(2012) Ayiti: Dokiman Estrateji pou Rediksyon Povrete—Rapò sou Pwogrè

© 2012 International Monetary Fund April 2012 IMF Country Report No. 12/75 February 23, 2012 January 29, 2001 January 29, 2001 January 29, 2001 January 29, 2001 Haiti: Poverty Reduction Strategy Paper—Progress Report This poverty reduction strategy paper—progress report on Haiti was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on February 23, 2012. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Haiti or the Executive Board of the IMF. The policy of publication of staff reports and other documents by the IMF allows for the deletion of market-sensitive information. 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 International Monetary Fund Washington, D.C.     REPUBLIC OF HAITI APRIL 2011 MINISTRY OF PLANNING AND EXTERNAL COOPERATION EXECUTIVE SECRETARIAT OF THE INTERMINISTERIAL COORDINATING AND MONITORING COMMITTEE FOR THE IMPLEMENTATION OF THE DSNCRP FINAL REPORT ON THE IMPLEMENTATION OF THE FIRST NATIONAL GROWTH AND POVERTY REDUCTION STRATEGY (2008-2010 DSNCRP) MAKING THE QUANTUM LEAP 2    MINISTRY OF PLANNING AND EXTERNAL COOPERATION EXECUTIVE SECRETARIAT OF THE INTERMINISTERIAL COORDINATING AND MONITORING COMMITTEE FOR THE IMPLEMENTATION OF THE DSNCRP FINAL REPORT ON THE IMPLEMENTATION OF THE FIRST NATIONAL GROWTH AND POVERTY REDUCTIO N STRATEGY PAPER (2008-2010 DSNCRP) MAKING THE QUANTUM LEAP 3    Filing for legal purposes xx-xx-xxx National Library of Haiti Printed in April 2011 By the XXX printing company Port-au-Prince, Haiti Ministry of Planning and External Cooperation (MPCE) 2011. All rights reserved. 4    Table of Contents LIST OF ABBREVIATIONS ...................................................................................................................................... 5  L IST OF TABLES ....................................................................................................................................................... 8  L IST OF GRAPHS ...................................................................................................................................................... 9  FOREWORD FROM THE PRIME MINISTER ....................................................................................... 10  EXECUTIVE SUMMARY ............................................................................................................................. 12  CONTEXT ............................................................................................................................................................ 17  INTRODUCTION .............................................................................................................................................. 18  CHAPTER I: MACROECONOMIC FRAMEWORK  ............................................................................ 21  CHAPTER II: BUDGETARY PROGRAMMING  .................................................................................. 35  CHAPTER III: IMPLEMENTATION ......................................................................................................... 44  C HAPTER IV: POLITICAL AND SECTORIAL REFORMS .............................................................................. 83  C HAPTER V: OUTCOMES ................................................................................................................................... 87  C HAPTER VI: COORDINATION, FOLLOW-UP AND COMMUNICATIONS ............................................. 106  C HAPTER VII: TOWARD A SECOND-GENERATION STRATEGY ............................................................. 119  C HAPTER VIII: CONCLUSIONS ...................................................................................................................... 125  5    List of abbreviations AIDS Acquired Immune Deficiency Syndrome ARV Antiretroviral BCG Bacille Calmette Guérin (tuberculosis vaccine) BDS Education Departmental Office BRH Bank of the Republic of Haiti CAP Priorities Arbitration Committee CBO Community-based Organization CCB Donor Advisory Committee CCPC Communal Civil Protection Committee CDGRD Departmental Risk and Disaster Management Committee CFI Investment Facilitation Center CICSMO Interministerial Committee for Implementation Coordination and Monitoring CII Interministerial Investment Commission CLPC Local Civil Protection Committee CNE National Equipment Center CNGRD National Risk and Disaster Management System CNI National Investment Council CNMP National Procurement Commission CNRA National Administ rative Reform Commission CONFEJES Conference of Ministers of Youth and Sports COSI Strategic Investment Orientation Council COUN National Emergency Operations Center CPM Commune Phare Majeure CSAFP High Council for Administration and the Civil Service CSCCA High Accounting and Administrative Disputes Office CTD Departmental Technical Committee DDE Departmental Education Directorate DDGC Detailed Large Projects Paper DPC Civil Protection Directorate DSNCRP National Growth and Poverty Reduction Strategy Paper DSNO Nord-ouest Health Directorate DTM Diphtheria/Typhoid/Malaria ECLA Cultural, Reading and Cultural Activity Center ECVH Survey on Living Conditions in Haiti EFACAP Primary School and Learning Support Center ENAPP National School of Administration and Public Policies ENTS National Sports Talent School EPPLS Government Enterprise to Promote Social Housing EPT Education for All FAES Economic and Social Assistance Fund FHF Haitian Soccer Federation FIA Accelerated Initial Training 6    FIJ Youth Integration Fund FIOP Identity and Project Operation Form GAC Group and Community Association GDP Gross Domestic Product GRD Risk and Disaster Management GSB Groupe Sante Bet HCR Community reference hospital HIPC Heavily Indebted Poor Countries IHSI Haiti Statistics and Data Processing Institute INARA National Agrarian Reform Institute IOM International Organization for Migration LNSP National Public Health Laboratory MAP Matrix of Priority Programs MAP Priority Activities Matrix MARNDR Ministry of Agriculture, Natural Resources and Rural Development MAST Ministry of Social Affairs and Labor MCC Ministry of Culture and Communication MDG Millennium Development Goals MEF Ministry of the Economy and Finance MENFP Ministry of National Education and Vocational Training MICT Ministry of the Interior and Territorial Authorities MJSAC Ministry of Youth, Sports and Civic Action MJSP Ministry of Justice and Social Protection MPCE Ministry of Planning and External Cooperation MSSP Ministry of Health and Social Protection MTBF Medium-Term Budgetary Framework MTCTP Mother-to-Child Transmission Prevention MTEF Medium-Term Expenditure Framework NGO Nongovernmental Organization OMRH Office of Human Resources Management ONPES National Poverty and Social Exclusion Laboratory OSAMH Morne L'Hôpital Supervision Office PAGE Economic Governance Support Program PARDH Action Plan for the Recovery and Development of Haiti PARQUE Program to Support Strengthening the Quality of Education PBG Policy-based Grant PDL Local Development Program PDNA Post Disaster Need Assessment PDT Tourism Master Plan PIP Public Investment Program PLAP Priority Action Plan PLIP DSNCRP Priority Investment Plan PLWHA People Living with HIV/AIDS PMS Minimum Package of Services 7    PNAP National Early Warning Program PNH National Police of Haiti PNLS National AIDS Program PREH Haiti Economic Strengthening Program PRGF Poverty Reduction and Growth Facility PRSP Poverty Reduction and Strategy Paper SCDCSMO Departmental Subcommittee for the Coordination and Monitoring of Implementation SCTICSMO Technical Subcommittee for the Coordination and Monitoring of Implementation SECICSMO Interministerial Executive Secretariat for the Coordination and Monitoring of Implementation SGS Société Générale de Surveillance SNCRP National Growth and Poverty Reduction Strategy SPGRD Permanent Secretariat for Risk and Disaster Management SQP Participatory Qualitative Monitoring SRP Poverty Reduction Strategy STI Sexually Transmitted Infection TDC Departmental Consultation Table UCS Communal Health Facility UEP Study and Programming Unit UNCTAD United Nations Commission on Trade and Development 8    List of tables Table 1 Change in the principal m acroeconomic variables between 2007 and 2010 Table 2 Change in funding and spe nding to fight poverty between 2008 and 2010 Table 3 Percentage of operating spe nding and investment spending in the total allocation Table 4 Annual change in actual spending to fight poverty (in percentages) Table 5 Percentage of operating a nd investment spending in total spending Table 6 Outstanding debt and debt se rvice before and after the completion point Table 7 Change in outstanding debt a nd debt service as a percentage after the completion point Table 8 Breakdown of investment funds according to the DSNCRP pillars Table 9 Pillar I: Growth vectors Table 10 Pillar II: Human development Table 11 Pillar III: Justice and security/local governance Table 12 Annual breakdow n of funding by pillar Table 13 Establishments destroyed or damage (Ouest, Sud-Est and Nippes departments) Table 14 Changes in a number of MDGs (1990 – 2008-2009) Table 15 Overall tenor of the assessments Table 16 Opinions on access to justice Access to legal services Table 17 Opinions on access to sanitation Availability of toilets        9    List of graphs Graph 1 Change in the real GDP growth rate between 2007 and 2010 Graph 2 Change in the inflation ra te year-over-year between 2007 and 2010 Graph 3 Change in imports and exports between 2007 and 2010 Graph 4 Change in net exchange reserves Graph 5 Change in priv ate unrequited transfers Graph 6 Change in allocations and expenditures for poverty Graph 7 Trend in spending on poverty between 2008 and 2010 Graph 8 Weight of the pillars in th e total of funding allocated to the DSNCRP projects in 2008-2010 Graph 9 Weight of the pillars in the DSNCRP Graph 10 Trend in funding allocated by sector Graph 11 Change in funding allo cated by sector of Pillar II Graph 12 Change in funding allocated by sector Graph 13 2008-2010 Specific and cross-cu tting policies and strategies Graph 14 Infant mortality rate per 1,000 live births Graph 15 Proportion of the population using an enhanced source of drinking water Graph 16 Per capita aid (current US dollars) Graph 17 Have you observed an improvement in life in your community?     10    FOREWORD FROM THE PRIME MI NISTER The final report on the implementation of the first National Growth and Poverty Reduction Strategy Paper (DSNCRP) that we have the privilege of submitting to the nation is the result of the efforts the government has made in an extremely difficult context, especially with the 2008 food crisis, the natural disasters, primarily the hurricane damage in 2009, and more particularly the January 12, 2010 earthquake, which seriously diminished the expected results that were to help us obtain sustainable growth and thereby share the benefits among the 72 percent of the population living in poverty. “Making the Quantum Leap” by promoting a strong dynamic to achieve the Millennium Development Goals: give the country a modern economy, strengthen all the institutional components of the government, and make our cultural creativity available to spur national development. These were and are the challenges to be met. The first annual report on the implementation of the DSNCRP (2007-2008) was published in February 2009 and highlighted the change in the country’s macroeconomic and social situation and the principal accomplishments; it also analyzed the operation of the systems for coordinating and monitoring its implementation. The January 12, 2010 earthquake that struck the country created a new situation, not only because of the extent of the damage and losses estimated at nearly US$8 billion, but also due to the fact that the paralysis of the Haitian public administration has temporarily stopped the work of preparing the second annual report that covers 2008-2009. It is in this context that a decision was made prepare a final report on implementation for the years in which the DSNCRP was put in place (2008-2010), taking into account the results achieved and the partial evaluation of its performances. The situation that the January 12, 2010 earthquake created gave the government the opportunity to bolster the vision statement of a long-term development that aims to make Haiti an emerging country by 2032. In this context, and over and above the management of the emergency situation that the earthquake created, the government plans to continue its program to structure development using the DSNCRP and other papers as a basis. To this end, it is necessary to ensure that the Haiti Action Plan for Recovery and Development (PARDH), launched in March 2010, which will cover a period of twenty (20) years, and that the DSNCRP will be aligned with it. Here, it should be noted that the PARDH is based on four main areas: Territorial Reform, Economic Reform, Social Reform and Institutional Reform. I repeat the remarks I made when the PARDH was launched in March 2010 at the New York Conference on Rebuilding Haiti: “We must act now, but with a clear vision of the future. We must agree on a short-term program and create the mechanisms that will make it possible to develop and implement detailed programs and projects that will solidify the activities over a period of ten years. This plan is divided into two periods: the immediate, which lasts 18 months and consists of the end of the emergency period and the preparation of projects to trigger a bona fide renaissance; and the second period over a 11    period of nine (9) years, which will include three programming cycles of the National Growth and Poverty Reduction Strategy.” The preparation of the second-generation DSNCRP must necessarily leverage the conceptual, strategic and operational accomplishments of the first DSNCRP and take into account the detailed plan of the major areas for reforming Haiti, which continues to be the reference strategically speaking. The defects found in the implementation system for the first-generation DSNCRP must be corrected as well, and this must be part of the series of measures to strengthen the chapter on the operational and institutional framework in the DSNCRP II. My government is fully aware of the difficulties to be overcome to put the country on a path to sustainable growth and overcome the widespread wait-and-see policy that is the result of our lack of confidence in ourselves. The government is hopeful that this common vision of an emerging country by 2032 will propel us onto the international scene with obvious results commensurate with the hope of improving the living conditions of our fellow citizens. Therefore, I deliver this report to you for your analysis and assessment for better ownership of the results obtained over the implementation period of our first Poverty Reduction and Growth Strategy. /s/ Jean Max Bellerive Minister of Planning and External Cooperation Prime Minister 12    EXECUTIVE SUMMARY   Following a broad-based participatory process that lasted more than three months and included the representatives of various government and civil society stakeholders in the country’s ten (10) geographical departments, the government of Haiti prepared a National Growth and Poverty Reduction Strategy Paper (DSNCRP). This paper is considered the unifying framework for the country’s development program. This paper served as a guide for preparing the priority sectoral development plans and public investment programs. It is: (i) a tool for coordinating government action and making it consistent to stimulate the partnership among the different stakeholders; (ii) an instrument for mobilizing resources and prioritizing national development programs around clearly defined objectives, along with performance and impact indicators; and (iii) leverage to promote the development of the territorial authorities though local governance. The three years of implementation of the National Growth and Poverty Reduction Strategy took place in an environment that was less favorable than expected. Unpredictable factors interfered with the desired results and objectives. Natural disasters, mainly the damage from the hurricanes in 2008 and the infamous January 12, 2010 earthquake, seriously hampered the results expected during the implementation of the DSNCRP. The damage caused by Hurricanes Fay, Gustave, Hannah and Ike caused damage to the agriculture sector, to infrastructure and production, estimated in general at about 15 percent of gross domestic product (GDP). The January 12 earthquake reversed all the accomplishments and caused damage and losses estimated at about 120 percent of GDP, with the consequence of a 5.1 percent drop in growth for 2009-2010 according to the preliminary estimates of the Haiti Statistics and Data Processing Institute (IHSI). Through the tax and fiscal policies that were implemented, government finances recorded satisfactory results over the last three years despite interferences that hampered the performances which the tax administrations had expected as well as the results projected for developing poverty reduction activities. Thus, budgetary revenue increased from 23.197 billion gourdes in 2006-2007 to 26.848 billion in 2007-2008, for a 16 percent increase. Actual spending of 26.984 billion gourdes in 2006-2007 rose by 14 percent to 30.856 billion in 2007-08. This performance continued in 2008-2009 with an 11 percent increase in tax revenue, to 29.881 billion gourdes, and a one percent drop in spending, which stood at 30.616 billion gourdes. In 2009-2010, the trend continued despite the sudden drop-off in the tax administrations caused by the earthquake and the stoppage of activities of many businesses that pay taxes and contributions. However, the growth of tax revenue was down by 5 percent, amounting to 31.425 billion gourdes. Budgetary spending continued its increase with 26 percent growth to rise from 30.616 billion gourdes in 2008-2009 to 38.709 billion gourdes in 2009-2010. In fact, the expenditures that finance investment projects using Public Treasury resources more than tripled, from 2.574 billion gourdes to 11.408 billion gourdes for the same period, or 343 percent. 13    In the end, the tax deficit as a percentage of GDP, offset by external grants, was harnessed at around 3 percent during the three years in which the DSNCRP was implemented. During this period the monetary authorities carried out a conservative monetary policy, not only to preserve but also to strengthen the stability of the financial system, transparency, and the effectiveness of monetary policy. Policies and measures were adopted to maintain domestic and external monetary stability while lowering inflation, controlling monetary financing, and the exchange rate was stable. Thus, a relative stability of the gourde was noted. As for poverty reduction, funds from the Public Treasury were allocated to the various government expenditure items, taking into account major items such as employment, food security, energy supply, transportation, sanitation, drinking water, health, education and social protection. During DSNCRP implementation, funds for poverty reduction accounted for about 44 percent of the funding total. The macroeconomic objectives that were adopted in the DSNCRP during the 2008-2010 period projected: an average real GDP growth rate of 4.0 percent; an inflation rate of less than 10 percent; and a budget shortfall of one percent of GDP. The political, economic and social challenges during the implementation of the first-generation DSNRCP were considerable. In the aftermath of the January 12 earthquake, national production was destroyed, human capital was weakened, the national landscape lay in ruin, public security was weakened, and finally, the failed and nearly destroyed public institutions necessitated urgent and organizational measures. The macroeconomic performances expected during the period under consideration did not occur. The results sought in terms of growth were not achieved. The outlook for recovery was 4.5 percent of GDP for fiscal year 2008/2009, but the period was heavily affected by both domestic and external risk factors inherited from 2007-2008. Still, through the efforts that were made and the activities that were carried out through the post-hurricane emergency program that the government implemented, Haiti stayed the course with positive growth of about 2.5 percent of real GDP for fiscal year 2008-2009, and growth accelerated in the subsequent years to reach the 4.5 percent goal in the strategy. The inflation rate was harnessed at less than 10 percent. The exchange rate remained steady at about 40 gourdes per dollar. Reforms in terms of governance and fiscal management went hand-in-hand with the implementation of the DSNRCP. In fact, through the set of measures initiated in 2004, the country was initially able to reach the decision point and then the completion point, which gave it access to mechanisms to lighten its debt. The Haitian authorities thus set in motion a series of activities to undertake these reforms based on quantitative and qualitative performance criteria. In this regard, significant progress was made. Thus, the initial trigger was the use of a participatory process to prepare the National Growth and Poverty Reduction Strategy (DSNCRP) and to implement it, along with a macroeconomic stabilization policy that was another challenge based on the performances that were achieved. The principal macroeconomic aggregates changed positively in the 14    three years of the program. Major structural and social reforms were undertaken as well, in particular in the areas of economic governance, public finance, and debt management. Project financing in accordance with the DSNCRP objectives and pillars amounted to 71 percent, 89 percent and 92 percent respectively of total funds for the Public Investment Programs (PIP) for fiscal years 2007-2008, 2008-2009 and 2009-2010. These figures show a clear improvement in the government’s taking this urgent necessity of improving economic growth and poverty reduction into consideration. Moreover, 15 percent of the project funds that are under the DSNCRP pillars are from domestic sources and 85 percent are from external sources for fiscal year 2007-2008; the figures are 14 percent and 86 percent for fiscal year 2008-2009, and 19 percent and 81 percent for 2009-2010. The increase in domestic sources expresses the government’s will to pay for projects that promote growth and reduce poverty, especially since the delayed arrival of aid pledged after the disasters that hit the country. The funding made available throughout the implementation period demonstrates the government’s genuine will to grow the country and fight poverty, since these funds increased steadily over the three years of the DSNCRP. According to the DSNCRP objectives, 157 indicators were identified to monitor and evaluate the activities carried out as part of this strategy and the MDGs. These indicators are divided into four types and deal with the measurement of the results/secondary effects of development (87 indicators), based on resources injected (16 indicators), and outputs obtained or activities generated (40 indicators); the impact expected in terms of economic growth and improved living conditions for households were measured using 14 indicators. In the analysis, emphasis was placed on the “physical” indicators that were produced and operational, such as building and rehabilitating roads and buildings and strengthening structures. The funds were in fact spent at the sector level. Some immediate results are visible, while others are difficult to see. One of the reasons reflects the fact that some expenditures fulfill strategic functions while others show passive/negative features. The performance of some government expenditures is due to the fact that for some time the government of Haiti has been successfully strengthening its administrative management standards, with an improvement in budget preparation procedures and the implementation and strengthening of the National Procurement Commission (CNMP), etc. In this context, it is already possible to predict that it will be difficult for the country to achieve most Millennium Development Goals for Development by 2015. The Haiti Recovery and Development Action Plan (PARDH), prepared by the government after the earthquake, and the Detailed Large Projects Paper (DDGC) now in preparation, are strategic planning tools that will guide the country on a new path. Their objectives of rebuilding the country on four levels—territorial, economic, social and institutional—will surely give a new boost to achieving the MDGs. The DSNCRP focuses on partnership in that it encourages the coordinated participation of bilateral programs, multilateral organizations and nongovernmental organizations in a 15    comprehensive program to reduce poverty and create wealth. This framework promotes greater openness in preparing public policies. In preparing this document, the government of Haiti sought to more systematically include the traditionally marginalized groups, the private sector, civil society and the poor, thereby reflecting the community’s consent and the support of the above-mentioned stakeholders. The opinions that were collected from a perception survey carried out in 2009 include not only the levels of satisfaction or evaluations of the beneficiary populations solely on a project; they cover all the projects carried out in the communities and regions. The evaluations are drawn from the corpus that the DSNCRP prepared based on the objectives. The components of this corpus that guided them are: income, employment, health, food, drinking water and sanitation, legal and citizen identity, access to justice, access to security, education, literacy, and the level of women’s participation. Satisfaction with regard to the availability of and access to basic social services and the quality of these services is deemed poor (68.9 percent of the evaluations). 1 Dissatisfaction is greater with regard to income and buying power, and nearly 96 percent of the evaluations consider that lack of activity, unemployment and especially skyrocketing prices have made it impossible to improve living conditions. The people’s evaluations do however reveal pockets of satisfaction. The level of satisfaction is high in terms of the gender equality issue. For 86 percent of the evaluations, the inclusion of women is satisfactory and already considered an accomplishment. With regard to the priority diseases such as tuberculosis and AIDS, the level of satisfaction is very high. The treatment of infected persons is perceived by the people as an excellent situation, and 88 percent of the citizen evaluations agreed with this. These evaluations point to a certain improvement in access to basic education. The citizens state that they perceive that the authorities are doing a better job of managing this sector. The citizen’s evaluations presented here should be taken at their fair value with regard to the expectations of these populations. However, the shocks that were Hurricanes Hannah, Gustave, and Ike (and the January 12 earthquake) do not accurately judge the effectiveness of the activities carried out over the last three years in the country under the DSNCRP. The minor advances were quickly offset by these natural disasters. However, they are nonetheless indicators that the policymakers should use to implement the precautionary principle for a better second-generation DSNCRP. The institutional system for implementing the DSNCRP was analyzed from the standpoint of its strengths and weaknesses. This analysis generated an evaluation and better understanding of the relevance and effectiveness of the system for implementing and monitoring/evaluating it in the context of the DSNCRP and to identify its defects, weaknesses and strengths. Proposals for solutions were also made to improve the current                                                                1  2008, 2009 and 2010 surveys.  [... middle sections omitted for long document ...] 129    products climbed to almost double the local price index, e.g. in June 2010, the local products price index stood at 4.0 and the imported products price index, at 8.9. The exchange rate During the implementation of the DSNCRP, the exchange rate stood at roughly 40 gourdes to the US dollar. The government adopted a flexible exchange rate. Overall, the exchange rate tended to rise with periods of overheating when it stood at 35, 37, 40 and 41 gourdes to the US dollar between 2008 and 2010. At the end of the different fiscal years, the exchange stood In 2007-2008 and 2008-2009, the exchange rate was expected to stand at around 41 gourdes. In 2009-2010, the exchange rate, which rose following the influx of external aid in response to the earthquake stabilized. Despite the shock of the earthquake, it remained at roughly 40 gourdes. Macroeconomic policies The macroeconomic objectives of the DSNCRP seek to create macroeconomic conditions favorable to the acceleration of growth and the pursuit of macroeconomic stability, conditions to attract investment, and the enhancement of the business climate. It also seeks to ensure the control over funding by the Central Bank of the central government. During the three years of the DSNCRP, the macroeconomic objectives were maintained, by and large, despite social, political, economic and climatic upheavals that disturbed the provisions and measures adopted. However, delays were noted in the implementation of certain policies and reforms. At the same time, an overall upturn in private investment was observed during the three years in the mobile telephony, new information and communications technologies (NICTs) and tourism sectors. Public investment increased in agriculture, road infrastructure and electricity supply. The process of registering investments was reduced from 195 to 75 days. It should be noted that the shock of the January 2010 earthquake halted this trend. The implementation of the DSNCRP witnessed the constant improvement of the macroeconomic framework from late 2004, in particular from the standpoint of public finances, control over inflation and the stabilization of the exchange rate. Prudent management of public finances and the flow of external aid enabled the public treasury to obtain the resources necessary to reimburse a portion of its commitments to the Central Bank. Inflation declined and the gourde appreciated in relation to the US dollar. However, despite the fall in rates on BRH8 bonds, the sluggish growth in credit in the private sector combined with delays in carrying out public spending meant that the anticipated level of growth in real GDP fell short of forecasts. Despite everything, macroeconomic performance was in keeping with forecasts. The safeguarding and maintenance of macroeconomic stability were achieved. The pursuit and finalization of structural reforms facilitated advancement toward the completion point under the PPTE and IADM in June 2009 and prospects for new resources to fund initiatives to combat poverty. Budgetary and fiscal policies Government revenues are modest. Tax revenues rose. Public finance policy instruments improved the level of revenues and more extensively streamlined public spending. The investment credits earmarked for the pillars of the DSNCRP using funds from the public treasury rose. Budgetary policy was to be more expansionary in 2009 than in preceding years. Both the customs and fiscal administrations were reinforced. 130    The ratio of tax revenues to GDP barely exceeds 10 percent. In 2007, it stood at 10.1 percent and in 2008, at 9.9 percent. The deficit is small and the government does not resort to funding the budgetary deficit by the Central Bank. The tax and customs administrations have been reinforced. Public spending has been streamlined and controlled. In 2006-2007, total spending was equivalent to 11.8 percent of GDP, as against 11.5 percent in 2007-2008. The allocation of public spending was enhanced by regularly increasing the relative weight of spending allocated to public investment and by improving the targeting and execution of expenditures made in priority sectors. There was an overall surplus of 0.2 percent in 2007. In 2008, there was a deficit (including donations) of 2.8 percent of GDP. Fiscal pressure rose to 14 percent in 2011. Reforms will be carried out to strengthen the institutional capacities of the tax administrations and enhance the effectiveness of their initiatives. Tax legislation was reviewed and updated. Customs control was reinforced throughout the territory, in particular in provincial ports, and tax scales were adjusted. For the period 2007-2011, the government expects to reduce current expenditures to 45.5 percent, on average, of overall public spending, thereby contributing to the determination of the budgetary space necessary to pursue the objectives set in the DSNCRP. Until 2011, it is anticipated that the deficit will stand at roughly -3 percent of GDP aside from donations, the overall government deficit should stand at approximately -6 percent of GDP in 2007 and should hover around -7 percent of GDP between 2007 and 2011. Projections for the period 2007-2011, based on historic trends, lead to levels of external donations ranging from 4 percent to 5 percent of GDP. Total revenues were expected to increase to 10.5 percent of GDP in 2009. Expenditures were higher in 2009 because of infrastructure reconstruction and rehabilitation needs, the recapitalization of farmers who were the victims of bad weather, humanitarian spending, and the implementation of the DSNCRP. Total expenditures should rise to roughly 19.6 percent of GDP in 2009. The overall budget deficit (including donations) for 2009 should stand at 3.9 percent of GDP, although the budget deficit should begin to fall in 2010 to about 1.5 percent of GDP. 131    Monetary policies The monetary policy prepared under the DSNCRP seeks essentially to establish and maintain moderate inflation during the implementation period of the strategy and to guarantee low inflation. By maintaining this discipline, the government can avoid resorting to financing public deficits by the Central Bank. To contend with external shocks, the objective with respect to gross foreign exchange reserves is to accumulate the equivalent of three months of imports of goods and services. The BRH bonds were the main monetary policy instruments under the DSNCRP. Between 2008 and 2010, the BRH pursued its prudent policy but with some degree of openness. Domestic credit has fallen significantly since January 2010. In 2010, foreign exchange reserves rose significantly to advance toward five months of imports. In recent years, policies and measures have been adopted to bolster the stability of the financial system and the transparency and efficacy of monetary policy. Domestic and external monetary stability were assured through the reduction in the inflation rate and a stable exchange rate. Initiatives to revitalize credit in the private sector were carried out, in particular progress in the preparation of a national microfinance development policy, which can contribute to the fight against poverty and, consequently, revitalize private investment. An order in council was adopted to create treasury bonds of the Republic of Haiti to finance the government efficiently and in the long term. The annual growth rate in the money supply will be maintained at roughly 9.3 percent in 2009, above growth in nominal GDP. The monetary policy centered on mastery of core inflation by means of close control over the monetary base. The disinflation policy was pursued between 2008 and 2011 and in 2008-2009 it was particularly affected in an international context of recession stemming from the global financial crisis. The reforms to be undertaken by the Central Bank should clarify and reorganize the framework for executing the monetary policy so as to reinforce the mechanisms to transmit the monetary policy and enhance the efficacy of the instruments used. Balance of payments Without official transfers, the balance of day-to-day operations of the balance of payments, expressed as a percentage of GDP, would have recorded a deficit slightly higher than 6 percent of GDP. Exports of goods and services represented 11.8 percent of GDP in 2008 and imports, 40.0 percent. Between 2007 and 2011, the deficit excluding official transfers should stand, on average, at around 8 percent of GDP, with a slight upward trend given the ongoing degradation of the trade balance. Estimates of the current deficit made for the period 2007-2011 assume that private capital flows from Haitians abroad constitute a permanent, generally stable component of Haiti’s balance of payments. In 2008, imports and exports were […] In 2009, exports were estimated at 10.6 percent of GDP and imports, 38.5 percent. For the period, current transactions in the balance of payments were affected by: 132    Private transfers The deficit in the balance of trade in goods and services stood at 7.3 percent of GDP in 2008. The increase in flows of current transfers and the anticipated increase in flows of direct foreign investments should facilitate this accumulation. When account is taken of these official transfers, the balance of the current account for 2007 would stand at just over 1 percent of GDP. The private transfers should represent nearly 20 percent of GDP in 2007 and remain at fairly comparable levels during the period. In recent decades, the balance of the current account has generally been less than 2 percent of GDP. Private transfers from abroad rose 15 percent in 2006-2007 and 13.2 percent in 2007-2008. In 2008-2009, a -5.7 percent drop was recorded. In 2009-2010, the trend resumed.  a small increase in imports in relation to the preceding fiscal year;  an increase of over 15 percent in funds sent by Haitian emigrant workers;  a slowdown in growth in exports, which reflect difficulties stemming from the implementation of the HOPE act;  a 5-percent increase in official grants. The drop in private transfers expected from abroad in 2009 is attributable to the impact on Haitian workers abroad of the international economic and financial crisis. 133    General conclusion on the three-year implementation period of the DSNCRP and prospects in the preparation of the DSNCRP II Tenacity in choices and initiatives The analysis of performance in the implementation of the DSNCRP in 2008-2010 has revealed disengagement from the objectives pursued. Projections for the period 2007-2011 were maintained, although to describe the scenarios, average growth rates have been maintained until 2015 at 6 percent and 4 percent, respectively, for the basic best-case scenario. The scenarios can be distinguished essentially by the additional activities obtained during the last two years of the period, the increase in the levels of investment because of the Haitian economy’s enhanced absorption capacity, and in the wake of an improvement in the level of resource mobilization. Because of unfavorable, exogenous factors, to keep in perspective the improvement in the population’s living conditions and the reduction of poverty, significant efforts must be made. The objectives must be pursued constantly and clear poverty reduction targets must be set. Directives must be unequivocal. Appendix 2: Estimate of income poverty Approach Incidence of degrees of poverty (as a percentage of the population) Threshold adjustment approach (1) Elasticity approach (2) Average (1) and (2) Extreme poverty 38.0 37.8 37.9 Poverty 66.8 71.8 69.3 Incidence of degrees of poverty (as a percentage of households) Extremem poverty 31.2 28.9 30.1 Poverty 54.9 59.0 56.9 Source: Accion (2003: authors’ calculations).