Abstract
Haiti's economic performance deteriorated as a result of continuing political crisis. The ongoing political crisis has impeded the implementation of a comprehensive, donor-backed effort to remove Haiti's serious structural impediments. The economic program seeks to help the government reestablish macroeconomic stability during the political transition, alleviate pressure on the exchange rate, and restore inflation to a downward path. Credit policy should continue to be restrained through open market operations. The IMF staff commends the measures taken to improve the supervision and health of the banking system.
1. The following information has become available since the staff report for the 2000 Article IV consultation and staff-monitored program for FY 2000/01 (EBS/00/221) was issued. It does not change the thrust of the staff appraisal.
2. Revised data for the central government accounts for FY 1999/00 (year ending September 30), indicate that the deficit was equivalent to 2.4 percent of GDP, compared with 2.2 percent of GDP estimated in the staff report, reflecting mainly somewhat lower revenue. Preliminary data also indicate that revenue in October was weaker than projected. On the basis of the import cost of recent shipments of petroleum products, the authorities will need to raise administered prices of these products, as envisaged in the SMP, to avoid subsidies and help protect fiscal revenue.
3. The currency depreciated sharply during the last days of September from G 24 per U.S. dollar, to slightly above G 28 per U.S. dollar. However, it strengthened to about G 24 per U.S. dollar in early October, and has since stabilized around that level. Net international reserves are estimated to have declined by US$5 million in October, compared with no change projected during October-December 2000.
4. Prices rose markedly in September, reflecting the currency depreciation as well as the domestic petroleum price increases at the beginning of the month. The 12-month increase in the CPI rose from 12.5 percent in August to 15.3 percent in September. This underscores the need to strengthen fiscal policy and maintain tight monetary policy as envisaged in the SMP, to put inflation back on a downward trend.