Press Release No. 14/596

Press Release: IMF's Executive Board Completes Eight and Final Review under Haiti's ECF Arrangement and Approves US$2.4 Million Disbursement

December 19, 2014

On December 17, the Executive Board of the International Monetary Fund (IMF) completed the eighth and final review of Haiti’s performance under its program supported by the Extended Credit Facility (ECF) arrangement. Completion of the review will enable an immediate disbursement equivalent to SDR 1.638 million (US$2.4 million), bringing total disbursements to SDR 40.95 million (US$60 million) under the ECF arrangement.

The Executive Board also approved a request for a waiver of non observance on performance criterion on net central bank credit to the central government, which was missed due to delays in the placement of treasury bills, and despite a lower-than-programmed fiscal deficit.

Haiti’s ECF arrangement was approved on July 21, 2010 (see Press Release No. 10/299) together with the full relief of the country’s outstanding debt to the Fund of about SDR 178 million (equivalent then to US$268 million).

Following the Executive Board’s discussion on Haiti, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, said:

“Haiti’s satisfactory performance and successful completion of the program supported by the ECF is commendable, particularly given the exceptionally difficult circumstances that followed the 2010 earthquake. Growth in FY2014 was in line with projections and headline inflation remained moderate, although fiscal imbalances remain high. Progress was also made in advancing the structural reform agenda, most notably regarding the implementation of the Treasury Single Account, strengthening the public accounting system, and an initial reduction in fuel subsidies.

“Fiscal consolidation remains essential to reduce vulnerabilities, and the Haitian authorities have taken steps to reduce the fiscal deficit and address external financing risks in FY2015. The ongoing effort to strengthen tax and customs administration will help to mobilize additional revenues, in tandem with continued streamlining of expenditures, while safeguarding priority social spending. To this end, the authorities have reduced fuel subsidies, together with mitigating measures, and are planning to restructure the electricity sector, which has become a large drain on the budget. Reforms are also ongoing in the areas of public financial and international reserve management.

“Monetary restraint in support of a tightened fiscal stance will help to curb inflationary pressures and reduce exchange rate pressures. Efforts will also be made to strengthen the financial sector’s supervisory and regulatory framework, with a view to enhancing financial stability. Greater exchange rate flexibility—with foreign exchange interventions limited primarily to smoothing large fluctuations—will contribute to strengthening reserve buffers.

“As stressed by the Ex-Post Assessment of Longer-Term Program Engagement (EPA), Fund-supported programs since 2006 have helped Haiti promote macroeconomic stability and encouraged structural reforms, given Haiti’s domestic and external vulnerabilities. However, while growth after the 2010 earthquake has been positive, it has been below original projections in the context of weaknesses in aid effectiveness; and fiscal deficits and public debt stocks have risen.

“The authorities intend to deepen implementation of key reforms, possibly under a new medium-term program to be negotiated with the Fund. Such a program would help in consolidating macroeconomic stability and removing remaining bottlenecks to sustained growth and poverty reduction.”