(2017-06) Budget framework letter for the FY2017-2018 Finance Bill
Summary — Prime Minister Jack Guy Lafontant's memorandum to all public spending authorities sets the macro-fiscal framework for the FY2017-2018 Finance Bill: 3.9% real GDP growth led by agriculture, 13.4% average inflation, tax pressure near 12.7%, and a budget deficit capped at 3.2% of GDP. It reviews a deteriorating FY2016-2017 (growth cut to 1.1%, inflation at 15.1%) and instructs ministries on budget submission priorities and deadlines.
Key Findings
- FY2017-2018 growth target set at 3.9%, led by agriculture and agro-processing.
- Outgoing FY2016-2017 growth was revised down from 2.2% to 1.1%, and inflation up from an initial 10.5% projection to 15.1% (14.6% recorded in April 2017).
- Budget deficit for FY2017-2018 capped at 3.2% of GDP with external budget support estimated at about 3.2 billion gourdes.
- Petroleum revenue losses of 8.8 billion gourdes were recorded between 1 October 2016 and 31 May 2017, and public arrears exceeded 5 billion gourdes by 30 April 2017.
- Gourde appreciated from 69.39 to 62.27 HTG/USD between 4 April and 26 May 2017.
Full Description
This memorandum, signed by Prime Minister Jack Guy Lafontant on 15 June 2017 and addressed to all spending authorities (ordonnateurs) of the public administration, transmits the macro-fiscal framework letter (lettre de cadrage) that ministries must respect when preparing their FY2017-2018 budget proposals ahead of the constitutional deadline for tabling the Finance Bill in Parliament (30 June). It opens with a stocktaking of the deteriorating outgoing fiscal year: growth revised down from an initial 2.2% projection to 1.1% (partly due to Hurricane Matthew's October 2016 impact on agriculture), inflation reaching 14.6% in April 2017 (revised full-year projection to 15.1% from an initial 10.5%), stagnant fiscal revenue in H1 FY2016-2017, a fiscal pressure ratio expected to fall 1.1 points below the 13.5% recorded in FY2015-2016, petroleum-related revenue losses of 8.8 billion gourdes (October 2016-May 2017), and public arrears exceeding 5 billion gourdes as of 30 April 2017, alongside some improving signals (gourde appreciation from 69.39 to 62.27 HTG/USD between April and May 2017, better rainfall, firmer global growth).
For FY2017-2018 the letter sets binding macroeconomic targets the Finance Bill must respect: 3.9% real GDP growth led by agricultural value added, 13.4% average annual inflation (11.4% end-of-period) on the assumption of a slight currency appreciation and full elimination of fuel subsidies, fiscal pressure around 12.7%, higher investment spending than the prior year's revised budget, net foreign reserves equivalent to about 5 months of imports, a broadly stable exchange rate, a 12% increase in current revenue, external budget support of about 3.2 billion gourdes, and a budget deficit capped at 3.2% of GDP. It designates agriculture and agro-processing as the priority growth engines for the government's five-year term and lists sectoral priorities (housing, environmental resilience, youth employment/HIMO, business climate, energy sector reform, social protection) as well as procedural requirements for ministries (performance indicators, expenditure justification, non-fiscal revenue forecasts, procurement plans, cash management programming).
Notes
Signed by the Prime Minister (Jack Guy Lafontant, Primature) and addressed to all spending-authority ministries including MEF, rather than authored by MEF itself; organization field set to MEF per dispatch instruction. Publication date is explicit on the cover (15 juin 2017).