Ayiti: Dezyèm Revizyon nan Pwogram yo ki nan Sipèvizyon Ekip yo ak Demann pou Ekstansyon — Kominikasyon ak Rapò Ekip yo

© 2025 International Monetary Fund IMF Country Report No. 25/337 HAITI SECOND REVIEW UNDER THE STAFF-MONITORED PROGRAM AND REQUEST FOR EXTENSION—PRESS RELEASE AND STAFF REPORT In the context of the Second Review Under the Staff-Monitored Program and Request for Extension, 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 October 8, with the officials of Haiti on economic developments and policies underpinning the Second Review Under the Staff-Monitored Program. Based on information available at the time of these discussions, the staff report was completed on December 1, 2025. •A Debt Sustainability Analysis prepared by the staffs of the IMF and the World Bank. The IMF’s transparency 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 International Monetary Fund Washington, D.C. December 2025 PR 25/398 IMF Management Approves the Second Review and Extends the Staff-Monitored Program with Haiti FOR IMMEDIATE RELEASE A Staff-Monitored Program (SMP) is an informal agreement between an IMF member countr y and IMF staff to monitor the member country’s economic program. As such, SMPs 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 s econd r eview of the Staff-Monitored Program (SMP) with Haiti, including the authorities’ request for a nine- month extension of the SMP through September 19, 2026. • Program implementation has been encouraging despite the challenging environment. All quantitative and indicative targets were met at the end- June test date, with monetary financing kept at zero and reserves accumulation exceeding the program target. The reform implementation has continued, though with delays in some areas . • The SMP extension will allow the authorities to maintain policy continuity, consolidate recent progress, and complete and strengthen reforms , particularly in governance, anticorruption, revenue mobilization, and enhancing the social safety net. Washington, DC: Management of the International Monetary Fund (IMF) approved on November 25, 2025 the second review of Haiti’s Staff-Monitored Program (SMP), including the authorities’ request for a nine- month extension of the SMP through September 19, 2026. SMPs are informal agreements between country authorities and the IMF to monitor the implementation of the authorities’ economic program and build a track record of policy implementation that could pave the way for financial assistance from the IMF’s upper credit tranche (UCT ). Haiti’s SMP is tailored to its context of acute security challenges, institutional fragility, and capacity constraints. It supports the authorities’ priorities of economic stabilization, improved governance, anticorruption, and strengthen ing the social safety net. Economic conditions in Haiti remain fragile amid persistent domestic and external shocks, and rising uncertainty. Against the backdrop of intensifying gang violence , Real GDP contracted in FY2025 for the seventh consecutive year , while annual inflation remained high at around 32 percent. The expiration of the TPS for Haitians in the United States in February 2026, the non- renewal of the HOPE/HELP preferential trade agreement which ended in September 2025, and the impact of Hurricane Melissa in late October 2025— which caused significant loss of life and widespread damage to infrastructure and agricultural areas, exacerbating humanitarian needs and further constraining resources— are expected to further strain the Haitian economy. Despite the challenging conditions, program implementation has been encouraging. All quantitative and indicative targets for the end- June test date were met. Monetary financing of the fiscal deficit has been maintained at zero, social spending reached the program’s targets , 2 and revenue performance stayed on track. International reserves continued to accumulate, supported by strong remittance inflows and foreign exchange purchases. Net international reserves reached almost US$ 1.5 billion by end July 2025. The reform agenda—covering governance, public financial management, safeguards, and data provision—continues to advance, although with delays in some areas. The authorities continue to demonstrate strong ownership and engagement, including through the high- level SMP Monitoring Committee. The nine-month extension of the SMP through September 2026 will help support macroeconomic stability, preserve reform momentum, and allow for political and security conditions to stabilize. The extension will consolidate recent achievements and advance key priorities, including strengthening governance and institutional safeguards, enhancing revenue mobilization, and improving the efficiency of public financial management. The additional time will also allow for a more thorough assessment of the impact of ongoing international initiatives, including the United Nations’ Gang Suppression Force and the Organization of American States’ ‘Haitian Led Road Roadmap for Recovery and Peace’ . While security remains the top priority, the SMP will continue to focus on key policy areas and reforms critical to Haiti, mainly: Advancing governance reforms to overcome fragility . Reform efforts should be coordinated and anchored i n the Governance Diagnostic Report, including (i) enhancing transparency and accountability in public financial management; (ii) mitigating corruption risks in revenue administration; and (iii) ensuring accountability for serious corruption, organized crime, and money laundering. The authorities are encouraged to complete the national assessment for money laundering and terrorist financing, and to continue addressing strategic deficiencies in Haiti’s anti-money laundering/combating the financing of terrorism (AML/CFT) framework to support its exit from the Financial Action Task Force (FATF) grey list. Mobilizing revenue and improving budget execution. Fiscal policy remains constrained by institutional weaknesses that hinder revenue mobilization and spending efficiency. Immediate priorities include operationalizing automated monthly data exchanges between the tax and customs systems and completing the rollout of tax declarations and payments services for all large taxpayers across all commercial banks . Strengthening budget execution— especially for social and security spending—is essential to adequately support vulnerable populations and advance critical infrastructure. This requires improved treasury cash management and robust project appraisal and budget prioritization, in line with the 2022 IMF Public Investment Management Assessment. Strengthening the central bank’s policy frameworks. Monetary policy credibility has improved with the elimination of monetary financing of the budget deficit. Given the challenging and uncertain environment, foreign exchange interventions should remain focused on supporting the accumulation of international reserves and preserving exchange rate stability. Advancing the financial system’s regulatory and supervisory reform is essential, particularly by enhancing both on-site and off-site supervision. Despite the authorities’ continued efforts, Haiti requires international financial support to address its significant development needs. To safeguard debt sustainability and build on progress under the SMP , this support should come as grants rather than non-concessional loans. Grant financing is essential to meet immediate humanitarian, social, and economic needs, and to place the economy on a steady and sustainable medium- and long-term growth path, which is essential for improving living conditions for the Haitian people. 3 In line with the Fund’s Strategy for Fragile and Conflict-Affected States, IMF staff will maintain close collaboration with Haiti’s main development partners, particularly on governance and capacity development. HAITI STAFF REPORT FOR THE SECOND REVIEW UNDER THE STAFF-MONITORED PROGRAM AND REQUEST FOR EXTENSION EXECUTIVE SUMMARY Haiti continues to face exceptional challenges amid a deteriorating security environment and institutional fragility. Gang violence has intensified, undermining state authority and disrupting economic activity. Uncertainty persists over the political transition and the feasibility of holding general elections in 2026. The United Nations Security Council’s authorization to deploy a new Gang Suppression Force and the establishment of a United Nations Support Office for Haiti mark a potential turning point for the country, though security gains will take time to materialize and will require international support. Economic conditions remain fragile and external pressures are rising. Real GDP is estimated to have contracted by 3.1 percent in FY2025 and projected to contract by 1.2 percent in FY2026. Inflation remains high, at 31.9 percent in FY2025. Recent external policy shifts—including the expiration of the Temporary Protected Status for Haitians living in the United States, the termination of textile and apparel trade preferences, and a new cash remittance tax—are expected to reduce foreign inflows and increase external and fiscal pressures. Economic conditions may be further strained by the impact of Hurricane Melissa in late October—which caused significant loss of life and widespread damage to infrastructure and agricultural areas, exacerbating humanitarian needs and is likely to further constrain resources. Program performance under the Staff-Monitored Program is progressing well. All end-June quantitative and indicative targets have been met. Monetary financing of the fiscal deficit has been maintained at zero, and international reserves continue to accumulate. The authorities remain strongly engaged through the high-level Staff- Monitored Program Monitoring Committee. Moreover, the reform agenda has advanced, as reflected in the implementation of most structural benchmarks, despite delays in some areas. Staff recommended maintaining focus on the core priorities of the Staff- Monitored Program. These include strengthening governance and anti-corruption efforts in line with the Governance Diagnostic Report, safeguarding adequate reserve coverage, improving public financial management—including revenue mobilization and December 1, 2025 HAITI 2 INTERNATIONAL MONETARY FUND expenditure efficiency—and, expanding targeted social assistance. To preserve macroeconomic stability, monetary financing of the deficit must remain at zero, and international reserves should be maintained at an adequate level while preserving the nominal anchor currently provided by the exchange rate. Domestic revenue mobilization efforts and governance reforms need to continue. The authorities requested a nine-month extension of the Staff-Monitored Program, which staff proposes for Management’s approval. The extension aims to support macroeconomic stability and preserve reform momentum, amid worsening security conditions and heightened political uncertainty. Staff hopes to see an improvement in the political and security conditions during this time. The extension will also allow for the completion of remaining structural benchmarks and will advance the governance and reform agenda through new structural benchmarks. Staff supports the request and proposes adjustments to the structural benchmarks accordingly to reinforce revenue collection, and enhance safeguards, accountability, and transparency. HAITI INTERNATIONAL MONETARY FUND 3 Approved By Dora Iakova (WHD) and Jay Peiris (SPR) Policy discussions were conducted remotely during September 30-October 8, 2025. The team comprised Camilo E. Tovar (Head), Nathalie Pouokam, Gonzalo Huertas, and Maylin Sun (all WHD); Tatsuya Hasegawa (SPR); Abdoul Karim Sidibe (STA); Jinkyu Sung (FAD), and Gabriel Duvalsaint and Ralph Wata (Port-au-Prince office). Ben Aldersey (LEG) and Laurence Coste (LEG) provided support on governance and AML/CFT issues. Henrique Chociay (SPR) and Mher Barseghyan (STA) participated in earlier discussions and preparation for this mission. Ms. Toyosi Ojo provided research analysis, and Soungbe Coquillat and Brett Smith (all WHD) assisted with mission scheduling and the preparation of the report. Mr. André Roncaglia and Ms. Ludmilla Buteau Allien (both OEDBR) joined key policy discussions. CONTENTS CONTEXT_________________________________________________________________________________________ 7 RECENT DEVELOPMENTS _______________________________________________________________________ 8 PROGRAM IMPLEMENTATION UNDER THE SMP ____________________________________________ 12 OUTLOOK AND RISKS _________________________________________________________________________ 13 POLICY DISCUSSIONS _________________________________________________________________________ 15 A. Fiscal Policy ___________________________________________________________________________________ 15 B. Enhancing Governance and Transparency _____________________________________________________ 20 C. Strengthening the Monetary and Exchange Rate Policy Framework ___________________________ 22 D. Safeguarding Financial Sector Stability ________________________________________________________ 23 E. Data Adequacy and Other Issues ______________________________________________________________ 23 PROGRAM ISSUES _____________________________________________________________________________ 24 STAFF APPRAISAL _____________________________________________________________________________ 25 FIGURES 1. Monitoring Economic Activity Through Satellite-Based Port Data ______________________________ 9 2. Revenue Performance, FY2021–25 _____________________________________________________________ 16 3. Real Sector Developments, 2019–25 __________________________________________________________ 40 4. Fiscal Sector Developments, 2019–25 _________________________________________________________ 41 5. Monetary and Financial Sectors Developments, 2019–25 ______________________________________ 42 HAITI 4 INTERNATIONAL MONETARY FUND 6. External Sector Developments, 2019–25 _______________________________________________________ 43 TABLES 1a. Quantitative and Indicative Targets, December 2024–September 2025 ______________________ 28 1b. Quantitative and Indicative Targets, December 2025–June 2026 _____________________________ 29 2a. Structural Benchmarks under the 2024 SMP _________________________________________________ 30 2b. Structural Benchmarks under the 2024 SMP—Proposed with the Extension _________________ 31 2c. Schedule of Reviews__________________________________________________________________________ 31 3. Selected Economic and Financial Indicators, 2021–30 _________________________________________ 32 4a. Non-Financial Public Sector Operations, 2021–30 (In millions of US$) _______________________ 33 4b. Non-Financial Public Sector Operations, 2021–30 (In percent of GDP) _______________________ 34 5a. Balance of Payments, 2021–30 (In millions of US$) ___________________________________________ 35 5b. Balance of Payments, 2021–30 (In percent of GDP) __________________________________________ 36 6. Summary Accounts of the Banking System, 2021–30 __________________________________________ 37 7. External Financing Requirements and Sources, 2021–30 ______________________________________ 38 8. Financial Soundness Indicators, September 2023 – June 2025 _________________________________ 39 ANNEXES I. Spillover Impact to Haiti from External Policy Shifts ____________________________________________ 44 II. External Sector Assessment ___________________________________________________________________ 46 III. Adverse Scenario and Sensitivity Analysis of Global Developments ___________________________ 51 IV. Risk Assessment Matrix _______________________________________________________________________ 53 V. Boosting Revenues ____________________________________________________________________________ 55 APPENDIXES I. Letter of Intent _________________________________________________________________________________ 57 Attachment I. Memorandum of Economic and Financial Policies ______________________________ 60 Attachment II. Technical Memorandum of Understanding ____________________________________ 72 HAITI INTERNATIONAL MONETARY FUND 5 Glossary AGD General Administration of Customs AML/CFT Anti-Money Laundering/Combating the Financing of Terrorism BINUH United Nations Integrated Office in Haiti BOP Balance of Payments BRH Bank of the Republic of Haiti CA Current Account CAR Capital Adequacy Ratio CCRIF Caribbean Catastrophe Risk Insurance Facility CERC Contingency Emergency Response Component CNMP National Commission for Public Procurement CSCCA Council of the Superior Court of Accounts and Administrative Disputes DGB General Directorate of the Budget DGI Directorate of General Taxes DNFBP Designated Non-Financial Businesses and Professions DPC Civil Pension Directorate ECF Extended Credit Facility ELA Emergency Liquidity Assistance EU European Union FAES Economic and Social Assistance Fund FATF Financial Action Task Force FDI Foreign Direct Investment FSW Food Shock Window FX Foreign Exchange GDR IMF Governance Diagnostic Report GDP Gross Domestic Product GIR Gross International Reserves GSF Gang Suppressing Force HELP Haiti Economic Lift Program Act HOPE Hemispheric Opportunity through Partnership and Encouragement Act IADB Inter-American Development Bank IHSI Haitian Institute of Statistics and Informatics HAITI 6 INTERNATIONAL MONETARY FUND IT Indicative Target IRFCL International Reserves and Foreign Currency Liquidity MCP Multiple Currency Practice MEF Ministry of Economy and Finance MSS Multinational Support Mission NFA Net Foreign Assets NFPS Nonfinancial Public Sector NIIP Net International Investment Position NIR Net International Reserves NPL Nonperforming Loan NAR National Risk Assessment OAS Organization of American States PIMA Public Investment Management Assessment PNPPS National Social Protection and Promotion Policy QT Quantitative Target REER Real Effective Exchange Rate RMS Revenue Management System SB Structural Benchmark SDR Special Drawing Right SIMAST Information System of the Ministry of Social Affairs and Labor SMP Staff-Monitored Program SYDONIA Customs Automation System TA Technical Assistance TMU Technical Memorandum of Understanding TPC Transitional Presidential Council TPS Temporary Protected Status TSA Treasury Single Account UCREF Central Financial Intelligence Unit UCT Upper Credit Tranche UN United Nations UNSOH UN Support Office in Haiti US United States USAID United States Agency for International Development WB World Bank HAITI INTERNATIONAL MONETARY FUND 7 CONTEXT 1. Haiti continues to confront an acute security and humanitarian crisis. Gang violence has intensified, with murder rates at record highs this year. 1 More than 1.4 million people were internally displaced as of September 2025—over three times as many as in December 2023—with hundreds of thousands more displaced abroad. Half the population (5.7 million) faces hunger. Gangs continue to undermine state authority, block roads, impose illicit tolls, and disrupt economic activity. International flights remain suspended in Port-au-Prince, and several ports face closures or restricted access. 2 Social unrest has escalated, with repeated attacks on the Péligre hydroelectric plant, causing major disruptions to the supply of electricity in the capital. In early August, upon taking office, the new head of the Transitional Presidential Council (TPC), Mr. Laurent Saint-Cyr, declared a three- month state of emergency in the central region to fight surging gang violence. 2. Coordinated international action remains essential to address the multidimensional crisis. In July this year, the United Nations (UN) Security Council extended the mandate of the UN Integrated Office (BINUH) until January 2026. In September, the UN Security Council issued a resolution authorizing the deployment of a new Gang Suppression Force (GSF)—for an initial period of 12 months and a force of up to 5,550 members—to replace the under-resourced Kenya-led Multinational Security Support mission, effective October 2. In addition, the resolution authorizes the establishment of a Support Office in Haiti (UNSOH) to assist the GSF, the BINUH, and the Haitian Police and Armed Forces. These initiatives complement other international initiatives to align efforts to address the multidimensional crisis in Haiti, among them is the Organization of American States (OAS) Haitian-led Roadmap for Stability and Peace to support long-term recovery and stability, 3 and the United States (US) designation of the Viv Ansanm and Gran Grif gangs as Foreign Terrorist Organizations and Specially Designated Global Terrorists—aiming to cut off their access to the US financial system. 3. The implementation of Haiti’s April 2024 political transitional map—security, constitutional and institutional reform, and elections—remains uncertain. Persistent insecurity and logistical challenges undermine prospects for holding general elections—the first since 2016— and installing a new government before the TPC’s mandate expires on February 7, 2026. With plans for a new constitution abandoned in early October 2025, elections are now expected to be held under the 1987 constitution, with the first round scheduled for late August 2026, and the second round in early December 2026, if security conditions are adequate. 1 Haiti reported 4,864 murders between October 2024 and June 2025. See BINUH and UN Human Rights report. 2 The Port of Saint-Louis du Sud opened in January 2025 may help reroute essential imports (e.g., rice and cement). 3 The OAS plan is structured around five pillars and estimated cost of $2.6 billion: security stabilization and peace restoration ($1.3 billion), political consensus and governance support ($5.1 million), electoral process and institutional legitimacy ($104.1 million), humanitarian response ($908.2 million), and sustainable development and economic development ($256.1 million). HAITI 8 INTERNATIONAL MONETARY FUND 4. Economic conditions remain fragile amid persistent shocks and rising uncertainty. Haiti experienced its seventh consecutive year of economic contraction amid high inflation. Recent US policy changes—including the expiration of the Temporary Protected Status (TPS) for Haitians, the termination of textile and apparel trade preferences under the Hemispheric Opportunity through Partnership and Encouragement and Haiti Economic Lift Program (HOPE/HELP) acts, a new tax on cash remittances, and the reevaluation and realignment of foreign assistance, including from the US Agency for International Development—USAID (Annex I)—are expected to reduce remittances and exports. These developments—together with the 207,000 deportations of Haitians from the Dominican Republic since January 2025—are likely to compound the impact of the security crisis on domestic production, deepen the humanitarian and economic crisis, and increase fiscal pressures. The recent Hurricane Melissa which caused significant losses of lives and extensive damages to property and infrastructure, particularly in the Southern departments, could further exacerbate the humanitarian crisis and place additional strain on already limited resources. Against this backdrop, maintaining progress under the Staff Monitored Program (SMP) may prove challenging, despite the authorities’ strong commitment. RECENT DEVELOPMENTS 5. Economic activity remains weak, reflecting dire security conditions (Figure 1). The index of economic activity contracted by 2.4 percent over the first three quarters of FY2025 (October to June), 4 and real GDP is estimated to have declined by 3.1 percent for the full fiscal year—down from a 1.0 percent contraction projected in the 1 st Review. Output has been adversely affected by persistent gang violence, roadblocks, and repeated attacks on the Péligre hydroelectric plant in Mirebalais—a vital electricity source for the country—alongside damage to transmission lines. Inflation reached 31.9 percent in FY2025, driven by supply-side pressures. 6. The banking sector remains vulnerable amid rising security risks. Banks have continued to reduce lending to the private sector, reflecting limited investment opportunities and challenges in collateral assessment due to the security crisis. Bank credit is estimated to have reached 3.1 percent of GDP in FY2025, down from 3.8 percent 4 The fiscal year (FY) runs from October 1 to September 30. HAITI INTERNATIONAL MONETARY FUND 9 of GDP in FY2024. The credit-to-GDP gap reached -11 percent in June 2025. The commercial banking system continues to show signs of weakness, as nonperforming loans (NPLs) reached 14.2 percent in June 2025—from 13.7 percent in March. Provisions to gross NPLs also fell from 81.5 percent in December 2024 to 66.0 percent in June 2025. Return on assets has been stable but low, at 1.5 percent as of June 2025. Nonetheless, the system’s capital adequacy ratio stood at 22.3 percent, well above the regulatory minimum of 12 percent, though with some variability across financial institutions. Figure 1. Haiti: Monitoring Economic Activity Through Satellite-Based Port Data Average daily ship arrivals and import volumes have declined in recent months, following a modest recovery since mid-2024. Total trade activity remains below pre-pandemic levels. Export volumes remain particularly weak, reflecting ongoing security conditions. Cargo and tanker ship arrivals have shown a modest increase compared to 2024, but overall arrivals remain subdued. 7. On September 23, the Government adopted a second supplementary budget for FY2025, aimed at supporting school reopening and protecting vulnerable households. The overall spending envelope was set at 317.7 billion gourdes—1.8 percent lower than the April supplementary budget—reflecting revenue shortfalls and weak budget execution. At the same time, HAITI 10 INTERNATIONAL MONETARY FUND about 3.8 billion gourdes were reallocated to social spending—including cash transfers to approximately 200,000 parents, improvements in school infrastructure, and the distribution of school kits to children from vulnerable families. 5 8. In FY2025, the fiscal position was balanced, reflecting both low revenue collection and low spending execution. 6 Revenues (Indicative Target, IT) rose by 12.8 percent, despite a three-month strike at the Directorate of General Taxes (DGI). However, the revenue-to-GDP ratio declined to 4.7 percent—0.6 percentage points below FY2024. Nominal expenditure increased by 39.6 percent. However, the execution of spending remained weak and concentrated towards the end of the fiscal year, reaching 72.1 percent of the total supplementary budget—with capital execution particularly low at 37.5 percent, due to inadequate project appraisal and limited administrative capacity. 7 Social spending (quantitative target, QT) rose 41.4 percent. Of the USD 105 million (15.6 billion gourdes) received under the 2023 IMF’s Food Shock Window (FSW), about 91 percent (14.1 billion gourdes) had been executed by September, with the remainder (about 1.45 billion gourdes) carried over into the FY2026 budget. 8 Monetary financing (QT) remained at zero in FY2025, down from an average of 2 percent of GDP during FY2020-23. Public debt is estimated at 11.7 percent of GDP at end-FY2025, the lowest in the Latin America and Caribbean region. 5 In September 2025, 0.5 billion gourdes were executed for the distribution of textbooks to students, and 0.3 billion gourdes for school infrastructure improvement. In addition, Ministry of Social Affairs and Labor executed 3.4 billion gourdes to strengthen support for vulnerable groups, including cash transfers, food kits, hot meals, and water containers. 6 Based on FY2025 fiscal data provided by the authorities on October 17, 2025. 7 Expenditures amounted to 44.1 billion gourdes in September 2025, due to a temporary spike in cash payments and commitments during the final month of the FY. 8 Preliminary September FSW execution, based on available data. HAITI INTERNATIONAL MONETARY FUND 11 9. The external position has improved, supported by strong remittances. The current account (CA) recorded a moderate surplus in FY2025, following a deficit of 0.6 percent of GDP in FY2024. This reflected a sharp increase in net remittances—up about 24 percent (October- August) relative to the same period in FY2024— driven by the need to support relatives amid deteriorating security and economic conditions and, possibly, in anticipation of changes in U.S. migration policy. Higher remittances supported a recovery in imports from mid-2024 through mid- 2025, as confirmed by satellite data (Figure 1), and helped offset falling exports—due to domestic production constraints—and a widening trade deficit. Text Table 1. Haiti: Exports, Imports, and Remittances 1/ 10. International reserve accumulation was strong during FY2025. The Bank of the Republic of Haiti (BRH) continued to purchase foreign exchange (FX), resulting in a NIR accumulation (QT) of US$567 million by end-June—well above the QT target of US$100 million. Gross international reserves remained adequate, exceeding US$3.1 billion (over 7 months of prospective imports) as of end-July. Despite the substantial FX purchases, the nominal exchange rate remained stable at around 130 gourdes per dollar throughout the FY—supported by sustained FX inflows from remittances— providing a nominal anchor for the economy. The real exchange rate is estimated to have appreciated over 30 percent during FY2025. HAITI 12 INTERNATIONAL MONETARY FUND PROGRAM IMPLEM ENTATION UNDER THE SMP 11. The authorities are strongly committed to the SMP, and performance since the 1 st Review has been encouraging, despite the challenging domestic environment. • Quantitative and Indicative Targets. The BRH has exceeded the end-June target for NIRs (QT), supported by strong remittances (Table 1a). All June QT/ITs on the nonfinancial public sector (NFPS) primary balance, social spending, and central government fiscal revenue were met. The June ceiling on net central bank credit to the public sector (QT) was also met, keeping monetary financing at zero. The authorities confirmed that no domestic or external arrears had been accumulated and that there are no plans to contract non-concessional loans (QT). • Structural Benchmarks. Progress on advancing reforms on governance, data provision and transparency has been steady, with six of the eleven structural benchmarks (SBs) being met (Table 2a). Reflecting the authority’s commitment to the implementation of the reform agenda, two additional SBs (SB4 and SB9) have been delivered albeit with some delay. Specifically: o The Governance Diagnostic Report was published in February 2025 (SB1, met). Text Table 2. Haiti: Net International Reserves - 2024 SMP Definition (In millions of US dollars, unless otherwise noted) HAITI INTERNATIONAL MONETARY FUND 13 o Procurement contracts continue to be published on the websites of the National Commission for Public Procurement (CNMP) and the Ministry of Economy and Finance (MEF), reflecting the government's commitment to transparency, but their publication has experienced some delays (SB2—continuous SB, not met). o Food Shock Window (FSW) monthly execution reports (SB3, met) are regularly published on the websites of the MEF and the General Directorate of the Budget (DGB). The quarterly internal expenditure audits have generally been provided on time, although capacity constraints caused the end-September audit to be delayed by two weeks (SB4—continuous SB, not met but implemented with delay). o The Superior Court of Auditors and Administrative Disputes (CSCCA) has conducted and published the financial and operational compliance audit of FSW spending for FY2022-23, and is in the process of finalizing it for FY2023-24. However, the March 2025 target for this audit was missed (SB5—end-March target, not met). o Quarterly reports on the operations and financial status of the Economic and Social Assistance Fund (FAES) are being published on the MEF’s website (SB6—continuous SB, met). o The administrative and technical cooperation protocol between the Directorate of General Taxes (DGI) and General Administration of Customs (AGD) for the interconnection of their IT systems was signed and published in June (SB7, met). However, the digitalization of tax declaration and payments through all commercial banks for the large taxpayers registered at the DGI remains to be completed due to technical challenges (SB8—end-September 2025 target, not met). o The BRH audit report and audited financial statements for FY2023 were completed and published but with some delay relative to the original target date (SB9—end-August 2025 target, not met but implemented with delay). o The Board of Directors of the BRH has approved a new reserve management framework with a new strategic asset allocation, updated investment policy and guidelines, and a medium- term plan for improving the composition of the investment portfolio (SB10—end September 2025 target, met). o The BRH has consistently provided its full balance sheet to IMF staff on time, using the standardized reporting form (SB11—continuous SB, met). OUTLOOK AND RISKS 12. Economic activity is expected to remain subdued in FY2026 and to gradually recover over the medium term, contingent on improving security. Real GDP is projected to decline by 1.2 percent in FY2026—down from the 1.0 percent increase expected in the 1 st Review—and is likely to HAITI 14 INTERNATIONAL MONETARY FUND be further affected by the damages and losses inflicted by Hurricane Melissa. 9 Economic activity will be affected by the non-renewal of the HOPE/HELP act, which expired in September 2025. This will remove preferential trade access for Haitian textile and apparel exports to the US. 10 Conditional on steady security improvements in security conditions, economic activity is expected to grow by 0.5 percent in FY2027, and to gradually converge to 1.5 percent over the medium term. Inflation is projected to reach single digits by FY2029 as supply shocks ease, provided macroeconomic policies remain sound and credible. 13. Fiscal policy remains constrained by security challenges, institutional weaknesses, and limited fiscal space. Domestic revenue (excluding grants) is expected to reach 4.7 percent of GDP in FY2026, and to gradually rise to 6.0 percent by FY2030, following the implementation of reforms enhancing revenue collection (¶19). Total expenditure is projected to increase from 5.5 percent to 7.6 percent of GDP over the same period, reflecting higher social and infrastructure spending. As a result, the deficit is expected to widen from 0.2 percent of GDP in FY2026 to 1.5 percent in FY2030. Public debt, while currently low and sustainable, is projected to remain at about 11 percent of GDP over the medium term. Nevertheless, the risk of debt distress remains high, reflecting the sustained weakening of Haiti’s production and export base due to the protracted security crisis (see 2025 Debt Sustainability Analysis). 11 14. Staff assesses Haiti’s external position in FY2024 as broadly in line with the level implied by fundamentals and desirable policies (Annex II). The CA gap is estimated at -0.9 percent of GDP. Over the medium term, the CA is projected to stabilize at around -2.0 percent of GDP. Remittances are projected to decline by about 3 percent of GDP in FY2026—down from 12.8 percent of GDP in FY2025—due to the termination of the TPS program in February 2026, and the introduction of a one-percent tax on certain types of cash remittances (Annex I). Remittances are projected to fall to 7 percent of GDP over FY2027-30. International reserve coverage is expected to remain adequate (at about 8 months of prospective imports by 2030). 15. Risks to the outlook are tilted to the downside. These include a rise in gang-related disruptions, escalation of violence and social unrest, all of which could deepen social and economic vulnerabilities. Also, further tightening of US trade and migration policies, reduced external financing, and political instability could undermine economic activity and the external and fiscal positions. On the upside, the UN Security Council’s authorization to transition the Multinational Security Support mission in Haiti for a new multinational Gang Suppression Force—supported by the newly established UN Support Office for Haiti and the Organization of American States—could mark a 9 Preliminary staff estimates as of end-October suggest that the disaster could potentially reduce real GDP growth in FY2026 by around 0.2 to 0.4 percentage points. 10 Haiti’s textile and apparel exports to the U.S. account for about 77 percent of total goods exports and generates over 27,000 formal jobs. 11 Preliminary assessments of the impact of Hurricane Melissa indicate that the fiscal response could further heighten liquidity risks, underscoring the need to sustain efforts to improve donor aid coordination, as well as to enhance revenue collection and cash flow management. The portion of the 2023 IMF Food Shock Window’s funds carried over into the FY2026 budget (1.45 billion gourdes) could be used to address food insecurity in the aftermath of the hurricane. HAITI INTERNATIONAL MONETARY FUND 15 turning point in efforts to restore security in the country, rebuild institutions, and lay the foundations for economic growth and improved prospects for the Haitian people. A more rapid normalization of security conditions—if supported by sound policies and external financing—and a renewal of the HOPE/HELP Act could improve the outlook. 12 16. Materialization of the downside risks could have long-lasting macroeconomic effects. Further deterioration of security and humanitarian conditions could severely deepen economic and social disruptions. Materialization of external risks, such as a decline in remittances, exports, and external grants, could increase the current account deficit by 1.4 percentage points, and lower real GDP growth by 0.9 percentage points in FY2026, relative to the baseline. This scenario would generate additional external financing needs of about $568 million, equivalent to 1.4 percent of GDP (Annex IV)—38 percent of NIRs. 13 POLICY DISCUSSIONS Discussions focused on implementation of the SMP, particularly, boosting revenue mobilization to meet targets and expanding support to vulnerable households; maintaining zero monetary financing of government spending; accumulating NIR; strengthening governance; and sustaining the reform agenda. A. Fiscal Policy 17. The SMP aims to strengthen the fiscal framework through domestic revenue mobilization and better-quality spending. These objectives are critical for maintaining stability amid security challenges. The balanced fiscal position in FY2025 reflects mostly under-execution of spending. 14 While nominal revenues increased in line with the program objectives, the ratio of revenues to GDP has continued to decline, underscoring the urgent need for sustained efforts to safeguard and boost revenue performance (Figure 2). Weak budget execution limits the impact of these gains, making it urgent to improve execution, particularly in sectors critical for recovery and social development. At the same time, it is important to ensure high-quality investment spending (e.g., schools, health, infrastructure) that supports employment and growth. 18. The FY2026 budget is broadly consistent with the SMP objectives. It maintains zero monetary financing of the deficit, strengthens domestic revenue mobilization, and safeguards critical social spending. 15 The global envelope at 345.5 billion gourdes—a 8.8 percent increase compared to 12 For example, the Inter-American Development Bank (IADB) is working on a Medium-Term Recovery and Development Plan 2025-2030, with three pillars (i) economic development and the role of the private sector; (ii) basic services and human development; and (iii) institutional development. 13 If this scenario materializes, additional financing may be needed to supplement a drawdown of reserves. 14 A sustainable tax level for Haiti is at least 10 percent of GDP, with international benchmarks suggesting 12.5 percent of GDP is needed for basic state capacity. See Annex VI in Haiti’s 2024 Article IV, IMF Country Report No. 2024/333. 15 The FY2026 budget was adopted on October 10, 2025. HAITI 16 INTERNATIONAL MONETARY FUND the second supplementary budget—aims to address the security crisis, support the political transition, and promote economic recovery. Domestic revenues are projected at 250.4 billion gourdes (4.7 percent of GDP), supported by measures to strengthen the digitalization of tax and customs administrations and to enhance the capacity to conduct risk assessments of large taxpayers, as well as the implementation of the AGD reform (¶19). Public expenditures are projected at 328.5 billion gourdes (6.2 percent of GDP), with allocations for security, elections, industrial support, and assistance to vulnerable Haitians. In particular, capital expenditures are projected at 115.0 billion gourdes (2.2 percent of GDP), with a focus on improving execution rates. The authorities’ budget projects an overall fiscal balance at -0.3 percent of GDP in FY2026. 19. Strengthening domestic revenue mobilization remains a priority. The implementation of the new tax code has been postponed to October 2026 to complete key administrative and legal tasks and to ensure adequate engagement with the private sector. Meanwhile, the authorities are advancing high-impact measures to boost revenue collection, particularly through the digitalization of tax and customs administration. The digitalization of tax declarations and payments through commercial banks for all large taxpayers is underway (end-September 2025 SB8, proposed to be reset to end-March 2026, ¶39). These efforts are being complemented by: (i) interconnecting the Tax Administration System and the customs automation system (SB12; TA); and (ii) operationalizing the Figure 2. Haiti: Revenue Performance, FY2021–25 Sources: Ministry of Economy and Finance and IMF staff calculations. HAITI INTERNATIONAL MONETARY FUND 17 AGD reform for strengthening governance and integrity. The AGD reform, which is expected to become effective during the first half of FY2025-26, will focus on developing human capital, enhancing revenue mobilization and controls, upgrading technology, reinforcing border security and coordination, and engaging stakeholders. 20. Staff welcomes the authorities’ plan to implement budget execution reforms aimed at improving spending efficiency and restoring fiscal credibility. Budget execution is a complex process, involving procurement, cash management, internal controls, compliance, and administrative procedures—all requiring strong institutional capacity and robust governance frameworks, as captured by the SMP’s SBs (e.g., SB 2 to 6). Staff commends the authorities’ efforts to (i) curb large end-of-year transfers to ministries; (ii) expand the use of executing agencies to accelerate capital spending; (iii) streamline procurement procedures in the security and defense sectors; and (iv) strengthen treasury cash management and advance the integration into the Treasury Single Account (TSA) through the closure of provincial accounts and the piloting of donor-financed project accounts. These measures, supported by TA, will enhance treasury operations, reduce fragmentation, and improve fiscal transparency. 21. But further efforts are needed to consolidate progress and address remaining budget execution challenges. Particularly, ensuring timely and well-targeted social and security spending to reach vulnerable groups and support essential security activities. Also, enhancing investment practices by prioritizing the completion of ongoing projects and ensuring rigorous appraisal before inclusion in the budget, as recommended by the 2022 Public Investment Management Assessment (PIMA). A follow-up PIMA TA mission will focus on project appraisal, selection, and multiyear investment planning (¶22). Finally, ensuring that public-private partnerships (PPPs) comply with transparent and competitive procurement procedures. 22. Anchoring fiscal policy in a medium-term framework will enhance resource allocation and planning, reinforcing fiscal discipline, transparency, and accountability. A multiyear framework will improve spending quality and calibrate the pace for development spending. This requires adopting a budgetary control guide, updating the expenditure execution manual, and refining investment planning tools. Staff underscores the need to strengthen medium-term fiscal planning and investment management by refining the fiscal framework, publishing multi-year fiscal goals, and developing a prioritized three-year public investment plan supported by stronger project appraisal and selection tools. The authorities agreed on the importance of these reforms but noted challenges stemming from security conditions, capacity constraints, and procurement delays. Social Assistance 23. Providing social protection is critical to help address Haiti’s humanitarian crisis. Despite challenging conditions, social spending reached 1.2 percent of GDP (52.0 billion gourdes) in FY2025—a 41.4 percent increase from FY2024. Although the authorities initially planned to fully execute the remaining FSW funds within FY2025, about 9.3 percent of the total (1.45 billion gourdes) remain unexecuted due to administrative bottlenecks and security constraints, which delayed field HAITI 18 INTERNATIONAL MONETARY FUND operations and procurement. These resources are included in the FY2026 budget. 16 The CSCCA has published the audit for FY2022–23 but not yet for FY2023–24 (SB5, end March 2025), and the FY2024–25 audit is being proposed to be conducted by end March 2026 (proposed new SB, ¶39). Text Table 3. Haiti: Execution of Social Spending 24. Targeting resources to the most vulnerable is essential amid extreme poverty and food insecurity. The Information System of the Ministry of Social Affairs and Labor (SIMAST) database covers 0.8 million households—3.3 million individuals across 92 communes, about 30 percent of the population. However, its coverage is insufficient given that 5.7 million Haitians live in poverty. Security conditions continue to hinder the implementation of the National Social Protection and Promotion Policy (PNPPS), which aims to develop a more coordinated social protection framework. Social programs also face technical constraints, including unstable internet connectivity, reliance on two telecom providers (Digicel, Natcom), limited digital and mobile coverage in rural areas, insufficient IT equipment and local maintenance, non-interoperable systems, and weak civil registration and identification systems. In FY2026, the authorities plan to expand SIMAST to 11 additional communes, covering around 60,000 new households and to introduce community-based targeting in areas where door-to-door surveys are not feasible. However, administrative capacity constraints and security-related restrictions on field access will make it difficult to achieve this target. The authorities are also reviewing the vulnerability assessment methodology to identify alternative data collection techniques and improve targeting accuracy, in collaboration with development partners. 16 The IMF disbursed SDR 81.9 million (about USD 105 million) under the FSW in 2023. HAITI INTERNATIONAL MONETARY FUND 19 Fiscal Risks and Contingency Planning 25. Establishing a market-based fuel pricing mechanism is vital for mitigating fiscal risks. While recent fuel price adjustments and lower international oil prices have generated net fuel revenue, future price surges could renew fiscal pressures and constrain resources available for social assistance. To mitigate this risk—and given political and social sensitivities—the authorities plan to gradually transition to a market-based retail fuel pricing system that adjusts and smooths retail prices in response to changes in international oil prices and the exchange rate. This reform would protect the budget, strengthen public financial management, promote efficient fuel use, and support HAITI 20 INTERNATIONAL MONETARY FUND medium-term fiscal sustainability (TA). Staff emphasize the need for clear communication to support its implementation. Establishing a regulatory framework for the petroleum-products sector and strengthening related regulatory institutions also remains critical. 26. A potential increase in deportations from abroad could worsen the humanitarian crisis and heighten fiscal pressures. In anticipation of the expiration of the TPS in February 2026, the authorities have prepared a two-phased response plan. An emergency phase to manage the immediate influx (February-April 2026), and a stabilization and reintegration phase (May-July 2026). Staff estimates the plan would cost about 0.2 percent of GDP (8.3 billion gourdes), if fully implemented. The National Office for Migration will lead the implementation in coordination with key ministries. To address urgent financing needs, the authorities plan to draw on the emergency fund (Fonds d’Urgence) and are preparing a digital registration and tracking system for returnees. 27. Contingency planning for natural disasters needs strengthening. The emergency fund— about 0.07 percent of GDP (3.1 billion gourdes)—has limited operational effectiveness due to weak allocation, monitoring, and execution protocols. Improving these systems is essential for a transparent and timely response. Haiti also relies on multilateral support, including the World Bank’s (WB) Contingency Emergency Response Component (CERC), which enables the rapid reallocation of funds following earthquakes and hurricanes, and the catastrophe risk insurance coverage through the Caribbean Catastrophe Risk Insurance Facility (CCRIF). The authorities have reaffirmed their commitment to maintaining CCRIF coverage and are exploring options to secure timely and sustainable premium payments—building on past support from partners such as the Caribbean Development Bank—to institutionalize these payments and strengthen disaster resilience. B. Enhancing Governance and Transparency 28. Strengthening governance is essential for overcoming Haiti’s fragility. Effective governance and anti-corruption reforms can reduce leakages in public spending, improve the impact of external assistance, enhance revenue mobilization, and lay the institutional foundation for sound fiscal management. The authorities have reaffirmed their commitment to these objectives. Going forward, reform efforts should be anchored in the priority recommendations of the Governance HAITI INTERNATIONAL MONETARY FUND 21 Diagnostic Report (GDR), particularly, reinforcing transparency and accountability in public financial management, reducing corruption risks in revenue administration, and ensuring accountability for serious corruption, organized crime, and money laundering. Recent steps to mitigate corruption risks include initiating the operationalization of the anti-corruption task force, enhancing coordination among oversight institutions, and advancing the development of a comprehensive long-term anti- corruption strategy. While the task force is focused on coordinating anti-corruption efforts, the GDR recommends establishing an Anti-Corruption Pole—a more robust platform to enable prosecution of high-level corruption, money-laundering, and organized crime. 29. Strengthening public financial management is central to the governance agenda. Reforms should aim to improve fiscal reporting, transparency, and accountability. These objectives can be achieved by limiting unspecified budget allocations to 3-5 percent of spending; reinstating the financial controller’s authority over public investment spending; adopting and implementing a revised expenditure execution manual; revising the procurement law to streamline controls and enhance competitiveness and transparency; strengthening internal and external audits, including by producing annual public reporting by the Inspectorate General of Finance and the CSCCA; and improving accounting and fiscal reporting, notably by revising the accounting decree, and integrating off-budget accounts into the TSA. 30. Staff commends the efforts to strengthen the governance and transparency of foreign reserves, which is crucial to safeguard the BRH’s credibility. The BRH is aligning its governance, foreign reserves management, and investment policy with international practices. The BRH’s Board of Directors recently approved the institution’s revised investment framework, which includes a new strategic asset allocation, updated investment policy and guidelines, and a high-level transition plan to improve portfolio composition. The Fund supported these efforts with TA aimed at helping assess the liquidity profile of FX reserves and supporting the transition to a sound asset allocation framework and governance structure. However, the guidelines should be strengthened. Going forward, some necessary aspects of the internal controls that should underpin the implementation of this framework and its completeness will need to be formalized. Staff also encourages the authorities to continue developing a governance corporate culture for reserve management, by establishing delegation protocols, escalation procedures and committee charters. Staff also urges the BRH to continue implementing measures to enhance safeguards (new SB, ¶39) without delay, particularly the recommendations from the 2024 safeguards monitoring mission. 31. The use of Special Drawing Rights (SDR) must continue to remain transparent. A portion of the SDR allocation was converted into US dollars to service external obligations, and SDR holdings have been used to meet IMF obligations. Transfers from the BRH to the government are made in gourde equivalent and governed by a memorandum of understanding for retrocession agreement. The authorities have reaffirmed their commitment to transparent and accountable use of SDRs, supported by clear institutional arrangements. Staff recommended minimizing gaps between SDR holdings and allocations and emphasized that conversions of SDRs into freely usable currencies should be published on the BRH or MEF websites. HAITI 22 INTERNATIONAL MONETARY FUND C. Strengthening the Monetary and Exchange Rate Policy Framework 32. The BRH’s policy credibility has improved with the elimination of monetary financing. Delivering on this commitment for a second consecutive year has been key to helping contain inflation. 17 However, price pressures remain elevated, driven by security conditions and supply-side constraints. 18 The real exchange rate continues to appreciate, given the stable nominal exchange rate. Despite a negative real interest rate (-11 percent in FY2025 on average), credit growth remains subdued. The authorities have firmly reiterated both the importance and their commitment to maintaining the zero ceiling on credit to the NFPS to preserve macroeconomic stability. Sources: Bank of the Republic of Haiti and IMF staff calculations. 33. FX intervention is warranted for reserve accumulation and to preserve exchange rate stability. In the context of persistent inflation and weak monetary transmission in Haiti, exchange rate stability continues to serve as a nominal anchor. FX interventions aimed at preserving exchange rate stability are justified, provided reserve adequacy is maintained. The authorities acknowledge the importance of maintaining a stable nominal anchor, particularly in the face of external shocks. 19 However, FX interventions must continue to be conducted in a manner consistent with Haiti’s obligations to remain in compliance with the IMF’s Article VIII on multiple currency practices (MCPs) and restrictions on current international transactions. The authorities reported that no changes in the foreign exchange system 17 See Annex VII of the 2024 Article IV Consultation Staff Report. 18 See Annex XI of the 2024 Article IV Consultation Staff Report. 19 Since January 2024 the de jure exchange rate is floating and the de facto exchange rate is classified as stabilized (see Annex II and 2024 Article IV, ¶37. HAITI INTERNATIONAL MONETARY FUND 23 have been made since the 1 st Review that would give rise to new MCPs or exchange restrictions on the payments and transfers for international transactions. D. Safeguarding Financial Sector Stability 34. The commercial banking system continues to show vulnerabilities. The high gross NPL ratios reflect deteriorating credit quality (¶6). Capital adequacy ratios (CAR) remain above the 12 percent regulatory minimum, though they are uneven across institutions. Some banks may need to strengthen buffers further given elevated credit risks, and the financial environment could deteriorate if a considerable number of substandard loans deteriorate into doubtful or loss loans. Citigroup’s exit—announced in July 2024 and now complete, pending surrender of its license to the BRH—reduces international banking presence, and may slightly narrow competition and institutional diversity, even though it accounted for only 2 percent of banking sector assets as of June 2024. 20 35. The authorities are advancing regulatory and supervisory reforms. The BRH has adopted and published revised regulations on credit risk concentration and plans to publish the final version on credit risk classification and provisioning by end-November 2025, following an internal review. It has advanced risk-based supervision, by testing new risk assessment grids and rating matrices on three banks, with two more underway. In collaboration with Fund staff, the BRH is also assessing banks’ risk profiles. Staff underlined the importance of continuing and expanding off-site supervision, as well as the annual on-site inspection program. The risk assessment grid framework should be integrated into the BRH Banking Supervision Software. The authorities concurred on the importance of strengthening the BRH’s bank-wide IT security (proposed new SB, ¶39). 36. Anti-money laundering/combating the financing of terrorism (AML/CFT) measures must be sustained. The Board of the Central Financial Intelligence Unit (UCREF) is expected to be appointed by February 2026, enabling full implementation of the 2023 decree aligning UCREF’s governance framework with international financial compliance standards. Finalizing the National Risk Assessment (NRA)—expected by December 2025— is also critical to developing a comprehensive understanding of money laundering/financing of terrorism (ML/TF) risks and, including those related to the laundering of proceeds of serious crimes and cross-border illicit finance financial flows. The authorities expressed their intention to assign supervisory responsibility for designated non-financial businesses and professions (DNFBPs) to UCREF. Staff emphasized the importance of ensuring UCREF is adequately resourced to effectively fulfill this function. E. Data Adequacy and Other Issues 37. The reliability and transparency of BRH’s data hinges, in part, on the timely and regular publication of its annual audited financial statements. Staff commends the BRH on the finalization and publication of the FY2023 audit (SB9, end-August), which required reconstituting and 20 The banking system will now be composed of 7 banks (2 public and 5 private). The two largest private banks hold over 60 percent of the banking system’s assets. HAITI 24 INTERNATIONAL MONETARY FUND validating data lost during the 2023 cyber incident. Staff encourages the authorities to promptly remedy the auditor’s qualified opinion on certain balances ahead of the FY2024 audit. Moreover, staff recommends continuously strengthening internal controls to prevent similar reservations for subsequent audits. Staff welcomes the BRH’ efforts to initiate without further delay the FY2024 audit report and their commitment to publication by mid-2026 (proposed new SB, ¶39). 38. Data provision has improved, supported by ongoing TA, but challenges remain. The authorities have reported monetary and financial statistics (MFS) to IMF staff monthly through standardized report forms. They remain committed to maintaining the timeliness of MFS data provision and strengthening the compilation of external sector statistics in line with TA recommendations. The authorities also welcomed the recent TA on International Reserves and Foreign Currency Liquidity (IRFCL) and have proactively incorporated its recommendations into the MFS. The authorities concurred on the urgency of compiling and reporting IRFCL data to the IMF. Staff encourages to align the reporting of financial soundness indicators with international standards. Finally, the authorities underscored their commitment to improving government accounts statistics by integrating extra-budgetary units with central government accounts, with support from IMF TA. PROGRAM ISSUES 39. Staff supports the authorities’ request for a nine-month extension of the SMP through September 19, 2026. The extension would support macroeconomic stability and preserve reform momentum amid worsening security conditions and heightened political uncertainty. Staff hopes to see an improvement in the political and security conditions during this time. The extension would also facilitate the implementation of the full structural reform agenda and provide space to assess the impact of ongoing international initiatives, including the GSF and the OAS Haitian Led Road Roadmap for Recovery and Peace. As elaborated in the attached Letter of Intent, the extension maintains current trajectories for the quantitative targets (Table 1b), modifies and reschedules some SBs (Table 2a), and introduces three new SBs to consolidate progress on key SMP objectives (Table 2b). Specifically, it is proposed to: • Modify SB5. The proposed modification aims to align the SB with the new SMP’s timeline and reinforce the authorities’ commitment to transparency and accountability in public spending. Under the modified SB5, the authorities commit to publishing the FSW expenditure audit report for FY2025 by end March 2026. • Reschedule SB8. The launch and implementation of digital tax declarations and payments (SB8) is rescheduled to end March 2026, given its importance for domestic revenue mobilization. • Introduce three new SBs to: o Strengthen domestic revenue mobilization, by interconnecting the Tax Administration System and SYDONIA (a customs management software system), and having the DGI and AGD issue HAITI INTERNATIONAL MONETARY FUND 25 a joint communiqué committing to publish an aggregate analysis of the results on the MEF website (SB12, end March 2026). This SB would be supported with TA. o Enhance Safeguards. (i) Adopt a framework and governance structure to strengthen the BRH’s bank-wide IT security and business continuity arrangements (SB13, end June 2026); and (ii) Publish the BRH’s external audit report and audited financial statements for FY2024 (SB14, end June 2026). 40. The objectives of the SMP remain achievable but deteriorating domestic and external conditions could make sustaining progress difficult. Despite the headwinds, staff will continue to support the authorities in maintaining macroeconomic stability, strengthening governance, and establishing a track record that could pave the way for financial assistance under the upper credit tranche (UCT). The third review will assess SBs 2 to 6, SB8, SBs11 to 12 (Tables 2a, 2b, and 2c), and end-December 2025 QTs, and will be completed by end April 2026. End-June 2026 QTs and SBs will be assessed during the fourth review which will be completed before the program end date (September 19, 2026). STAFF APPRAISAL 41. Haiti is facing a multidimensional crisis that continues to deepen its fragility. Real GDP is estimated to have contracted amid high inflation. The expiration of the TPS for Haitians in the US (in February 2026), and the non-renewal of the HOPE/HELP preferential trade agreement which ended in September 2025, will weigh on the Haitian economy, which is expected to contract in FY2026. Risks to the outlook are tilted to the downside due to escalating gang violence and social unrest, political instability, reduced external financing, and further tightening of US trade and immigration policies. On the upside, the newly created multinational GSF could mark a turning point toward restoring security and enabling a sustainable recovery. 42. Despite challenging conditions in the country, program implementation has been broadly satisfactory. Staff commends the authorities for having full ownership and commitment to the SMP, and for remaining actively engaged with IMF staff through the bi-weekly high-level Program Monitoring Committee. All QT/IT targets for the end-June test date have been met: monetary financing of the fiscal deficit was kept at zero, social spending reached program’s targets, revenue performance stayed on track, and reserve accumulation exceeded expectations. Reform momentum was maintained, with 6 out of the 11 SBs met—covering publication of the GDR (SB1), publication of monthly reports of FSW execution (SB3), publication of quarterly FAES operations reports (SB6), a protocol between the DGI and the AGD for the interconnection of their IT systems (SB7), approval of a new BRH investment strategy (SB10), and monthly provision of the BRH’s full balance sheet to the IMF (SB11). Two additional SBs were completed with delay—publication of the BRH audit (SB9) and reporting quarterly FSW internal audits across all ministries to the CSCCA (SB4). 43. The fiscal stance remains broadly consistent with the objectives of the SMP, but implementation challenges continue to hinder effective policy execution. In FY2025, nominal HAITI 26 INTERNATIONAL MONETARY FUND revenue performance improved, yet it declined as percentage of GDP, underscoring weaknesses in tax administration and limited fiscal space. The authorities reallocated resources toward security and social priorities, but budget execution remained weak—particularly for capital expenditure—due to persistent security constraints and administrative bottlenecks. The FY2026 budget is anchored in the SMP’s core priorities: fiscal discipline, enhanced revenue mobilization, and protection of key social and investment spending. However, further efforts are needed to strengthen revenue mobilization, improve budget transparency, and align investment practices with international standards. 44. Strengthening Haiti’s fiscal position requires sustained efforts to boost domestic revenue mobilization. The authorities aim to reverse the downward revenue trend in FY2026 through targeted measures (e.g., enhancing risk-based audits for large taxpayers and digitalizing tax filing and payment systems). Staff welcomes these initiatives and encourages swift implementation of the new tax code, improved coordination between tax and customs agencies, and expansion of the taxpayer base. Strengthening revenue performance is essential for creating fiscal space for priority spending and ensuring long-term fiscal sustainability. 45. Improving spending efficiency and execution capacity is critical. Staff supports the authorities’ reform agenda to strengthen cash and procurement management, advance TSA integration, and align public investment practices with PIMA recommendations—initiatives that will be supported by TA. PPPs should follow transparent and competitive procurement processes to safeguard fiscal integrity and contain risks. 46. Staff welcomes the authorities’ efforts to strengthen contingency planning given Haiti’s exposure to multiple fiscal risks. Continued gradual implementation of fuel price reforms, accompanied by clear communication and targeted support for vulnerable groups is recommended. The timely adoption of a response plan to address humanitarian needs arising from the arrivals of Haitian nationals living abroad is appropriate, given the elevated social vulnerabilities. The continued access to the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and the World Bank’s Contingency Emergency Response Component (CERC) further enhances preparedness for natural disasters. Sustained efforts to anchor fiscal policy in a credible medium-term framework and to reinforce public financial management will be essential for safeguarding stability and promoting inclusive growth. 47. Exchange rate stability has served as a nominal anchor in the context of heightened uncertainty and supply-chain disruptions linked to gang-related violence. Given the challenging and uncertain environment, foreign exchange interventions should focus on preserving exchange rate stability, conditional on maintaining an adequate level of international reserves. Continued commitment to zero monetary financing and gradual normalization of security conditions are key for containing inflationary pressures. 48. The BRH needs to enhance its strategy for mitigating financial risks in the commercial banking sector. Staff welcomes progress made by the BRH in advancing supervisory reforms, including the adoption of a new chart of accounts, enhanced risk-based supervision, and improved regulatory oversight for microfinance institutions. The authorities are encouraged to conduct regular [... middle sections omitted for long document ...] HAITI INTERNATIONAL MONETARY FUND 13 21. Haiti’s external and overall risk of debt distress rating remains “high” and debt is assessed as sustainable. The high risk of external debt distress rating stems from breaches in both export-related external debt indicators—baseline scenario. Since these breaches occur within the 10-year projection horizon, the mechanical rating points to a high risk of debt distress—driven by the continued erosion of Haiti's production and export base which has been exacerbated by the ongoing security crisis. Debt sustainability hinges on a steadfast commitment to a sound macroeconomic framework, the implementation of reforms to boost revenue and enhance governance, and continued donor support to secure grants and concessional financing. 22. The debt outlook for Haiti is vulnerable to shocks. A drop in official grants, remittances, FDI, or a natural disaster comparable to Hurricane Matthew could push debt ratios back to pre- Petrocaribe relief levels. External debt service capacity is particularly sensitive to declines in official grants, remittances, and FDI, as illustrated by the increase in debt-service-to-revenue under stress scenario (Table 5). Authorities’ Views 23. The authorities agreed with the staff's assessment of an external and overall high risk of debt distress and sustainable debt. They reiterated their commitment to implementing sound macroeconomic policies, including a prudent fiscal policy and a debt strategy prioritizing concessional external financing in the short and medium term, in order to safeguard debt sustainability. However, the authorities expressed concerns about the limited availability of concessional external financing, which they deemed insufficient to meet the country's huge investment and development needs. Nevertheless, they committed to pursuing ongoing efforts to improve public debt management and promote greater transparency. The authorities also stressed the urgency of restoring security, which is an essential condition for the resumption of economic activity and the revival of exports, with a view to containing debt vulnerabilities exacerbated by the weakness of the country’s narrow export base. HAITI 14 INTERNATIONAL MONETARY FUND Figure 1. Haiti: Indicators of Public and Publicly Guaranteed External Debt Under Alternatives Scenarios, 2025–45 HAITI INTERNATIONAL MONETARY FUND 15 Figure 2. Haiti: Indicators of Public Debt Under Alternative Scenarios, 2025-45 HAITI 16 INTERNATIONAL MONETARY FUND Figure 3. Haiti: Drivers of Debt Dynamics-Baseline Scenario HAITI INTERNATIONAL MONETARY FUND 17 Figure 4. Haiti: Realism Tools HAITI 18 INTERNATIONAL MONETARY FUND Table 2. Haiti: Structure of Public Debt and Debt Service (Fiscal-year basis) Table 3. Haiti: External Debt Sustainability Framework, Baseline Scenario, 2022–2045 (In Percent of GDP, unless otherwise indicated) HAITI INTERNATIONAL MONETARY FUND 19 Table 4. Haiti: Public Sector Debt Sustainability Framework, Baseline Scenario, 2022–2045 (In Percent of GDP, unless otherwise indicated) HAITI 20 INTERNATIONAL MONETARY FUND HAITI INTERNATIONAL MONETARY FUND 21 Table 5. Haiti: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2025–45 (In Percent) HAITI 22 INTERNATIONAL MONETARY FUND Table 6. Haiti: Sensitivity Analysis for Key Indicators of Public Debt, 2025–45