(2016-06) Budget framing memorandum for the 2016-2017 finance law
Summary — Memorandum from the Prime Minister's office to all spending-unit heads of the Haitian state administration, dated 17 June 2016, setting the macro-fiscal framework and expenditure guidance for the 2016-2017 draft finance law. It reviews the difficult 2015-2016 execution (weak revenue mobilization, drought and flood shocks, political uncertainty) and fixes growth, inflation and deficit targets for the coming budget.
Key Findings
- Growth for FY2016-2017 projected at 2.2% amid climate and political uncertainty, well below the 7% annual growth CNSA estimates is needed to cut food insecurity to 10% by 2020.
- Mid-year FY2015-2016 resource mobilization reached only 30.44% of the initial budget forecast, 92% of it domestic.
- Gourde depreciated 18.8% over the first seven months of FY2015-2016, 92% of it in the first five months, before decelerating after the 20 April 2016 cash-management accord.
- April 2016 inflation hit 14.8% y/y versus 6.3% a year earlier.
- 2016-2017 budget assumptions: 2.2% real growth, 10.5% average/13.5% end-of-period inflation, ~13.5% fiscal pressure, 76.6 billion gourdes in current revenue, deficit capped at 2.3% of GDP.
- BRH cut interest rates on all bon BRH maturities by 2 percentage points from 13 June 2016 to ease monetary conditions.
Full Description
This memorandum, signed by Prime Minister Enex J. Jean-Charles on 17 June 2016, is the annual budget-framing letter (lettre de cadrage) sent to all ordonnateurs (spending-unit heads) of the Haitian state administration ahead of the 2016-2017 draft finance law. It opens with a review of the socio-political climate following the incomplete August and October 2015 general elections and its negative effect on an already fragile economy marked by persistent drought and flooding. It reports mixed first-half 2015-2016 indicators: industrial production up 0.3% quarter-on-quarter and 3.3% year-on-year, electricity production up 12.2% y/y, commercial activity up 5.6% and construction up 3%, inflation at 14.8% y/y in April 2016 (versus 6.3% a year earlier), and a 18.8% depreciation of the gourde over the first seven months of FY2015-2016 (92% of it in the first five months, decelerating after March following the 20 April 2016 cash-management accord between fiscal and monetary authorities). Budget execution was weak: only 30.44% of initial-budget resource forecasts were mobilized at mid-year (92% domestic), while expenditure execution held at 28.7% of forecasts. Monetary financing of 5.9 billion gourdes in Q1 produced a commitment-basis surplus of about 4.2 billion gourdes at mid-year but a cash-basis deficit of 1.1 billion gourdes; domestically financed investment spending rose 75% (from 1.5 to 2.6 billion gourdes half-on-half). Tax and non-tax revenue collected reached 34.7 billion gourdes at mid-year (+19% y/y, 45% of the 77.2 billion gourdes full-year target). For 2016-2017 the letter sets macro-fiscal assumptions of 2.2% real GDP growth, 10.5% average and 13.5% end-of-period inflation on a controlled currency depreciation, a fiscal-pressure ratio around 13.5%, current revenue of 76.6 billion gourdes, external budget support capped at the prior year's level, and a budget deficit contained within 2.3% of GDP.
Notes
Document is a Primature (Prime Minister's Office) memorandum signed by PM Enex J. Jean-Charles rather than an MEF-letterhead document, though it directly frames the MEF-led 2016-2017 finance law process; organization tagged MEF per the budget-cadrage series convention. Cover dated 17 juin 2016.