(2002-02) Haiti Selected Issues
Summary — This IMF Country Report for Haiti examines the recent evolution of credit to the private sector, petroleum taxation, and exchange rate and current account sustainability. It finds that supply-side factors have dominated demand-side factors in the decline of credit to the private sector and that Haiti's current account deficit appears sustainable but vulnerable to external shocks.
Key Findings
- Supply-side factors dominate demand-side factors in the decline of credit to the private sector.
- Haiti's current account deficit appears sustainable but vulnerable to external shocks.
- Flexible pricing mechanism for petroleum products would shield budget revenue from fluctuations in international oil prices and exchange rates.
- Remittances and grants are key BOP characteristics and permanent inflows to the economy.
- Real interest rates and real private sector credit have tended to move in opposite directions since early 2000.
Full Description
This Selected Issues paper for Haiti analyzes several key economic challenges. It examines the decline in real bank credit to the private sector, finding that supply-side factors like increased central bank bond issuance and higher reserve requirements have outweighed demand-side factors. The report also provides an overview of petroleum taxation under the current fixed pricing policy and a hypothetical flexible pricing mechanism, projecting similar revenues under both scenarios given current oil price trends. Finally, it assesses the sustainability of Haiti's current account, noting its vulnerability to external shocks like oil price increases and declining remittances, despite appearing sustainable in the medium term under optimistic growth assumptions.
Notes
IMF Country Report (02-18)