(2009) Pwogrè Rapò sou estrateji diminisyon povrete Ayiti (Ane: 2009)

© 2009 International Monetary Fund August 2009 9 / 290 [Month, Day ], 2001 [Month, Day], 2001 Haiti: Poverty Reduction Strategy Paper Progress Report Poverty Reduction Strategy Papers (PRSPs) are prepared by member countries in broad consultation with stakeholders and development partners, including the staffs of the World Bank and the IMF. Updated every three years with annual progress reports, they describe the country's macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major sources of financing. This country document for Haiti, dated February 2009, is being made available on the IMF website by agreement with the member country as a service to users of the IMF website. Copies of this report are available to the public from International Monetary Fund  Publication Services 700 19 th Street, N.W.  Washington, D.C. 20431 Telephone: (202) 623-7430  Telefax: (202) 623-7201 E-mail: publications@imf.org  Internet: http://www.imf.org Price: $18.00 a copy International Monetary Fund Washington, D.C. 3925635 - HTI--2009 PRSP - 3 - DMSDR1S.DOC août 12, 2009 (4:47 ) FIRST ANNUAL REPORT ON GPRSP IMPLEMENTATION (2007-2008) Making a Qualitative Leap Forward * February 2009 * English Translation of Official Original Document in French Official Original Document in French Available at http://www.mpce.gouv.ht 2 Copyright 09-04-177 National Library of Haiti Final version printed in April 2009 by XXX, Port-au-Prince, Haiti Ministry of Planning and External Cooperation (MPCE) 2009. All rights reserved. 3 LIST OF ABREVIATIONS AIDS Acquired Immune Deficiency Syndrome ARV Antiretroviral BCG Tuberculosis vaccine [Bacille de Calmette et de Guérin] BDS Departmental School Office [Bureau Départemental Scolaire] CAP Priority Arbitration Committee [Comité d’Arbitrage des Priorités] CBO Community-based Organization CICSMO Interministerial Committee for Implementation Coordination and Monitoring [Comité Interministériel de Coordination et de Suivi de la Mise en Œuvre] COSI Strategic Orientation Investment Council [Conseil d’Orientation Stratégique de l’Investissement] CPD Civil Protection Directorate CSAFP Higher Council for Government and Civil Service Affairs [Conseil Supérieur de l’Administration et de la Fonction Publique] CSCCA Supreme Court for Audits and Administrative Disputes DAC Donor Advisory Committee DDE Departmental Directorate for Education DTP Diphtheria, Tetanus, and Pertussis EFA Education for All EFACAP Basic School and Center for Pedagogical Support [Ecole Fondamentale et Centre d’Appui Pédagogique] EPA Economic Partnership Agreement FAES Economic and Social Assistance Fund [ Fonds d’Assistance Economique et Sociale] FIOP Project Identification and Operation Card [Fiche d’Identité et d’Opération de Projets ] GAC Community Group and Association GDP Gross Domestic Product GPRS Growth and Poverty Reduction Strategy GPRSP Growth and Poverty Reduction Strategy Paper LA Latin America MDG Millennium Development Goals MEF Ministry of Economy and Finance MENFP Ministry of National Education and Professional Training MPCE Ministry of Planning and External Cooperation MTBF Medium-Term Budgetary Framework MTEF Medium-Term Expenditure Framework NGO Non-Governmental Organization NIC National Investment Council OMRH Human Resource Management Office [Office de Management des Ressources Humaines] ONPES National Observatory on Poverty and Social Exclusion [Observatoire N ational de la Pauvreté et de l’Exclusion Sociale] PAGE Program to Support Economic Governance [Programme d’Appui à la Gouvernance Economique] PARQUE Support Program for Improvement of the Quality of Education [Programme d’Appui au Renforcement de la Qualité de l’Education] PBG Policy Base Grant PDL Local Development Program [ Programme de Développement Local] PIP Public Investment Program PLIP GPRSP Priority Investment Plan [Plan d’investissements Prioritaires du DSNCRP] PMCT Prevention of Mother-to-Child Transmission PNH Haitian National Police [Police Nationale d’Haïti] PPP Purchasing Power Parity PREH Program to Strengthen Haiti’s Economy [Programme de Renforcement de l’Economie d’Haïti] PRGF Poverty Reduction and Growth Facility PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper 4 QPM Qualitative Participatory Monitoring SCDCSMO Departmental Technical Subcommittee for Implementation Coordination and Monitoring [Sous- Comité Technique Départemental de Coordination et de suivi de la mise en œuvre] SCTICSMO Interministerial Subcommittee for Implementation Coordination and Monitoring [Sous-comité Interministériel de Coordination et de Suivi de la Mise en Œuvre] SECICSMO Executive Secretariat of the Interministerial Subcommittee for Implementation Coordination and Monitoring [Secrétariat Exécutif du Comité Interministériel de Coordination et de Suivi de la Mise en Œuvre] SGS Société Générale de Surveillance (inspection, verification, testing, and certification company) SPGRD Risk and Disaster Prevention and Management System TDC Table Départementale de Concentration UEP Design and Programming Unit [Unité d’Etudes et de Programmation] UNCTAD United Nations Conference on Trade and Development 5 TABLE OF CONTENTS I. EXECUTIVE SUMMARY II. INTRODUCTION III. CHAPTER I: GPRSP IMPLEME NTATION 1. Context Revision of the macroeconomic framework Readjustment of initial priorities Institutional framework 2. Main Implementation Phases Organizational phase Feedback, awareness-building, and ownership phase Operational phase 3. Constraints, Solutions, and Prospects Institutional framework Statistical information system Capacity-building 4. Next phases in implementation IV. CHAPTER II: MACROECO NOMIC FRAMEWORK 1. Recent economic situation 2. Macroeconomic outlook for 2009-2010 3. Macroeconomic objectives for 2009-2010 V. CHAPTER III: SOCIAL SITUATION 1. Trends in poverty reduction expenditure 2. Trends in poverty and inequality 3. Trends in the Millennium Development Goals (MDGs) VI. CHAPTER IV: GROWTH A ND POVERTY REDUCTIO N OBJECTIVES AND THE MAIN OUTCOMES 1. Restatement of the growth and poverty reduction objectives 2. Pillar 1. Growth Vectors Sectors Agriculture and Rural Development Infrastructure: Roads and Electricity 3. Pillar II. Human Developm ent Sectors Education and Vocational Training Health 6 4. Pillar III. Democratic Governance Sectors Justice and Public Security Local Governance 5. Crosscutting Sectors Food Security Social Protection and Persons with Special Needs Youth, Sports, and Civic Actions Gender Equality Environment and Sustainable Development Disaster and Risk Reduction Multisectoral HIV/AIDS Programs State Capacity Building Territorial Development Culture and Communication VII. CHAPTER V: MONITORING AND EVALUATION 1. Quantitative Monitoring 2. Participatory Qualitative Monitoring VIII. CHAPTER VI: STATUS OF COMPLETIO N POINT TRIGGERS 1. Public Finance and Economic Governance Reforms 2. Structural Reforms 3. Education 4. Health 5. Debt Management IX. CONCLUSION TABLES 1. Macroeconomic Performance and Monetary Poverty Indicators 2. Selected Macroeconomic Indicators – 2005–2008 3. Execution Status of Governmental Poverty Reduction Expenditure in 2006–2007 and 2007–2008 4. Values of Selected MDG Indicators (1990–2006) 5. Estimated Needs, Appropriations, and Additional Finacing To be sought for the GPRSP 6. Distribution of Capital Investment Appropriation According to GPRSP Pillar GRAPHS 1. Incidence of Extreme Poverty 2. Proportion of the population living on less than US$2 (PPP) per day or the incidence of overall poverty 7 ANNEXES 1. Comparative Table Reviewing the Macroeconomic Framework 2. Institutional Framework Implementing and Monitoring the Growth and Poverty Reduction Strategy Paper (GPRSP 2008-2010) 3. Main GPRSP Monitoring Indicators 4. The MDG Situation 5. The Poverty and Inequality Situation 6. Increase in Poverty among the Population and its Vulnerability 7. Trends and Projections of 13 of the 48 MDG Indicators 8. Chart of Priority Actions 9. Status of Completion Point Triggers 8 I. Executive Summary 1. The Republic of Haiti is facing major challenges owing to the commitments made and agreements signed with international partners with respect to reforms. In fact, Haiti made a commitment to undertake a series of reforms in the context of Poverty Reduction and Growth Facility (PRGF) programs, the completion point triggers for the Heavily Indebted Poor Countries (HIPC) Initiative, the Millennium Development Goals (MDGs) and, more specifically, the preparation of a Poverty Reduction Strategy Paper (PRSP). 2. The Haitian authorities therefore launched a series of actions with the aim of executing these reforms, for which quantitative and qualitative performance criteria were set and point to the achievement of noteworthy progress. The outcomes of these reforms suggest that Haiti has made significant progress toward achievement of the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative, supported by the Poverty Reduction and Growth Facility (PRGF). 3. Having reached the decision point in October 2006, which enabled Haiti to benefit from interim debt relief vis-à-vis its debtors, the country implemented a large number of reforms aimed at receiving permanent debt relief, expected in June 2009, in addition to allocating greater resources to poverty reduction. In this regard, the participatory approach to the Growth and Poverty Reduction Strategy Paper (GPRSP) and its implementation, accompanied by a macroeconomic stabilization policy, represent an important step toward making the qualitative leap sought, with a view to achieving the country’s sustainable development. 4. Needless to say, an ongoing effort is required to strengthen the impact of the Government’s poverty-related efforts and the effective use of both national resources and development assistance. The Growth and Poverty Reduction Strategy Paper (GPRSP) should clearly be updated at regular intervals in order to adapt it to situations that may arise during the course of its execution. These annual implementation progress reports should be drafted and discussed at the national level and shared with international community partners, in particular the Bretton Woods Institutions. 5. The implementation context of the Poverty Reduction Strategy (PRS) since the time of its adoption by the Government in September 2007 has been characterized in particular by numerous events experienced by Haiti during the first year of implementation, which have jeopardized a number of objectives and results targeted for 2008. These events include the increase in food and fuel prices on the international market and four devastating hurricanes that hit the country in August and September 2008. The Government had to provide emergency humanitarian assistance as well as assistance to repair destroyed or damaged physical infrastructure. 6. In light of these events, the authorities had no choice but to revise the growth objectives targeted for 2007-2008. The projected GDP growth rate of 3.7 percent had to be revised downward to 1.5 percent, owing to persistently high food and oil prices on the international market since the end of the first six-month period, and its effects at the national level, as well as the disasters that struck the agricultural sector, infrastructure, and general 9 production in the wake of hurricanes Fay, Gustave, Hannah, and Ike, the damage of which was approximately 15 percent of GDP. The most recent preliminary estimates provided by the Haitian Institute of Statistics and Data Processing [Institut Haïtien de Statistiques et d’Informatique IHSI] pointed to an anemic growth rate of 1.3 percent in 2008. Owing to the aforementioned factors, 2008-2009 started in a less favorable context than the preceding fiscal year, with a projected growth rate of 2.5 percent. 7. Without a doubt, the damage caused by these hurricanes has reduced economic growth. The immediate reaction of the Government has been to launch a major emergency program using its own funds, in order to make the main roads traversable and to repair a number of health and school facilities, with the aim of ensuring the opening of schools and the resumption of agricultural production. Likewise, with a view to preserving the gains made over the past five years, the Government had to recalibrate its objectives and take appropriate measures to minimize the impact of the food crisis on the purchasing power of the poorest population sectors, lessen the damage wrought by the disasters, improve basic education and health services, and complete basic infrastructure in order to stimulate economic recovery, particularly agricultural production. These measures are in line with those set in the Growth and Poverty Reduction Strategy Paper (GPRSP), and the Program to Strengthen Haiti’s Economy [Programme de Renforcement de l’Economie d’Haïti PREH] known as the gap program [programme de soudure] resulting from this strategy is an accelerator or supplement rather than a substitute for the entire government program. Consequently, it should not be construed as a reversal of course, but rather as an effort aimed at making up for losses resulting from the economic downturn. 8. The implementation mechanism, namely the National Investment Council (CNI), has a two-pronged structure: one is strategic and operates under the sponsorship of the President of Haiti and the arbitration of the Prime Minister and is composed of the Strategic Orientation Investment Council (COSI), the Donor Advisory Committee (DAC), and the Priority Arbitration Committee (CAP), and the other is operational and is chaired by the Ministry of Planning and External Cooperation (MCPE) and the Ministry of Economy and Finance (MEF), through the Interministerial Committee for Implementation Coordination and Monitoring (CICSMO), with assistance from an Executive Secretariat. These two levels include the main development partners, namely: the sectoral ministries, civil society, and international partners. 9. The Executive Secretariat of the Interministerial Subcommittee for Implementation Coordination and Monitoring (SECICSMO) provides coordination and operational monitoring of the strategy with the support of State and non-State entities at both the sectoral and territorial levels. In January 2008, the implementation process was started, based on the following main phases: organizational, feedback, awareness-building, ownership, and operational, which facilitated the establishment of coordination and monitoring entities, the organization of workshops, seminars, and feedback sessions, as well as awareness-building and ownership of the GPRSP with such different entities as civil society organizations and groups, ministerial officials, senior officials, and civil society representatives in the region. 10. The operationalization of im plementation took place through priority action sectoral matrices, the listing of programs and projects under way corresponding to GPRSP priority actions, sectoral action plans resulting from priority action matrices that list the resources to be deployed by each sector, the Priority Investment Plan resulting from sectoral plans, the final choice of monitoring indicators of objectives, the results and impact of the GPRS executed 10 jointly with the various partner sectors, and the inclusion of programs and projects implementing GPRSP priority actions in the 2008-2009 Public Investment Program. 11. State modernization is continuing. Economic governance was improved with the institutional strengthening of the central government, review of the legal framework of a number of centralized public institutions, correction of the financial management and budgeting process and procedures, strengthening of the public procurement system, and ramped up efforts to combat corruption. 12. Given the myriad political, economic, and social challenges facing the country, growth prospects are, in general terms, modest for FY 2008-2009. The work to be done as well as the work currently under way mainly through the post-hurricane emergency program implemented immediately after these hurricanes and the adjustment program currently being prepared by the Government lead to the projection of a positive GDP growth rate on the order of 2.5 percent in 2009 and higher growth in subsequent years, the goal being achievement of the 4.5 percent rate initially targeted in the Growth and Poverty Reduction Strategy Paper (GPRSP). 13. In the context of Paris Club commitments, an automatic public expenditure monitoring mechanism specifically linked to poverty reduction was introduced in Haiti’s general budget. This mechanism has facilitated the assessment of work done through Public Treasury appropriations allocated to various items related to employment, food security, energy supply, transportation, sanitation, drinking water, health, education, and social protection. 14. The recent natural disasters, which took a heavy toll on the homes and finances of households that were already vulnerable, exacerbated the poverty situation. In 1987, poverty statistics (in monetary terms), indicated that more than 60 percent of Haitians lived on less than US$1 a day (extreme poverty) in the country as a whole. This situation improved slightly in 2000, when 48 percent of Haitians were living on less than US$1 a day. The proportion of the population living in extreme poverty climbed to 55 percent in 2001, a seven-percentage point increase. The relative poverty index also changed considerably. In 1987, the proportion of the population living on less than US$2 in PPP terms stood at 59.6 percent, while in 2001, this percentage stood at 76 percent. The monetary poverty situation indicates that the proportion of persons living in extreme poverty is increasing at a faster rate than the proportion of persons living in relative poverty. Also, income distribution remains a major concern in light of heightened inequality. 15. Positioning Haiti to overcome the time lag with respect to the Millennium Development Goals is one of the major challenges contained in the GPRSP. Thirteen of the fourteen impact monitoring indicators used to track the GPRSP are MDG indicators. However, we have good reason to question the possibility of achieving predefined targets. The available figures show that few of the MDG targets will be achieved by 2015, as the gaps that remain are too wide. Examples include maternal health, where the trend has been reversed (from progress to regression), and infant mortality, where progress is rather slow. However, other targets could be achieved if appropriate measures are taken in a timely manner. We note the progress made, albeit slowly, in reducing the percentage of the population without access to drinking water and reasonable trends in school enrollment and literacy rates in relation to the targe ts to be met. 16. In order to assess the result or effects of actions ta rgeting growth and poverty 11 reduction, the methodology used consisted, in the areas for which new information is available relative to the information used to prepare the assessment provided in the GPRSP, of examining the direction of the trend yielding this new information. This approach is based on the fact that in general, an impact assessment has not yet been done of Government actions taken in the past twelve months. The main achievements during the first year of execution appear in Chapter IV of the report. 17. Some of the more relevant results according to GPRSP pillars, particularly for the priority sectors, show that many of the interventions took place in the agricultural sector (rehabilitation of irrigation systems, development of watersheds, distribution of inputs and agricultural tools); the infrastructure sector (repair and building of roads and bridges, urban and electricity rehabilitation); the educational sector (back-to-school subsidies, school cafeterias, construction and/or repair of schools); the health sector (repair of hospitals, vaccinations, combating HIV/AIDS); and the justice sector (construction and repair of courts and police stations). 18. Project financing which was, to some degree, synchronized with GPRSP pillars and objectives, accounted for 82 percent of total Public Investment Program (PIP) appropriations for FY 2007-2008 and for 87 percent of total Public Investment Program appropriations for FY 2008-2009. Because they were identified and prepared prior to drafting of the GPRSP, it is difficult to use performance indicators for these projects instead of the indicators identified in the Priority Investment Plan. Domestic financing declined from 13 percent for FY 2007-2008 to 12 percent for FY 2008-2009, while external resources rose from 87 percent to 88 percent during that same period. This funding during the first two years of GPRSP execution represents 51 percent of estimated project cost; consequently, 49 percent will have to be identified for the final year of execution. 19. GPRSP funding is not completely guaranteed for the first three years of its execution taking into account estimated needs and appropriations for FY 2007-2008 and FY2008-2009. In fact, of the G 172,745,182,209 (US$4,318, 629,555) in estimated costs, 51 percent of this amount was allocated to public investment programs for 2007-2008 and 2008-2009, leaving a shortfall of G 86,134,062,382 (US$2,153,351,560), representing 49 percent of the estimated cost of the GPRSP. 20. This report is composed of six chapters. The first covers the context and the main implementation phases, as well as constraints, solutions, and prospects. The second presents the macroeconomic framework and discusses the recent economic situation, the outlook for 2009-2010, as well as the macroeconomic objectives for that period. The third chapter addresses the social situation for the period 2007-2008 using trends in poverty reduction expenditure and the millennium goals for Haiti’s development. The fourth presents a number of specific results achieved in the priority sectors of agriculture, road infrastructure and electricity, education, health, and justice. The fifth chapter presents the monitoring and evaluation system established and the final chapter discusses the situation in February 2009 with respect to the completion point triggers. 12 II. Introduction 21. This document is the first annual report on implementation of the Growth and Poverty Reduction Strategy (GPRS). This strategy was prepared using a dynamic and open process in which civil society, development partners, and all public administrations participated and contributed once Haiti reached the decision point under the Heavily Indebted Poor Countries (HIPC) Initiative in October 2006. Validated by the Government following a national forum in September 2007, the GPRSP was submitted to the World Bank and International Monetary Fund, whose Executive Boards approved it in November 2007. This report covers the period October 1, 2007 to September 30, 2008. 22. This annual report reviews the main implementation phases from an institutional standpoint, presents trends in the macroeconomic and social situation in the country, and the main areas of progress during the first year of execution of the GPRSP, while analyzing the functioning of monitoring and evaluation mechanisms, and concludes with a progress report on completion point triggers. 23. The report is the product of collaboration among the sectoral ministries responsible for the application of the Government’s public policies through the various sectoral priority action plans, the analysis of the National Observatory on Poverty an d Social Exclusion (ONPES) on poverty trends and the Millennium Development Goals, as well as the monitoring of output indicators for the GPRSP and the Executive Secretariat of the Interministerial Committee for GPRSP Implementation Coordination and Monitoring (SECICSMO). 13 III. GPRSP Implementation 1. Context 24. The first Growth and Poverty Reduction Strategy Paper (GPRSP) for the Republic of Haiti covers a three-year period. Each year, the Government is required to submit an annual progress report (APR) in order to demonstrate the progress made with implementation of the strategy. Needless to say, an ongoing effort is required to enhance the impact of Government intervention in the area of poverty and the effective use of both domestic resources and development assistance. It is therefore important to update the Growth and Poverty Reduction Strategy at regular intervals in order to adapt it to situations that may arise during the course of its execution. These annual implementation progress reports should be drafted and discussed at the national level and submitted to the Bretton Woods Institutions. 25. The implementation context of the Poverty Reduction Strategy (PRS) since the time of its adoption by the Government in September 2007 has been characterized in particular by numerous events experienced by Haiti during the first year of implementation, which have jeopardized a number of the objectives and results targeted for 2008. We need only mention the riots in April 2008, sparked by the increase in food and fuel prices and the climate and humanitarian disasters resulting from the impact of the passage over Haiti of four devastating hurricanes in September 2008, prompting the Government to provide emergency humanitarian assistance as well as assistance with destroyed or damaged physical infrastructure. Revision of the Macroeconomic Framework 26. The macroeconomic framework had to be revised to reflect the new situation. In fact, the initially targeted growth objectives (GDP - 3.7 percent) had to be revised downward (1.3 percent), owing to persistently high food and oil prices on the international market and its effects at the national level, as well as the disasters that struck the agricultural sector, infrastructure, and production in general in the wake of four successive hurricanes, the damage of which was estimated at approximately 15 percent of GDP. The inflation rate rose markedly, from 7.9 percent in September 2007 to 19.8 percent in September 2008. However, an inflation rate of 5 percent is projected for end-2009, compared to the estimated 9.5 percent rate (comparative table on trends in macroeconomic framework in Annex No. 1). 27. While the exchange rate was trending upward, ranging from an average of G 36 to G 40 to US$1 between 2005 and 2006 when the document was drafted, an exchange rate of G 40 to US$1 was used in the initial document, while the exchange rate projected for 2008-2009 is approximately G 40 to US$1. 28. Macroeconomic policy projects cover essentially the 2007-2011 period, and seek to preserve and maintain macroeconomic stabilization. These policies also target the completion of structural reforms and the continuation of all measures furthering achievement of the completion point. However, objectives run the risk of being stymied by such factors as legislative elections, global food and fuel prices, and climate change taking into account Haiti’s vulnerability in this area. However, under the scenarios provided in the initial document, average growth rates of 6 percent and 4 percent through 2015 were used, under an 14 optimistic scenario and a baseline scenario respectively (refer to pages 117 and 118 of the GPRSP). 29. In the fiscal and taxation spheres, targets have been revised in the area of revenues and expenditures, given that revenue objectives fell short of expectations and expenditure needs were greater. However, the need to raise taxes from 10 percent in 2006 to 14 percent in 2011 remained unchanged, as did the need to reduce current expenditure to an average of 45.5 percent of all public expenditure for the period 2007-2011. Fiscal policy will be more expansionary. In the monetary policy sphere, an inflation-targeting approach and exchange rate sterilization in the context of a flexible exchange rate policy are expected. Readjustment of Initial Priorities 30. The damage caused by the hurricanes has, without a doubt, reduced economic growth and the immediate reaction of the Government has been to launch an emergency program using its own funds, in order to make the main roads traversable and to repair a number of health and school facilities, with the aim of ensuring the opening of schools and the resumption of agricultural production. This program did not, however, cover all losses, estimated at US$1 billion or 15 percent of GDP. 31. Consequently, the Government, with a view to preserving the gains made over the past five years, had to readjust its objectives and take appropriate measures to minimize the impact of the food crisis on the purchasing power of the poorest population sectors, lessen the damage wrought by the disasters, improve basic education and health services, and complete basic infrastructure in order to stimulate economic recovery, particularly agricultural production. 32. These measures are in line with those set forth in the Growth and Poverty Reduction Strategy (GPRS), and the gap program, namely the Program to Strengthen Haiti’s Economy (PREH) [programme de soudure] resulting from this strategy, is an accelerator or supplement rather than a substitute for the entire government policy. Consequently, it should not be construed as a reversal of course, but rather as an effort aimed at making up for losses resulting from the economic downturn. 33. This program consists of three main components: disaster and risk reduction, the growth vector pillar and human development pillar, taken directly from the GPRSP, and the third pillar, democratic governance, which is covered largely by projects already under way. The crosscutting policies fit into each area listed in the fast-acting program, which should cover the setbacks attributable to damaged infrastructure and provide the resources necessary to continue to provide basic services to the population. Institutional Framework 34. The implementation mechanism, namely the National Investment Council (CNI), has a two-pronged structure: one is strategic and operates under the sponsorship of the President and the arbitration of the Prime Minister and is composed of the Strategic Orientation Investment Council (COSI), the Donor Advisory Committee (DAC), and the Priority Arbitration Committee (CAP), and the other is operational and is chaired by the Ministry of Planning and External Cooperation (MCPE) and the Ministry of Economy and Finance (MEF), through the Interministerial Committee for Implementation Coordination and Monitoring (CICSMO), with 15 assistance from an Executive Secretariat. These two levels serve as the main development partners, namely: the sectoral ministries, civil society, and donors. 35. The Executive Secretariat of the Interministerial Subcommittee for Implementation Coordination and Monitoring (SECICSMO) provides coordination and operational monitoring of the strategy with the support of State and non-State entities at both the sectoral and territorial levels. The institutional framework for GPRSP implementation listing its various entities and their respective responsibilities are shown in Annex 2. 2. Main Implementation Phases 36. In January 2008, the GPRSP implementation process was started based on the following main phases: organizational, feedback, awareness-building, ownership, and operational. Organizational Phase 37. Strategic-level entities: the Strategic Orientation Investment Council (COSI), the Donor Advisory Committee (DAC), and the Priority Arbitration Committee (CAP) are not yet officially up and running. At the operational level, the Interministerial Committee for Implementation Coordination and Monitoring (CICSMO) is up and running and is chaired by the Minister of Planning and External Cooperation. The Executive Secretariat of CICSMO, the key entity for the entire implementation mechanism, the Interministerial Subcommittee for Sectoral Coordination and Monitoring (SCTICSMO), and the Departmental Subcommittees for Implementation Coordination and Monitoring in the regions (SCDCSMOs) have been established. SCTICSMO is holding its ninth monthly coordination and monitoring meeting. However, these two subcommittees are not yet fully up to speed, owing to the delayed submission of periodic sectoral implementation progress reports and sectoral work plans as a result of weak or non-existent Design and Programming Units (UEPs) in the ministries. The National Observatory on Poverty and Social Exclusion (ONPES), a unit in the Ministry of Planning and External Cooperation, has been established and handles, in conjunction with the Office for Economic and Social Planning of this Ministry, coordination of the GPRSP monitoring and evaluation mechanism. 16 Feedback, Awareness-building, and Ownership Phase 38. Activities are delayed owing to the lack of funding for the communications plan that has been prepared and is awaiting signing by the UNDP of the financing agreement in the context of the Project to Support GPRSP implementation. However, feedback, awareness- building, and ownership workshops have been organized in the ten departmental administrative centers [chefs-lieux] and are continuing at the invitation of a number of ministries and organized civil society groups. Similarly, a newspaper and brochures entitled “GPRSP Bulletins” disseminating information on the content of the GPRSP and providing information on the implementation process is continuing, with the publica tion of the issue No. 4 in the series. Moreover, three project planning and preparation training courses, geared toward officials in the Program and Design Units of ministries and the Ministry of Planning and External Cooperation, have been organized and others have already been planned for 2009. Operational Phase 39. The following main activities have been conducted: Preparation of the Inventory of Programs and Projects (IPPs) being executed and corresponding to GPRSP priority programs, with a view to collecting data that should facilitate assessment of the initial results of the execution of programs and projects during the first year of GPRSP implementation (see the list the public investment programs and project document at http://www.mpce.gouv.ht). Preparation of Priority Action Sectoral Matrices in conjunction with the sectors involved, including a system organizing priorities and an analysis of the estimated cost of priority actions. The action matrices have been prepared based on the major works of the Government reorganized in three pillars and supported by targeted and crosscutting policies and strategies set forth in the GPRSP (see the Priority Action Matrices – GPRSP document at http://www.mpce.gouv.ht). Preparation of the Priority Investment Plan (PIP) which sets forth the resources to be implemented, by area, to promote growth and combat the downward spiral into poverty and destitution being experienced in the country. This plan is the product of the Sectoral Priority Action Matrices and includes the programs and projects selected for the first three years of GPRSP execution (2008-2010) (see the GPRSP Priority Investment Plan for 2008-2010 document at http://www.mpce.gouv.ht). Choice of GPRSP monitoring indicators made in conjunction with the various sectoral partners (see the main GPRSP monitoring indicators document, Annex No. 3). Listing of PIP programs and projects for 2008-09 operationalizing GPRSP priority actions (See Public Investment Program for 2008-09 at http://www.mpce.gouv.ht). 3. Constraints, Solutions, and Prospects Institutional Framework 40. The clear directives that should come from the strategic entities are not provided on a regular basis. However, the implementation process continues while awaiting any necessary 17 corrections from the strategic entities. Nonetheless, the different strategic entities are informed of the phases of the process, given that they are furnished with reports on monthly SCTICSMO meetings on a regular basis, as well as implementation progress guides and monthly progress reports. In addition, the Minister of Planning and External Cooperation keeps the Prime Minister and President of Haiti as well as the Donor Advisory Committee directly appraised of GPRSP implementation progress, based on a report from the Executive Secretariat of the Interministerial Committee for Coordination and Monitoring. Statistical Information System 41. Despite the work done (household surveys, poverty map, and population survey), the statistical system is facing daunting problems in terms of the coordination of work and the generation of macroeconomic and sectoral statistics. It is hoped that the Memorandum of Understanding between the MEF and MPCE on a basic statistical project would alleviate this major problem. A program aimed at strengthening sectoral statistics in the various ministries would supplement work being done. 42. The output-based planning system (patterned after the MTEF), which facilitates assessment of the appropriateness of public expenditure in relation to GPRSP strategic orientations, is still not operating properly. In order to ensure better linkage between GPRSP orientation and the budget, the Medium Term Expenditure Framework (MTEF) and the Medium Term Budget Framework (MTBF) will be gradually introduced. Capacity Building 43. In the context of technical support from the international community to Haiti, capacity- building of the Design and Planning Unit (UEP) of the priority sectoral ministries is expected. A lack of institutional capacity can jeopardize sound implementation of the Growth and Poverty Reduction Strategy. Technical support for “coordination of government action,” “coordination of development assistance,” and the “formulation of sectoral policy” is being sought. 44. The MCPE, through its various technical entities and with OPES support, is being mobilized in order to ensure coordinated monitoring of the execution of all the priority actions set forth in the GPRSP. Monitoring and evaluation instruments are designed in such a way as to ensure the monitoring of actions. Involvement of the MEF and sectoral institutions in activities upstream and throughout the process serves to guarantee a functioning coordination system. The set up and operationalization of the Design and Programming Units (UEPs) will strengthen the system. 45. In the area of qualitative participatory monitoring, the process is proceeding apace. The training of trainers by volunteers from grassroots organizations to collect data on the views of beneficiaries with respect to the impact of the GPRSP will supplement the annual sector program and project execution assessment. Ten new technical officials have just been recruited to strengthen the departmental offices of the MPCE, in particular with the training of Departmental Subcommittees for GPRSP Coordination and Monitoring and grassroots organizations in the area of institutional and technical capacity building, with a view to better representativeness. 18 4. Next Phases in Implementation 46. The following are the next phases of implementation: (i) Adaptation of the format of physical and financial progress reports for the programs and projects listed in the PIP so that they can be more closely aligned with GPRSP implementation monitoring and evaluation needs; (ii) Validation of the manual of procedures and operating methods of the entities involved with the GPRSP mechanism for implementation coordination and monitoring; (iii) Preparation of a basic common reference framework and its methodological support for the information system for GPRSP and MDG monitoring; and (iv) Mid-term evaluation of the GPRSP monitoring and coordination mechanisms. 19 IV. Macroeconomic Framework 1. Recent Economic Situation 47. Implementation of the Growth and Poverty Reduction Strategy (GPRSP) took place in an unstable environment, characterized in 2008 by intense shocks that greatly undermined the progress made in the area of poverty reduction. Following two years of significant improvement in the economic situation, with a positive GDP growth rate in real terms of 2.3 percent in 2006 and 3.4 percent in 2007, the growth rate fell to 1.3 percent in FY 2007-2008, while the inflation rate, projected to be under 10 percent, instead doubled, a factor that helped fuel a food crisis. 48. Per capita GDP remained below the GPRSP projection (See Table No. 1 below). As a result, little progress was made in the area of monetary poverty, while vulnerability increased as a result of the rise in the cost of living and the loss of capital resulting from the hurricanes, despite the efforts made to redistribute aid to the poorest and disaster-stricken population groups. Consequently, it is of vital importance to step up efforts if the poverty rate is to be reduced by 2011. In light of this, the projected growth rate of 2.5 percent for 2008-2009 is too low. Table 1. Macroeconomic Performance and Monetary Poverty Indicators 2005 2006 2007 2008 2009 2010 2011 Real GDP annual growth rate 1.8% 2.3% 3.4% 1.3% 2.5% 3.5% 4.5% Inflation (average annual change) as a % 14.8% 14.2% 8.9% 14.3% 5.0% 8% 7.5% Public savings as a % of GDP 1.3 0.9 1.0 0.1 0.1 1.0 1.0 Total revenue as a % of PIB 9.6 % 9.9% 10.1% 10.1% 10.5% 12.0% 14.0% Total expenditure as a * of % GDP 10.1% 10.7% 11.8% 11.6% 11.0% - - Current balance of payments excluding grants (% of GDP) -1.6 -1.4 -0.4 -2.6 -3.6 - Net foreign exchange reserves (in US$ millions) 70.4 130.2 269.1 288.6 237.0 250 262 Annual change in the nominal exchange rate in relation to the US dollar as a %* -1.56% 6.6 % -9.8% 2.3% 2.5% 3.5% 4% Projected baseline GPRSP Per capita GDP growth rate 1.4% 2.4% 1.9% 1.9% 1.9% Projected poverty rate 55% 53.5% 52.4% 51.2% 50.2 Per capita GDP growth rate 1.1% -0.8% 0.4%* - - Actual Poverty rate 55.2 55.7 55.4** - - [... middle sections omitted for long document ...] 108 109 Summary of Central Government Financial Transactions (% of GDP) Projections 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total income 8.45% 9.12% 11.63% 15.98% 17.91% 20.59% 21.97% 21.28% 22.43% Total domestic income 8.33% 8.97% 8.98% 9.67% 10.03% 10.31% 11.69% 11.99% 12.45% Current revenue 8.32% 8.97% 8.98% 9.67% 10.03% 10.31% 11.69% 11.99% 12.45% Domestic revenue 6.12% 6.66% 6.48% 7. 13% 6.99% 7.27% 8.08% 8.25% 8.98% Customs revenues 2.20% 2.31% 2.50% 2.54% 3.04% 3.03% 3.62% 3.74% 3.47% Other current income 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Grants 0.12% 0.14% 2.65% 6.31% 7.88% 10.28% 10.28% 9.28% 9.98% Total expenditure 11.80% 12.56% 13.79% 16.41% 18.50% 20.01% 23.09% 23.13% 24.20% Current expenditure 9.65% 9.05% 7.96% 8.84% 9.26% 7.04% 10.37% 11.05% 10.99% Wages and salaries 3.70% 3.23% 2.94% 3. 39% 3.23% 3.59% 4.93% 5.04% 4.93% Operating expenses 4.54% 3.74% 3.26% 2. 47% 2.43% 0.52% 2.93% 3.34% 3.60% Subsidies and transfers 0.82% 1.21% 0.83% 2.38% 2.77% 2.37% 2.19% 2.13% 1.90% Interest payments 0.59% 0.88% 0.92% 0. 60% 0.84% 0.56% 0.32% 0.54% 0.55% Investment expenditure 2.15% 3.51% 5.84% 7.57% 9.24% 12.97% 12.71% 12.08% 13.21% Domestic 2.03% 3.36% 3.19% 1.26% 1.36% 2.68% 2.43% 2.79% 3.23% Foreign 0.12% 0.14% 2.65% 6.31% 7.88% 10.28% 10.28% 9.28% 9.98% Current balance -1.32% -0.08% 1.02% 0.83% 0.77% 3.27% 1.32% 0.94% 1.46% Overall balance -3.35% -3.44% -2.16% -0.42% -0.59% 0.58% -1.11% -1.85% -1.77% Overall balance excluding grants -3.47% -3.58% -4.81% -6.74% -8.47% -9.70% - 11.39% - 11.14% - 11.75% Financing 3.35% 3.44% 2.16% 0.42% 0.59% -0.58% 1.11% 1.85% 1.77% Domestic financing 3.52% 2.83% 2.17% -0.07% -0.08% -0.78% -0.16% -0.32% -0.29% Monetary authorities 3.08% 3.04% 2.07% 0.00% -0.17% -0.50% 0.00% 0.00% 0.00% Commercial banks -0.04% 0.01% 0.04% -0.03% 0.06% -0.03% -0.16% -0.14% -0.13% Other 0.48% -0.23% 0.06% -0.05% 0. 02% -0.25% 0.00% -0.17% -0.16% External financing -0.17% 0.62% -0.01% 0.50% 0.67% 0.20% 1.27% -0.61% -0.56% of which: Budget support -0.42% 0.51% 0.72% 1.34% Grants 1.41% Drawings 0.28% Paris Club rescheduling 0.05% 0.00% 0.00% HIPC 0.21% 0.30% 0.00% Funding gap 0.00% 2.79% 2.61% Funding gap (US$) 110 Summary of Haiti Balance of Payments (millions of US dollars) Projections 2002 2003 2004 2005 2006 2007 2008 2009 2010 Current account - 30 - 46 - 57 114 - 1 67 - 12 - 222 - 267 Current account (excluding grants) - 165 - 183 - 157 - 214 - 381 - 361 - 460 - 572 - 755 Trade balance -708 -783 -833 -850 -1,054 - 1,086 - 1,231 - 1,392 - 1,516 Merchandise exports 274 333 378 459 494 553 698 786 875 of which, maquila 221 278 320 397 435 491 631 713 795 Merchandise imports -983 - 1,116 - 1,211 - 1,308 -1,548 - 1,640 - 1,929 - 2,178 - 2,391 of which, petroleum products -157 -196 -218 -313 -397 -400 -450 -467 -473 Net services -93 -166 -204 -313 -336 -357 -400 -414 -561 Credit 164 135 133 138 197 230 290 366 295 Debit -256 -301 -337 -452 -533 -587 -690 -780 -856 Net income -13 -16 -12 -37 7 1 -4 2 12 Net current transfers 784 918 993 1,313 1,382 1,509 1,623 1,582 1,797 Net official transfers 135 137 100 328 380 428 448 350 488 Net private transfers 649 781 893 985 1,002 1,081 1,175 1,232 1,309 Capital and financial account - 42 27 89 - 58 88 90 89 93 141 Foreign direct investment 5 14 6 26 160 80 80 80 80 Net capital flows to the public sector -25 -3 -10 31 51 23 43 50 98 Net flows from/of the banking sector 3 -47 29 -76 -83 -13 -34 -37 -38 Net errors and omissions -25 63 65 -40 -39 0 0 0 0 Overall balance - 72 - 19 33 56 88 157 77 - 129 - 127 Financing 72 19 - 33 - 56 - 88 - 156 - 77 - 93 - 102 Variation in reserve assets 49 21 -51 -22 -107 -199 -118 -124 -114 Variation in liabilities -8 -11 -2 9 10 21 23 23 12 Variation in arrears 31 9 20 -43 9 -45 0 0 0 Other (including HIPC debt rescheduling) 0 0 0 0 0 67 18 8 0 Funding gap 0 0 0 0 0 0 0 222 229 111 Monetary situation (in millions of Gourdes) Projections 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Net external claims 8,421 13,475 12,683 18,630 24,000 30,493 35,866 41,660 47,775 54,147 Net domestic claims 28,808 38,553 44,078 49,660 51,091 51,895 54,737 59,016 63,503 67,771 Credit to the public sector (excluding special accounts) 15,229 18,700 21,097 21,159 20,118 20,118 20,118 20,118 20,118 20,118 Credit to central government 15,219 18,611 21,401 21,322 20,570 20,124 20,124 20,124 20,124 20,124 Other credit to the public sector 10 89 -303 -163 -452 -6 -6 -6 -6 -6 Credit to the private sector 14,512 19,365 21,142 25,609 27,019 28,399 31,241 35,520 39,778 43,845 Other items - net (including special accounts) -932 488 1,839 2,892 3,955 3,378 3,378 3,378 3,607 3,808 M3 aggregate - Broad money 37,229 52,028 56,761 68,290 75,091 82,388 90,602 100,677 111,278 121,918 Notes and coins in circulation 6,652 8,443 8,685 10,547 11,159 12,018 12,982 14,285 15,630 16,905 Deposits 30,576 43,585 48,076 57,743 63,932 70,370 77,621 86,391 95,648 105,013 Gourde deposits 16,810 21,903 25,824 28,292 31,533 33,962 36,685 40,369 44,168 47,773 Dollar deposits 13,766 21,683 22,252 29,451 32,399 36,408 40,936 46,022 51,480 57,241 112 Ministry of Planning and External Cooperation (MPCE) 25, Rue Mgr Guilloux, Palais des Ministères Tel: 223-8921 Port-au-Prince, HAITI Website: www.mpce.gouv.ht • e-mail: info@mpce.gouv.ht