Prime Minister's Budget Framework Letter

The framework letter for the FY2015-2016 budget, addressed to all authorising officers of the state administration.

It calls the circumstances of preparation complex. The socio-political climate of the electoral period carries the recessionary effects of a latent uncertainty, and the government that emerges from the coming elections will inherit this budget. The situation is complicated by the deportation of several thousand migrants from the Dominican Republic, which places additional pressure on resources already insufficient. The financing constraint is tightening and the depreciation of the gourde reflects persistent structural fragility.

The March 2015 budget rectification revised investment credits downward, following a fall of more than half in Petrocaribe resource flows, while the tightening of monetary policy in response to the deterioration of the gourde limits the credit expansion needed to stimulate growth.

First-half indicators confirm that growth is being maintained but is entering a slowdown. Inflation is rising again, reaching 8.5% year on year in September 2015 against 5.3% in the same period a year earlier. Over the last four years agriculture grew only in 2013, and non-agricultural GDP has grown faster than the total, which the letter reads as reflecting the sector's dependence on climate and rainfall. It follows that the price index for local products rises faster than that for imports, which is contained by falling international food and commodity prices, and the letter names as a risk a reversal in those prices combined with faster depreciation of the gourde.