Press Release No. 24/498

IMF Management Approves a New Staff Monitored-Program with Haiti

December 21, 2024

• Management of the International Monetary Fund (IMF) approved on December 20, 2024, a Staff-Monitored Program (SMP) with Haiti covering the period through December 2025.
• This new 12-month SMP is expected to contribute to strengthen macroeconomic stability to support well-being of people and to enhance economic resilience and governance. It will anchor the government’s macroeconomic priorities for the year ahead.
• Fund management also welcomes the authorities’ commitment to publish the forthcoming Governance Diagnostic Report.

Washington, DC–December 21, 2024: Management of the International Monetary Fund (IMF) approved on December 20, 2024, a Staff-Monitored Program (SMP) with Haiti which runs through December 19, 2025. The new 12-month SMP was designed by the Haitian authorities and IMF staff, keeping in mind Haiti’s fragility and capacity constraints while supporting the authorities’ economic policy objectives.

SMPs are arrangements between country authorities and the IMF to monitor the implementation of the authorities’ economic program and to establish a track record of policy implementation that could pave the way for financial assistance from the Fund under the Upper Credit Tranche (UCT).

Haiti faces a multidimensional crisis, a political transition, with a challenging outlook. The country is beset by both global and country-specific shocks, which have heightened its fragility. In addition to causing terrible human suffering, escalating gang violence has blocked the flow of goods and services. These events have further fueled inflation and left half the population suffering acute food insecurity. The supply-side shock caused by the security crisis will continue to suppress growth and feed inflation unless the security outlook improves.

The top priority is to continue to restore security. This is a prerequisite for macroeconomic stability and for allowing growth to materialize. Despite domestic and global difficulties, the authorities are firmly committed to negotiating a new SMP and have managed to contain somewhat the impact of the various shocks, thereby averting even worse macroeconomic outcomes. Net international reserves were valued at nearly US$1billion at the end of September 2024. Despite the political instability, Haiti’s two key economic institutions (Ministry of Economy and Finance and the Central Bank of Haiti) have remained continuously engaged with the Fund. They have consistently attempted to adopt feasible measures to limit macroeconomic imbalances and ensure a reasonable level of economic activity in the country. They have also continued to provide data and information on previously agreed benchmarks, even when the previous SMP had lapsed.

The SMP is an important anchor for signaling the authorities’ commitment to continue making progress toward macroeconomic stabilization and strengthen governance, and locking in macroeconomic gains accumulated over recent years, despite the many headwinds. Despite the delicate political context, and thanks to a highly inclusive consultative process, the authorities have been able to demonstrate full ownership and support for the SMP through the high-level Program Monitoring Committee (Comite du Suvie).

The authorities have a narrow but important window of opportunity to implement reforms that can help Haiti build resilience and eventually restore its medium- and long-term potential. An urgent government priority is re-starting the mobilization of revenue, to support the country’s massive development needs and boost well-targeted spending. The measures under the new SMP should help achieve these goals.

Continued strengthening of the social safety net is essential to cushion the impact of the shocks on the population and alleviate widespread poverty. The spending commitments previously indicated by the authorities using Food Shock Window resources should be audited in line with SMP commitments.

The fiscal and monetary authorities’ commitment to keeping monetary financing of the deficit at zero is commendable and should continue. The FY2023 financial audit of the BRH is urgent and its eventual publication by June 2025 would be important for demonstrating transparency. The authorities’ careful pace of monetary tightening has been appropriate and consistent with the goal of fighting inflation.

Advancing governance reforms is paramount to help Haiti exit from fragility, ensure inclusive growth and build trust with the private sector and development partners. In this vein, the authorities’ commitment to publish the Governance Diagnostic Report is commendable. It should provide a road map for reforms to enhance governance and will require capacity development support not only from the Fund but also from development partners.

A government-led strategy to continue to strengthen the economy’s resilience to multiple shocks requires the financial support of the international community. This assistance is indispensable to allow quality spending, over the short, medium, and long term. Without it, Haiti will continue to suffer large import compression. External assistance should take the form of grants. The authorities should avoid contracting non-concessional loans, to ensure consistency with the SMP commitments. Non-concessional loans would not only be against SMP commitment. It would also undermine debt sustainability.

In line with the Fund Strategy for Fragile and Conflict-Affected States, IMF staff will also continue to coordinate closely with Haiti’s main development partners, particularly on governance and capacity development.