Front Matter Page
© 2005 International Monetary Fund
February 2005
IMF Country Report No. 05/65
Haiti: Use of Fund Resources—Request for Emergency Post-Conflict Assistance—Staff Report; Staff Statement; Press Release; and Statement by the Executive Director for Haiti
In the context of the Use of Fund Resources—Request for Emergency Post-Conflict Assistance by Haiti, the following documents have been released and are included in this package:
the staff report for the Use of Fund Resources—Request for Emergency Post-Conflict Assistance, prepared by a staff team of the IMF, following discussions that ended on November 16, 2004, 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 December 28, 2004. 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 10, 2005 updating information on recent developments.
a Press Release summarizing the views of the Executive Board as expressed during its January 10, 2005 discussion of the staff report that completed the request.
a statement by the Executive Director for Haiti.
The documents listed below have been or will be separately released.
Letter of Intent sent to the IMF by the authorities of Haiti*
Memorandum of Economic and Financial Policies by the authorities of Haiti*
May also be included in Staff Report
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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Front Matter Page
INTERNATIONAL MONETARY FUND
HAITI
Use of Fund Resources—Request for Emergency Post-Conflict Assistance
Prepared by the Western Hemisphere Department
(In consultation with other departments)
Approved by Christopher Towe and Carlos Muñiz
December 28, 2004
Haiti has experienced an extended political conflict that led to an armed rebellion in early 2004 and a change in government in mid-March. In the period preceding the political transition, several hundred people were killed and many more injured, there were extensive property losses (5½ percent of GDP) and damage to Haiti’s institutional and administrative capacity.
Additional losses resulted from devastating flooding in May and September 2004. Nearly 5,000 persons lost their lives or were missing, and the property losses are estimated at 3½ percent of GDP.
The discussions on the authorities’ request for emergency assistance took place at the Fund’s headquarters during November 8–12 and in Port-au-Prince during November 15–16, 2004. Article IV consultation discussions were not completed during this mission due to the security situation and will be concluded in early 2005. The staff team comprised P. Gajdeczka (Head), G. Everaert, L. Jaramillo, C. Sancak (all WHD), D. Simard (FAD), and J. Mathisen (PDR). It was assisted by M. Rached (Resident Representative). The mission met with Finance Minister Bazin, BRH Governor Magloire and other senior officials.
The objectives of the Staff Monitored Program, which expired last September, were largely met. All end-June and end-September quantitative targets were observed by wide margins, with NIR significantly above the program floor and overall budget deficit well below target, and good progress was made on structural measures.
Request for emergency assistance from the Fund. In the attached Letter of Intent (LOI) and Memorandum of Economic and Financial Policies (MEFP), the Haitian authorities request a purchase of 12.5 percent of quota under the Fund’s Emergency Post-Conflict Assistance (EPCA) policy. The authorities indicated their intention to request an additional purchase under the EPCA.
Publication. The authorities expressed their intention to publish their LOI/MEFP and the staff report on the IMF website.
Executive Summary
Recent developments and performance under the SMP
Political and security conditions remain difficult. The former ruling party refuses to participate in the elections scheduled for late 2005, armed rebel groups challenge the transition government’s authority in the provinces, and gang-related crime and kidnappings have increased. Poverty indicators have deteriorated over the past year.
The authorities have made good progress toward restoring financial and economic stability. Real GDP contracted in 2003/04, but external trade has returned to the pre-crisis levels, the gourde remains stable at around G37/US$, and monthly inflation has declined.
Performance under the SMP was satisfactory. All quantitative targets were observed by wide margins, with the overall budget deficit significantly below the SMP target due to higher-than-expected revenues and slow implementation of emergency outlays.
Although administrative capacity constraints resulted in delays in the implementation of some structural commitments, the authorities have demonstrated commendable determination to improve public sector governance and transparency.
Program for 2004/05
The authorities’ program draws on a broad reform and development program prepared in collaboration with the international community. The principal objectives of the program are to strengthen key institutions and governance, promote economic recovery, improve access to basic services, restore security, and promote national dialogue.
The macroeconomic framework targets real GDP growth at 2.5 percent, a decline in consumer price inflation to about 12 percent (end of period), and an increase in NIR to US$85 million. The 2004/05 budget envisages increased provision of key public services and investment, and would avoid the need for domestic financing.
Structural measures aim to enhance public sector governance and transparency. In particular, the authorities are committed to: (i) continue to limit the use of ministerial discretionary accounts; (ii) complete the census of employment of the ministries and key public enterprises; (iii) carry out a survey of central government arrears; (iv) prepare and publish audits of government accounts; (v) take steps to complete audits of key public sector enterprises; and (vii) make the anti-corruption unit operational.
In the staff’s view, Haiti meets the criteria for Fund assistance under EPCA. The proposed purchase under the Fund’s EPCA policy is for SDR 10.23 million (12.5 percent of quota).
Although there are risks to political and macroeconomic stability, the strength of the authorities’ performance under the SMP demonstrates a strong commitment to proceed with reforms in a difficult environment.
Contents
I. Introduction
II. Background and Recent Developments
A. Political, Security, and Social Situation
B. Recent Economic Developments
III. Policy Discussions
A. Fiscal Policy
B. Monetary and Financial Sector Policy
C. External Financing and Arrears Clearance
D. Structural Reforms and Governance
E. Program Issues
IV. Staff Appraisal
Tables
1. Selected Economic and Financial Indicators
2.a Central Government Operations
2.b Central Government Operations
3. Summary Accounts of the Banking System
4. Balance of Payment
5. Medium-Term Scenario
6. Indicators of Fund Credit, 2004–09
7. Stock of Arrears and Projected Debt Service, 2000–05
8. Millenium Development Goal
9. Status of Main Policy Actions under the SMP
Text Table 1: Pledges at July 2004 Donors’ Conference
Figures
1. Exchange Rate
2. Inflation
3. Revenues, Expenditures, and Overall Balance
4. Gourde Interest Rates
Attachments
I. Letter of Intent
II. Memorandum of Economic and Financial Policies (MEFP) for FY 2004/05
III. Technical Memorandum of Understanding
IV. Eligibility for Emergency Post-Conflict Assistance from the Fund
Annexes
I. Fund Relations
II. Relations with the World Bank Group
III. Relations with the IDB
IV. Statistical Issue
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Press Release No. 05/4
FOR IMMEDIATE RELEASE
January 10, 2005
International Monetary Fund
Washington, D.C. 20431 USA
Washington, D. C. 20431 USA • Telephone 202-623-6772 • Fax 202-623-6772 • www.imf.org
