Press Release No. 05/234

Press Release: IMF Executive Board Approves US$14.7 Million in Additional Emergency Post-Conflict Assistance to Haiti

October 19, 2005

The Executive Board of the International Monetary Fund (IMF) today approved SDR 10.23 million (about US$14.7 million) in Emergency Post-Conflict Assistance to Haiti, adding to the SDR 10.24 million (about $US14.7 million) in IMF Emergency Post-Conflict Assistance provided to Haiti in January 2005 (see Press Release No. 05/4).

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. Agustín Carstens, Deputy Managing Director and Acting Chair, stated:

"The Haitian authorities have made progress toward restoring macroeconomic stability and implementing structural reforms under the program supported by the IMF's Emergency Post-Conflict Assistance (EPCA), approved in January 2005. They implemented the 2004/05 budget without net recourse to central bank financing, and tightened monetary policy in the face of the difficult macroeconomic and security situation as well as delays in donor disbursements. Important structural measures implemented include the completion of a census of employment in key ministries and public sector entities, progress toward completing a survey of domestic arrears, and stricter control over discretionary ministerial accounts.

"The government's program for 2005/06 adequately maintains the focus on preserving macroeconomic stability, enhancing governance and transparency, and increasing spending on infrastructure and social services. At the same time, continued international donor support will be critical for supporting the improvement in security necessary for safe and fair elections and economic recovery.

"The key objectives of the 2005/06 program are to strengthen the fiscal position, while avoiding central bank financing, to strengthen Haiti's external position, and to advance key structural reforms. In particular, revenue performance and expenditure management will be strengthened, and monetary policy will be tightened, to stem pressures on domestic prices and help ensure that the program's net international reserves target is met without undue pressure in the foreign exchange market. In support of these objectives, the authorities will take further measures to achieve a lasting improvement in the management and transparency of the public sector. These include: a more comprehensive census of public employees, based on a full headcount, once the security situation allows and resources become available; implementing a program to settle domestic arrears; continuing to publish the budget execution and the list of beneficiaries of government programs in support of the private sector; and moving ahead with the audit of public sector enterprises. The authorities are also committed to implementing a monitoring mechanism of fuel purchases and to ensure that new contracts on electricity production are based on open and competitive bids.

"Looking ahead, additional assistance from the international community will be required to support the authorities' 2005/06 program, the ongoing electoral process, and Haiti's longer-term development needs. In addition to providing a framework for donor support, it is anticipated that continued success in policy implementation under the EPCA-supported program will provide a basis for a possible PRGF-supported program and HIPC debt relief," Mr. Carstens said.