation protocol between the Directorate of General Taxes and General Administration of Customs (AGD), which should focus not only on the interconnection of IT systems, but also on the (i) the nature, format and frequency of the information and data to be exchanged between the two administrations, and (ii) preventive • launch and implement the digitalization of tax declarations and payments through all commercial banks for the large taxpayers registered at the DGI. 17. Structural benchmarks under the SMP will help broaden the tax base and enhance the transparency of collection through digitalization . Staff urge d the authorities to continue strengthening domestic revenue mobilization and avoid monetary financing of the budget. The recent lower spending levels are due to the country’s ongoing security threats, which have prevent ed full execution of the budget. Such expenditure levels, however, are neither sustainable nor desirable given the economy’s fragility and widespread social vulnerability. As security stabilizes and spending capacity rises, higher revenue mobilization will b e essential for financing large investment needs. Staff underscored the importance of sustaining reforms to enhance digitalization, transparency, and accountability in tax revenue collection and in the use of public funds. The authorities indicated that their top priority is fiscal and tax reform, with a goal of increasing tax revenue from 5 percent to 10 percent of the GDP in the m edium term. They requested IMF technical 4 Pending provisions to support the implementation of the new Tax Code to strengthen tax revenue mobilization include provisions on: (i) transfer pricing documentation and simplified declaration model, (ii) detailed list of products exempt from turnover taxes, (iii) detailed list of products subject to excise, (iv) application of special regimes (investment code, free zones, and industrial parks), and (v) a decree on the methodology for calculating technical reserves for the taxation of life insurance companies. These provisions should be well designed, with few exemptions from turnover tax and limited application of special regimes, as well as excises whose values reflect their externalities. HAITI 12 INTERNATIONAL MONETARY FUND assistance to support their goal. 18. The SMP is helping the authorities adopt the spending reforms needed to overcome fragility . With Haiti facing huge development challenges, investment opportunities are considerable. Tapping them will require improving the quality of public spending (in health and education) and investing in resilient infrastructure (physical and digital) and in human capital. Unequal access to education could be addressed through targeted social spending, conditional cash transfers that encourage girls’ access to education, and child allowances (also to help reduce the dropout rate of girls). To improve the quality of public spending, Haiti needs to adopt investment practices that maximize value for money in line with the Fund’s Public Investment Management Assessment (PIMA) 2022 recommendations . This requires that projects be evaluated before inclusion Table 1. Haiti: Food Shock Window Spending Priorities Indicated by the Authorities (In millions of gourdes) FY2023 FY2024 FY2025 2/ Reactivation of community restaurants and mobile canteens 2,000 - 115 - Distribution of food to vulnerable households ( paniers de solidarité ) 500 1,134 310 - Cash transfer to vulnerable households 2,500 - 588 - Cash to workers in subcontracting industries 1,500 1,113 614 - Ministry of National Education and Vocational Training Cash transfer to vulnerable households to encourage school attendance Support to parents 7,500 442 5,155 - Support plan for internally displaced persons - - - 324 Grants/subsidies to public transportation drivers Fuel cards for drivers 1,600 400 - - Support for Micro, Small and Medium sized enterprises with difficulties Establishment of a seed funding mechanism to finance businesses - - - 28 Ministry of Women's Affairs and Women's Rights Feeding Women in Detention - - - 29 Total 15,600 3,089 6,782 380 Source: Ministry of Economy and Finance. 1/ Allocated under the FY23 budget. 2/ Spending up to February 2025. Institution Purpose Measure Original allocation 1/ Spent Fonds d'Assistance Economique et Social (FAES) Food security Cash distribution to vulnerable population Ministry of Social Affairs and Labor Ministry of Trade and Industry HAITI INTERNATIONAL MONETARY FUND 13 in the budget and that completion of ongoing projects be prioritized. Improved spending quality would also require strengthening the medium - term fiscal framework (preparing baseline projections and determining fiscal space for new initiatives). This all mu st be accomplished before involving line ministries in preparing their baseline projections and in identifying priority projects and their implementation timeframe in order to have a multiyear budget framework. A multiyear framework would then allow decisi on - makers to take a long - term view of public finance, identifying potential cost of projects early on, prioritizing spending across multiple years, better calibrating the pace of development spending , and making more strategic decisions to avoid short - term fluctuations and reactive spending in response to immediate pressures . In addition, it would require reinstating the financial controller’s prerogatives about a priori control of public investment spending. This entails adopting a budgetary control guide and a renovated expenditure execution manual as well as improving treasury cash management, with the help of technical assistance. Figure 2 . Haiti: Revenue Performance, FY2021 – 25 Sources: Ministry of Economy and F inance and IMF staff calculations. As for the top charts and lower left chart: cumulative values, September 2021 = 100, real revenue. Lower right chart reports revenue, in nominal terms. 0 20 40 60 80 100 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2021 2022 2023 2024 2025 Total Domestic Internal Taxes Total Domestic Internal Taxes - 7 - 13 11 14 35 -40 0 40 80 120 160 200 Oct Nov Dec Jan Feb FY2024 FY2025 Total Tax Revenue (Year - over - year percent change ) 0 20 40 60 80 100 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2021 2022 2023 2024 2025 Total Tax Revenue 0 20 40 60 80 100 120 140 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2021 2022 2023 2024 2025 Customs Duties HAITI 14 INTERNATIONAL MONETARY FUND B. Social Assistance 19. Efforts to strengthen social safety nets have advanced and should continue. Fuel cards are provided to individuals who own a registered public transport vehicle, which must be designated for either passenger or goods transport. To date, about 3,800 fuel cards have been distributed nationwide. However, the insecure environment has hindered the authorities’ ability to interact with drivers and to collect data, limiting the registration of additional transport vehicles. The fuel cards were accompanied by cash transfers (checks) for the most vulnerable as identified in the SIMAST database which cover 30 percent of the population), which the World Bank and WFP have helped maintain and expand. The authorities’ efforts to improve SIMAST and expand its coverage are ongoing, but progress is s low due to the security condition. Given the critical importance of food security, most social programs are focused on food support. In FY2024, FAES programs included: (i) 94,658 people receiving food kits, (ii) 18,000 people receiving hot meals, (iii) 26, 960 vulnerable households receiving 20,000 gourdes, and (iv) 186,788 parents of students receiving 20,000 gourdes. 5 Cash transfers are being implemented through telecom operators, Digicel and Natcom, although use of mobile phones is still limited relative to other Caribbean countries and fragile and Conflict - Affected States (Figure 1, 2024 Article IV Staff report ). In FY2024, energy subsidies to the electricity company (EDH) were about 3 billion gourdes, owing to reduced electricity consumption caused by the security situation. The authorities allocated 7.5 billion gourdes in the FY2025 budget, assuming a resumption of economic activity. However, they plan to reduce energy subsidies to EDH in the FY2025 supplementary budget relative to the initial budget. Fuel subsidies have been at zero since FY2023 but only because of lower international oil prices rather than being the result of any systemic reforms (including introducing a smoothing price mechanism, improving energy billing and collection) . 20. Progress in reducing fuel subsidies is essential for medium - term fiscal sustainability . Given Haiti’s limited fiscal space, lower f uel subsidies would allow funds to be reallocated to other urgent priorities, including social assistance programs that target the country’s most vulnerable households. Given the political and social challenges of this reform, however, the authorities have moved cautiously. They reviewed the retail price - setting mechanism to allow for changes in international fuel prices and exc hange rates to be partly passed on to consumers, with a smoothing mechanism that would cap the monthly variation in retail prices. The authorities agreed on the need to reform this smoothing mechanism to protect the budget from substantial international price volatility, improve public finance management, and encourage the efficient consumpt ion of fuel products. Staff emphasized the importance of an effective communication policy to facilitate implementation. Among reform priorities should be the establishm ent of a regulatory framework for the petroleum - products sector and strengthening related regulatory institutions 5 In the first quarter of FY2025 (October – December 2024), FAES programs included: (i) 80,000 people receiving food kits, (ii) 23,973 people receiving hot meals, and (iii) 16,976 vulnerable households receiving 20,000 gourdes. HAITI INTERNATIONAL MONETARY FUND 15 C. Enhancing Governance and Transparency 21. G overnance reforms are paramount for overcoming Haiti ’s fragility . The authorities reiterated their commitment to fighting corruption and strengthening governance, including by implementing the Governance Diagnostic report which they published at end - February (structural benchmark, see Annex II). Progress has been made in enhancing cooperation between the tax and customs offices, including by working toward a technical cooperation protocol between the two offices on the interconnection of their IT systems ( June structural benchmark) . Improving governance is critical for rebuilding the trust of investors and development partners, given the low levels of FDI and ODA of recent years, which could lower further going forward. 22. Public financial management (PFM) reforms should continue to enhance public finance reporting, transparency, and acco