Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Haiti

Abstract

Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Haiti

Haiti: Joint Bank-Fund Debt Sustainability Analysis

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The Debt Sustainability Analysis (DSA) was prepared in accordance with the revised joint Bank-Fund debt sustainability framework (DSF) for low-income countries (LICs).1 It updates the DSA prepared for the 2019 Article IV Consultation.2

Haiti’s risk of debt distress is assessed to be “high”, although the model-based risk rating for both external and overall public debt is “moderate.” An application of judgement was applied to change the rating from “moderate” to “high” because of the high probability of threshold breaches under the baseline scenario from FY2033, and by Haiti’s institutional fragilities and exceptional vulnerability to natural disasters. Haiti is an FCV country—a country affected by fragility, conflict, and violence as defined by the World Bank—and tailored stress tests suggest that its debt risk rating is very vulnerable to large natural disaster shocks which are statistically very frequent.

Nevertheless, the moderate level of public debt and broadly stable debt trajectory over the next ten years point to sustainable public debt.

Figure 1.
Figure 1.

Haiti: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2020–40

Citation: IMF Staff Country Reports 2020, 123; 10.5089/9781513541549.002.A002

Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in or before 2030. Stress tests with one-off breaches are also presented (if any), while these one-off breaches are deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most extreme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented.2/ The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook prepared by the IMF research department.
Figure 2.
Figure 2.

Haiti: Indicators of Public Debt Under Alternatives Scenarios, 2020–40

Citation: IMF Staff Country Reports 2020, 123; 10.5089/9781513541549.002.A002

Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in or before 2030. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most extreme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented.
Figure 3.
Figure 3.

Haiti: Drivers of Debt Dynamics-Baseline Scenario External Debt

Citation: IMF Staff Country Reports 2020, 123; 10.5089/9781513541549.002.A002

1/ Difference between anticipated and actual contributions on debt ratios.2/ Distribution across LICs for w hich LIC DSAs w ere produced.3/ Given the relatively low private external debt for average low -income countries, a ppt change in PF3 external debt should be largely explained by the drivers of the external debt dynamics equation.
Figure 4.
Figure 4.

Haiti: Realism Tools

Citation: IMF Staff Country Reports 2020, 123; 10.5089/9781513541549.002.A002

Table 1.

Haiti: External Debt Sustainability Framework, Baseline Scenario, 2017–40

(In percent of GDP, unless otherwise indicated)

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Sources: Country authorities; and staff estimates and projections.1/ Includes both public and private sector external debt2/ Derived as[r-g-ρ(1+g) + εα (1+r)]/(1+g+ρ + gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, ρ = growth rate of GDP deflator in U.S. dollar terms, ε = nominal appreciation of the local currency, and α= share of local currency-denominated external debt in total external debt.3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.4/ Current-year interest payments divided by previous period debt stock.5/ Defined as grants, concessional loans, and debt relief.6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).7/ Assumes that PV of private sector debt is equivalent to its face value.8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years.
Table 2.

Haiti: Public Sector Debt Sustainability Framework, Baseline Scenario, 2017–40

(In percent of GDP, unless otherwise indicated)

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Sources: Country authorities; and staff estimates and projections.1/ Coverage of debt: The general government. Definition of external debt is Residency-based.2/ The underlying PV of external debt-to-GDP ratio under the public DSA differs from the external DSA with the size of differences depending on exchange rates projections.3/ Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt.4/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows.5/ Defined as a primary deficit minus a change in the public debt-to-GDP ratio ((-): a primary surplus), which would stabilizes the debt ratio only in the year in question.6/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years.
Table 3.

Haiti: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2020–40

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Sources: Country authorities; and staff estimates and projections.

A bold value indicates a breach of the threshold.

Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.

Includes official and private transfers and FDI.

Table 4.

Haiti: Sensitivity Analysis for Key Indicators of Public Debt, 2020–40

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Sources: Country authorities; and staff estimates and projections.

A bold value indicates a breach of the benchmark.

Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP.

Includes official and private transfers and FDI.

1

Guidance Note on the Bank-Fund Debt Sustainability Framework for Low-Income Countries, February 2018.

2

This DSA assumes that debt service to the IMF falling due in the 24 months from April 14, 2020 will be covered under the Catastrophe Containment and Relief Trust Fund (CCRTF), subject to availability of resources and decisions of the Executive Board of the IMF.

Haiti: Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Haiti
Author: International Monetary Fund. Western Hemisphere Dept.