Press Release No. 05/4

Press Release: IMF Executive Board Approves US$15.6 Million in Emergency Post-Conflict Assistance to Haiti

January 10, 2005

The Executive Board of the International Monetary Fund (IMF) today approved SDR 10.23 million (about US$15.6 million) in Emergency Post-Conflict Assistance to Haiti. The assistance is intended to help Haiti's recovery from an extended period of political conflict and will support the interim government's efforts to strengthen key institutions and governance, promote economic recovery, improve access to basic services, and restore security.

Emergency Post-Conflict Assistance (EPCA) is designed to help IMF member countries with urgent balance of payments financing needs in the wake of armed conflicts.¹ EPCA financing, which can play an important role in catalyzing donor support, is designed to be fast-disbursing but is coupled with IMF policy advice, covering the full range of macroeconomic policies and supporting structural measures, as well as technical assistance.

Following the Executive Board's discussion of Haiti, Mr. Takatoshi Kato, Deputy Managing Director and Acting Chair, stated:

"Haiti is emerging from an extended period of political conflict and poor economic performance. Financial and economic stability has been restored under the six-month Staff Monitored Program (SMP) implemented in 2004. The exchange rate has stabilized, inflation is declining, and official international reserves have increased. In addition, good progress has been made in implementing key structural measures, in particular the steps to improve public sector governance and transparency.

"The key challenge for the authorities will be to use the pledged international support effectively to implement the social and economic agenda agreed with donors, strengthen security, and ensure safe and timely elections.

"The authorities' program for fiscal year 2004/05, which will be supported by the Fund's Emergency Post-Conflict Assistance, focuses on maintaining financial stability, strengthening institutional capacity, and reviving economic growth, drawing on the Interim Cooperation Framework that has been prepared in collaboration with the international community. Substantial resources are allocated for Haiti's immediate reconstruction needs and for increasing the provision of basic services while eliminating budget deficit financing by the central bank. In particular, the budget allows for recruiting and maintaining quality staff in the key security, education, and health sectors, and for doubling of public investment in line with the priorities agreed with donors.

"The recent decline in inflation is welcome. The authorities appropriately stand ready to tighten monetary conditions if necessary to achieve the program's targets and protect financial stability.

"The authorities have demonstrated strong commitment to improving public sector governance and transparency. Particularly welcome is the establishment of an Anti-Corruption Unit, publication of the central government budget, and commitment to full transparency of the financing schemes that have recently been made available to the private sector. It will be important to complete without further delay the census of employment in ministries and key public sector entities, the survey of central government arrears, and to prepare and publish audits of government accounts.

"The authorities are working with donors to accelerate the disbursement of external assistance. Haiti has regularized its arrears to the World Bank, and the Bank has resumed its lending program. The authorities' debt service during the program period to bilateral creditors to which Haiti remains in payment arrears has been deferred to ensure that the resources at the disposal of the Government of Haiti can be used to the maximum extent possible for emergency and reconstruction assistance. Good performance under the EPCA will help pave the way for a Fund program that could be supported by the Poverty Reduction and Growth Facility. The EPCA will facilitate continuous Fund engagement, while still catalyzing other, more concessional, donor support," Mr. Kato said.