WASHINGTON, CMC – The International Monetary Fund (IMF) says it has completed the first review of Haiti’s Staff-Monitored Programme (SMP) that considered the country’s fragility and capacity constraints.
The IMF said that the SMP was designed to support Haiti’s economic policy objectives and build a track record of reform implementation.
“Haiti is mid-way through an SMP that has been an important anchor for Haitian policymakers, despite one of the most challenging economic environments in many years. Haiti is faced with many difficulties, which have been worsened by higher food and fuel prices stemming the war in Ukraine, which have increased its economy’s fragility,” the Washington-based financial institution said.
It added that the external shocks and deterioration of the security situation have resulted in a macroeconomic outlook worse than at the time of the program’s approval by IMF management in June 2022.
“Despite the more difficult macroeconomic conditions and downside risks, recent data and progress on structural reforms suggest that the authorities are making meaningful efforts to ease the country’s multiple challenges.”
The IMF said that in this challenging context, the authorities have committed to continue implementing policies that would restore macroeconomic stability and growth, strengthen governance, and provide relief to the most vulnerable households.
The IMF said the SMP, approved in June last year and runs through May 31, 2023, has been instrumental in catalyzing forthcoming external financing. Its implementation has been broadly satisfactory, despite obstacles in meeting quantitative targets due to a less favorable environment than initially anticipated.
It said the Haitian authorities had adopted a budget for the 2023 financial year consistent with agreed targets under the SMP and in the context of a medium-term budget.
“They ensured that a meaningful budget allocation is used to protect the most vulnerable and are implementing public financial management systems to monitor the use of public funds. The authorities are committed to reducing central bank financing of the deficit to levels consistent with low inflation and limit foreign exchange intervention to smoothing excess volatility.”
The IMF said that in line with the reforms under the SMP, the Haitian authorities took measures aimed at raising domestic revenues, approving a new tax code in December, and following through with the adoption of the customs and tax administration reforms.
In particular, the tax code, a primer in the country’s history, entails the rationalization and simplification of the personal and corporate income tax, including broadening the tax base and eliminating many exemptions.
But the IMF warned that progress in governance is critical to ensure inclusive growth. It said the authorities had taken steps to strengthen accountability in the collection and use of public resources and have boosted the transparency of public procurement for emergency resources. They are working to bring AML/CFT laws up to international standards supported by Fund’s capacity development.
“IMF staff will continue to work closely with the authorities to support the implementation of their program and help them build public support. Indeed, ongoing IMF technical assistance underpins most elements of the authorities’ program.
“The Fund will continue coordinating closely with Haiti’s other development partners to leverage efforts supporting common objectives. SMP is only subject to formal IMF management review,” the IMF added.
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