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© 2002 International Monetary Fund
February 2002
IMF Country Report No. 02/17
Haiti: 2001 Article IV Consultation—Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Haiti
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2001 Article IV consultation with Haiti, the following documents have been released and are included in this package:
the staff report for the 2001 Article IV consultation, prepared by a staff team of the IMF, following discussions that ended on October 2, 2001, with the officials of Haiti on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on January 4, 2002. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
a staff statement of January 18, 2002 updating information on recent developments.
a Public Information Notice (PIN) summarizing the views of the Executive Board as expressed during its January 18, 2002 discussion of the staff report that concluded the Article IV consultation.
a statement by the Executive Director for Haiti.
The document(s) listed below have been or will be separately released.
Selected Issues
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to Publicationpolicy@imf.org.
Copies of this report are available to the public from
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International Monetary Fund
Washington, D.C.
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INTERNATIONAL MONETARY FUND
HAITI
Staff Report for the 2001 Article IV Consultation
Prepared by the Staff Representatives for the 2001 Consultation with Haiti
Approved by Miguel E. Bonangelino and M. T. Hadjimichael
January 4, 2002
Contents
Executive Summary
I. Introduction
II. Background and Development During FY 2000/01
III. Policy Discussions
A. Fiscal Policy
B. Monetary Policy
C. External Sector Policies
D. Structural Reform and Poverty
IV. Medium-Term Outlook
V. Staff Appraisal
Text Boxes
1. Reserves Requirement, Gourdes Liquidity, and Banks’ Profitability
2. Recent Health Indicators
Figures
I. Outstanding BRH Stock, Credit to the Central Government, and Reserves Requirements
II. Exchange Rate Developments
Tables
1. Quantitative Benchmarks and Actual Outcomes under the SMP
2. Selected Economic and Financial Indicators
3. Central Government Operations
4. Summary Accounts of the Banking System
5. Summary Indicators of Commercial Banking Sector Soundness
6. Balance of Payments
7. Stock of External Arrears and Projected Debt Service
8. Structural Benchmarks, October 2000–September 2001
9. Projection of the Impact on Prices and Revenues of Alternative Petroleum Pricing Policies for 2002
10. Medium-Term Scenario
11. Medium-Term Balance of Payments
Attachments
I. Fund Relations
II. Relations with the World Bank Group
III. IDB Loan Commitments and Disbursements
IV. Statistical Issues
Table in Attachment IV
1. Core Statistical Indicators
Appendix Boxes
1. Haiti’s New National Account
2. The Operating Balance of the Banque de la Republique d’Haiti and Interest Expenditure on BRH Bonds
3. Poverty Monitoring Indicators
Executive Summary
Recent developments
Haiti’s continuing political crisis remains unresolved, with adverse effects on investment and economic growth. While still channeling humanitarian assistance through NGOs, the main donors have suspended budgetary aid pending the resolution of the political stalemate. Performance under the staff-monitored program (SMP) during FY 2000/01 (year ending September 30) was weak. Real GDP is estimated to have declined by around two percent. Inflation remained high during most of the year. The overall central government deficit rose as budgetary revenue, as a ratio of GDP, declined to a historically low level; in the absence of budgetary aid, the deficit was financed mostly by the central bank. While budgetary spending was broadly contained, major problems remain regarding the transparency and accountability of budget execution. Tight monetary conditions helped keep the gourde broadly stable relative to the U.S. dollar; however, together with continuing political uncertainty, this contributed to a sharp decline in credit to the private sector. The health of the banking system showed signs of weakening.
Net official reserves declined to the equivalent of 1 month of imports of goods and services through end-September 2001 while there was an accumulation of external arrears to multilateral and bilateral creditors. The IDB withheld new disbursements pending the payment of arrears, and the World Bank cancelled undisbursed loans.
Policy discussions
The discussions centered on the need for a strong fiscal adjustment in the context of a scarce budgetary aid. Staff recommended a macroeconomic adjustment scenario, including increased central government revenue and enhanced control of expenditure. Staff also urged the authorities to start taking actions to address widespread concerns about governance. The authorities agreed that fiscal adjustment would reduce the pressure on interest rates and, in the context of an improved political climate, relieve growing economic and financial strains. However, agreement could not be reached on fiscal and monetary policies consistent with these objectives, with the authorities indicating that it would be difficult to take significant actions in the present weak economic environment and very tense political situation. As a result, the discussions on a possible new SMP were not concluded. Staff encouraged the authorities to formalize their macroeconomic framework and adopt policies along the lines recommended by the mission, and will continue to monitor closely economic developments in the country.
The resumption of growth over the medium term would critically depend on heightened private sector confidence and investment, as well as on increased public sector capital inflows following the resolution of the current political impasse. The instrument for achieving higher growth would be a medium-term program under the poverty reduction and growth facility (PRGF). Satisfactory performance under a possible new SMP would be a precondition to initiate discussions for an eventual PRGF arrangement.
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January 18, 2002
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Public Information Notice (PIN) No. 02/07
FOR IMMEDIATE RELEASE
February 8, 2002
International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
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January 18, 2002
