On behalf of our Haitian Authorities, we thank the Managing Director, WHD management, the mission chief and her team for their continuous support to Haiti. Our authorities are particularly thankful for the seamless handover between mission chiefs and the granting of well-targeted Technical Assistance operations. These actions allowed for the completion, this past December, of the first Review of the SMP that was approved in June 2022, after years of discussions within the realm of uncertainty, repeated shocks, and rising challenges. The authorities are also very thankful to the current mission chief and her team for the timely preparation of this request for disbursement under the Food Crisis Window (FSW) of the Rapid Credit Facility (RCF) in close collaboration with our authorities and the technical teams of the Ministry of Economy and Finance (MEF) and the Central Bank of Haiti (BRH). The weekly dialogue held between staff and the SMP Monitoring Committee of MEF and BRH has been instrumental to build a mutual understanding on social and economic developments as well as on the near-term outlook and on how to make progress towards achieving SMP objectives.

Despite multiple, compounding challenges, our Haitian authorities managed to maintain overall macroeconomic stability and stayed the course on the reform agenda, achieving broadly satisfactory progress in implementing the SMP. They have taken commendable steps to strengthen governance, ensure macroeconomic and financial stability and enhance transparency and efficiency in the use of public resources. Long outstanding reforms such as the consolidation in the Single Treasury Account of central budgetary agencies’ bank accounts, the Medium-Term Budget Framework and a substantial reduction of unsustainable fuel subsidies have been completed. Additionally, Haiti adopted and published a new tax code and associated procedure code. Beneficial owners of public procurement contracts are now regularly published. On the financial front, the BRH continues to make progress towards a risk-based supervision and further strengthening the monetary policy framework. Steps are also being taken to bring the ALM/CFT law to international standards and to implement the Action Plan under the FATF’s International Cooperation Review Group.

The authorities are determined to successfully implement the SMP as a foundation to rejoining a sustainable and inclusive growth path. Engagement with the Fund through policy dialogue and technical assistance has been maintained throughout an extremely challenging context. Now, the immediate priority is to achieve a minimum degree of economic, political, and social stability to create the conditions for a more structured medium-term program. Hence, the authorities have renewed their commitment to continue establishing the one-year track record required to build the pre-conditions and allow Haiti to access an Upper Credit Tranche (UCT) financing arrangement. Going forward, the Fund’s intensified support and signaling will remain paramount for Haiti to benefit from adequate medium-term financing to support economic growth and social development.

The BRH will continue to implement reforms in line with the 2019 recommendations. Notably, they are committed to finalize amendments to its organic act with a view to strengthen governance arrangements, mandate, and autonomy safeguards, and submit a revised act for consideration by the Council of Ministers. To address inflationary pressures and exchange rate volatility, the BRH stands ready to use all tools at hand including interest rates and reserve requirements, while phasing out foreign exchange repurchase requirements and constraining FX interventions to disorderly situations. Following the recent practice, the Central Bank will also purchase foreign exchange, as conditions allow, to secure adequate levels of net international reserves (NIR).

Haiti’s balance of payments (BOP) is under pressure after four successive years of GDP contraction, combined with the recent surge in food and energy prices, limited external assistance, and decreasing remittances. Moreover, last year, the United Nations warned that catastrophic hunger was recorded in Haiti for the first time. The World Food Program (WFP) considers Haiti to have one of the highest levels of food insecurity in the world with nearly half the population not having enough to eat. In addition, the WFP and the Food and Agriculture Organization (FAO) rank Haiti at a catastrophic level on the integrated Food Security Phase Classification Index. Therefore, support under the FSW is urgently needed to help close the BOP gap and provide critical relief to the most vulnerable.

The authorities are counting on the signaling effect of the conclusion of the first review of the SMP and the disbursement under the FSW to help catalyze needed donor funds. The proceeds of the FSW will be used to support poor households through cash transfers and food rations within the government’s strategy to tackle food insecurity and strengthen social safety nets. Additional measures to support vulnerable households are also listed in the FY23 Budget. We underscore the creation of temporary jobs in agriculture, environment protection, and public sectors countrywide as well as youth vocational training programs and public transit subsidy programs for registered buses. The latter will also help mitigate the impact of increased fuel prices.

The authorities are fully committed to implement transparency and safeguards measures. The authorities have pledged to strictly enforce governance arrangements to procurement contracts awarded on the spending of emergency resources and to follow good public financial management (PFM) practices to monitor the implementation of social programs. They are upgrading transparency and audit capacity in the spending of emergency resources and working towards ensuring that the law governing the Supreme Court of Auditors and Administrative Disputes (CSCCA), currently under review, guarantees the standards applicable to supreme audit institutions. In addition, comprehensive monthly reports on the budget implementation will be published no later than 45 days after the end of each month. The Central Bank will continue to work towards implementing remaining recommendations of the 2019 Safeguards Assessment and accelerate the transition to International Financial Reporting Standards (IFRS). The authorities have also called for a Governance Diagnostic whose recommendations will be considered among the reforms for the second review of the SMP.

Innovation and digitalization are being devised to further inclusion and social programs. Both fiscal and monetary authorities are exploring innovative tools with the support of the WB and the IDB to leverage digital tools to cushion the impact of shocks on the population including by enhancing financial inclusion. The BRH hopes that the CBDC— currently in testing stage—will eventually facilitate the diversification of the channels through which public transfers are distributed, helping address financial inclusion weaknesses in the rural area.

Haiti is at a critical juncture, which requires nationally concerted efforts with the backing of the international community to break the vicious cycle of poverty, fragility, and violence. In this regard, accelerated steps are being taken to quell gang violence, fight corruption and strengthen public institutions. During the past two months, the Haitian National Police (HNP) has multiplied arrests of high-profile gang leaders. The anti-corruption unit is also intensifying its action against embezzlement of public funds, money laundering and other illicit transactions. The governing board of the Economic and Social Assistance Fund, which implements most of the government’s social programs, has reconvened its regular meetings and started publication of its quarterly operations report. Also, in November 2022, BRH issued detailed instructions to financial institutions on a sanction regime against gangs and criminal activities following the UN Security Council’s resolution targeting gang leaders and those who finance them.

Amid persistent, multi-dimensional crises, the Haitian economy is displaying tentative signs of stabilization and recovery, but uncertainty remains elevated. The near-term outlook is highly dependent on the ability of the Haitian government to quell insecurity, for which they are requesting assistance from the international community. General elections planned for end-2023 should help restore the full functioning of democratic institutions. Growth is expected to return to positive territory in FY23 and domestic revenue collection to strengthen. In fact, after the replacement of senior members of management of the customs and revenue administrations, significant increase in revenue collection has been registered and the authorities are taking steps to further increase domestic resource mobilization and prioritize social spending. The FY23 budget adopted last month is consistent with the objective of reducing monetary financing of the deficit in order to lower inflation and help restore stability.

In sum, we reiterate the importance of IMF and the international community supporting Haiti’s efforts to cope with the overwhelming challenges. Stepping out of fragility is never an easy task. In the past decades, Haiti has been subject to devastating shocks, which have thrown the economy and the society at the brink of collapse multiple times. For the Fund to navigate on such conditions of extreme fragility and remain relevant, it is critical to maintain a long-term trustworthy partnership with the pertinent authorities and take risks as appropriate—with the suitable safeguards—to support the steps taken in the right direction. We appreciate the Fund’s continuous engagement and welcome its presence on the ground, which is instrumental to enhance staff’s knowledge of the concrete situation in the country and engage in closer dialogue with the authorities, helping to build trust. We look forward to boosting this presence on the ground with the posting of a Resident Representative and resuming in-person missions to Haiti as conditions allow. Fortunately, the BRH and the Ministry of Economy and Finance—IMF’s key counterparts—have been crucial mainstays of the Haitian administration and economy, deeply committed to pushing for the right actions in the country. They count on the Fund continued engagement and support to proceed with their endeavors to stabilize the economy and resume a sustainable and inclusive development path.