Haiti: 2019 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director For Haiti
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International Monetary Fund. Western Hemisphere Dept.
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Publication Date:
20 Apr 2020
eISBN:
9781513541464
Language:
English
Keywords:
ISCR; CR; staff appraisal; Moïse; deterioration in food security; U.S. dollar; article IV discussion; food assistance; anti-corruption policy priority; Energy sector; Natural disasters; Arrears; South America; Central America; Caribbean; Global; exchange rate; private sector; current account; commercial bank; fiscal year; Credit; Budget planning and preparation
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2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Haiti

Abstract

2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Haiti

Background—The Challenges of a Fragile State

1. Haiti’s recent history is marked by political instability, weak governance and widespread corruption. There have been 18 presidents and four coups d’état since the Duvalier dictatorship ended in 1986. Because of political instability and weak institutions, sustained implementation of policies has proved challenging. Since it disbanded its army in 1995, Haiti has relied heavily on UN peacekeeping forces to maintain order and train the police force, although the UN presence was downsized in October—as planned—to a smaller, mostly administrative office. The government recently moved to reconstitute its own military.

2. Poverty is widespread and inequality high. Over 58 percent of the population live below the national poverty line (US$2.41/day) and real per capita income has stagnated since 2015 at around US$870 (2018). Other indicators of human development remain at distressing levels, with life expectancy at 63 years, literacy at 62 percent, and only about 63 percent of the population with access to safe water (2015). As of 2012, about half of the country’s income share was held by the top 20 percent and the lack of opportunity to improve living conditions has driven rising social discontent. The recent crisis has placed severe strains on the population given the burden of high inflation on the poor and shortages of basic goods and services

3. Natural disasters are frequent and environmental degradation contributes to fragility. Some 82 natural disasters hit Haiti during 1990–2017, including a devastating earthquake in 2010. Weak infrastructure, anarchic urban development, and deforestation aggravate the country’s vulnerability to earthquakes and hurricanes. Environmental degradation hinders social and economic development, including causing lower agriculture yields, water pollution, and health epidemics.

4. Productivity growth and capital accumulation are low, and barriers to entry high. A low level of human capital, limited electricity supply, weak regulations, and an under-developed financial system have hindered private investment. Annual GDP growth averaged 1.4 percent from FY2015 through FY2018, near the rate of population growth and slightly below the average of 1.5 percent from 1996–2017. 1 Private sector resources and capital are highly concentrated among a relatively small but powerful group—much acquired during the Duvalier era through monopoly rights and exclusive import licenses. 2

5. There are growth opportunities to be explored. Economic growth could come from several sectors, including construction, agriculture, environmental remediation, tourism, mining, telecom, light manufacturing, alternative energy, and services. Community-based social structures are strong, and the Haitian diaspora presents a potential source of skills, resources and positive influence. To develop this potential, however, some degree of political stability and policy continuity are needed.

Recent Developments

6. Economic conditions have deteriorated significantly over the past year. Following the 2018 Staff Monitored Program (SMP), staff responded to the authorities’ request for support and agreed ad referendum on a program in March 2019 (Box 1). However, this could not proceed after the resignation of Prime Minister Céant and failure to ratify a replacement; subsequent attempts have also been unsuccessful. The political crisis has many elements, but poverty, inequality, and corruption—most recently the misuse of public funds under the Petrocaribe program—appear to be fueling unrest. The political crisis has prevented the government from passing budget laws for FY2019 and FY2020, impaired policy reforms, and adversely affected revenue collection and public spending. Output is estimated to have contracted by 1.2 percent in FY2019 while supply shortages and currency depreciation helped push inflation above 20 percent (y/y). External financial support has collapsed, with zero budget support in FY2019 and delayed project loans.

Fund Relations and Policies Since the 2018 SMP

  • A series of on-off Fund-supported programs since 2015 led to repeated delays of Article IV consultations. The Extended Credit Facility (ECF) arrangement approved in May 2015 terminated without completion of the first review. In November 2016, in the aftermath of Hurricane Matthew, the IMF approved SDR 30.715 million under the Rapid Credit Facility (RCF). An SMP agreed in 2018 aimed to pave the way for a possible upper credit tranche arrangement.

  • The 2018 SMP expired in August 2018 and achieved progress, though reforms in the energy sector were incomplete. The billing rate of the state-owned company Électricité d’Haiti (EDH) rose but fell short of the 50 percent target and the shortlisting of bidders to replace expired electricity supply contracts was late. Moreover, the government eliminated fuel subsidies in July 2018 without implementing planned mitigating measures in advance. This was followed by riots, reversal of the decision, and resignation of the prime minister.

  • Macroeconomic management did improve. A January 2019 agreement (Pacte de Gouvernance Économique et Financière) between the Banque de la République d’Haiti (BRH) and ministry of finance to limit BRH financing of the fiscal deficit was implemented, helping to slow the pace of international reserve decline. As recommended during program negotiations, the authorities also eliminated the oil import monopoly of the state Bureau de Monétisation des Aides Publiques au Développement (BMPAD). Efforts to draft a broad-based national plan on social policy (the Politique Nationale de Protection et de Promotion Sociale—PNPPS) and expand coverage of the beneficiary information system (SIMAST) have continued despite political turbulence.

  • Unfortunately, other policies were disrupted. The budget for FY2019 was not approved by parliament and no budget has been submitted for FY2020. While liberalization of oil imports was a step forward, the government failed to pay fuel companies on time, which has led to fuel shortages and budget arrears and, as noted above, insufficient progress in the energy sector.

7. As revenues collapsed and energy subsidies increased, the fiscal deficit widened. The deficit of the non-financial public sector (NFPS) in FY2019 rose to an estimated 3.8 percent of GDP against 2.9 percent of GDP in FY2018, largely due to a 22 percent drop in revenues in real terms, an increase in fuel subsidies to maintain fixed prices in gourdes, and losses of the electricity company EDH. Estimates of total government support to the energy sector increased from 4.6 to 6.5 percent of GDP. In response, the government slashed domestically-financed capital spending by two-thirds and cut spending on goods and services by 10 percent in nominal terms. Despite the jump in energy-related transfers, government spending contracted by 3.0 percentage points of GDP. Domestic arrears though surged to 3.7 percent of GDP, fuel shortages occurred, and external arrears (to a foreign oil company) reached 0.4 percent of GDP at end-September.

Haiti: Annual Fiscal Losses from the Energy Sector

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Source: National Authorities and IMF staff calculations.

8. As a result of currency depreciation and arrears accumulation, public debt jumped by 7 percentage points to 47 percent of GDP at end-September. 3 About 58 percent of public debt is external and subject to exchange rate valuation effects. The debt sustainability analysis nonetheless shows that public debt is still sustainable, despite a high risk of debt distress related to institutional fragilities and exceptional vulnerability to natural disasters.

9. The authorities succeeded in partially containing monetary financing of the government in FY2019. In FY2018, the higher deficit and lower external financing pushed total financing by the BRH of the NFPS to 4.1 percent of GDP. In FY2019, BRH financing remained within the range set in the January 2019 Pacte de Gouvernance (henceforth “Pacte,” Box 1) but inflation rose due to a lagged impact from the 2018 surge in BRH credit to the government as well as supply shortages (food). The BRH sterilized part of this financing by raising interest rates on BRH bonds by 400–1000 basis points in June (depending on the maturity) and reducing net foreign assets. Despite these efforts, base money grew by 26 percent during the fiscal year and net international reserves (NIR) fell to US$649 million in September. 4 The BRH cut rates on BRH bonds by 500–700 basis points on November 15th to support the private sector after a few months of “peyi lock” (nation-wide lock-down).

10. The external current account deficit has narrowed but the overall external balance has deteriorated. The current account deficit is estimated to have shrunk from 3.9 percent of GDP in FY2018 to 2.0 percent of GDP in FY2019 owing mostly to higher remittances but also to weak import growth. The tourism sector has been negatively affected by social unrest while net capital inflows and FDI have mostly dried up. The exchange rate depreciated by more than 25 percent in the first 9 months of FY2019 but was stable between June-November.

11. The authorities are making considerable efforts to limit the deterioration. The ministry of finance announced in October its intention to present a budget for 2020, despite the end of the parliamentary session, and reiterated its decision first announced in February to end most customs duties exemptions in order to boost revenue collection. 5 The ministry also proposed short-term measures to contain energy subsidies, such as a rise in the price of aviation gasoline, the conversion of public transportation vehicles to propane, the temporary suspension of subsidies to EDH, and collection of amounts allegedly due the government by power producers for over-invoicing. On November 27, the BRH and ministry of finance signed a new Pacte to limit financing of the deficit for FY2020 to 10 billion gourdes, about 1.2 percent of GDP.

12. Available data suggests that the banking system was negatively affected by high interest rates and weak domestic demand. Non-performing loans (NPLs) rose rapidly in 2019, which suggests the need for a cautious assessment of banking sector stability risks. Banks dominate the financial sector but play a limited role in the economy and financial inclusion. The ratio of private sector credit to GDP (in both gourdes and dollars) has stabilized at around 19.7 percent. Profitability assessed in local currency remains high on average, with return on equity declining from 23.9 percent in September 2018 to 21.1 percent in June 2019 as provisions have increased more slowly than NPLs. Regulatory capital to risk-weighted assets was 21.7 percent in June 2019, well above the regulatory minimum (12 percent). Risks from currency mismatches are limited as current prudential regulations limit banks’ net open foreign exchange position to 2.0 percent of equity and the two systemic banks report more assets than liabilities in foreign currency. The main vulnerabilities come from the concentrated lending portfolios and relatively underdeveloped credit risk management practices.

Monetary Financing and Inflation

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: National Authorities and IMF staff calculations.

Reserves and Exchange Rate

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Outlook and Risks

13. Absent sustained implementation of good policies and comprehensive reforms, medium-term growth prospects remain grim. The baseline scenario assumes some political stabilization in FY2020 but not enough to deliver material progress. This would allow the formulation of a notional budget for FY2020 but growth would remain negative at -0.4 percent. Without measures to boost productivity, potential growth under the baseline is projected to remain below 1.5 percent over the medium term. 6 External capital flows are expected to decrease further in 2020 before recovering in subsequent years and inflation would ease to 17.5 percent (y/y) by end-2020, falling to below 10 percent by 2025. Short-term measures to contain energy subsidies combined with further spending cuts would imply a reduction in the fiscal deficit to 3.1 percent of GDP by 2021 where it would stabilize thereafter. Fiscal policy remains severely constrained by a lack of financing and would need to rely on accumulation of arrears for several years to close the gap. Beyond 2020, tax revenues are expected to recover somewhat with a normalization of revenue collection and boost from recent measures such as suspension of all tax exemptions except for those covered by treaties and diplomats. Fiscal losses to the energy sector as a share of GDP would decline gradually in real terms in line with international fuel prices and modest measures to reduce EDH losses, but would remain above the long-term average of about 3.0 percent of GDP (Table 2). The external current account deficit would shrink to 0.9 percent of GDP in 2020 as demand and imports remain weak. The external sector assessment suggests that Haiti’s external position at present is moderately weaker than medium-term fundamentals and desired policies (Annex III). 7

Table 1.

Haiti: Selected Economic and Financial Indicators, FY2017–24 1

(Fiscal year ending September 30)

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Sources: Ministry of Economy and Finance; Bank of the Republic of Haiti; World Bank; Fund staff estimates and projections.

Includes state-owned electricity company (EDH).

In percent of exports of goods and nonfactor services. Includes debt relief.

Table 2a.

Haiti: Non-Financial Public Sector Operations, FY2017–24

(Fiscal year ending September 30; in millions of gourdes)

article image
Sources: Ministry of Finance and Economy; and Fund staff estimates and projections.

Includes previously-programmed multilateral budget support that could be delayed.

Commitment basis, except for domestically financed spending, which is reported on the basis of project account replenishments.

Comprises payments on behalf of EDH for electricity generation, tax payments remitted to EDH and transfers to fuel distributors to maintain pump prices.

Includes the net change in the stock of government securities held by non-banks, of checks that are not yet cashed, of supplier credits and of domestic arrears.

Table 2b.

Haiti: Non-Financial Public Sector Operations, FY2017–24

(Fiscal year ending September 30; percent of GDP)

article image
Sources: Ministry of Finance and Economy; and Fund staff estimates and projections.

Includes previously-programmed multilateral budget support that could be delayed.

Commitment basis, except for domestically financed spending, which is reported on the basis of project account replenishments.

Comprises payments on behalf of EDH for electricity generation, tax payments remitted to EDH and transfers to fuel distributors to maintain pump prices.

Includes the net change in the stock of government securities held by non-banks, of checks that are not yet cashed, of supplier credits and of domestic arrears.

14. Risks are on the downside, but stability could bring important upsides (Annex II). Internal risks include a continuation of political instability and security problems, little economic reform, and extreme natural disasters. On the upside, a resolution of the current crisis, appointment of a government committed to reform, and return of support from the international community could lead to higher investment and potential growth. Externally, Haiti is vulnerable to oil price shocks and a reduction in remittance flows, triggered possibly by the termination of “Temporary Protected Status” of Haitian nationals in the U.S. or a slowdown in the U.S. and Canada. In an adverse scenario, cancellation of trade preferences, for example the U.S. HOPE Act, would hurt Haitian exports and could lead to FDI outflows in the textile sector, the main thriving export sector.

Authorities’ Views

15. The authorities broadly agreed with the staff’s baseline growth projection and risk assessment. They indicated the report would benefit from the presentation of alternative, more positive macro scenarios. They emphasized the severity and unprecedented duration of the current crisis, which is forcing them to rethink existing plans. They indicated that the political crisis was a result of the relentless poverty and inequality in Haiti and could not be resolved independently of the latter, and which would require external support. A particularly worrying development is the deterioration of the security situation and growing role of armed gangs. That said, they agreed that a resolution to the political situation and resumption of activity in early-2020 could lead to a rebound and would support a higher growth trajectory than forecast by staff. They emphasized in particular that creating jobs and boosting growth should be the priority objectives of any reform program.

Policy Discussions—Macroeconomic Stability

Discussions focused on: (i) immediate policies to limit the economic deterioration in the current environment and build capacity, strengthen governance, and tackle corruption; and (ii) medium-term policies that would require improvements in political stability. Staff recognize the serious challenges to implementation posed by the current political and security situation. As such, the emphasis was on short-term measures that would be feasible under the current circumstances, supported with capacity building technical assistance (TA) from the Fund. In addition to fiscal and monetary policy reforms, staff recommended the authorities also focus on strengthening the social safety net and reforming the energy sector.

A. Fiscal Policy

16. As an immediate priority, the authorities should prepare and publish a budget framework for FY2020. As a first step toward restoring fiscal stability, the government needs a notional budget with a deficit target consistent with financing constraints. The notional budget should include measures to stabilize domestic revenues by strengthening tax administration (¶19) and reducing tax expenditures. Exemptions under the three main taxes—income, sales (taxe sur le chiffre d’affaires), and import duties—amount to at least 2.6 percent of GDP. 8 The framework should also include a plan for the resolution of the stock of budget arrears. In the absence of budget guidance or obvious financing sources, staff project a deficit of the NFPS of 3.4 percent of GDP in FY2020. Gross financing needs, including debt amortization, would be met by domestic debt issuance, the central bank up to the limit under the Pacte, and further arrears accumulation (¶23–24, Tables 2a-b).

17. Over the medium-term, staff recommend a deficit target for the NFPS of 2.0 percent of GDP. This target is consistent with staff estimates that BRH financing of about 1.2 percent of GDP would not increase inflation in the medium term, assuming that the money base grows at the same rate as nominal GDP. Net project loans of about 0.8 percent of GDP per year would cover remaining financing needs under this framework. Staff estimate that a target of 2.0 percent of GDP would allow the debt ratio to decrease slightly over the medium term, leaving some room to accommodate adverse shocks.

18. Reaching even that goal will require significantly increasing domestic revenue collection. Staff recommend strengthening the capacity of the Directorate General of Taxes (DGI) and the Customs Administration (AGD), establishing a function-based organizational structure, enhancing their data exchange and use of third-party information to detect compliance risks, consolidating the registry of large taxpayers, and reducing tax expenditures. Efforts to advance computerization of customs operations and increase the use of online tax payments should also continue (see Annex IV).

19. The authorities should continue modernizing tax policy. They should follow through with implementation of the tax reform roadmap adopted in March 2018. In addition to drafting and advancing adoption of the new Tax Code and Procedure Code, other measures needed include excise tax reform, improvement of the framework for municipal taxation and, as noted above, reductions in tax expenditures. These reforms, including eventually a transition from the current sales tax to a VAT, should increase revenues over the medium term if properly sequenced and implemented.

20. Current expenditures should be reallocated to growth-enhancing capital and social spending. The public-sector wage bill and spending on goods and services need to be rationalized, including by adjusting the public workforce with attrition, adopting a price reference list for procurement of goods and services, and better enforcing spending controls (¶22). Spending on goods and services represents 20 percent of total spending, above the regional average. Transfers to the loss-making energy sector will need to be eliminated over time after mitigating measures are taken to compensate the impact of reform on the poor (Section C).

21. Strengthening public finance management (PFM) would improve governance and reduce the scope for misuse of public funds. In line with TA recommendations, Haiti should continue expanding coverage of the Treasury Single Account (TSA) to all ministries, autonomous agencies, and public enterprises. Other TA recommendations could be implemented regardless of the political turmoil, including ending recourse to “exceptional” spending procedures that undermine cash management. The authorities should also adopt a medium-term fiscal framework (MTFF) with the NFPS deficit target as the main anchor. This would aid in annual budget formulation, impose stronger fiscal discipline, and allow the government to sustain a stronger pace of public investment while keeping the overall deficit in line with the medium-term goal of fiscal sustainability. The Fund stands ready to continue providing TA in these areas.

Authorities’ Views

22. The authorities reiterated their determination to put in place an appropriate budget. However, given the technical difficulties they face to obtain parliamentary approval, they are formulating a budget framework that would be adopted by the government for the purposes of programming expenditures and cash management. They stressed that security problems and “peyi lok” seriously impeded taxpayers from physically delivering tax payments, and tax and customs officials from going to work. Progress on revenue reforms was also stopped. That said, they concurred with the need to raise domestic revenues and took note of staff’s short-term suggestions to strengthen tax administration. They highlighted additional measures underway to reduce monetary financing of the NFPS deficit, including exploring options to reduce transfers to the energy sector that could generate more savings compared to staff’s baseline projections, such as negotiating a temporary reduction in transfers to EDH and seeking refunds from independent power producers (IPPs) related to alleged sur-facturation (over-invoicing). They would prefer to set a range for the medium-term deficit target to account for the uncertainty surrounding growth and investment projections.

Near-term Measures to Restore Macroeconomic Stability

Fiscal:

  • Prepare and publish a notional budget for 2020, as announced in October.

  • Remove customs duties exemptions and reduce tax exemptions.

  • Further rationalize non-essential spending.

  • Prepare a plan for the resolution of arrears.

Monetary:

  • Enforce the new Pacte de Gouvernance between the BRH and the ministry of finance.

  • Reduce base money growth.

Governance:

  • Set up the steering committee envisaged under the 2009 National Anti-Corruption Strategy, with independent representatives from civil society.

  • Strictly enforce the asset declaration system for senior public officials.

Social Protection:

  • Formally adopt the PNPPS.

  • Set up a robust cash-transfer distribution system.

  • Design and launch a cash-transfer pilot-program (for families with young children).

Energy Sector Reform:

  • Overhaul the management and performance of EDH, including billing and collection.

  • Renegotiate contracts with independent producers in a transparent manner.

B. Monetary, Exchange Rate, and Financial Sector Policies

23. While the Pacte aims to address fiscal dominance, a financing gap will persist. Staff commend the renewal of the Pacte to maintain fiscal discipline and limit monetary financing of the deficit. Unfortunately, with the difficult economic situation, external financing support not available, and a shallow market for domestic debt, staff estimate there would remain a financing gap of 3.1 percent of GDP in 2020—met by arrears accumulation under the baseline (Table 2). Staff assessed the trade-off of different approaches and on balance, judged that this approach, compared to massive monetary financing of the deficit, was the least-worst option since it would imply lower inflation thereby less erosion of purchasing power of the poor, and would pose less risk to macro and financial stability. At the same time, the negative consequences of arrears accumulation are non-trivial and likely to involve shortages of goods like fuel, interruptions in public services like electricity, lower growth, and erosion of confidence in fiscal policy. In this regard, it will be critical for the fiscal authorities to mobilize revenues in the near-term and limit expenditures until policy reforms can occur.

24. Looking further ahead, a quantitative monetary target should become the policy anchor as fiscal dominance declines. This would help the BRH resist pressure to finance the government or support the exchange rate for reasons beyond those laid out in its policy framework. The BRH requested TA to help with the development of a secondary market for government debt securities but should also advance work on the transition to IFRS, amendments to the central bank law, improvements in foreign reserve management and foreign exchange regulation, and development and strengthening of the quality of monetary statistics—with calculation of foreign exchange reserves consistent with IMF guidelines.

25. Foreign exchange interventions should be limited to instances of disorderly market conditions. In recent years, the BRH has allowed the exchange rate to adjust in an orderly fashion, selling reserves in response to external shocks like a drop in remittances while using prudential measures, including reserve requirements, to limit banks’ vulnerability to forex liquidity risk. While the exchange rate has been remarkably stable during the second half of 2019, intervention should be limited to smoothing volatility or stabilizing market expectations in the short term, given the large and rapid exchange rate pass-through to consumer prices.

26. Improvements in financial intermediation are needed to support growth. Credit to the private sector represents about 19 percent of GDP, only 33 percent of the adult population has an account at a formal financial institution (Findex), and 75 percent of bank lending goes to only 20 borrowers. This reflects weaknesses in the legal and institutional framework, including contract enforcement, and limited competition between banks. With investment in infrastructure connectivity, developing fintech and mobile banking would be critical for raising access to finance and promoting financial inclusion. These efforts could be supported by the BRH as part of its 2015 National Financial Inclusion Strategy.

27. Safeguards assessment. An update safeguards assessment of the BRH was completed in 2019, noting that the central bank continues to face significant safeguards risks. Fiscal dominance has strained its financial position and legislative reforms are required to strengthen its autonomy and governance arrangements and curb financing of the government. While the BRH has taken steps to reduce delays in completion of its annual audits, measures are still needed to reinforce financial accountability and transparency, including by transitioning to International Financial Reporting Standards (IFRS), revamping foreign reserves management, and tightening controls over the reporting of monetary statistics. Steps towards transition to IFRS have been initiated and the BRH requested Fund TA to prepare legislative amendments to the central bank law.

Authorities’ Views

28. The authorities discussed the challenges faced in the conduct of monetary policy in the current environment. They concurred with staff’s assumptions on the composition of deficit financing as they intend to keep BRH financing at levels agreed under the Pacte in order to avoid excess liquidity creation given the high pass-through and direct impact on the exchange rate and inflation. In their view, the financing gap would be smaller, and the risk of arrears addressed since they expect that efforts underway and controls in place would limit fiscal financing needs. Their medium-term strategy aims to crowd in domestic private financing by accelerating reforms to deepen the market for government securities. The BRH explained that its reaction function currently puts more weight on the exchange rate than on money supply as the high dollarization of deposits complicates quantitative money targeting. They continue to view excessive exchange rate fluctuations as undesirable and agreed with staff on the need to intervene in the market as needed to avoid excess volatility. With regards to banking supervision, the BRH is committed to continuing the transition to risk-based supervision and to advancing reforms to promote financial inclusion, particularly raising access to finance for small business and moving forward with Fintech innovations.

C. Governance and Transparency

29. Governance weaknesses continue to plague Haiti despite the authorities’ prior commitments to combat corruption (Annex IV). Notwithstanding some progress enhancing accountability and transparency, notably with regard to PFM, the draft law aimed at strengthening the anti-corruption unit (Unité de Lutte contre la Corruption, or ULCC) was never submitted to parliament and the steering committee tasked with monitoring implementation of the 2009 anti-corruption strategy was never established. Overall, the anti-corruption framework is not adequately deterring corruption. Relevant agencies lack the legal powers and financial means to fulfill their mandates and the prosecution and sanction of corruption offenses is limited. Staff recommend revamping the anti-corruption priorities and setting up the steering committee with participation from independent members of civil society to monitor implementation. The asset declaration system for senior public officials should be implemented in line with international best practices, including by verifying the accuracy of the declaration, sanctioning omissions and false reporting, and ensuring public access to declarations. Anti-money laundering (AML) measures would support anticorruption efforts, particularly by strengthening banks’ implementation of due diligence requirements on politically exposed persons and enhancing transparency by making related beneficial ownership information available.

Governance Issues in Haiti

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources World Bank, World Development Indicators Worlwide Governance Indicators; FATF, Consolidated Asssessment Ratings; and IMF staff calculationsNote: Variables have been normalized (0=lowest level/rank, 5=highest level/rank).Low income countries (LIC) are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,025 or less in 2018. For the effectiveness of AML/CFT measures, the average of L ICs was calculated using available data from Burkina Faso, Ethiopia, Haiti, Madagascar, Tajikistan and Uganda.

30. Regulatory reforms should aim at reducing barriers to entry and rigidities that create opportunities for rent seeking and corruption. Reforms are needed to better guarantee property rights and reduce business and import monopoly powers. A more level-playing field is needed to stimulate competition, increase foreign investment, and promote private sector growth. These regulatory efforts should be accompanied by select infrastructure projects that tackle the worst physical bottlenecks and public investment to improve the power grid and telecommunications network.

Authorities’ Views

31. The authorities agreed that rooting out corruption and long-standing governance problems is a priority and essential for ensuring sustainable growth. They highlighted the progress achieved since the 2009 national strategy, including the strengthening of the anti-corruption legal framework, although they recognized implementation challenges. They described the process underway to prepare a new strategy for the next decade. More generally, they agreed that Haiti would benefit from reforms to strengthen property rights, reduce red tape, and create a level playing field for all businesses.

D. The Social Safety Net

32. Staff commend the authorities for their progress on the new policy PNPPS, despite the political turmoil. The PNPPS is a national initiative led by the ministry of social affairs and labor (MAST), the ministry of planning and external cooperation, and involving the ministries of health, education, and women’s’ condition, and other public organizations. A draft was submitted for national consultation in June 2019 and a revised draft was expected to be presented for approval by the Council of Ministers by end-2019. This inclusive and comprehensive approach is a good starting point to prepare a home-grown, more effective social safety net—a prerequisite for the success of other structural reforms. Staff urge the authorities to follow through with the timetable for finalizing the PNPPS.

33. The goals of the PNPPS are to reduce program overlap and boost coverage, effectiveness, and ownership. The existing array of programs is complex and ineffective, with inadequate coverage, overlaps and weak delivery systems (see Selected Issues Papers (SIP) on social protection and inequality). Staff support the approach of eliminating some programs and giving MAST the primary coordination role but encourage the authorities to focus on a limited number of unconditional, quasi universal cash transfer programs that are simple in design and have proven effective in other low-income countries. In coordination with the World Bank, staff urge the authorities to design and launch a new pilot program as soon as possible. They should continue expanding the coverage of the beneficiary information system (SIMAST), which can be used to identify beneficiary groups and improve the delivery of health and education services. The PNPPS should be based on a sustainable funding strategy as external support is phased out: while external financial flows may launch a pilot program and complement the PNPPS, funding for social protection should come primarily from domestic budget resources.

34. Effective transfer programs require the development of a strong system for the distribution of benefits. Methods for the distribution of cash transfers should be clarified quickly by drawing on lessons learned from programs set up after Hurricane Matthew and successful examples in other countries, adapted to prevailing technological and financial infrastructures. Haiti could draw on expertise from the World Bank and other partners. The mechanism chosen should be subject to regular and transparent monitoring and evaluation involving independent, nongovernment representatives in order to reduce the risks of mismanagement.

Authorities’ Views

35. The authorities stated clearly that poverty reduction is the number one priority and a prerequisite for the success of any future reforms. They share staff’s diagnostic that the lack of coordination between various programs and providers has led to overlap and inefficiencies. They stated that strengthening the social safety net should be accompanied by employment programs and stronger growth. They expressed concern that unconditional cash transfer programs could hinder their ability to target scarce resources and lead to unintended consequences. The BRH emphasized that the 2015 national financial inclusion strategy could play an important role in helping to reduce poverty by supporting job creation, raising access to credit for entrepreneurs, and facilitating payments between individuals with Fintech advances.

E. Reform of the Energy Sector

36. Achieving higher rates of economic growth will not be possible without comprehensive reform of the energy sector. Only 39 percent of Haitians have access to electricity. For those getting electricity from the grid (EDH), more than half are not billed. The rest of the population relies on diesel or charcoal-powered self-generation. Poor governance at EDH and flawed controls have led to large losses, including from theft at collection points, middlemen who intervene in the provision of electricity, non-payment by government entities, and illegal connections to the grid (see SIP). The fuel market is in flux with the end of the government import monopoly, while fixed retail fuel prices since early 2015, with one exception in 2017, have led to efficiency losses and resource misallocation.

37. Given the growing fiscal cost of energy subsidies, staff recommend initiating gradual and comprehensive reform of the sector. As a percent of GDP, direct fiscal losses are estimated at 4.5 percent in 2018 and 6.4 percent in 2019 (Box 3). Earlier progress under the SMP with respect to EDH accounting, billing, and contracting practices should be taken forward more aggressively. The management and oversight of EDH needs to be overhauled and costs, prices, and purchases from IPPs reviewed when their contracts expire. Any eventual approach to fuel subsidy reform should be well sequenced and differentiated to affect higher income groups, preceded by targeted measures to offset the impact on key groups, particularly the transportation sector, and include a clear communications plan that lays out in advance the rationale, timing and end-goals. It is essential that offsetting social programs be in place before engaging in reforms with redistributive implications.

Import Prices and Retail Prices

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

38. The transition to a cleaner energy mix and off-grid electricity offer opportunities for greater pluralism (a mix of private and public sector) 9. The private sector can play a role in financing the investment required to increase the use of renewable energy sources, namely biomass, solar and wind, and complement the government’s efforts to provide electricity to rural areas. Clean energy plans and energy sector reform would help alleviate the adverse social and economic impact of environmental degradation and move Haiti toward its climate change mitigation targets. An island country vulnerable to climate change and natural disasters, Haiti would in due course benefit from a Climate Change Policy Assessment which would help identify relevant adaptation, financing, and risk management strategies.

The Fiscal Cost of Energy Subsidies

  • The energy sector in Haiti generates large fiscal and economic efficiency losses. Direct fiscal losses from the fuel and electricity sectors are estimated at 4.6 and 6.5 percent of GDP in FY2018 and FY2019 respectively (SIP). In FY2018, these comprised foregone tax revenues and transfers to cover the EDH losses (1.8 percent of GDP) and fuel price subsidies (2.7 percent of GDP), among other things. Retail fuel prices have been administered since 2011, despite swings in international prices and gourde depreciation. When the fixed price was not sufficient to cover payments to suppliers, excise taxes and custom duties were waived. As the retail and import prices diverged further, the government provided direct transfers to distributors in addition to forgoing taxes and duties.

  • With administered fuel prices lower compared to prices in the region, smuggling has risen. Retail fuel prices in Haiti are now about 50 percent lower than in neighboring Dominican Republic. This large difference has created an incentive to smuggle petroleum products to the DR, increasing the budgetary burden for Haiti.

  • Chronic losses at EDH have been covered by the budget. The state subsidizes the electricity sector in four ways: (i) foregone tax revenues—collected by EDH but never transferred; (ii) the provision of free fuel to thermal plants; (iii) payment guarantees in the form of electricity purchases from IPPs on behalf of EDH; and (iv) the payment of fuel purchased by Sogener, supposedly in exchange for incomplete payments by EDH for electricity supplied. EDH routinely pays late charges on its billings from IPPs, continues to maintain unpaid debts to them, and in the past has borrowed from the state bank Banque Nationale de Crédit to fund operations. The financing of EDH (through transfers, arrears, and loans) is neither clear nor transparent.

Fuel Prices and Revenue

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Price Difference between Haiti and Dominican Republic

(In gourdes)

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

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Sources: National Authorities and IMF staff calculations.

Authorities’ Views

39. The authorities concurred with staff that energy sector reforms would improve the productivity of fiscal spending and remove an important constraint on growth. They agreed that the fiscal costs of the current system were unsustainable but noted that painstaking efforts were needed to prepare in advance for reform, including to offset its impact on the poor. They agreed that addressing high technical and commercial losses and weak management at EDH, and poor governance in the sector would reduce quasi-fiscal deficits

F. Statistical Issues

40. Improving the quality of economic data is essential given shortcomings that hamper surveillance. The biggest priorities relate to national accounts and labor indicators, while fiscal and external sector data need improvement in coverage and timeliness. With Fund-supported TA, the authorities should produce revised monetary statistics and reduce publication lags. In particular, improving the timeliness and quality of the Standard Reporting Forms (SRFs) for monetary statistics—with calculation of foreign exchange reserves consistent with IMF guidelines—is a priority.

Staff Appraisal

41. The costs of the current political crisis are taking a heavy toll on the economy and an already vulnerable population. Growth is expected to be negative in 2019 and 2020 while inflation is running at about 20 percent. This has reduced the purchasing power of households, especially the poorest. External budgetary assistance has nearly dried up, domestic revenues have fallen sharply, and budget arrears have risen. Under the gloomy but realistic baseline assumption of only a stabilization in the political situation (but no fundamental reform), potential growth is estimated at 1.4 percent over the medium-term. Haiti has potential for much stronger and more inclusive growth, but its realization will require some political stability and sustained implementation of good policies.

42. While acknowledging the considerable challenges faced by the monetary and fiscal authorities in the current context, the immediate priority should be to stabilize the macroeconomic situation. In the absence of a formal budget approved by parliament, the fiscal authorities should implement a budgetary framework for 2020 that would include measures to boost domestic revenues and contain non-priority spending. Staff recommended implementing actions laid out in recent TA to develop tax administration capacity, including improving sharing of data, using third-party data to detect fraud, consolidating the register of large taxpayers, and continuing progress to computerize customs operations.

43. Under present circumstances, the authorities face a daunting challenge to close the financing gap. From this angle, the costs of the ongoing crisis stand in stark relief. With options limited, it will be critical for the monetary and fiscal authorities to continue to coordinate closely to manage risks, mobilize revenues in the near-term, and limit expenditures until reforms can be implemented. The IMF continues to provide policy advice and technical assistance and stands ready to help with more intensive support when political conditions permit.

44. Looking further ahead, the fiscal authorities will need to shift resources away from non-priority spending toward social programs and investment. Strengthening PFM should improve governance, including by adopting reference prices for the purchase of goods and services, tighter controls on spending, and gradually reducing transfers to the energy sector. The government should expand coverage of the TSA to all ministries and public entities, enforce proper accounting and audits, and prepare a resolution plan for arrears. It would be useful for Haiti to adopt a medium-term budget framework anchored around a target for the NFPS deficit. Staff stand ready to provide additional TA in the areas of tax administration and PFM.

45. The central bank should continue to allow the exchange rate to adjust in an orderly fashion. When the fiscal dominance issue is addressed in due course, monetary policy should set a quantitative growth target for the money supply so as to resist pressures to monetize the deficit or support the exchange rate for reasons other than to smooth excess volatility. The BRH should work to advance key institutional reforms in the areas of foreign reserve management, the transition of financial reporting to IFRS, amendment of the central bank law, and improvement in the quality of monetary statistics. The Fund stands ready to provide further TA in these areas. To deepen financial intermediation and access to financial products, staff urged the monetary authorities to accelerate efforts to develop financial technology. Over the longer term, reforms are needed to address weaknesses in the legal and institutional environment, in particular with regard to the enforcement of contracts.

46. Corruption remains an obstacle to prosperity and key actions could be implemented in the short-term. The authorities should update the anti-corruption strategy, set up the steering committee with independent representatives from civil society, and implement the asset declaration system in line with international best practices. AML measures should support the fight against corruption and include insisting on verification and ‘know your customer’ rules. Regular audits of public companies and administrations by the High Court of Auditors should be enforced and published. Staff also encourage the government to present a new draft law to parliament (when possible) to strengthen the anti-corruption framework.

47. Existing resources devoted to social protection could be deployed more effectively. IMF staff commend the authorities for their efforts to finalize the PNPPS and urge its adoption by the Council of Ministers. Within this framework, staff recommend the introduction of a limited number of cash transfer programs under the auspices of MAST. Existing programs not in line with the objectives of the PNPPS should be wound down. The information system SIMAST should serve as the basis for the identification of beneficiaries and its coverage expanded. The methods for the distribution of transfers should be clarified quickly and coordinated with the development of mobile and financial infrastructures.

48. Fundamental reform of the energy sector is needed for fiscal sustainability and higher growth. In the electricity sector, a drastic overhaul of the management and performance of EDH is the first priority, followed by the transparent renegotiation of contracts with independent producers. In the fuel sector, the original goal of fixing prices was to protect purchasing power, yet this logic has unraveled: subsidy costs and fiscal deficits led to monetary financing which contributed to inflation, depreciation and a vicious cycle of higher subsidy costs, deficits, monetary financing and inflation. Any reform must be developed in consultation with relevant stakeholders, be preceded by measures to offset the impact on vulnerable groups, and involve a strong communications plan ex ante. Staff discussed possible approaches with the authorities, including implementing reforms differentiated by product and phased over time, and accompanied by compensating measures, such as assistance to providers and users of public transport. The authorities are encouraged to include diversification of the energy matrix towards renewable, cleaner energy sources in their reform plan.

49. In the medium term, regulatory reforms are needed to open and level the playing field for private business. Haiti needs to ensure stronger property rights and remove import and industry monopolies to lower barriers to entry and raise investment. These regulatory efforts should be accompanied by infrastructure projects to address key bottlenecks and public investment to improve the electric power grid and the telecommunication network.

50. Staff urge the authorities to continue their efforts to improve the quality, coverage, and timeliness of statistical data.

51. It is recommended that the next Article IV consultation take place on the standard 12-month cycle.

Figure 1.
Figure 1.

Haiti: Real Sector Developments, 2013–191

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: National Authorities; UNDP; World Bank; International Labour Organization (ILO) and IMF staff calculations.1 Data are in fiscal years, ending September 30.2/ Data for 2019 is only available until August 2019.3/ Modeled ILO estimate.
Figure 2.
Figure 2.

Haiti: Fiscal Sector Developments, 2013–191

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: National Authorities and IMF staff calculations.1 Data are in fiscal years, ending September 30.2/ External financing under Financing by Source includes project loan disbursements and external arrears net of amortization.3/ Non bank financing under Financing by Source includes domestic supplier credits and domestic arrears.4/ Social spending includes health, education, and agriculture spending. No data breakdown between Ministries for years 2013–15 and 2019.
Figure 3.
Figure 3.

Haiti: Monetary Sector Developments, 2013–191

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: National Authorities and IMF staff calculations.1 Data are in fiscal years, ending September 30.
Figure 4.
Figure 4.

Haiti: External Sector Development, 2013–191

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: National Authorities and IMF staff calculations.1 Data are in fiscal years, ending September 30.
Figure 5.
Figure 5.

Haiti: Social Indicators

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: UNICEF, WHO, World Bank, Global Poverty Working Group and IMF staff calculations.1/ Latest available data. The poverty headcount ratio is the percentage of the given population living below the national poverty lines.2/ HND, PAN, GTM, CRI, DOM,HTI and SLV denote respectively Honduras, Panama, Guatemala, Costa Rica, Dominican Republic, Haiti and El Salvador.3/ Low income countries (LICs) are defined as those with a GNI per capita (calculated using the World Bank Atlas method) of $1,025 or less in 2018.4/ Average for Central American countries was calculated based on 2016 data or latest available for each country.5/ The HCI index score ranges from 0 to 1 and measures the amount of human capital that a child born today can expect to attain by age 18. It attempts to measure the productivity of the next generation of workers compared to workers with complete education and full health.6/ For South America: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, Venezuela and Mexico.
Table 3.

Haiti: Summary Accounts of the Banking System, FY2017–24

(Fiscal year ending September 30; in millions of gourdes, unless otherwise indicated)

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Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections.

Program definition. Excludes commercial bank forex deposits, letters of credit, guarantees, earmarked project accounts and US$ denominated bank reserves. The SDR allocation is not netted out of NIR.

Table 4a.

Haiti: Balance of Payments, FY2017–24

(In millions of US$ on a fiscal year basis; unless otherwise indicated)

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Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections.

Includes previously-programmed multilateral budget support that could be delayed.

Change in net foreign assets of commercial banks.

Includes debt to Venezuela for oil shipments already paid by the GOH in local currency but not yet cleared in U.S. dollars.

Includes gold.

Includes arrears on oil imports

Table 4b.

Haiti: Balance of Payments, FY2017–24

(In percent of GDP on a fiscal year basis; unless otherwise indicated)

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Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections.

Includes previously-programmed multilateral budget support that could be delayed.

Change in net foreign assets of commercial banks.

Includes debt to Venezuela for oil shipments already paid by the GOH in local currency but not yet cleared in U.S. dollars.

Includes gold.

Includes arrears on oil imports

Table 5.

Haiti: Financial Soundness Indicators, June 2017–June 2019

(In percent; unless otherwise indicated)

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Sources: BRH Banking System Financial Summary; and IMF estimates and projections. These indicators reflect the aggregated results of the nine licensed banks in operation in Haiti; thus figures in this table may not exactly match the information in Table 3, which reflect the consolidated banking system.

Defined as the difference between average lending rate and average fixed deposit rate in the banking system.

Liquid assets comprise cash and central bank bonds.

Annex I. Country Engagement Strategy

1. The results of past Fund-supported arrangements with Haiti have been disappointing. An ECF arrangement approved in 2015 lapsed because of failure to complete the first review and an SMP ended in August 2018 with incomplete progress. Despite other extensive international assistance and financial aid following the 2010 earthquake, foreign interventions have so far failed to deliver change. Moreover, the proliferation of development and humanitarian projects and partners has contributed to fragmentation of programs, uncoordinated and inefficient delivery of goods and services, and importantly, a loss of policy ownership.

2. Haiti’s fragility warrants a careful and tailored approach. In addition to typical sources of fragility related to political instability and conflict, poverty, inequality, weak capacity and infrastructure, Haiti has other important sources of fragility: (i) high susceptibility to natural disasters; (ii) weak institutions and little national ownership of policies; (iii) weak business regulations and judiciary which have contributed to a concentration of economic power and encouraged rent-seeking activities among public officials; and (iv) insufficient means to maintain security and order.

3. Several recurring factors underlie the cycle of failed reform efforts. Based on a broad and objective stocktaking, including from the 2015 Ex-Post Assessment, the following issues undermined past efforts and must be addressed to break the cycle: (i) reform programs did not match in terms of scope and design Haiti’s fragility and limited capacity to carry out the multiple and not always well-coordinated projects initiated by international partners; (ii) Haitian ownership of the relief and reform agenda was lacking; (iii) investment in, and empowerment of, all Haitians was inadequate (ISE 2014); and (iv) accountability and transparency in the use of public funds was weak or absent.

4. Concept. This engagement strategy (CES) aims to raise awareness and build consensus and commitment among internal stakeholders in Haiti for a set of basic economic principles that underpin the imperative of economic stability and policy continuity. Given the lack of effective institutional and political commitment for sustained reforms, the goal would be to develop an alternative ‘commitment device’ that effectively leverages communications by exploiting the strong Haitian culture of active civil society.

5. Approach. The strategy attempts to address the issues identified above in two steps.

Step 1. The first would be to start to build consensus around a basic set of generic economic principles and objectives, consistent with Haiti’s limited capacity, that could attract universal support. This consensus would need to be owned by the government, endorsed by key stakeholders in Haiti (including the private sector, labor, civil society, and eventually the opposition) and supported by the international community.

Step 2. The second step would be to encourage policymakers (and stakeholders) to spell out their engagements in writing. An international forum or round table in Haiti could be an opportunity to initiate the dialogue and develop this as a form of ‘commitment device’. Given the weakness of public institutions and the political system, a different national framework or tool could help to mobilize commitment, empower Haitians, and follow through on the most basic principles of macroeconomic management, at least until such time as national systems function more effectively. The formulation of a Poverty Reduction and Growth Strategy document could provide an opportunity for discussion among domestic stakeholders of more detailed reform proposals to implement those principles and achieve the basic objectives previously identified.

6. IMF role. The Fund is well placed to initiate a dialogue among stakeholders and to assemble foreign partners. Coordination between international financial institutions would be strengthened by formalizing the ongoing cooperation with the World bank and the IDB through the creation of a tripartite working group at the mission chief/country director level. The group could meet at least quarterly to discuss reform progress and future engagement plans.

7. Timing. Informal outreach in Haiti and with external partners should begin soon. Staff initiated discussions with stakeholders during the Article IV consultation on the broad concept and objectives of the proposed strategy. Preliminary feedback was positive, although many flagged the challenges. The Resident Representative would be critical in promoting the process on the ground.

8. Potential fund support. When a government is in place that is in a position to commit to and implement policies that would put Haiti on a path toward economic stability and sustainability, the Fund could consider financing support. Under those conditions, an RCF/SMP combination, contingent on the determination of an urgent balance of payments need, could provide a bridge to an ECF arrangement. The combination of facilities would need to be appropriately adapted to the Fragile and Conflict States guidelines and should include rapid implementation of broader social protection policies to alleviate social distress and bolster public support and ownership of reform.

9. Economic reform priorities. The reform strategy would focus on four key objectives: (i) restoring macroeconomic stability, (ii) strengthening governance and transparency, (iii) building a social safety net, and (iv) reforming the energy sector.

10. Capacity building. Fund TA is critical for ongoing capacity building, should support program conditions, and be informed by the experience and lessons from past TA. The provision of TA also allows for continuous IMF engagement with Haiti even during periods of political crisis when lending operations cannot move forward. Including efforts to monitor and trace resource use—addressing a disincentive to donors at present—could help mobilize development assistance (see Annex IV).

11. Outreach and communications will be key to advance the strategy and raise understanding of key issues. A coordinated approach with the government would be important. The Resident Representative will have a key role in outreach with stakeholders and to raise awareness and support among the broader public, particularly highlighting the purpose of the strategy—to build consensus on the need for macro stability and policy continuity—and focusing on the reforms that strengthen the social safety net and fight corruption. Haiti’s active civil engagement and relatively free media are assets that could be leveraged to help gain traction for these goals and strengthen national ownership. It would be important in due course to harness the most effective modes of news transmission particular to Haiti, including radio and social media.

Annex II. Risk Assessment Matrix 1

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Annex III. External Sector Assessment

The external position of Haiti in FY2019 is assessed to be moderately weaker than medium-term fundamentals and desired macroeconomic policies. It should be noted that the assessment occurs in the recent context of output contraction, a decline in public spending by 3.0 percentage points of GDP, demand and import compression, and a surge in arrears, developments that larger external financing might have prevented.

A. External Balance Sheets

1. Haiti had net external liabilities of about 18 percent of GDP as of September 30, 2019. Gross external assets of 30.5 percent of GDP consisted primarily of the central bank’s international reserves at 55 percent of the total and other investments by the banking sector at 32 percent of the total. Gross external liabilities stood at 48.7 percent of GDP, with foreign direct investment (FDI) accounting for 55 percent of these liabilities. Public external debt is all on concessional terms, mostly (82 percent) owed to Venezuela, and accounts for one-half of gross liabilities. After the devastating 2010 earthquake, large donor grant inflows contributed to a surge in foreign reserves, resulting in a positive net asset position during FY2010–2012. In subsequent years, both public external debt and FDI increased while foreign reserves declined.

Net International Investment Position (NIIP)

(Percent of GDP, eop)1/

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: Bank of the Republic of Haiti and IMF staff calculations.1/ Data for FY2017–FY2019 are provisional.

Assessment

2. Given persistent current account deficits, Haiti’s NIIP/GDP ratio is projected to worsen over the medium term. Public external borrowing to finance capital expenditures is expected to remain weak under the baseline assumptions, leading to a gradual decline in the external debt-to-GDP ratio over the medium-term. FDI is projected to recover from its sharp drop and low base in 2019, rising from under 1.0 percent of GDP to about 1.8 percent of GDP by 2025, an improvement but low given the investment needs of the country.

B. The Current Account

3. Haiti runs a current account (CA) deficit comprised of a large goods trade deficit that is mostly offset by private remittances. Remittances to Haiti amount to 35 percent of GDP, making it one of the largest recipients of remittances in the region. 1 The trade deficit has averaged about 38 percent of GDP over the past 10 years. Goods exports are low and Haiti depends heavily on food and fuel imports. The relatively low share of exports in GDP, averaging about 19 percent over the last decade, reflects long term structural weaknesses, including poor port and road infrastructure, limited availability of credit, insufficient and unreliable electricity, water shortages, and a weak legal and regulatory environment 2 Haiti is ranked in the lowest decile of the World Bank’s Doing Business index. 3 Goods exports are concentrated, with apparels accounting for more than three-quarters of goods exports of which the U.S. absorbs about 70 percent. Dependence on imports of basic essentials and frequent natural disasters exacerbate Haiti’s vulnerabilities to exogenous shocks.

4. The current account deficit shrank to 2.0 percent of GDP in FY2019 from 3.9 percent of GDP a year earlier, largely due to a reduction in total imports and an increase in remittances. The modest rise in fuel imports due to higher global fuel prices was largely offset by strong private remittance flows at 34.9 percent of GDP—the highest level as a share of GDP in two decades. The CA deficit in FY2020 is projected to increase slowly to about 2.3 percent of GDP in spite of the continued growth in private remittances.

Current Account Balance

(Percent of GDP)

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: Bank of the Republic of Haiti and IMF staff calculations.

Exports of Goods

(Percent of GDP; average over 2014–18)

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: IMF, World Economic Outlook database and IMF staff calculations.

Assessment

5. Staff’s assessment based on the refined EBA-lite model shows the FY2019 CA balance to be moderately weaker than what medium-term fundamentals and desired policies would suggest. The CA model’s fit has significantly worsened over the last few years compared to the historical average. As noted above, the recent context of political crisis involves output contraction, demand-related import compression, and a rise in arrears, developments that complicate the model-based exercise. Accordingly, staff adjusted the CA norm downward to account for heightened uncertainty and the sizeable political shocks not captured by the model (Table 1). The size of the adjustment was calculated based on the difference between the model residual for 2019 and the average value of the residual in the last 5 years. As a result, the CA gap is -2.0 percent of GDP; the multilaterally-consistent cyclically-adjusted CA norm is -1.5 percent of GDP and the cyclically-adjusted CA balance is –3.5 percent of GDP. Policy gaps contribute about 2.8 percentage points of GDP to the model-estimated CA gap and the rest reflects unidentified country-specific factors and/or regression residuals. 4

Annex Table 1.

Haiti: Assessment of the Current Account Balance

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Source: IMF staff estimates.

6. Structural reforms could help achieve fiscal sustainability while enhancing long-term growth. Measures are needed to increase productivity and lower private precautionary savings. This would involve policies to support improvement in social indicators and human capital, including higher spending on social protection, education and health, and increased access to finance. A comprehensive review of the business environment and key reforms are needed to boost private investment and export competitiveness.

Real Exchange Rate

7. The real effective exchange rate (REER) depreciated by 10.8 percent in FY2019. This was due to depreciation in the nominal effective exchange rate (NEER) by 23.6 percent.

Annex Table 2.

Haiti: Assessment of the Real Exchange Rate

(In percent)

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Source: IMF staff estimates.

Assessment

8. The EBA-lite REER model estimates the REER gap at -1.9 percent. On this basis, the position is assessed to be broadly consistent with fundamentals and desirable policy settings. Monetary policy should continue to strive for lower inflation, reduce direct financing of the government, and allow exchange rate flexibility.

Effective Exchange Rates

(Index, 02010= 100; fiscal-year averages)

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: IMF, Information Notice System database and IMF staff calculations.

C. Capital and Financial Flows

9. Haiti maintains an open financial account but receives limited portfolio inflows. At 1.7 percent of GDP average over the past ten years, FDI inflows to Haiti are lower than the regional average. In FY2019, financial flows remained largely stable as a share of GDP, reflecting lower disbursement for public projects and a rise in non-banking sector inflows.

Assessment

10. Over the medium term, the capital and financial accounts are expected to remain in modest surplus. Under the baseline, the political crisis would abate and FDI and external financing associated with public investment projects would recover somewhat. These flows, combined with a sustainable level of CA deficit, would support a modest improvement in the overall balance of payments.

Capital and Financial Account Balance

(Percent of GDP)

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: Bank of the Republic of Haiti and IMF staff calculations.

Net Direct Investment Inflows

(Percent of GDP; average over 2014–18)

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: IMF, World Economic Outlook database and IMF staff calculations.

D. Foreign Reserves

11. As of September 2019, gross international reserves stood at about US$2.18 billion, equivalent to about 4.8 months of next years’ projected imports of goods and services. Haiti’s dejure exchange rate regime is floating, but de facto regime is classified as “crawl-like”. The central bank tracks the developments in the exchange rate market given its high pass-through to domestic prices, implications for liquidity in the banking system, and impact on growth. BRH intervenes in the foreign exchange market mostly to manage volatility in the exchange rate, but also to provide market liquidity and build up reserves.

Gross International Reserves

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Sources: Bank of the Republic of Haiti and IMF staff calculations.

Assessment

12. Gross international reserves are at present adequate to finance more than 4 months of prospective imports of goods and services, although this adequacy level has steadily declined in recent years. The IMF’s reserve adequacy estimate for low-income economies suggests that 2¾-4 months of current import coverage of reserves would be adequate. 5 At 4.8 months of prospective import coverage, gross reserves for FY2019 are assessed to be adequate under current assumptions. However, the above estimate is sensitive to assumptions of unconditional probability of a large shock affecting the economy. Thus, higher reserves would serve as an important buffer, but they are not substitutes for needed policy adjustments and structural reforms.

Annex IV. Proposals for Governance Reform

The purpose of this annex is to assemble in an integrated manner the elements of reform that fall under the Fund’s core competencies and that would contribute clearly to improving governance, transparency and accountability, and tackling corruption in Haiti. 1 These draw on the framework of the March staff-level agreement, the 2019 safeguards assessment of the central bank (BRH), and ongoing TA.

A. Context

1. Haiti faces severe governance vulnerabilities. Corruption is perceived as high and widespread. The existing anti-corruption legislation does not appear to be enforced. Out of 232 presidents and ministers over the period 2008-February 2018, less than half submitted an asset declaration at the beginning of their tenure and only 11 percent did so at the end of their tenure, as required by law. Of the tax controllers, 99 percent did not submit asset declarations, nor did 97 percent of senators and 93 percent of congressmen. 2 Since the creation of the Anti-Corruption Unit (Unité de Lutte Contre la Corruption or ULCC) in 2004, only 39 cases have been prosecuted by the justice system. In 2018, the UCREF (Unité Centrale de Renseignements Financiers), Haiti’s financial intelligence agency, reported receiving about 400 reports of suspicious financial activity, but referred less than twelve to the judiciary. According to the Caribbean Financial Action Task Force (CFATF), Haiti has not recorded any successful prosecution or conviction for money-laundering offences for the past five years (2014–18). 3

2. These vulnerabilities affect all categories of state functions and have significant negative effects on the economy. Fiscal governance, financial sector oversight, central bank governance and operations, the quality of market regulation, rule of law, and the AML-CFT framework all suffer from governance weaknesses that create vulnerability to corruption. Fiscal governance weaknesses have significant negative effects on tax revenue and customs collection, public spending effectiveness, and the fiscal position. The central bank’s autonomy and accountability are compromised by a weak legal framework. Business confidence is hindered by weak property rights and contract enforcement. The rule of law, and capacity of the police are weak and undermine the enforcement of laws and prosecution of crimes, fueling popular resentment against the government. A recent report based on a broad-based national and sector-focused dialogue launched by President Moïse highlighted the following issues as the key impediments to Haiti’s modernization: the lack of independence of the judiciary and interference by the executive and legislative powers in judicial affairs, the weaknesses of political parties, and economic monopolies.

3. Corruption has become a more serious issue since revelation of the misuse of Petrocaribe funds in the years following Haiti’s 2010 earthquake. In two reports released in January and May 2019, the Superior Audit Court (Court Supérieure des Comptes et du Contentieux Administratif or CSCCA) presented details of its investigation into the use of 77 percent (US$1.6 billion) of the total funds received in the context of the Petrocaribe program, highlighting widespread mismanagement and misuse and calling for judiciary action against involved officials. 4 The Petrocaribe scandal triggered large demonstrations in October and November 2018, and again in February 2019, with protesters demanding better accounting of the use of funds and the replacement of officials involved.

B. Priorities for Reform

Strengthening the Anti-corruption Framework

4. Although elements of the legal and institutional framework to fight corruption are in place, its effective implementation is lacking. Control bodies and institutions involved in the fight against corruption lack the legal powers and resources. The ULCC employs only 130 people and is present in just half of the départements (administrative districts). Beyond the ULCC, the 2014 OAS report on the implementation of the Interamerican Convention against Corruption calls for the strengthening of the CSCCA, the Public Procurement Commission (Commission Nationale des Marchés Publics or CNMP), the Superior Judiciary Council (Conseil Supérieur du Pouvoir Judiciare or CSPJ), and the Finance Inspection (Inspection Générale des Finances or IGF). 5

5. The prevention and enforcement against corruption should be enhanced. The appointment and employment rules of commissioners and the director general at the Steering Committee should better ensure their independence, with a greater role for representatives of civil society. Public reporting of the work of the commission should be guaranteed. The authorities should update the anti-corruption strategy and ensure its proper implementation. The draft anti-corruption legislation should be brought into line with the requirements of the United Nations Convention against Corruption by strengthening the independence and authority of the anti-corruption agency and increasing its transparency. The new office should be given the power to prosecute crimes in addition to investigating them. The asset declaration system for senior public officials should be properly implemented in line with international best practices, including by verifying the accuracy of the declaration, sanctioning the failure and false reporting, and having public access to the declarations.

6. Transparency is key to raising public accountability. The CSCCA should progressively audit and publish all annual consolidated financial statements made available by the ministry of finance. All reports by the CSCCA should be systematically published, as was the case for the reports on the use of Petrocaribe funds. The wages and benefits of all public officials and high civil servants should be publicly available. The asset declaration requirement for public officials and high-level civil servants should be better enforced.

Public Financial Management (PFM)

7. Improvements in PFM would reduce the scope for misuse of public funds. While Haiti has benefited from the support of several TA missions, the presence of a long-term expert in the ministry of Economy and Finance is key to ensure the implementation of the TA recommendations given the significant capacity constraints of the Haitian administration.

8. The Treasury Single Account (TSA) is a major component of the PFM reform strategy. By consolidating all state financial resources, the TSA can help to ease payments, strengthen cash management and prevent new expenditure payments arrears, reduce borrowing costs, and improve fiscal reporting and transparency. Since 2014, the TSA has been extended to 18 ministries— accounting for more than half of total public expenditure—by consolidating or linking existing individual bank accounts held by entities and agencies within the administrative jurisdiction of the state into or to a single account. However, as of March 2019, there remained over 900 accounts at the central bank (BRH) and at the Banque Nationale de Crédit. Specifically, there are about 74 accounts open at the BRH by various ministries and public institutions that could be merged rapidly in the TSA.

9. Limiting the use of “exceptional spending procedures” and enforcing the timely reporting of financial accounts would raise transparency and accountability. The use of lettres de virement, which bypass regular financial control procedures and spending authorization, to pay for government expenditures, have grown from 8.1 percent of total budget spending in 2015–16 to around 16 percent of total budget spending in early FY2019 and jeopardize the proper monitoring of public spending. The coverage and quality of financial accounts should be improved to facilitate public finances monitoring.

10. A medium-term budget framework and investment plan is needed to improve fiscal management and spending prioritization. Both reforms would strengthen the credibility of fiscal policy, impose greater fiscal discipline and aid in budget formulation while ensuring that the selected investment projects are properly financed. It would also allow proper monitoring and prioritizing of ongoing investment projects. Eventually a Public Investment Management Assessment would help guide the reform of the public investment process.

Customs Collection

11. Current customs processes and valuation assessments allow for considerable discretion and uneven enforcement by customs officers. There remain large revenue leakages at the customs agency (AGD). A prominent example is that AGD records imports from the Dominican Republic at one half of the level of exports to Haiti recorded by the Dominican Republic (see SIP). According to World Bank preliminary estimates, numerous customs duties exemptions (machinery, spare parts, semi-finished products, materials needed for the development of specific sectors, imports by NGOs) may be costing the Haitian government the equivalent of 0.8 percent of GDP in customs duties.

12. Staff urges swift implementation of the measures recommended in 2018 to strengthen customs administration. This includes improving the interconnectivity of the information systems of the tax and customs administrations (DGI and AGD) to facilitate data sharing and verification and increasing the use of the ASYCUDA software to automatically input manifests for imported goods and manage goods in customs bond awaiting clearance. 6 Staff welcome the authorities’ project to connect the Haitian and Dominican Republic customs administration (the latter also uses ASYCUDA). To further combat fraud, AGD should also establish a reference price list to be systematically used to assess customs duties. Given the very limited staff capacity of the AGD, the presence of a long-term or peripatetic expert is viewed as essential for the success of these reforms.

Governance of State-owned Enterprises (SOEs) and the Public Electricity Utility (EDH)

13. SOE governance is weak. The rules governing SOEs are spelled out in the Décret du 17 mai 2005 portant Organisation de l’Administration Centrale de l’Etat. Board members are appointed by the Council of Ministers after approval by the Senate. Reporting obligations are limited and often not enforced. SOE accounts are not consolidated in government financial statistics.

14. EDH losses amount to about 2 percent of GDP per year. This reflects a combination of weak management and governance. A large share of accounts is not billed, and payments not collected, administrative costs are high, and many users are reportedly informally connected to the grid but not registered. Purchase agreements with energy suppliers lack transparency and often include a “take-or-pay” clause that prevents EDH from optimizing across energy sources. 7 As a focus for reform under the 2018 SMP, EDH registered important gains, notably on transparency, with the publication of the utility’s first full budget, on the billing rate, which rose from 40 to 50 percent, and on supply contracts, some of which are now being put out to public bid (see SIP).

15. Staff recommend the timely adoption and publication by EDH of an annual budget. The budget should have cash flow projections along with a multi-year plan to raise invoicing and collection rates. The staff-level agreement concluded in March 2019 set structural benchmarks to contracts with private electricity suppliers.

Business Regulations

16. Haiti needs to lower the costs of starting a business, improve the protection of minority investors, and reduce market dominance. According to the Doing Business and the Global Competitiveness Reports, Haiti is one of the weakest performers in the world on these three dimensions. 8 The lack of a level-playing field resulting from the absence of a legal framework for competition discourages investment and drives rent-extraction behavior. As a result, consumer prices, including for food products, are reported to be 40 to 50 percent higher in Haiti than in other countries in the region.

Tax Code and Administration

17. The draft tax code needs to be approved by parliament and published. This will clarify the tax rules and help to improve compliance. Future TA missions will focus on drafting the tax procedure code, building the capacity to enforce the tax policy (large taxpayers’ unit), and reviewing derogatory regimes and tax exemptions.

18. Reorganization of the tax administration (DGI) is a prerequisite for future tax reforms, such as introduction of a VAT. The DGI’s organizational structure is not aligned with key functions and the monitoring function is lacking. Day-to-day operations are not effectively controlled; for example, the taxpayers’ register is unreliable while the stock of arrears is unknown. A draft organic law to reorganize the DGI still awaits submission to parliament.

Central Bank Governance and Operations

19. The 2019 safeguards assessment identified the need to reinforce the central bank’s autonomy, accountability and governance framework. The report noted weaknesses with regard to the central bank’s institutional and financial autonomy and governance arrangements, financial reporting practices, audit mechanisms, and reserves management. Improvements in these areas, including through comprehensive legal reforms and transition to International Financial Reporting Standards (IFRS) to increase transparency, are key priorities. First steps towards the transition to IFRS were initiated in 2019.

AML/CFT

20. The July 2019 Mutual Evaluation Report of AML/CFT measures published by the Caribbean Financial Action Task Force (CFATF) graded Haiti a low level of effectiveness of its AML/CFT regime and called for fundamental improvements. 9 The report noted that “Haiti has not conducted any ML/TF risk assessment that is geared towards identifying and understanding its ML/TF risks”. As a result of the absence of any ML/TF risk assessment, the jurisdiction’s authorities have not taken any measures to mitigate ML/TF risks. Technical compliance with FATF recommendations is weak: Haiti was found to have low effectiveness ratings for all immediate outcomes and to be partially compliant or non-compliant with 38 out of 40 FATF recommendations Further steps should be swiftly taken to ensure compliance with the FATF standards and their effective implementation into Haiti’s framework, and to prevent pressure on correspondent banking relationships, which could increase financial intermediation costs, including for trade and remittances. The World Bank is advising the authorities in the AML/CFT area.

Annex Figure 1.
Annex Figure 1.

Haiti: IMF Contributions to Governance Reforms

Citation: IMF Staff Country Reports 2020, 121; 10.5089/9781513541464.002.A001

Annex V. Capacity Development Strategy

1. The capacity of Haiti’s institutions is low. Over the past two years, Haiti has received extensive TA from FAD, MCM, and CARTAC, on tax administration, tax policy, public financial management, banking supervision, and price and national accounts statistics. However, the implementation of TA recommendations has been relatively slow, in part due to acute capacity constraints and political instability. The establishment of a Treasury Single Account (TSA) has been ongoing since the first TA mission in June 2014 and is still not complete. Similarly, the reorganization of the tax administration, first proposed in 2014, has not progressed despite follow-up missions in 2015, 2017, and early 2019.

2. The presence of resident long-term experts and the preparation of roadmaps would improve ownership and make TA more effective. Past experience shows that resident long-term TA advisors can assist in the coordination of TA and the hands-on transfer of knowledge, and build capacity more intensively than mission-based support. Similarly, the preparation by the authorities of a roadmap (note de cadrage and feuille de route) ahead of any TA-supported reform has been found to improve traction with technical staff and facilitate the implementation of proposed changes. Priorities. The authorities indicated their priorities for TA are to: (i) reform tax policy with a new tax code; (ii) strengthen revenue collection; (iii) improve public financial management and fiscal accountability; (iv) develop and strengthen local markets for foreign exchange and government debt securities; and (v) improve data compilation and reporting (monetary, price, and national accounts statistics). To ensure maximum effectiveness, staff propose that Fund TA focus on tax and customs administration, public financial management including governance of state enterprises, reform of the energy sector and reduction in fiscal losses, and expenditure policy (including social spending). Capacity development in the areas of foreign reserve management, transition of the central bank’s financial reporting to IFRS, amendments to the central bank law, foreign exchange regulation and development, anti-corruption legislation, and improving the timeliness and quality of the Standard Reporting Forms (SRFs) for monetary statistics—with calculation of foreign exchange reserves consistent with IMF guidelines—would be necessary in the event of approval of a new financing arrangement. Details about TA priorities by department are provided in the table next page.

3. Main partners. Many donors are financing capacity development or providing TA in Haiti. The main financial partners include Canada, the E.U. and the U.S. The main technical partners include USAID (social protection, electricity market, and oil import market), the World Bank (social protection, health, transport, AML-CFT, and resilience to natural disasters), the IDB (transport, water and sanitation) and the World Food Program (social protection). To strengthen coordination and improve the effectiveness of TA, a partnership framework (cadre de partenariat) has been in place since May 2017 with the Haitian government and the financial and technical partners in the areas of fiscal reform and public financial management. A similar type of partnership is being considered in the area of social protection.

Technical Assistance by Function

FAD

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MCM

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STA

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LEG and FIN

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1

In this report, annual data refer to the fiscal year ending September 30th.

2

World Bank Group, “Haiti: Towards a New Narrative,” Systematic Country Diagnostic, May 2015.

3

This includes the debt of the government to the central bank of 12.2 percent of GDP.

4

A methodological change resulted in a downward revision of gross reserves by US$68 million at end-September 2018. Historical series were revised accordingly (Table 4) .

5

In the absence of an annual budget, the law directs the state to implement the last legally approved Budget Law. As of October 1, the government had reverted to the 2017/18 Budget Law.

6

This number accounts for the average cost of likely natural disasters. It is slightly above projected population growth, resulting in a modest increase in per capita GDP.

7

The positive policy gap means, however, that desired policies would worsen, not improve, the current account deficit, suggesting significant structural competitiveness problems.

8

Évaluation de dépenses fiscales en Haïti —European Union, France, Haiti (April 2019).

9

Rethinking Power Sector Reform, World Bank (2019)

1

The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path (the scenario most likely to materialize in the view of IMF staff). The relative likelihood is the staff’s subjective assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between 10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities.

1

See IMF Working Paper No. WP/17/144, June 2017.

2

See IMF Country Report No. 15/158, June 2015.

3

Caution is needed in interpreting country rankings under the Doing Business Indicators as (i) they are not a comprehensive measure of business environment in most countries, (ii) there is no internationally accepted statistical standard for these indicators, (iii) they assess what the laws and regulations provide for rather than their implementation, and (iv) an external review is ongoing to assess recent changes in methodology.

4

The EBA-lite model considers the actual policy (P) and its desired level (P*) in the country under study relative to its trading partners. Thus, policy gap is defined as (P – Pworld) – (P* – P*world). The overall policy gap, as a share of GDP, is broken down into: fiscal policy 0.78 percent; public health expenditure 1.02 percent; changes in reserves -0.04 percent; private credit level -0.06 percent; private credit growth 0.16 percent; and capital controls when combined with relative productivity and global risk aversion 0.96 percent.

5

These estimates consider the current de facto exchange rate regime, and assume (i) risk neutrality, (ii) opportunity cost of holding reserves at 4½-and 6¼ percent range, and (iii) an unconditional probability of a large shock at 50 percent. For more discussions, see IMF, 2016, Guidance Note on the Assessment of Reserve Adequacy and Related Considerations, June 2016.

1

The focus is in line with the Fund’s enhanced governance framework “Review of 1997 Guidance Note on Governance—A proposed Framework for Enhanced Fund Engagement,” April 2018.

2

FJKL, La loi portant déclaration de patrimoine, un engagement citoyen, May 2019.

3

CFTAF-GAFIC, Anti-Money Laundering and Counter-Terrorist Financing Measures, Republic of Haiti, Mutual Evaluation Report, July 2019.

4

CSCCA, Audit Spécifique de Gestion du Fonds Petro Caribe, Volume 1 and 2, January and May 2019.

5

Mécanisme de Suivi de la Mise en Œuvre de la Convention Interaméricaine contre la Corruption, République d’Haïti, Rapport Final, September 2014.

6

Partial implementation of ASYCUDA at ports, airports, border checkpoints, and industrial parks is a step towards automating customs processes and increasing revenue generation by reducing discretion in import valuation, providing real-time information, and reducing the risk of fraudulent import declarations.

7

See Baum, Hackney, Medas and Sy (2019) for evidence on how corruption affects the performance of SOEs.

8

World Bank, Doing Business 2019, Haïti, 16th edition; World Economic Forum, Global Competitiveness Report 2018.

9

Caribbean Financial Action Task Force (CFATF), Anti-money laundering and counter-terrorist financing measures – Republic of Haiti, Mutual Evaluation Report, 2019.

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Cover IMF Staff Country Reports
Haiti: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Haiti
Author:
International Monetary Fund. Western Hemisphere Dept.
Volume/Issue:
Volume 2020: Issue 121
Publisher:
International Monetary Fund
ISBN:
9781513541464
ISSN:
1934-7685
Pages:
88
DOI:
https://doi.org/10.5089/9781513541464.002

Monetary Financing and Inflation

Reserves and Exchange Rate

Governance Issues in Haiti

Import Prices and Retail Prices

Fuel Prices and Revenue

Price Difference between Haiti and Dominican Republic

(In gourdes)
Figure 1.

Haiti: Real Sector Developments, 2013–191
Figure 2.

Haiti: Fiscal Sector Developments, 2013–191
Figure 3.

Haiti: Monetary Sector Developments, 2013–191
Figure 4.

Haiti: External Sector Development, 2013–191
Figure 5.

Haiti: Social Indicators

Net International Investment Position (NIIP)

(Percent of GDP, eop)1/

Current Account Balance

(Percent of GDP)

Exports of Goods

(Percent of GDP; average over 2014–18)

Effective Exchange Rates

(Index, 02010= 100; fiscal-year averages)

Capital and Financial Account Balance

(Percent of GDP)

Net Direct Investment Inflows

(Percent of GDP; average over 2014–18)

Gross International Reserves
Annex Figure 1.

Haiti: IMF Contributions to Governance Reforms