--- Page 1 --- MONETARY FUND INTERNATIONAL IMF Country Report No. 23/80 HAITI UNDER THE RAPID REQUEST FOR DISBURSEMENT REPORT; RELEASE; STAFF February 2023 CREDIT FACILITY-PRESS EXECUTIVE DIRECTOR FOR BY THE AND STATEMENT HAITI Under the Rapid Credit Facility, the In the context of the Request for Disbursement included in this package: documents have been released and are following statement by the Chair of the Executive Board. A Press Release including a a staff team of the IMF for the Executive Board's The Staff Report prepared by discussions that ended on December 8, consideration on January 23, 2023, following developments and policies underpinning 2022, with the officials of Haiti on economic Based on information available at under the Rapid Credit Facility. the IMF arrangement staff was completed on January 6, 2023. the time of these discussions, the report by the staffs of the IMF and the World Bank. Analysis prepared A Debt Sustainability Statement by the Executive Director for Haiti. A listed below have been or will be separately released. The documents of Intent sent to the IMF by the authorities of Haiti* Letter *Also included in the Staff Report. deletion of market-sensitive information and allows for the The IMF' S transparency policy intentions in published staff reports and disclosure of the authorities' policy premature other documents. of this report are available to the public from Copies International Monetary Fund o Publication Services PO Box 92780 e Washington, D.C. 20090 Telephone: (202) 623-7430 o Fax: (202) 623-7201 Web: http/Awww.imf.org E-mail: pubications@imforg Price: $18.00 per printed copy International Monetary Fund Washington, D.C. O 2023 International Monetary Fund transparency policy intentions in published staff reports and disclosure of the authorities' policy premature other documents. of this report are available to the public from Copies International Monetary Fund o Publication Services PO Box 92780 e Washington, D.C. 20090 Telephone: (202) 623-7430 o Fax: (202) 623-7201 Web: http/Awww.imf.org E-mail: pubications@imforg Price: $18.00 per printed copy International Monetary Fund Washington, D.C. O 2023 International Monetary Fund --- Page 2 --- - PRESS RELEASE IMF Executive PR23/12 Board Approves US$105 Million Food Shock Window to Haiti FOR IMMEDIATE RELEASE The Executive Board of the International disbursement of SDR 81.9 million Monetary Fund (IMF) approved today a Window of the Rapid Credit (US$105 million) to Haiti under the Food Shock Facility. While Haiti's population was already suffering the war in Ukraine, especially its severe malnutrition and food before suffering has been insecurity commodity prices compounded by the surge in food Washington, DC - January 23, 2023: The Fund (IMF) approved today a disbursement Executive Board of the International under the Food Shock of SDR 81.9 million (US$105 Monetary Window of the Rapid Credit million) to Haiti balance of payment needs related to the Facility' to help Haiti address urgent global food crisis. Haiti has been hit hard by the global food Haiti's fragility given the high price shock. Record price inflation has in food supplies. With pass through from global to domestic worsened more than half the food prices and a dire humanitarian crisis, with population already below the shortages million (0.5 an expected financing gap in poverty line, Haiti faces percent of GDP), assuming import FY2023 of at least US$105 financing from development partners. This shock compression and pending additional external highly fragile country-also suffering a compounds the hardships of an risks. public health emergency (cholera) and already serious security Following the Executive Board's and Acting Chair, issued the discussion, Ms. Antoinette Sayeh, Deputy following statement: Managing Director "Haiti is facing a dire humanitarian crisis and Russia's invasion of Ukraine. was hit hard by the economic Haiti's These spillovers included record spillovers from fragility and compounded the suffering of price inflation that worsened severe malnutrition. Measures are Haiti's population already affected food price shocks being taken by the to by a on the population and to expand the government social cushion the impact of the safety nets. "IMF emergency support under the food shock the balance of payment gap and window of the Rapid Credit Facility will fill feeding programs and cash support those most affected by food help fees and in-kind transfers to price rises through and other measures. vulnerable households, waives school have 1 The urgent Food Shock balance Window of provides, for aj period of a year, a new channel for exports. payment needs due to acute food insecurity, a sharp increase emergency in their Fund food financing to member countries that import bill, or a shock to their cereal 700 19th Street NW Washington, DC 20431 USA IMForg of payment gap and window of the Rapid Credit Facility will fill feeding programs and cash support those most affected by food help fees and in-kind transfers to price rises through and other measures. vulnerable households, waives school have 1 The urgent Food Shock balance Window of provides, for aj period of a year, a new channel for exports. payment needs due to acute food insecurity, a sharp increase emergency in their Fund food financing to member countries that import bill, or a shock to their cereal 700 19th Street NW Washington, DC 20431 USA IMForg --- Page 3 --- "To address the crisis, budgetary resources will need to be allocated toward priority spending on food programs and to increase social assistance toward the most vulnerable. To ensure the appropriate use of emergency financing, which will be vital for catalyzing further donor support and mitigate risks to debt sustainability, the authorities should carefully control, track, record, and publish all spending related to the emergency response. Supported by close Fund engagement, they should undertake internal expenditure audits by all the line ministries involved in the use of emergency resources provided under the food shock window through the General Inspectorate of Finance and communicate these internal audits to the Supreme Audit Court in a timely way. "The combination of appropriate macroeconomic and structural policies under the StaffMonitored Program (SMP) provides additional safeguards for the Fund's outstanding obligations. While providing adequate liquidity support to the financial sector, the central bank should reduce monetary financing of the deficit and limit foreign exchange interventions to smoothing volatility. "The SMP is also catalytic to donor support. A successful implementation of Haiti's SMP would be key in the process of restoring macroeconomic stability and sustainability, strengthening the social safety net, and tackling governance weaknesses and corruption." --- Page 4 --- MONETARY FUND INTERNATIONAL HAITI UNDER THE RAPID CREDIT REQUEST FOR DISBURSEMENT January 6, 2023 FACILITY EXECUTIVE SUMMARY food price shock. In September 2022, Context. Haiti has been hit hard by the global 70 percent. With more than inflation reached 44 percent, with rice inflation nearly crisis, food below the poverty line, Haiti faces a dire humanitarian half the population already US$105 million (0.5 percent of financing gap in FY2023 of at least with an expected additional external financing from GDP), assuming import compression and pending of an already highly fragile partners. This shock compounds the hardships risks. development (cholera) and serious security country--also suffering a public health emergency of violence, the macroeconomic trends and also due to an escalation time of In line with global relative to the outlook in June 2022, at the situation has been more challenging That said, recent data suggest that the approval of the Staff Monitored Program (SMP). the multiple challenges efforts to overcome the authorities are making meaningful SMP was approved by IMF Management the country and the First Review of the facing on December 21, 2022. The Haitian authorities have requested support-under Food Shock Window Request. Food Shock Window (FSW)-to address the Rapid Credit Facility (RCF) through the to acute food insecurity and urgent balance of payments (BOP) needs attributable These needs, if not costs that exceed the last five-year average. higher food import and severe economic disruption. Staff supports addressed, could result in an immediate million (about US$105 million), with access proposed at SDR 81.9 this request, estimated BOP gap in FY2023. equivalent to 50 percent of quota, or to the and accountability in the Safeguards and risk mitigation. To ensure transparency households, and to protect resources for the most vulnerable spending of emergency have committed to carefully control, track, against misappropriation, the authorities response. They have also record, and publish all spending related to the emergency line ministries involved in conduct internal expenditure audits by all the committed to under the Food Shock Window through the the use of emergency resources provided communicate the internal audits to the Supreme General Inspectorate of Finance and to Administratif or des Comptes et du Contentieux Audit Court (la Cour Superieure compliance audits related to the CSCCA) in a timely way. The CSCCA will conduct bi-annually and publish the authorities' measures to address food insecurity measures and operational authorities published on June 9, 2022, the financial audit findings. The involved in conduct internal expenditure audits by all the committed to under the Food Shock Window through the the use of emergency resources provided communicate the internal audits to the Supreme General Inspectorate of Finance and to Administratif or des Comptes et du Contentieux Audit Court (la Cour Superieure compliance audits related to the CSCCA) in a timely way. The CSCCA will conduct bi-annually and publish the authorities' measures to address food insecurity measures and operational authorities published on June 9, 2022, the financial audit findings. The --- Page 5 --- HAITI audit on COVID-related spending agreed under the 2020 RCF arrangement, with the auditor flagging the lack of supporting documentation that impeded the rendering of a full audit opinion. Nonetheless, the audit quality was adequate reflecting the willingness of the government to expose weaknesses and highlighting PFM issues needing improvement. In this context, the authorities' commitment to continuing to advance governance and anticorruption reforms in the context of the SMP has been encouraging. The recent consolidation of central budgetary units into one Treasury Single Account (TSA) at the central bank, with the Fund's technical assistance, will help improve control and reporting of resources. The authorities also agreed to continue implementing the 2019 safeguards assessment recommendations. Economic policies. The authorities conveyed in their Letter of Intent (LOI) their strong commitment to advancing policies that will ensure continued macroeconomic stability. The authorities have adopted a detailed strategy for enhancing social safety nets. The authorities will use emergency financing to support spending allocated in the budget for mitigating the impact of the food price shock on the population. Measures, among others, include: the increase in cash transfers and food rations for poor households; begin school feeding programs and provide hot meals for vulnerable households and community restaurants; and waive school fees. 2 INTERNATIONAL MONETARY FUND --- Page 6 --- HAITI Approved By Discussions Patricia Alonso-Gamo began in person during the week of the Annual meetings (October 10-15), (WHD) and Andrea November, and continued with weekly virtual meetings in Schaechter (SPR) mission concluded from Washington during a remote during December 1-8, 2022. The team comprised Ms. Tumbarello (Head), Mr. Noah Ndela, Mses. (all WHD), Ms. Osorio-Buitron Bhattacharya and Aliperti Duvalsaint and Wata (FAD), Mr. Shenai (SPR), and Messrs. (Port-au-Prince office). Ms. assisted with logistics and document Coquillat (WHD) Ms. Florestal (OED), joined the preparation. Mr. Saraiva and Michel Patrick Boisvert discussions. The team met with Mr. (Minister of Finance), Mr. Jean Baden (Governor of the Central Bank of Haiti, Dubois (Minister of Social Affairs BRH), Mr. Pierre Ricot Odney throughout and Labor), other senior officials, and the process with the international community. CONTENTS CONTEXT AND RECENT DEVELOPMENTS IMPACT OF FOOD PRICE SHOCK OUTLOOK, RISKS, AND DEBT SUSTAINABILITY POLICY DISCUSSIONS MODALITIES OF FINANCIAL SUPPORT, SAFEGUARDS, AND CAPACITY TO REPAY STAFF APPRAISAL BOX 1. Impact of the Global Food Crisis on Haiti's Balance of Payments FIGURE 1. Food Prices and Social Indicators TABLES 1. Selected Economic and Financial 2a. Non-Financial Public Indicators, FY2019-25 Sector Operations, FY2019-25 2b. Non-Financial Public Sector (In millions of gourdes). 3. Summary Accounts of the Operations, FY2019-25 (In percent of GDP) 4a. Balance of Banking System, FY2019-25 Payments, FY2019-25 (in millions of 4b. Balance of Payments, FY2019-25 US$) (in percent of GDP) INTERNATIONAL MONETARY FUND 3 1. Selected Economic and Financial 2a. Non-Financial Public Indicators, FY2019-25 Sector Operations, FY2019-25 2b. Non-Financial Public Sector (In millions of gourdes). 3. Summary Accounts of the Operations, FY2019-25 (In percent of GDP) 4a. Balance of Banking System, FY2019-25 Payments, FY2019-25 (in millions of 4b. Balance of Payments, FY2019-25 US$) (in percent of GDP) INTERNATIONAL MONETARY FUND 3 --- Page 7 --- HAITI 5. Indicators of Capacity to Repay the Fund (Existing and Proposed Credit), FY2019-27 6. External Financing Requirements and Sources, FY2019-25 7. Financial Soundness Indicators, June 2020 - March 2022 ANNEX I. Social Safety Net APPENDIX I. letter of Intent 4 INTERNATIONAL MONETARY FUND --- Page 8 --- HAITI CONTEXT AND RECENT DEVELOPMENTS 1. Haiti is facing a dire humanitarian spillovers of Russia's invasion of crisis. The country was hit hard by the Ukraine. These economic spillovers included record price inflation that worsened Acute Food Haiti's fragility given the high Insecurity Situation to domestic food pass through from global C prices and shortages in food While Haiti's population was already supplies. malnutrition and food suffering severe insecurity before the war in Ukraine especially children-with at least half the population assessed by the World Bank to be below the poverty line-its living suffering has been compounded by the surge in food commodity As more than half of household prices. is on food, inflation is consumption spending R2A yfor Acute the Food Ma urity Classification causing a hunger crisis. Mini imal - Areas with inadequa ate vid Arean significant resse isis Area Symbols as not anal alysed L untedfor E assistance assifo on) 2. The food price shock comes at a difficult caloric ofh needs households through meet25:50% assistan nce juncture. >25%0 ofcaloric ofhousehoids needs Prougha meet> assistan >50% nce Source: Integrated Food Security Classification (IPC). Political uncertainty persists. Prime Minister violent protests, has Henry, who has faced several months escalated pledged to hold elections as soon as it is safe to of increasingly sharply in recent months with a of do SO. Violence has Haitians. Protests were further inflamed surge internal displacement of thousands of September 14. Armed gangs have by the announcement of fuel price increases on control of the capital, grown in power over the last year and have increased of the blocking access to the main fuel terminal of their activities until end of October, Varreux and paralyzing most hospital and school closures, aggravating widespread fuel shortages, forcing efforts to control the disrupting food and water distribution, and further temporary recent cholera outbreak. With the hampering terminal beginning of November, fuel distribution police regaining control of the fuel slowly restarted. The UN Security Council has resumed, and economic activity has gang leaders and those who finance unanimously approved a sanction regime financial them, followed by the Central Bank of targeting institutions, issued in November, to support its Haiti's instructions to implementation. Macroeconomic conditions. Real GDP likely contracted for the year 2022, ending in September, at about -1.5 fourth consecutive year in fiscal September 2022, driven by high international percent. Inflation reached 38.7 percent (y/y) in disruptions, and monetary food and import prices, drought- -related financing of the budget deficit supply prevent further depreciation of the (Table 1). To tackle inflation and short-term interest gourde, the Banque de la Republique rates to 11.5 percent in August (from 10 d'Haiti (BRH) raised mandatory reserve percent since March requirements on liabilities, in US dollar 2020); boosted interest rates on credit lines. The non-financial terms, to 53 percent; and increased (including grants) is estimated at 2.2 public sector (NFPS) fiscal deficit for FY2022 projected at the time of the SMP percent of GDP, about 0.7 percent of GDP larger than approval in June 2022, reflecting higher costs of petroleum INTERNATIONAL MONETARY FUND 5 August (from 10 d'Haiti (BRH) raised mandatory reserve percent since March requirements on liabilities, in US dollar 2020); boosted interest rates on credit lines. The non-financial terms, to 53 percent; and increased (including grants) is estimated at 2.2 public sector (NFPS) fiscal deficit for FY2022 projected at the time of the SMP percent of GDP, about 0.7 percent of GDP larger than approval in June 2022, reflecting higher costs of petroleum INTERNATIONAL MONETARY FUND 5 --- Page 9 --- HAITI Despite the riots in September, subsidies, before the price increase in September. reached about 90 percent of product well for the overall year and domestic revenues held up relatively deficit is estimated at 2.4 percent of GDP in in June. The current account the value expected market came under pressure in the summer, FY2022. The gourde and the foreign exchange which aggravated the shortage of slowing in remittance inflows, partly because of a temporary at 4.6 months of projected Gross international reserves are still estimated million since the foreign exchange. have been declining, by about US$240 imports, but net international reserves end of FY2021. OF FOOD PRICE SHOCK IMPACT has been broad based. Food inflation The impact of the global shock on food prices with rice and milk powder 3. 2022 and 8 percent (m/m), reached nearly 44 percent (y/y) in September has worsened a difficult situation by causing to 70 and 60 percent (y/y). The war in Ukraine costs for fertilizers, surging products (52 percent y/y in September), increasing for record inflation on imported cereals. Substantial risks weigh on the outlook and shortages in food supplies, particularly Haiti and mostly imported. Moreover, pressures international prices for rice, widely consumed in likely to continue into 2023 and side. The decline in cereal production is highly remain on the supply could become even more serious (Figure 1). lack of availability and access to food shock has Text Table 1. Haiti: Recent Developments in 4. The food price balance-ofthe Balance of Payments 1/ contributed to an urgent elevated millions of US$ on a fiscal year basis; unless payments need in FY2023. With (In otherwise indicated) food prices and a humanitarian crisis FY2022-23 Difference Haiti is expected to see a large rise SMP approval RCF request -91 unfolding, bill in FY2023 (Box 1). This will Current account -4,796 -108 -4523 -199 in its import relative to Trade Balance 1,218 1259 widen the current account deficit of which textile exports -1,156 1009 in the June 2022 SMP, resulting of which oil food imports imports -901 -949 -619 -48 the projections at of which 3,835 3216 in a balance of payments financing gap of Remittances accounts 138 126 -12 Table 1), although Capital and financial ). This will Current account -4,796 -108 -4523 -199 in its import relative to Trade Balance 1,218 1259 widen the current account deficit of which textile exports -1,156 1009 in the June 2022 SMP, resulting of which oil food imports imports -901 -949 -619 -48 the projections at of which 3,835 3216 in a balance of payments financing gap of Remittances accounts 138 126 -12 Table 1), although Capital and financial least US$105 million (Text of which FDI 500 610 are subject to substantial Official Disbursements 30 -73 -103 projections behind these Overall Balance 105 52 uncertainty. The key assumptions Financing RCF -30 -32 estimates are: Other Authorities' incl. decline data; in reserves and Fund staff estimates and projections. channel to Sources: 1/1 The2 2022 Staff Monitored Program (SMP) was approved in June 2022. lower remittance flows, a key smooth consumption, lowered foreign for households to pay higher food prices; exchange income making even more difficult of GDP decline in textile exports; remain subdued, partly because of a 2 percent exports will (FDI), at still 0.4 percent of GDP in FY2023; weak Foreign Direct Investment additional forthcoming external financing; and import compression pending INTERNATIONAL MONETARY FUND --- Page 10 --- HAITI declining Net International Reserves (NIR). Text Table 2. Haiti: Additional Expenditures Related to Food Price Shock The fiscal deficit also contributes Measures to sizable BOP needs, Millions of Share of including Transfers HTG GDP (%) because critical current public Dry food (non-energy) rations sector spending has a large import Transfers to poor families 3,707 0.14 component. On the fiscal front, Transfers to teachers 8,237 0.31 the Transfers to textile workers 0 0.00 emergency financing would be Other transfers 0 0.00 used to support poor households Capital expenditures (University 481 0.02 through cash transfers and Total hospital) 0 0.00 food rations (Text Table 2). dry Sources: Authorities' data; and Fund staff estimates and 12,425 0.47 projections. Box 1. Impact of the Global Food Crisis on Haiti's Balance of Payments Haiti's import bill surged amid higher bill, in dollar terms, expanded global food and commodity prices. $3.7 billion in nearly 40 percent from about During FY2020-22, the FY2020 to some $5.1 billion in FY2022, of 1,100 Import Bill import nearly half is for fossil fuels and food. which 1,000 fossil fuel bill grew 44 During this period, the .47 projections. Box 1. Impact of the Global Food Crisis on Haiti's Balance of Payments Haiti's import bill surged amid higher bill, in dollar terms, expanded global food and commodity prices. $3.7 billion in nearly 40 percent from about During FY2020-22, the FY2020 to some $5.1 billion in FY2022, of 1,100 Import Bill import nearly half is for fossil fuels and food. which 1,000 fossil fuel bill grew 44 During this period, the percent, with the latter percent and the food import bill 40 S 800 prices (chart). increasing in line with the surge in food E 700 Foodi imports Haiti's S 600 Fossil fueli imports the global emergency economic situation is closely linked with Commodity index food price 100 food shock. Haiti has an urgent BOP (2020= 100), -RHS 90 with acute food insecurity that is inflicting serious need associated 2020 2021 2022 (E) 2023 (P) 2024 (P) disruption on the country. The World Food economic and Sources: projections BRH WordE from Economic 2022 onwa Outlook rds and Fund staff 2025 stimates (P) and Agriculture Programme and Food Classification index.1 Organization rank Haiti at a catastrophic level on the Food insecurity is particularly Integrated Food Security Phase Services exports-mainly tourism revenuesacute among the most vulnerable and expected to recover until the -are at only 20 percent of pre-pandemic poorest citizens. current food and security situations levels and are not Balance of payments support from the RCF at 50 improve. net external buffers. Although percent of quota will be critical months of gross foreign exchange reserves given Haiti's limited imports, net international reserves of the BRH remain sufficient to cover five liabilities to banks. Haiti could be have been declining as a result of nearly reserve-related liabilities. The exposed to external sustainability risks if it rising external BRH will limit its foreign is unable to roll over its volatility (LOI 18). Fund engagement via the SMP is exchange intervention only to smoothing excess authorities close their BOP within likely to catalyze donor funds, further gap a year. helping the 1/ See (United Nations, 2022). OUTLOOK, RISKS, AND DEBT SUSTAINABILITY 5. The outlook remains improvement in challenging. The economy is expected to security, and inflation to decline over the recover slowly, assuming an medium term, contingent upon adequate INTERNATIONAL MONETARY FUND 7 volatility (LOI 18). Fund engagement via the SMP is exchange intervention only to smoothing excess authorities close their BOP within likely to catalyze donor funds, further gap a year. helping the 1/ See (United Nations, 2022). OUTLOOK, RISKS, AND DEBT SUSTAINABILITY 5. The outlook remains improvement in challenging. The economy is expected to security, and inflation to decline over the recover slowly, assuming an medium term, contingent upon adequate INTERNATIONAL MONETARY FUND 7 --- Page 11 --- HAITI of structural reforms. Staff assesses a macroeconomic policies and continued implementation in FY2023 at 0.3 percent, but only in FY2023. Growth is projected to turn positive reflecting mainly the financing gap forecast at the time of the SMP approval in June 2022, security weaker than 1.4 percent recovery would be driven by a modest downward revision of the global outlook. A marginal agriculture (after the recent drought improvement and a small pick-up in key sectors, particularly medium term. After surging in 2022, lowered harvests); and reach 1.5 percent over the and fuel price that has end-FY2023. A worsening security situation inflation would decline to 21 percent by of FY2023, but inflation would inflationary pressures high in the first quarter into effect increases would keep financing of the fiscal deficit comes moderate gradually as the impact of lower monetary deficit of the NFPS is projected at world market prices for food and fuel stabilize. The fiscal the time of the SMP and point lower than envisaged at 2 percent of GDP in FY2023, 0.3 percentage on transfers to provide food to vulnerable Spending would increase due to higher outlays The deficit would increase approval. to address the cholera outbreak. households and health expenditure medium term, driven primarily by capital to around 2.7-2.8 percent of GDP over the of GDP in FY2023 as a slightly deficit is expected to narrow to 0.8 percent spending. The current account further to 0.6 percent of GDP in the medium term. result of the food price shock and would narrow downside. Domestic risks include intensified political The balance of risks is tilted to the of 6. public health emergency (further spreading instability, gang-related disruptions to activity, to volatile remittance flows, lower- thancholera), and natural disasters. Externally, Haiti is vulnerable food and energy prices. However, as well as renewed surges in global move expected external financing some fiscal relief. Should the authorities the reduction in fuel subsidies is expected to provide the fiscal outlook would improve, that follow global market conditions, on the to regular adjustments while reducing pressures public higher public investment and raising growth, the outlook. permitting situation would also improve finances. Further normalization of the security risk of distress" and debt carrying capacity is Public debt is sustainable with "high at the time of the 7. updates the analysis conducted rated "medium. " The DSA (See DSA Supplement) largely unchanged. More broadly, in June 2022, with the overall analysis remaining in external SMP approval the medium term, funded by a gradual increase slightly higher primary deficits over of subdued export growth, brings the present value concessional financing against the background share of into the "high" range of debt external debt as a exports at of public and publicly guaranteed Bank DSA. Debt carrying capacity is unchanged distress thresholds in the joint IMF-World and the debt outlook remains subject to risks. "medium" POLICY DISCUSSIONS to contain the food price shock and protect the poor. Discussions focused on the immediate policies cushion the impact of the shocks on the population. 8. The authorities are taking steps to of Economy and Finance have prepared a of Social Affairs and Labor and the Ministry text Table 3), The Ministry and strengthen the social safety (see detailed strategy to tackle food insecurity that living very The plan aims to expand programs improve also leveraging ongoing programs. MONETARY FUND 8 INTERNATIONAL and the debt outlook remains subject to risks. "medium" POLICY DISCUSSIONS to contain the food price shock and protect the poor. Discussions focused on the immediate policies cushion the impact of the shocks on the population. 8. The authorities are taking steps to of Economy and Finance have prepared a of Social Affairs and Labor and the Ministry text Table 3), The Ministry and strengthen the social safety (see detailed strategy to tackle food insecurity that living very The plan aims to expand programs improve also leveraging ongoing programs. MONETARY FUND 8 INTERNATIONAL --- Page 12 --- HAITI conditions and enhance social inclusion, focusing on the most vulnerable groups (children, pregnant women, the disabled, and the elderly). The BRH has moved to ease loan repayment obligations- extending them for three months for households and six months for corporates. The ministry of finance is planning to support workers in several sectors (including textile) and to increase cash transfers and food rations for households. The authorities have begun making cash transfers to about 50,000 of the most vulnerable households. They have also begun school feeding programs and providing hot meals for vulnerable households and community restaurants. They also plan to waive school fees. They are considering leveraging digital tools for cash transfers, thanks to support from the Word Bank and Inter-American Development Bank. Staff welcome these measures which are in line with Fund advice, Text Table 3. Haiti: Measures to Support Vulnerable Households in FY2023 Executing party Financing Measure Purpose Scope 250 community restaurants with (300 meals/day) Expansion of social assistance 100,000 dry rations (per month) programs for vulnerable Food security Hot meals (mobile canteens) households Subsidies to industrial park workers for food and Ministry of transportation Social Affairs and Labor Budget Temporary job creation for the Creation of more than 57,000 temporary jobs in (MAST) unemployed (prioritization of Food security agriculture, environment, and public sectors vulnerable households) country-wide 25,000 parents, each receiving an allowance of School feeding program (food HTG 10,000 and transportation support) Food security HTG 375,000,000 subsidy to transportation company for the purchase of 50 new buses Public transit subsidy program for registered buses Social safety net Fuel for registered buses Youth vocational training programs in high-growth Social safety net 5,000 young people country wide Ministry of sectors Social Affairs Support artisans and small and Labor Budget businesses, and reinforce their 5,000 artisans (MAST) Social safety net receiving an allowance of HTG value chains and production 5,000 for two months capacity Socio-cultural and sports-based activities for youth in vulnerable Social safety net 100 projects neighborhoods Register more than 200,000 new households in SIMAST country- Social safety net Six cash transfer cycles, each reaching 50,000 Ministry of Budget, WB, households Economy and IDB, USAID, wide Finance (MEF) WFP Enhance the current digital payment system to facilitate Social safety net money transfers Sources: Ministry of Economy and Finance and Ministry of Social Affairs and Labor. INTERNATIONAL MONETARY FUND 9 months capacity Socio-cultural and sports-based activities for youth in vulnerable Social safety net 100 projects neighborhoods Register more than 200,000 new households in SIMAST country- Social safety net Six cash transfer cycles, each reaching 50,000 Ministry of Budget, WB, households Economy and IDB, USAID, wide Finance (MEF) WFP Enhance the current digital payment system to facilitate Social safety net money transfers Sources: Ministry of Economy and Finance and Ministry of Social Affairs and Labor. INTERNATIONAL MONETARY FUND 9 --- Page 13 --- HAITI Estimates of Fiscal Space Under Different Fuel Price Adjustment of these Scenarios 9. To monitor implementation and 1.4 (Percent of GDP) programs and strengthen transparency the authorities committed to accountability, in line with recent 0.6 0.8 follow PFM guidelines, 0.4 technical assistance from the Fund. In particular, 2 all spending related to the new resources, including 0.2 are included in the budget and the social spending, 0.6 2022 2023 2024 2025 2026 2027 2028 2029 2030 associated financing recorded in the Treasury No Globa price pal oul adjustment and nd maximum adjustm adj ustment ment of * att atth the monthly Account at the central bank, while abiding o1 E increase and DU max sactrmem of3 * atthe t att E pump L monthly Single E oil taff - procedures. Strengthening Ministry ofF Finance un by proper procurement the social safety net will continue to be supported Additional efforts to enhance transparency by by financing from development partners (Annex I). of the financial operations of the Economic the authorities include continued regular publication statements for public institutions, a Assistance Fund (FAES), using a template of financial reform as of and Social the authorities plan an institutional part key objective of the SMP program. Similarly, (PNPPS), which will centralize social spending the national policy for social protection and promotion social affairs and labor, in line with IMF initiatives and their execution under the ministry of In particular, the authorities recommendations (IMF 2020), with a view to enhancing transparency. (WFP) and expand the partial with the UN World Food Program aim to enhance their collaboration database, in which about 420,000 Haitian poor registry, called SIMAST (national vulnerability Staff will continue to engage with other households, or 2,500,000 people, are registered). UN WFP, and the World Bank, in order to support development partners, such as the EU, IADB, the the measures to protect the most in effectively and transparently deploying the government vulnerable. and should continue to do authorities made efforts to sustain revenue collection would 10. The to the tax code and tax procedure code. Next steps so. Recent reforms include amendments the tax code (and the tax procedure code) and entail following through with implementation the end of June 2022, weaker-than-expected revenue reforms. At customs and tax administration measures, including replacing collection prompted the implementation of administrative boosted domestic revenues to a monthly management at the revenue agency. These measures in April-June- and to 3.4 billion from average of 2.2 billion gourdes average of 6.4 billion gourdes, meaningful efforts, worsening security undermined gourdes in July-August. Despite the authorities' Relative to the June agency's capacity to collect taxes in September-October. revenue in FY2022. As a the revenue estimated a shortfall of 5 billion gourdes in domestic more 2022 outlook, staff 2.3 of GDP (49.5 billion gourdes)-0.1 percent financing increased to percent result, monetary than expected. and the associated procedure code (structural benchmark 11 The new tax code, a primer in the country's history, and simplification of the personal income tax and businesses; corporate completed under the SMP) entail the rationalization eliminating many exemptions; a new tax system for small the Investment income tax and broadening their bases by in their rates; the integration of local taxes, of rationalization of excises and small taxes and increase into the tax code. Code and the Special Economic Zone Regime 10 INTERNATIONAL MONETARY FUND .1 percent financing increased to percent result, monetary than expected. and the associated procedure code (structural benchmark 11 The new tax code, a primer in the country's history, and simplification of the personal income tax and businesses; corporate completed under the SMP) entail the rationalization eliminating many exemptions; a new tax system for small the Investment income tax and broadening their bases by in their rates; the integration of local taxes, of rationalization of excises and small taxes and increase into the tax code. Code and the Special Economic Zone Regime 10 INTERNATIONAL MONETARY FUND --- Page 14 --- HAITI 11. The authorities have Text Table 4. Haiti: FSW and Reallocation of Fuel approved a credible budget Subsidies Toward framework for FY2023 and over the Priority Spending (In billions of gourdes and percent of GDP) medium term. The 2023 budget, FY2022 FY2023 approved on December 19, aims for a HTG bn % of GDP HTG bn % of GDP budget deficit of about 1.5 percent of Energy 38,886 1.8 10,506 0.4 EDH 7,644 0.4 10,506 0.4 GDP, slightly lower the one projected Fuel (net subsides) 31,242 1.5 0 0.0 by staff of 2 percent of GDP. The fuel Non- -Energy 5,820 0.3 48,034 1.7 Re- allocation from fuel subsidies 0 0.0 33,480 1.2 price rise announced in September IMF FSW loan 0 0.0 12,379 0.4 Other (including social spending) 5,820 0.3 2,174 was reflected in prices at the pump in Source: Authorities' data; and IMF staff estimates and projections. 0.1 November, but fuel imports fell sharply because of the security situation. As a result, net fuel revenues are projected at 1.1 percent of GDP in FY2023 (vs. -1.5 percent in FY2022). This assumes that prices at Text Table 5. Haiti: Impact of Fuel Price Adjustments the pump remain near their cost and FY2022 FY2023 % change Prices (HTG/gallon) global oil prices moderate in line with Formula- cost price (weighted average) 559 605 8.3 WEO projections (Text Tables 4-5 and Gasoline 594 616 3.6 Gazoil 548 642 17.3 Chart). The additional budget space is Kerosene 519 583 12.4 Price at the pump (weighted average) 291 621 113.2 expected to raise non-fuel transfers to Gasoline 250 570 128.0 1.2 percent of GDP and pro-growth Gazoil 353 670 89.8 Kerosene 352 665 88.9 capital spending to 3.5 percent of GDP Fuel budget impact (% GDP) Subsidies 2.9 0.1 (1.4 percent domestically funded). The (Forgone) Taxes 1.5 1.1 authorities intend to use the Net tax collection -1.5 1.1 freed-up Memorandum items: resources to compensate those most World oil price (USD/gallon) 94.6 81.5 -13.9 Exchange rate (HTG/USD) 107 117.1 9.3 affected by food price rises, including Sources: Authorities' data and Fund Staff estimates and projections. through their Programme d'urgence, which they aim to roll out soon. 5.0 Contributions to FY2023 Fiscal Deficit 4.0 4.5 (Percent of GDP) Contributions to the Financing of the Fiscal Deficit (Percent of GDP) DBRH 4.0 1.5 DExternal financing financing 3.5 0.1 3.0 DOther domestic financing 1.2 - Fiscal deficit 3.0 2.0 - 2.5 2.2 2.0 0.2 2.0 1.5 1.0 1.0 0.5 DReduce deficit mIncrease deficit 0.0 N 0.0 FY2022 fiscal Current Energy Capital Tax revenue Grants FY2023 fiscal -1.0 deficit spending 1/ subsidies expenditure deficit FY2022 FY2023 Sources: National authorities and Fund staff calculations. 1/ Non- energy transfers financed from resources from the requested Food Shock Window are estimated at about 0.5 percent of GDP in FY2023. INTERNATIONAL MONETARY FUND 11 .2 2.0 1.5 1.0 1.0 0.5 DReduce deficit mIncrease deficit 0.0 N 0.0 FY2022 fiscal Current Energy Capital Tax revenue Grants FY2023 fiscal -1.0 deficit spending 1/ subsidies expenditure deficit FY2022 FY2023 Sources: National authorities and Fund staff calculations. 1/ Non- energy transfers financed from resources from the requested Food Shock Window are estimated at about 0.5 percent of GDP in FY2023. INTERNATIONAL MONETARY FUND 11 --- Page 15 --- HAITI mobilization and on PFM to progress has been achieved on revenue The 12. Meaningful and improve the quality of spending. increase the transparency of public spending Fund technical assistance which will be finalized the new customs tariffs with help from Account (TSA) all authorities toward consolidating in the Treasury Single published later in December. Work been also and the medium-term units has completed bank accounts of the central budgetary deficit as the main anchor, was framework, with the non-financial public sector (NFPS) the tax and customs budget reform priorities are meant to simplify approved on December 19. These policy accountability, and audit capacity. systems and enhance transparency, of the Fiscal Deficit 13. The authorities had Text Table 6. Haiti: Financing of GDP) taken steps to (In billions of gourdes and percent FY2022 FY2023 already monetary and HTG bn % ofGDP HTGbn % of GDP strengthen and -5,822 -0.3 -11,110 -0.4 0.0 exchange policy frameworks External financing 3,450 0.2 0 -0.4 them to continue Project loans -9,272 -0.4 -11,110 staff urged Amortization 63,240 3.0 68,678 2.4 these important efforts. Central Domestic financing 49,515 2.3 45,803 1.6 0.4 non-financialBRH 0 0.0 12,379 bank lending to the IMF FSW loan and T-Bills 15,950 0.7 10,496 0.4 (NFPS) was below the Commercial bank deposits 10,950 0.5 0 0.0 public-sector Domestic suppliers -13,175 -0.6 0 0.0 end-June target, although has Domestic Authorities' debt data; amortization andl IMF staff estimates and projections. increased in September as the Source: revenue collection was under financing to 1.5 percent of GDP-in FY2023 committed to limiting monetary strain. The authorities reserves will be sterilized by liquidity absorption. Any excess which staff assesses as non-inflationary. to initiate disinflation, given the large interest rates would help A further increase in short-term needs in FY2023 could be covered by negative real rate (about 15 percent). Additional financing Table 6). The BRH will limit its foreign since public debt is sustainable (Text domestic borrowing excess volatility (LOI 118). exchange intervention only to smoothing 80 Exchange Rate and FX Intervention FX USS million 2,500 Net Foreign Assets (NFA) and Net International Inet are central FX sales; bank are intervention, FX purchases) Reserves (NIR) of the Central Bank (BRH) ERA reference rate (RHS) 2,000 (USS million) a NFA Parallel EXR (RHS) NIR Interbank market EXR (RHS) 1,500 H will limit its foreign since public debt is sustainable (Text domestic borrowing excess volatility (LOI 118). exchange intervention only to smoothing 80 Exchange Rate and FX Intervention FX USS million 2,500 Net Foreign Assets (NFA) and Net International Inet are central FX sales; bank are intervention, FX purchases) Reserves (NIR) of the Central Bank (BRH) ERA reference rate (RHS) 2,000 (USS million) a NFA Parallel EXR (RHS) NIR Interbank market EXR (RHS) 1,500 1,000 866 931 938 774 732 677 -20 -40 142 203 -60 N 2 80 R R 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 (E) (P) Sources: BHR and Fund staff calculations. INTERNATIONAL MONETARY FUND --- Page 16 --- HAITI supervision and strengthen the AML/CFT 14. The BRH is advancing reforms to enhance banking supervision to technical assistance, the BRH has been strengthening framework. With The BRH has also framework and move to risk-based supervision. in upgrade the regulatory reforms on anti-money laundering by issuing heightened risk-based supervision and advanced the of a sanction instruction to financial institutions to support implementation November detailed The authorities should accelerate progress in regime against gangs and criminal activities. in order to meet the deadlines of the action addressing the items on the FATF recommendations preventative measures applicable to address the deficiencies in AML/CFT plan. The BRH is working to entities under its supervision. SUPPORT, SAFEGUARDS, MODALITIES OF FINANCIAL AND CAPACITY TO REPAY under the new Food Shock Window (FSW) of 15. Haiti qualifies for emergency financing under the RCF of 50 percent of quota (SDR the RCF. The authorities have requested access BOP need, attributable to acute food million) through the new FSW.2 Haiti has an urgent in the case of 81.9 costs that exceed a certain threshold equivalent insecurity and increase in food import external need will seriously disrupt If not addressed, the payments Haiti to the last five-year average. crisis. 3 Haiti is unable to implement an Upperand aggravate the current humanitarian The proposed the economy owing to its limited implementation capacity. Credit Tranche (UCT)-quality program, limits under the PRGT and the sub-limits under access is within the applicable overall access the FSW will be disbursed to the central bank financing instruments. The financing under This will help the government emergency to be on-lent to the government for budget support. and cash transfers and is expected through purchases of food finance its response to the food price shock, including confirm that they have established a households. In their LOI, the authorities central bank to the most vulnerable of economy and finance and the Memorandum of Understanding between the ministry their respective roles and and clarifying agreeing to the terms of the on-lending arrangement to the Fund. They indicate also their responsibilities for timely servicing of the financial obligations policies supporting macro with the Fund and to pursue economic commitment to cooperate stability, in line with the current SMP. to the Fund is adequate, but subject to risks. 16. Haiti's capacity to repay its obligation risk of debt distress (See DSA Supplement). Haiti's debt is considered sustainable, although at high of quota or 1.1 percent of GDP and exposure to Haiti will increase to 115.2 percent and services The Fund's to reach 2.6 percent of exports of goods future debt service to the Fund is expected Window Under the Rapid Financing Instrument and No. 2022/042 "Proposal for a Food Shock must at least one of the food 2 See IMF Policy Paper criteria. A requesting member fulfil of acute food Rapid Credit Facility" for standard qualification an urgent BOP need associated with: (i) a situation exceeding shock impact criteria, i.e., it needs to experience a certain threshold or (ii) cereal export shortfall insecurity or an increase in food/fertilizer costs exceeding a certain threshold. Haiti qualifies based on (i). the FSW is achieved through import compression, the amount of 3 The lack of additional financing gap beyond in the pipeline. pending additional external financing INTERNATIONAL MONETARY FUND 13 IMF Policy Paper criteria. A requesting member fulfil of acute food Rapid Credit Facility" for standard qualification an urgent BOP need associated with: (i) a situation exceeding shock impact criteria, i.e., it needs to experience a certain threshold or (ii) cereal export shortfall insecurity or an increase in food/fertilizer costs exceeding a certain threshold. Haiti qualifies based on (i). the FSW is achieved through import compression, the amount of 3 The lack of additional financing gap beyond in the pipeline. pending additional external financing INTERNATIONAL MONETARY FUND 13 --- Page 17 --- HAITI which are higher than PRGT comparators. The and almost 2 percent of gross international reserves, well as high risk of debt distress, add to risks. high fragility and institutional weakness, as commitment to maintaining a country's to be mitigated by the authorities' strong However, risks are expected demonstrated by weekly meetings and by pursuing structural close engagement with the Fund, as achieving macro stability and Fund's advice, their commitment to continuing reforms in line with undertaking reforms to strengthen governance. initiated several additional measures to and safeguards. The authorities 17. Risk mitigation emergency resources on the most vulnerable and accountability in spending related to the ensure transparency track, record, and publish all expenditures households. They committed to carefully and accountability, with respect to the response. Accurate and transparent recording budget emergency further donor support (e.g., expected allocation of financing, is important for catalyzing to advance governance and The authorities' commitment to continuing support from the EU). SMP has been encouraging. They have, for example, anticorruption reforms in the context of the COVID-related spending, which was publication of the financial and operational audit on the to the need completed RCF disbursement, even if it exposed government agreed at the time of the previous and PFM reforms have proceeded steadily. of further improve PFM systems. Moreover, governance contracts awarded since November These include publication of all public procurement of the successful bidders and regular (monthly) information on the beneficiaries units, 2021- including Account at the BRH (including central budgetary the consolidation into one Single Treasury PFM and mitigate fraud and corruption assistance). To further strengthen thanks to FAD technical execution procedures and the authorities will enforce compliance with proper expenditure no later than 45 days risks, monthly budget execution reports, controls; publish related comprehensive audits by all the line ministries after the end of each month; and conduct internal expenditure under the Food Shock Window through the involved in the use of emergency resources provided internal audits will be of Finance. They will ensure that these expenditure et du Contentieux General Inspectorate Audit Court (La Cour Superieure des Comptes CSCCA communicated to the Supreme also adequate resources to the Administratif or CSCCA) in a timely manner. They will provide basis, starting for the period audits related to these measures on a bi-annual within six months to conduct compliance audits are to be completed and published July-December 2022. These compliance committed to provide staff access to its of the end of the audit period (LOI 15). The authorities and authorize its external auditors to completed external audit reports central bank's most recently hold discussions with staff. forward in implementing the 2019 safeguards 18. The authorities will continue to move audit, conducted by KPMG, was The central bank external with assessment recommendations. 2022. The BRH also progressed towards an agreement completed and published on June 30, internal audit function plans to verify program government debt and the drafting the MEF on consolidating The BRH also recently submitted monetary data at program test dates, as recommended. the Act in some respects, some areas, amendments to its organic act. While these would improve safeguards, need further arrangements, mandate, and autonomy Other including on governance in consultation with IMF staff. strengthening. Work on these amendments is continuing Financial Reporting Standards and recommendations, such as the adoption of International priority 14 INTERNATIONAL MONETARY FUND , internal audit function plans to verify program government debt and the drafting the MEF on consolidating The BRH also recently submitted monetary data at program test dates, as recommended. the Act in some respects, some areas, amendments to its organic act. While these would improve safeguards, need further arrangements, mandate, and autonomy Other including on governance in consultation with IMF staff. strengthening. Work on these amendments is continuing Financial Reporting Standards and recommendations, such as the adoption of International priority 14 INTERNATIONAL MONETARY FUND --- Page 18 --- HAITI BRH's involvement in development activities, as development of a medium-term plan to phase-out with best practices, remain in progress. of the foreign investment strategy well as the alignment of recommendations. Staff will continue to monitor the implementation STAFF APPRAISAL financing of 50 percent of the authorities' request for Fund emergency that Haiti 19. Staff supports under the Rapid Credit Facility. Staff assesses quota under the Food Shock Window of need that, if not addressed, would qualifies for support as it faces an urgent balance payments access to be appropriate, given disruption. Staff considers the proposed cause severe economic least US$105 million in FY2023, its debt sustainability, Haiti's large and urgent financing needs of at level of access, given the strength of the capacity to repay the Fund at the proposed food insecurity its adequate Haiti's urgent BOP need is attributed to acute authorities' policies under the SMP. certain threshold (equivalent, in Haiti's case, to in food import costs that exceed a to and to an increase disbursement would provide critical and timely support the last five-year average). The proposed food price shock, including through purchases of the finance its response to the as a to official help government households, while acting catalyst food and cash transfers to the most vulnerable that the authorities' commitments in and bilateral financial assistance. Staff considers multilateral to ensure macroeconomic stability. their Letter of Intent (see appendix) are appropriate policies that will ensure continued The authorities are committed to advancing to enhance 20. the poor and have shared a detailed strategy macroeconomic: stability and support to policies under the SMP remain in close consultation with staff implement and social safety nets. They foster domestic resource mobilization, macroeconomic and financial stability, Fund that will promote the aim of paving the way for an eventual full-fledged ensure continued donor support-with authorities' LOI makes it clear that the emergency Upper-Credit-Tranche (UCT)-quality program. The on food and cash transfers in allocated in the budget financing will be used to support spending the the impact of the food price shock on population. order to mitigate INTERNATIONAL MONETARY FUND 15 --- Page 19 --- HAITI Figure 1. Haiti: Food Prices and Social Indicators Inflation, largely imported, accelerated in 2022... .and import volume of rice from the US dropped 55 Contribution to Inflation 50 (y/y growth) 550,000 Rice Exports to Haiti - Others US Housing, water, electricity 500,000 (In metric. tons) Food and non- alcoholic beverages CPI local products CPI- imported products 450,000 Overall CPI 400,000 350,000 300,000 250,000 200,000 o R R 2 a a N 9 8 5 a & 150,000 Inflation, largely imported, accelerated in 2022... .and import volume of rice from the US dropped 55 Contribution to Inflation 50 (y/y growth) 550,000 Rice Exports to Haiti - Others US Housing, water, electricity 500,000 (In metric. tons) Food and non- alcoholic beverages CPI local products CPI- imported products 450,000 Overall CPI 400,000 350,000 300,000 250,000 200,000 o R R 2 a a N 9 8 5 a & 150,000 8 8 2a The absolute number of people undernourished has reached .together with domestic production of cereal. historic highs... 5.6 Number of People Undernourished 700,000 Cereals, Total Production (In millions, three- -year average) (In tonnes) 5.4 650,000 5.2 600,000 550,000 4.8 500,000 4.6 450,000 4.4 400,000 4.2 350,000 2010 2012 2014 2016 2018 2020 .and has reversed the meager progress in reducing Security problems has led to displacement of thousands of poverty. people. 40,000 21 150,000 Poverty Rates 1/ Total Displaced Persons by Violence (n percent) (Number of people) Haiti Kosovo 125,000 30,000 - Papua New Guinea Burundi (RHS) Lebanon (RHS) 100,000 20,000 75,000 50,000 10,000 International poverty rate ($2.15 in 2017 PPP) 25,000 Lower middle- -income poverty rate ($3.65 in 2017 PPP) Upper middle -income poverty rate ($6.85 in 2017 PPP) 2012 2014 2016 2018 2020 2022 (E) 2010 2012 2014 2016 2018 2020 2022 Sources: International Organization for Migration (IOM) Displacement Tracking Matrix, FAO, United States Department of Agriculture Foreign Agricultural Service, World Bank, World Development Indicators, and Fund staff calculations. 1/ Data was extracted from the World Bank, Macro Poverty Outlook October 2022. Data is not available from 2013-17. 2/1 Data for Haiti for 2022 is an estimate by IOM as of September 2022. The estimates for 2022 for other countries are not available. 16 INTERNATIONAL MONETARY FUND --- Page 20 --- HAITI Table 1. Haiti: Selected Economic and Financial Indicators, FY2019-25 (Fiscal year ending September 30) Nominal GDP (2021): US$21.0billion Population (2021): 11.9 million GDP per capita (2021): US$1,765 Percent of population below poverty line (2021): 52.3 FY2019 FY2020 FY2021 FY2022 FY2022 FY2023 FY2024 FY2025 Prog. Est. Proj. Proj. Proj. (Change over previousy year; unless otherwise indicated) National income and prices GDP at constant prices -1.7 -3.3 1.8 0.3 -1.5 0.3 GDP deflator 1.2 1.5 17.6 20.6 19.3 26.1 27.6 33.4 12.9 Consumer prices (period average) 17.3 22.9 15.9 26.1 27.6 33.4 14.0 Consumer prices (end- -of- period) 19.7 14.0 12.9 25.2 13.1 27.5 38.7 21.0 13.4 12.4 External Sector Exports (goods valued in U.S. 1.5 17.6 20.6 19.3 26.1 27.6 33.4 12.9 Consumer prices (period average) 17.3 22.9 15.9 26.1 27.6 33.4 14.0 Consumer prices (end- -of- period) 19.7 14.0 12.9 25.2 13.1 27.5 38.7 21.0 13.4 12.4 External Sector Exports (goods valued in U.S. dollars, f.o.b.) 11.4 -26.3 27.7 7.0 13.1 4.8 6.1 Imports (goods, valued in U.S. dollars, f.o.b.) -6.0 -16.7 22.3 12.8 8.4 6.2 Remittances (valued in U.S. dollars) 7.6 5.2 4.6 3.2 6.0 21.1 5.0 -8.6 0.0 Real effective exchange rate (eop; appreciation) -11.0 5.2 5.7 34.2 -5.2 Money and credit (valued in gourdes) Credit to private sector (in U.S. dollars and gourdes) 24.0 -11.2 15.2 5.8 6.5 9.4 Base money (currency in circulation and gourde deposits) 22.9 22.4 11.2 12.5 Broad money (excl. foreign currency deposits) 21.5 21.5 14.9 13.8 13.3 11.6 20.4 -0.3 38.2 20.8 14.2 13.0 12.5 11.2 (In percent of GDP; unless otherwise indicated) Central government Overall balance (including grants) -2.1 -2.4 -2.6 -1.5 -2.2 Domestic revenue -2.0 -2.5 -2.7 Grants 6.4 6.2 5.9 5.8 5.4 6.6 6.9 7.3 Expenditures 1.7 1.3 2.3 2.7 2.8 2.5 2.3 2.2 Current expenditures 10.1 9.9 10.8 10.1 10.3 11.1 11.7 12.2 Capital expenditures 8.0 8.1 7.4 6.6 6.9 7.6 7.8 8.0 2.1 1.8 3.4 3.5 3.4 3.5 3.9 4.1 Overall balance of the nonfinancial public sector 1/ -1.7 -3.2 -2.5 -1.5 -2.2 -2.0 -2.5 -2.7 Savings and investment Gross investment 20.3 17.7 18.0 19.4 18.7 15.3 15.2 Ofv which: public investment 2.1 1.8 3.4 3.5 15.9 Gross national savings 3.4 3.5 3.9 4.1 19.2 18.8 18.5 20.2 16.3 14.5 14.7 15.3 External current account balance (incl. 2.7 Savings and investment Gross investment 20.3 17.7 18.0 19.4 18.7 15.3 15.2 Ofv which: public investment 2.1 1.8 3.4 3.5 15.9 Gross national savings 3.4 3.5 3.9 4.1 19.2 18.8 18.5 20.2 16.3 14.5 14.7 15.3 External current account balance (incl. official grants) -1.1 1.1 0.5 0.8 -2.4 -0.8 Net fuel exports 0.5 -0.6 -7.5 -5.0 -3.1 6.1 -5.0 -4.2 -3.5 -3.3 Public debt External public debt (medium and long- term, eop) 15.8 10.5 12.9 11.2 12.9 Total public sector debt (end of- period) 26.5 11.1 11.1 11.2 External public debt 23.3 28.5 27.3 29.4 25.3 25.5 25.9 service 2/ 6.6 12.5 9.5 9.3 8.8 8.6 8.0 8.1 Memorandum items: (In millions of dollars, unless otherwise indicated) Overall balance of payments -207 139 4 36 -282 -73 Net international reserves (program definition) 732 677 452 Gross international reserves 492 142 203 242 285 2,100 2,501 2,534 2,574 2,328 2,348 In months of imports of thef following year 6.0 5.8 5.4 5.0 2,373 2,398 Nominal GDP (millions of gourdes) 4.6 4.5 4.4 4.3 Nominal GDP (millions ofU.S. dollars) 1,244,014 1,449,888 1,699,208 2,149,404 2,135,272 2,857,327 3,295,019 3,776,214 14,787 14,508 21,017 20,135 20,223 24,236 25,192 26,128 Sources: Ministry of Economy and Finance; Bank of the Republic of Haiti; World Bank; Fund staff estimates and projections. 1/ Includes transfers to the state- owned electricity company (EDH), and unsettled payment obligations 2/Inp percent of exports of goods and nonfactor services. Includes debt relief. INTERNATIONAL MONETARY FUND 17 --- Page 21 --- HAITI Table 2a. Haiti: Non-Financial Public Sector Operations, FY2019-25 (Fiscal September 30; In millions of gourdes) year ending FY2019 FY2020 FY2021 FY2022 FY2022 FY2023 FY2024 FY2025 Prog. Est. Proj. Proj. Proj. 99,665 108,524 139,852 184,082 173,689 259,708 302,124 357,280 Total revenue and grants 100,635 125,552 114,919 187,736 226,608 275,792 Domestic revenu e 79,071 90,046 53,299 52,378 74,012 87,286 82,525 115,961 137,052 166,130 Domestic taxes 20,098 21,127 22,613 31,166 27,341 64,842 81,363 100,046 Customs duties 689 259,708 302,124 357,280 Total revenue and grants 100,635 125,552 114,919 187,736 226,608 275,792 Domestic revenu e 79,071 90,046 53,299 52,378 74,012 87,286 82,525 115,961 137,052 166,130 Domestic taxes 20,098 21,127 22,613 31,166 27,341 64,842 81,363 100,046 Customs duties 30,554 35,232 28,298 Of which: fuel taxes 4,009 7,099 6,933 8,193 9,616 5,674 16,541 5,053 Other current revenue 18,478 39,217 58,530 58,770 71,972 75,515 81,488 Grants 20,594 1,930 445 9,432 5,886 6,504 Budget support 1/ 0 3,868 1,321 20,594 14,610 37,897 56,600 58,325 62,540 69,630 74,985 Project grants 125,952 143,265 184,164 217,344 220,400 317,276 384,959 459,694 Total expenditure 2/ 126,058 142,405 146,835 216,159 255,837 303,753 Current expenditure 99,835 117,479 40,280 45,333 55,130 68,134 63,030 94,292 112,031 132,167 Wages and salaries 32,899 32,504 57,147 65,900 75,524 Goods and services 23,022 32,119 35,472 3,398 3,604 6,014 4,401 6,596 6,181 6,480 8,540 Interest payments 33,134 27,984 28,842 36,970 44,706 58,540 71,426 87,521 Transfers and subsidies 13,395 11,838 9,111 9,111 7,644 10,506 12,116 13,885 Ofv which: Transfers to EDH Ofv which: Fuel direct subsidies to oil companies 12,974 8,844 10,682 22,736 31,242 3/ 0 8,439 600 Exceptional expenditures 26,117 25,786 58,107 74,939 73,564 101,117 129,122 155,941 Capital expenditure 5,264 12,334 15,359 14,889 11,789 38,577 46,413 63,614 Domestically financed 20,853 13,452 42,748 60,050 61,775 62,540 82,709 92,328 Foreign-financed -34,741 -44,313 -33,262 -46,710 -57,568 -82,835 -102,414 Central government balance including grants -26,286 -67,000 -91,574 financed projects -26,028 -39,767 -40,782 -31,742 -43,706 -75,642 Excluding grants and externally -38,298 -40,115 -51,387 -76,356 -93,874 Primary balance of NFPS, incl. grants and other transfers to EDH -22,888 -31,138 -28,860 5,746 11,058 -2,031 0 -256 -102,414 Central government balance including grants -26,286 -67,000 -91,574 financed projects -26,028 -39,767 -40,782 -31,742 -43,706 -75,642 Excluding grants and externally -38,298 -40,115 -51,387 -76,356 -93,874 Primary balance of NFPS, incl. grants and other transfers to EDH -22,888 -31,138 -28,860 5,746 11,058 -2,031 0 -256 Adjustment (unsettled payment obligations) -20,540 -45,800 -42,282 -33,262 -46,454 -57,568 -82,835 -102,414 Overall balance of NFPS, including grants 20,540 45,800 42,282 33,262 46,454 57,568 82,835 102,414 Financing, NFPS 2,780 -6,728 -5,865 7,490 -5,822 -11,110 648 3,658 External net financing -6,790 6,728 -2,640 -7,490 -5,822 -11,110 648 3,658 Loans (net) 259 2,281 4,851 3,450 3,450 0 13,079 17,343 Disbursements -7,049 -9,009 7,491 10,940 -9,272 -11,110 -12,431 -13,685 Amortization 4,010 0 -3,225 Arrears (net) 23,320 52,527 48,147 40,752 52,276 68,678 82,187 98,756 Internal net financing 68,678 82,187 98,756 9,434 50,584 54,916 58,808 65,464 Banking system 9,823 41,255 51,165 46,533 49,515 58,182 65,900 75,524 BRH 4/ -388 9,329 3,751 12,275 15,950 10,496 16,287 23,232 Commercial banks -13,188 Nonbank financing 5/ 13,886 1,943 -6,769 -18,056 Men morandum items 32,754 29,332 31,984 53,840 62,553 2,021 -1,569 7,575 Forgone fuel taxes and fuel direct subsidies 31,311 2,021 -1,569 7,575 o/w Forgone fuel taxes 19,780 20,488 21,302 31,104 12,974 8,844 10,682 22,736 31,242 o/w Fuel direct subsidies to oil companies 18,801 29,050 28,173 36,540 36,300 50,003 59,310 69,860 Health, education and agriculture spending 1,699,208 2,149,404 2,135,272 2,857,327 3,295,019 3,776,214 Nominal GDP 1,244,014 1,449,888 Sources: Ministry of Finance and Economy; and Fund staff estimates and projections. 1/Includes previously- programmed multilateral budget support that could be delayed, as well as CCRT debt relief. 2/Commitment basis, except for domestically financed spending, which IS reported on the basis of project account replenishments. 3/Includes all COVID- -related expenditures for FY2020 and FY2021. 4/ Amounts include RCF financing for FY2020 and the full two- year debt relief under the CCRT and for FY2021 half of the SDR allocation. 5/ Includes the net changei in the stock of government securities held by non- banks, of checks that are not yet cashed, of supplier credits and of domestic arrears. 18 INTERNATIONAL MONETARY FUND CCRT debt relief. 2/Commitment basis, except for domestically financed spending, which IS reported on the basis of project account replenishments. 3/Includes all COVID- -related expenditures for FY2020 and FY2021. 4/ Amounts include RCF financing for FY2020 and the full two- year debt relief under the CCRT and for FY2021 half of the SDR allocation. 5/ Includes the net changei in the stock of government securities held by non- banks, of checks that are not yet cashed, of supplier credits and of domestic arrears. 18 INTERNATIONAL MONETARY FUND --- Page 22 --- HAITI Table 2b. Haiti: Non-Financial Public Sector Operations, FY2019-25 (Fiscal year ending September 30; percent of GDP) FY2019 FY2020 FY2021 FY2022 FY2022 FY2023 FY2024 FY2025 Prog. Est. Proj. Proj. Proj. 8.0 7.5 8.2 8.6 8.1 9.1 9.2 9.5 Total revenue and grants 6.4 6.2 5.9 5.8 5.4 6.6 6.9 7.3 Domestic revenue 4.3 3.6 4.4 4.1 3.9 4.1 4.2 4.4 Domestic taxes 1.6 1.5 1.3 1.5 1.3 2.3 2.5 2.6 Customs duties 0.0 0.0 0.0 0.0 0.0 1,1 1.1 0.7 Ofv which: fuel taxes 0.5 1.1 0.2 0.3 0.2 0.2 0.2 0.3 Other current revenue 1.7 1.3 2.3 2.7 2.8 2.5 2.3 2.2 Grants 0.0 0.3 0.1 0.1 0.0 0.3 0.2 0.2 Budget support 1/ 1.7 1.0 2.2 2.6 2.7 2.2 2.1 2.0 Project grants 10.1 9.9 10.8 10.1 10.3 11.1 11.7 12.2 Total expenditure 21 8.0 8.1 7.4 6.6 6.9 7.6 7.8 8.0 Current expenditure 3.2 3.1 3.2 3.2 3.0 3.3 3.4 3.5 Wages and salaries 1.9 2.2 2.1 1.5 1.5 2.0 2.0 2.0 Goods and services 0.4 0.3 0.2 0.2 0.2 0.3 0.2 0.2 Interest payments 2.7 1.9 1.7 1.7 2.1 2.0 2.2 2.3 Transfers and subsidies 1.1 0.8 0.5 0.4 0.4 0.4 0.4 0.4 Ofv which: Transfers to EDH 0.6 1.1 1.5 0.0 0.0 0.0 Ofv which: Fuel direct subsidies to oil companies 1.0 0.6 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 Exceptional expenditures 3/ 2.1 1.8 3.4 3.5 3.4 3.5 3.9 4.1 Capital expenditure 0.4 0.9 0.9 0.7 0.6 1.4 1.4 1.7 Domestically financed 1.7 0.9 2.5 2.8 2.9 2.2 2.5 2.4 Foreign- financed -2.1 -2.4 -2.6 -1.5 -2.2 -2.0 -2.5 -2.7 Central government balance including grants 1.5 2.0 -2.3 -2.4 Excluding grants and externally financed projects -2.1 -2.7 -2.4 -2.3 Primary balance of NFPS, incl. 1.7 0.9 2.5 2.8 2.9 2.2 2.5 2.4 Foreign- financed -2.1 -2.4 -2.6 -1.5 -2.2 -2.0 -2.5 -2.7 Central government balance including grants 1.5 2.0 -2.3 -2.4 Excluding grants and externally financed projects -2.1 -2.7 -2.4 -2.3 Primary balance of NFPS, incl. grants and other transfers to EDH -1.8 -2.1 -2.3 -1.3 -1.9 -1.8 -2.3 -2.5 -0.5 0.8 -0.1 0.0 0.0 0.0 0.0 0.0 Adjustment (unsettled payment obligations) -3.2 -2.5 -1.5 -2.2 -2.0 -2.5 -2.7 Overall balance of NFPS, including grants -1.7 1.7 3.2 2.5 1.5 2.2 2.0 2.5 2.7 Financing, NFPS -0.2 -0.5 -0.3 -0.3 -0.3 -0.4 0.0 0.1 External net financing -0.5 -0.5 -0.2 -0.3 -0.3 -0.4 0.0 0.1 Loans (net) 0.0 0.2 0.3 0.2 0.2 0.0 0.4 0.5 Disbursements -0.6 -0.6 -0.4 -0.5 -0.4 -0.4 -0.4 -0.4 Am mortization 0.3 0.0 -0.2 0.0 0.0 0.0 0.0 0.0 Arrears (net) 1.9 3.6 2.8 1.9 2.4 2.4 2.5 2.6 Internal netf financing 0.8 3.5 3.2 2.7 3.1 2.4 2.5 2.6 Banking system 0.8 2.8 3.0 2.2 2.3 2.0 2.0 2.0 BRH 4/ 0.0 0.6 0.2 0.6 0.7 0.4 0.5 0.6 Commercial banks 1.1 0.1 -0.4 -0.8 -0.6 0.0 0.0 0.0 Nonbank financing 5/ Memorandum items 2.6 2.0 1.9 2.5 2.9 0.1 0.0 0.2 Forgone fuel taxes and fuel direct subsidies 0.1 0.0 0.2 1.6 1.4 1.3 1.4 1.5 o/w Forgone fuel taxes 1.0 0.6 0.6 1.1 1.5 0.0 0.0 0.0 o/w Fuel direct subsidies to oil companies 1.7 1.7 1.8 1.8 1.9 Health, education and agriculture spending 1.5 2.0 1.7 1,244,014 1,449,888 1,699,208 2,149,404 2,135,272 2,857,327 3,295,019 3,776,214 Nominal GDP (millions of gourdes) Sources: Ministry of Finance and Economy; and Fund staff estimates and projections. 0 0.0 o/w Fuel direct subsidies to oil companies 1.7 1.7 1.8 1.8 1.9 Health, education and agriculture spending 1.5 2.0 1.7 1,244,014 1,449,888 1,699,208 2,149,404 2,135,272 2,857,327 3,295,019 3,776,214 Nominal GDP (millions of gourdes) Sources: Ministry of Finance and Economy; and Fund staff estimates and projections. 1/1 Includes previously- programmed multilateral budget support that could be delayed, as wella as CCRT debt relief. 2/ Commitment basis, except for domestically financed spending, which iS reported on the basis of project account replenishments. 3/ Includes all COVID- related expenditures for FY2020 and FY2021 4/ Amounts include RCF financing for FY2020 and the full two- year debt- -relief under the CCRT and for FY2021 half of the SDR allocation. 5/ Includes the net change in the stock of government ec urities held by non banks, of checks that are noty yet cashed, of supplier credits and of dom mes estic arrears. INTERNATIONAL MONETARY FUND 19 --- Page 23 --- HAITI Table 3. Haiti: Summary Accounts of the Banking System, FY2019-25 (Fiscal year ending September 30; in millions of gourdes, unless otherwise indicated) FY2019 FY2020 FY2021 FY2022 FY2022 FY2023 FY2024 FY2025 Prog. Est. Proj. Proj Proj. Central bank Net foreign assets 146,120 117,208 146,005 (In millions of U.S. dollars) 175,822 145,574 151,422 172,907 197,069 Ofv which: Net international reserves (in millions of U.S. dollars) 1/ 1,566 732 1,778 1,499 1,553 1,312 1,237 1,272 1,317 Ofv which Commercial bank forex deposits (in millions of U.S. dollars) 677 452 492 142 203 242 285 914 1,160 1,324 1,338 1,447 1,331 1,326 1,328 Net domestic assets Net credit to the nonfinancial public sector -19,709 37,550 42,096 52,710 70,475 94,475 105,740 113,912 Ofv which: Net credit to the central government 69,108 109,964 159,923 206,456 209,638 255,441 321,341 396,865 Claims on central government 70,939 112,194 162,197 208,730 211,911 257,714 323,615 399,139 Central government deposits 107,087 143,984 200,974 247,332 250,489 296,292 362,192 437,716 Of which: IMF PCDR debt relief 36,148 31,791 38,777 38,602 38,577 38,577 38,577 38,577 Liabilities to commercial banks (excl. 396,865 Claims on central government 70,939 112,194 162,197 208,730 211,911 257,714 323,615 399,139 Central government deposits 107,087 143,984 200,974 247,332 250,489 296,292 362,192 437,716 Of which: IMF PCDR debt relief 36,148 31,791 38,777 38,602 38,577 38,577 38,577 38,577 Liabilities to commercial banks (excl. gourde deposits) -4,776 4,686 -2,634 -3,279 3,279 -4,119 -4,958 -5,798 BRH bonds/Open market operations 95,156 81,390 138,460 170,923 167,329 179,381 197,770 217,251 Commercial bank forex deposits 6,200 841 3,525 13,453 800 10,453 11,453 12,453 Other 88,956 80,549 134,935 157,470 166,529 168,928 186,317 204,798 6,339 8,976 20,632 17,176 28,166 18,416 17,830 65,703 Base money 126,411 154,758 188,101 228,532 Currency in circulation 216,049 245,898 278,647 310,980 66,530 96,234 108,670 120,944 Commercial bank gourde deposits 121,126 134,590 148,208 161,849 59,881 58,524 79,431 107,588 94,923 111,307 130,438 149,131 II Consolidated banking system Net foreign assets 188,238 150,596 205,868 282,144 208,208 (In millions of U.S. dollars) 214,894 238,396 264,156 Ofy which: Commercial banks NFA (in millions of U.S. dollars) 2,017 451 2,285 2,114 2,491 1,877 1,756 1,753 1,765 506 615 939 565 519 482 448 Net domestic assets 182,592 219,132 305,095 334,893 Credit to the nonfinancial public sector 375,126 444,112 502,805 559,942 Of which: Net credit to the central government 80,286 130,870 199,795 258,603 265,459 321,758 403,945 502,701 Claims on central government 80,286 130,870 195,957 254,765 261,622 317,921 400,108 498,864 Central government deposits 133,988 178,659 252,599 311,231 318,063 374,362 456,549 555,305 Credit to the private sector 53,702 47,789 56,641 56,466 56,441 56,441 56,441 56,441 130,485 115,840 133,478 141,241 142,109 In gourdes 155,470 172,953 194,583 In foreign currency 60,236 70,344 72,552 75,578 76,895 84,093 93,516 105,211 Other 70,250 45,495 60,926 65,663 65,214 71,376 79,438 89,372 -28,179 27,577 -28,178 -64,951 32,442 -33,116 -74,094 -137,343 Broad money 370,830 369,728 510,963 617,036 583,333 659,006 Currency in circulation 741,201 824,098 Gourde deposits 60,743 85,390 98,150 110,424 110,606 124,070 137,689 151,329 Foreign currency deposits 90,630 114,581 134,373 166,210 139,670 158,548 177,078 197,209 (In millions of U.S. 116 -74,094 -137,343 Broad money 370,830 369,728 510,963 617,036 583,333 659,006 Currency in circulation 741,201 824,098 Gourde deposits 60,743 85,390 98,150 110,424 110,606 124,070 137,689 151,329 Foreign currency deposits 90,630 114,581 134,373 166,210 139,670 158,548 177,078 197,209 (In millions of U.S. dollars) 215,530 165,194 270,986 322,188 322,644 370,768 419,035 465,983 2,310 2,506 2,782 2,845 2,909 3,030 3,082 3,114 (12-month percentage change) Currency in circulation 28.7 40.6 12.5 Base money 14.9 12.7 12.2 11.0 9.9 Broad money (M3) 22.9 22.4 21.5 21.5 14.9 13.8 13.3 11.6 20.4 -0.3 38.2 20.8 14.2 13.0 12.5 11.2 Gourde deposits -5.3 26.4 17.3 23.7 3.9 13.5 Foreign currency deposits 32.6 23.4 64.0 18.9 19.1 11.7 11.4 14.9 13.0 11.2 Credit to the private sector 24.0 -11.2 15.2 Credit in gourdes 5.8 6.5 9.4 11.2 12.5 Credit in foreign currency 7.5 16.8 3.1 4.2 6.0 9.4 11.2 12.5 42.9 -35.2 33.9 7.8 7.0 9.4 11.3 12.5 Memorandum items: Foreign currency deposits (% of total private deposits) 71.0 59.7 67.4 65.9 69.7 Foreign curr. credit to priv. sector (% of total) 53.7 39.2 45.5 70.0 70.3 70.2 46.5 45.9 45.9 Commercial banks' credit to private sector (% of GDP) 10.5 8.0 7.9 6.6 45.9 45.9 6.7 5.4 5.2 5.2 Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections. 1/Program definition. Excludes comme ercial bank forex deposits, letters of credit, guarantees, earmarked project accounts and in NIR USS denominated bank reserves. 70.0 70.3 70.2 46.5 45.9 45.9 Commercial banks' credit to private sector (% of GDP) 10.5 8.0 7.9 6.6 45.9 45.9 6.7 5.4 5.2 5.2 Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections. 1/Program definition. Excludes comme ercial bank forex deposits, letters of credit, guarantees, earmarked project accounts and in NIR USS denominated bank reserves. A portion of SDR allocation is 20 INTERNATIONAL MONETARY FUND --- Page 24 --- HAITI Table 4a. Haiti: Balance of Payments, FY2019-25 (In millions of US$ on a fiscal year basis; unless otherwise indicated) FY2019 FY2020 FY2021 FY2022 FY2022 FY2023 FY2024 FY2025 Prog. Est. Proj. Proj. Proj. -169 158 98 154 -481 -199 -126 -147 Current account (including grants) -705 -703 -711 -350 -36 -389 -810 Current account (excluding grants) -3,318 -2,879 3,474 -3,984 -3,711 -4,030 4,225 -4,394 Trade balance 1,339 1,421 1,509 1,202 885 1,130 1,209 1,278 Exports of goods 1,133 824 1,071 1,159 1,199 1,259 1,332 1,416 Of which: Assembly industry -4,604 -4,989 5,369 -5,646 -5,903 Imports of goods 4,520 -3,764 -5,193 -1,112 720 -643 -1,236 -1,016 1,009 893 -865 Of which: Fossil fuels -110 -313 464 -500 532 -493 416 -416 Services (net) 118 118 150 156 163 129 124 Receipts 641 -441 -589 -618 -650 -643 573 -579 Payments Income (net) 3,210 3,321 4,013 4,616 3,739 4,263 4,438 4,566 Current transfers (net) 610 577 Official transfers (net) 181 126 135 544 2,741 2,906 3,518 3,694 3,215 3,216 3,383 3,574 Private transfers (net) 300 437 478 428 Other transfers (net) -131 -104 -72 -190 200 126 151 172 Capital and financial accounts Capital transfers -75 -35 20 -106 Public sector capital flows (net) -92 0 100 120 Loan disbursements -95 -98 -95 -10 -10 106 -106 -105 Amortization 97 101 105 Foreign direct investment (net) -79 -76 -162 -324 Banks (net) 1/ Other items (net) 2/ -50 -35 -29 Errors and omissions -207 139 -36 282 -73 Overall balance 207 139 36 282 -25 -25 Financing 123 -350 -91 -40 206 -20 -25 -25 Change in net foreign assets (+ is decrease) -25 -25 o/w Change in gross reserves (+ is decrease) 123 -350 -91 -40 206 -20 -12 -5 -10 -10 ) 1/ Other items (net) 2/ -50 -35 -29 Errors and omissions -207 139 -36 282 -73 Overall balance 207 139 36 282 -25 -25 Financing 123 -350 -91 -40 206 -20 -25 -25 Change in net foreign assets (+ is decrease) -25 -25 o/w Change in gross reserves (+ is decrease) 123 -350 -91 -40 206 -20 -12 -5 -10 -10 Change in IMF credit and loans (+ is increase) 96 104 Exceptional financing o/w Changes in arrears 3/ o/w Debt rescheduling and debt relief 4/ Memorandum items: Changei in US$ denom. reserve deposits at BRH (+ IS decrease) 15 -246 -164 -14 123 116 -2 55 225 -40 310 -61 -39 -43 Changei in NIR (program definition) (+ IS decrease) 6.2 11.4 -26.3 27.7 7.0 13.1 4.8 6.1 Exports of goods, f.o.b (percent change) -6.0 16.7 22.3 12.8 8.4 7.6 5.2 4.6 Imports of goods, f.o.b (percent change) 106.8 96.8 81.1 75.4 71.9 Projected average oil price (U.S. dollars per barrel, APSP) 61.4 41.8 69.2 of and 6.6 12.5 9.5 9.3 8.8 8.6 8.0 8.1 Debt service (in percent of exports goods services) 2,398 Gross international reserves (in millions of U.S. dollars) 2,100 2,501 2,534 2,574 2,328 2,348 2,373 (in months of next year's imports of goods and services) 6.0 5.8 5.4 5.0 4.6 4.5 4.4 4.3 14,787 14,508 21,017 20,135 20,223 24,236 25,192 26,128 Nominal GDP (millions of U.S. dollars) Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections. 1/Changei in net foreign assets of commercial banks. 2/1 Includes arrears on oili imports. 3/1 Includes debt to Venezuela for oil shipments already paid by the GOH in local currency but not yet cleared in U.S. dollars. 4/1 Includes the CCRT debt relief. INTERNATIONAL MONETARY FUND 21 14,508 21,017 20,135 20,223 24,236 25,192 26,128 Nominal GDP (millions of U.S. dollars) Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections. 1/Changei in net foreign assets of commercial banks. 2/1 Includes arrears on oili imports. 3/1 Includes debt to Venezuela for oil shipments already paid by the GOH in local currency but not yet cleared in U.S. dollars. 4/1 Includes the CCRT debt relief. INTERNATIONAL MONETARY FUND 21 --- Page 25 --- HAITI Table 4b. Haiti: Balance of Payments, FY2019-25 (In percent of GDP on a fiscal year basis; unless otherwise indicated) FY2019 FY2020 FY2021 FY2022 FY2022 FY2023 FY2024 FY2025 Prog. Est. Proj. Proj. Proj. -1.1 1.1 0.5 0.8 -2.4 -0.8 -0.5 -0.6 Current account (including grants) -2.4 0.2 -0.2 -1.9 -3.5 -3.3 -2.8 -2.7 Current account (excluding grants) 22.4 -19.8 -16.5 -19.8 18.3 -16.6 -16.8 16.8 Trade balance 8.1 6.1 5.4 6.0 6.3 5.5 5.6 5.8 Exports of goods 7.7 5.7 5.1 5.8 5.9 5.2 5.3 5.4 Of which: Assembly industry -24.7 -22.2 -22.4 -22.6 Imports of goods 30.6 -25.9 -21.9 -25.8 7.5 5.0 -3.1 -6.1 -5.0 -4.2 -3.5 -3.3 Of which: Fossil fuels -0.7 -2.2 -2.2 -2.5 -2.6 -2.0 -1.7 -1.6 Services (net) 3.6 0.9 0.6 0.6 0.6 0.6 0.6 0.6 Receipts -4.3 -3.0 -2.8 -3.1 -3.2 -2.7 -2.3 -2.2 Payments 0.3 0.2 0.1 0.1 0.1 0.3 0.3 0.4 Income (net) 21.7 22.9 19.1 22.9 18.5 17.6 17.6 17.5 Current transfers (net) 1.2 0.9 0.6 2.7 1.1 2.5 2.3 2.2 Official transfers (net) 20.0 18.3 15.9 13.3 13.4 13.7 Private transfers (net) 18.5 16.7 1.9 2.0 1.7 1.9 1.5 1.8 1.9 1.6 Other transfers (net) -0.9 -0.7 -0.3 -0.9 1.0 0.5 0.6 0.7 Capital and financial accounts 0.3 0.1 0.1 0.1 0.4 0.3 0.3 0.1 Capital transfers 0.6 -0.5 -0.2 0.1 0.1 -0.4 0.0 0.1 Public sector capital flows (net) 0.1 0.0 0.4 0.5 0.0 0.2 0.3 0.1 Loan disbursements -0.6 -0.7 -0.5 0.0 0.0 -0.4 -0.4 -0.4 Amortization 0.5 0.2 0.2 0.3 0.3 0.4 0.4 0.4 Foreign direct investment (net) 0.2 0.1 0.1 0.5 -0.5 -0.8 -1.6 0.2 Banks (net) 1/ 0.1 0.0 0.1 0.3 0.0 0.0 Other items (net) 2/ -0.3 -0.2 0.6 0.6 -0.1 0.0 0.0 0.0 0.0 0.0 Errors and omissions -1.4 1.0 0.0 -0.2 -1.4 -0.3 0.1 0.1 Overall balance 1.4 -1.0 0.0 0.2 1.4 0.3 -0.1 -0.1 Financing 0.8 -2.4 0.4 -0.2 1.0 -0.1 -0.1 0.1 Changei in net foreign assets (+ is decrease) 0.0 -0.1 0.7 missions -1.4 1.0 0.0 -0.2 -1.4 -0.3 0.1 0.1 Overall balance 1.4 -1.0 0.0 0.2 1.4 0.3 -0.1 -0.1 Financing 0.8 -2.4 0.4 -0.2 1.0 -0.1 -0.1 0.1 Changei in net foreign assets (+ is decrease) 0.0 -0.1 0.7 0.0 0.0 0.0 0.4 0.0 Change in IMF credit and loans (+ is increase) 0.7 0.7 0.5 0.4 0.4 0.0 0.0 0.0 Exceptional financing 0.6 0.7 0.4 0.4 0.4 0.0 0.0 0.0 o/w Changes in arrears 3/ 0.0 0.0 0.0 0.0 o/w Debt rescheduling and debt relief 4/ 0.0 0.0 0.0 0.0 Memorandum items: 11.4 -26.3 27.7 7.0 13.1 4.8 6.1 6.2 Exports of goods, f.o.b (percent change) 8.4 7.6 5.2 4.6 -6.0 -16.7 22.3 12.8 Imports of goods, fo.b (percent change) 106.8 96.8 81.1 75.4 71.9 Projected average oil price (U.S. dollars per barrel, APSP) 61.4 41.8 69.2 of and services) 6.6 12.5 9.5 9.3 8.8 8.6 8.0 8.1 Debt service (in percent of exports goods 84.1 99.9 80.9 Nominal exchange rate 2,100 2,501 2,534 2,574 2,328 2,348 2,373 2,398 Gross international reserves (in millions of U.S. dollars) of and services) 6.0 5.8 5.4 5.0 4.6 4.5 4.4 4.3 (in months of next year's imports goods 21,017 20,135 20,223 24,236 25,192 26,128 Nominal GDP (millions ofl FU.S. exchange rate 2,100 2,501 2,534 2,574 2,328 2,348 2,373 2,398 Gross international reserves (in millions of U.S. dollars) of and services) 6.0 5.8 5.4 5.0 4.6 4.5 4.4 4.3 (in months of next year's imports goods 21,017 20,135 20,223 24,236 25,192 26,128 Nominal GDP (millions ofl FU.S. dollars) 14,787 14,508 Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections. 1/ Change in net foreign assets of commercial banks. 2/ Includes arrears on oil imports. 3/ Includes debt to Venezuela for oil shipments already paid by the GOH in local currency but not yet cleared in U.S. dollars. 4/ Includes the CCRT debt relief 22 INTERNATIONAL MONETARY FUND --- Page 26 --- HAITI Table 5. Haiti: Indicators of Capacity to Repay the Fund (Existing and Proposed Credit), FY2019-27 (Units as indicated) FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 Fund obligations based on existing credit (in millions of SDRs) Principal 7.7 12.0 4.9 7.5 9.0 8.2 7.7 22.5 19.5 Interest 0.4 0.2 0.4 0.4 2.7 2.7 2.7 2.7 2.7 Fund obligations based on existing and prospective credit (in millions of SDRS) Principal 7.7 12.0 4.9 7.5 8.8 8.0 15.0 22.5 16.4 Interest 0.4 0.2 0.4 0.4 2.7 2.7 2.7 2.7 2.7 Total obligations based on existing and prospective credit In millions of SDRS 8.1 12.2 5.2 7.9 11.5 10.7 17.7 25.2 In millions of US$ 11.2 17.0 7.5 10.6 15.3 14.3 19.1 In percent of 23.9 33.9 25.7 exports 0.6 1.7 0.6 0.8 1.1 1.0 1.5 2.0 1.4 government revenue 0.8 1.3 0.3 0.5 0.5 0.5 0.8 0.9 0.6 reserves 0.5 0.7 0.3 0.5 0.7 0.6 1.5 debt service 1.0 1.0 9.7 14.4 6.0 8.6 12.3 11.6 19.3 23.3 17.8 quota 4.9 7.4 3.2 4.8 7.0 6.5 10.8 15.4 11.7 Outstanding Fund credit (end of period) In millions of SDRS 58.4 128.3 123.4 115.9 188.8 180.7 164.8 142.3 In millions of US$ 80.7 178.6 175.8 155.9 251.0 241.7 122.9 In percent of 221.7 191.4 165.2 exports 4.7 17.6 14.0 11.7 17.7 16.1 13.9 11.3 9.2 government e evenues 6.8 16.5 10.2 9.1 10.8 10.0 8.8 7.2 5.9 reserves 3.8 7.1 6.9 6.7 10.7 10.2 9.7 8.2 6.7 quota 35.6 78.3 75.3 70.7 115.2 110.3 100.6 86.9 75.0 Memorandum items: Exports 1/2/ 1.7 1.0 1.3 1.3 1.4 1.5 1.6 1.7 1.8 Government revenues 1/ 3/ 1.2 1.1 1.7 1.7 2.3 2.4 2.5 2.7 Reserves 1/4/ 2.1 2.5 2.5 2.3 2.3 2.4 2.3 2.3 2.5 2.8 Debt service 1/ 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Quota (in millions of SDRs) 163.8 163.8 163.8 163.8 163.8 163.8 163.8 163.8 163.8 GDP 1/ 14.8 14 5 2.3 2.3 2.4 2.3 2.3 2.5 2.8 Debt service 1/ 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Quota (in millions of SDRs) 163.8 163.8 163.8 163.8 163.8 163.8 163.8 163.8 163.8 GDP 1/ 14.8 14 .5 21.0 20.2 22.2 22.9 23.7 24.5 25.3 Sources: Haitian authorities; and Fund staff estimates and projections. Note: Data covers Haiti's fiscal year, which run S from October 1 to September 30. 1/In billions of U.S. dollars. 2/1 Exports of goods and services. 3/ Central government domestic reven les. 4/ Gross liquid international reserves, end of period. INTERNATIONAL MONETARY FUND 23 --- Page 27 --- HAITI Table 6. Haiti: External Financing Requirements and Sources, FY2019-25 (In millions of US$ on a fiscal year basis; unless otherwise indicated) 1/ FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Est. Proj. Proj. Proj. 66 131 715 916 809 816 Requirements 350 -32 36 705 810 703 711 Current account deficit, excluding grants Debt amortization, excluding repayments to the IMF 98 95 10 106 106 105 361 -145 36 640 928 809 816 Sources Capital transfers, excluding official transfers 58 54 57 19 19 97 101 105 Foreign direct investment support 184 116 190 254 530 632 639 Official disbursements, excluding budget Of which: Project loans 0 100 120 Other flows, including commercial banks (net) -36 -27 -173 66 122 0 197 45 Official budget support 2/ Change in central bank' 's NFA (+ is decrease) 3/ 123 -350 -91 206 -20 -25 -25 84 211 76 -12 Additional Financing IMF disbursement under RCF 0 111 IMF debt relief under CCRT Change in existing obligations to the IMF (+ is increase) -12 -5 -5 -10 -12 Debt rescheduling and debt relief, excluding the Fund -1 93 96 Change in arrears 4/ Memorandum items: Gross international reserves 5/ 2,100 2,501 2,534 2,328 2,348 2,373 2,398 (in months of next year'si imports of goods and services) 6.0 5.8 5.4 4.6 4.5 4.4 4.3 0 224 obligations to the IMF (+ is increase) -12 -5 -5 -10 -12 Debt rescheduling and debt relief, excluding the Fund -1 93 96 Change in arrears 4/ Memorandum items: Gross international reserves 5/ 2,100 2,501 2,534 2,328 2,348 2,373 2,398 (in months of next year'si imports of goods and services) 6.0 5.8 5.4 4.6 4.5 4.4 4.3 0 224 SDR allocation Sources: Bank of the Republic of Haiti; and Fund staff estimates and projections. 1/ Components may not exactly match up to totals due to rounding 2/1 Includes previously- -programmed multilateral budget support that could be delayed. 3/ Excluding exceptional financing. 4/ Includes debt to Venezuela for oil shipments already paid by the GOH in local currency but not yet cleared in U.S. dollars. 5/ Includes gold. 24 INTERNATIONAL MONETARY FUND --- Page 28 --- HAITI Table 7. Haiti: Financial Soundness Indicators, June 2020 - March 2022 (In percent; unless otherwise stated) Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Size and growth 4332.7 4319.1 5754.2 5745.0 5340.4 5341.3 5320.3 5267.8 Asset volume (in US$ millions) Deposit volume (in US$ millions) 3554.5 3382.5 4577.6 4613.0 4318.4 4351.5 4327.3 4275.6 23.5 -6.7 1.0 3.9 0.9 38.8 32.2 23.7 Asset growth (in gourde terms), y/y 5.7 -13.7 -8.3 -5.0 -2.1 21.2 20.6 18.8 Credit growth (net, in gourde terms), y/y Capital adequacy 27.3 22.6 18.4 22.3 20.8 21.4 Regulatory capital to risk- weighted assets 21.3 26.2 7.4 9.2 9.3 8.1 7.0 7.9 7.6 7.5 Regulatory capital to assets Asset quality and composition 25.8 26.0 25.1 24.8 24.8 Loans (net) to assets 26.8 28.7 27.1 loans 8.0 5.0 5.4 7.1 5.9 5.6 6.3 7.8 NPLS to gross 63.0 105.4 107.5 81.8 101.6 103.1 96.5 77.8 Provisions to gross NPLS Earnings and profitability Cumulative since beginning of calendar year 2.1 1.2 1.4 2.2 2.2 2.1 2.0 1.9 Return on assets (ROA) 24.1 12.4 14.4 21.4 23.0 23.2 21.5 21.6 Return on equity (ROE) Net interest income to gross income 50.1 57.1 55.0 52.6 50.2 51.1 51.6 51.6 to net 58.5 71.4 68.1 57.0 57.4 58.6 59.4 63.0 Operating expenses profits Efficiency 8.6 9.7 8.6 9.9 9.3 9.4 9.1 9.0 Interest rate spread 1/ Liquidity 45.3 47.3 48.6 48.1 50.3 48.5 47.8 Liquid assets to total assets 2/ 49.2 60.0 57.8 59.4 60.6 59.4 61.8 59.6 58.8 Liquid assets to deposits 2/ Dollarization Foreign currency loans to total loans (net) 57.0 40.0 42.8 45.5 43.5 44.9 47.2 47.7 Foreign currency deposits to total deposits 70.6 58.5 59.6 60.1 63.8 66.1 66.5 66.3 Foreign currency loans to foreign currency deposits 26.4 25.1 24.5 24.3 21.9 20.9 21.6 22.0 Sources: BRH Banking System Financial Summary and Fund staff calculations. These indicators reflect the aggregated results off the eight licensed banks in operation in Haiti; thus figures in this table may not exactly match the information in Table 3, which reflect the consolidated banking system. 1/1 Defined as the difference between average lending rate and average fixed deposit rate in the banking system. 2/1 Liquid assets comprise cash and central bank bonds. INTERNATIONAL MONETARY FUND 25 26.4 25.1 24.5 24.3 21.9 20.9 21.6 22.0 Sources: BRH Banking System Financial Summary and Fund staff calculations. These indicators reflect the aggregated results off the eight licensed banks in operation in Haiti; thus figures in this table may not exactly match the information in Table 3, which reflect the consolidated banking system. 1/1 Defined as the difference between average lending rate and average fixed deposit rate in the banking system. 2/1 Liquid assets comprise cash and central bank bonds. INTERNATIONAL MONETARY FUND 25 --- Page 29 --- HAITI Annex I. Social Safety Net Table1. Haiti: Measures in Place to Strengthen the Social Safety Net in FY2022 Executing Financing Program Measure Units reached party Purpose Expenditure Planned( (FY2022) Execution(FY 2022) (inHTG) Ministry of 22,000 vulnerable households, Social Cash transfers social safety net Food security receiving around US$ 45 monthly 2,278 Budget, Klere households 53,490,349 Affairs for 24 months (MAST) WB Chimen Cash transfer earthquake early US$ 100 for three months, and WFP recovery Food security covering 3,814 households 1,609 households 36,629,600 country-wide 50,000 households received Cash transfer Food security 150,000 households HTG. 3,105 per month, July- Sep. 155,250,000 Economic Programme "Panye Solidarite" food kits Food security 210,000 food kits 63,720 food kits to vulnerable and Social d'Urgence households 82,850,000 Assistance Budget "Restoran Kominote" Food security 684 157 community restaurants Fund community restaurants locatedi in vulnerable areas 39,547,440 (FAES) "Kantin Mobil" Food security At least 120,000 hotr meals School rehabilitation Food security 28 schools Noe execution National school rehabilitation Food security Completed 13,247,521 Education quality improvement Social safety net Economic 33,776,593 and Social Temporary social safety net and skills Food training for youth security 951,783,398 Assistance IADB Social safety for the vulnerable affected Fund by Covid- 19 Food security 1,703,926,700 (FAES) Expansion oft the social safety net for those affected by Covid- 19 Food security 2,823,454,469 Sources: Economic and Social AssistanceFund, Ministry ofEconomy and Finance andMinistry of Social Affairs andLabor. 26 INTERNATIONAL MONETARY FUND Social safety net Economic 33,776,593 and Social Temporary social safety net and skills Food training for youth security 951,783,398 Assistance IADB Social safety for the vulnerable affected Fund by Covid- 19 Food security 1,703,926,700 (FAES) Expansion oft the social safety net for those affected by Covid- 19 Food security 2,823,454,469 Sources: Economic and Social AssistanceFund, Ministry ofEconomy and Finance andMinistry of Social Affairs andLabor. 26 INTERNATIONAL MONETARY FUND --- Page 30 --- HAITI Appendix I. Letter of Intent Port-au-Prince January 5, 2023 Ms. Kristalina Georgieva Managing Director International Monetary Fund Washington, D.C., 20431 U.S.A. Madam Managing Director: during the recent IMF Annual Meetings in 1. We are grateful for the productive meeting time for our country. Haiti is and your support for our efforts during this challenging and has been hit hard by the Washington of Russia's invasion in Ukraine suffering greatly from the consequences circumstances, we have managed to continue global food price shock. Overall, despite challenging to the resilience of our citizens and continued our structural reform agenda, thanks implementing assistance from the IMF, for which we are grateful. implementing technical with annualized food inflation reaching The impact on food prices has been broad-based, 60-70 percent. This 2. 2022-and rice and milk powder prices surging nearly 44 percent in September Haitian households. About 4.7 million of people shock is particularly acute for the most vulnerable food crisis comes at a difficult time, with Haiti food insecurity. Moreover, the global With elevated food are suffering in the form of a cholera outbreak. suffering from a new public health emergency bill is expected to increase markedly in crisis unfolding, Haiti's import a prices and a humanitarian deficit relative to early projections, resulting in FY2023. This will widen the current account million. This projection takes into account balance-of-payments financing gap of at least US$105 from other development additional forthcoming external financing import compression, pending partners. assistance from the IMF under the Under these circumstances, we are requesting financial to SDR 3. the Credit Facility (RCF) in the amount equivalent Food Shock Window (FSW) of Rapid to be disbursed to the Treasury Single to 50 percent of Haiti's quota, meet urgent 81.9 million, corresponding Haiti This IMF assistance will help us Account at the Bank of the Republic of (BRH). of the war in Ukraine, which, if not need arising from the consequences balance-of-payments and severe economic disruption. addressed, will result in immediate between the Banque de la We commit to putting in place a Memorandum of Understanding the terms of the 4. of Economy and Finance that will clarify République d'Haïti (BRH) and the Ministry FSW-and our responsibility to service in a arrangement of the disbursement under the policy, we commit to on-lending to the IMF. In line with the IMF safeguards timely way our financial obligations assessment recommendations, and to provide continued implementation of the 2019 safeguards INTERNATIONAL MONETARY FUND 27 , will result in immediate between the Banque de la We commit to putting in place a Memorandum of Understanding the terms of the 4. of Economy and Finance that will clarify République d'Haïti (BRH) and the Ministry FSW-and our responsibility to service in a arrangement of the disbursement under the policy, we commit to on-lending to the IMF. In line with the IMF safeguards timely way our financial obligations assessment recommendations, and to provide continued implementation of the 2019 safeguards INTERNATIONAL MONETARY FUND 27 --- Page 31 --- HAITI external audit reports and to authorize IMF staff with access to the BRH's most recently completed will also undergo a new safeguards assessment external auditors to hold discussion with staff. We before the its assessment must be completed as feasible. We understand the safeguards as soon IMF arrangement with Haiti. approval of any subsequent commit to ensuring transparency and accountability 5. To enhance governance, we strongly related to the emergency response. We will track, record, and publish all spending without and will carefully execution procedures and controls exception; enforce compliance with proper expenditure reports, no later than 45 days after the related comprehensive monthly budget execution information on the publish all contracts, including end of each month; continue to publish procurement internal expenditure audits by all the line beneficial owners of successful bidders; and conduct under the Food Shock Window ministries involved in the use of emergency resources provided audits will be of Finance. These internal expenditure et through the General Inspectorate Audit Court (La Cour Superieure des Comptes communicated in a timely manner to the Supreme authorities' measures to address food Administratif or CSCCA), in the context of the audits du Contentieux to enable the CSCCA to conduct compliance insecurity. We will provide adequate resources 2022 period. These bi-annually, starting with the July-December related to these measures within six months of the end of the audit period. compliance audits will be completed and published the most cushion the impact of the shocks on the population, particularly 6. Our priority is to and growth objectives The Ministry of Social vulnerable ones, in line with our poverty reduction Finance have prepared a detailed strategy to Affairs and Labor and the Ministry of Economy and leveraging ongoing programs. We plan and strengthen the social safety net, tackle food insecurity conditions and enhance social inclusion, focusing programs that improve living to expand existing women, the disabled, and the elderly); support on the most vulnerable groups (children, pregnant rations for households. We have begun school workers in the textile sector; and increase food households and community restaurants. programs and providing hot meals for vulnerable for about 50,000 of the most feeding school fees and boost cash transfers, already in place World We plan to waive tools for cash transfers with support from the vulnerable households, and to leverage digital will also work closely with the World Food Development Bank. We Bank and Inter-American Program. implementing our circumstances, we have managed to continue 7. Overall, despite challenging Monitored Program (SMP), thanks to the government's structural reform agenda supported by Staff support from the IMF, for which we are commitment, the resilience of our citizens, and continued of structural reforms and policies grateful. We remain even more convinced that the implementation must continue in order to promote macroeconomic stability and strengthen governance our to restore the confidence, and reassure stronger and more inclusive growth, restore population's of the SMP establishes a development partners. We hope that our satisfactory implementation with the Fund over a subsequent favorable track record that will facilitate our negotiations sound macroeconomic program. We remain committed to implementing well-being. We will provide upper-credit-tranches in order to improve our population's policies and improving governance 28 INTERNATIONAL MONETARY FUND and policies grateful. We remain even more convinced that the implementation must continue in order to promote macroeconomic stability and strengthen governance our to restore the confidence, and reassure stronger and more inclusive growth, restore population's of the SMP establishes a development partners. We hope that our satisfactory implementation with the Fund over a subsequent favorable track record that will facilitate our negotiations sound macroeconomic program. We remain committed to implementing well-being. We will provide upper-credit-tranches in order to improve our population's policies and improving governance 28 INTERNATIONAL MONETARY FUND --- Page 32 --- HAITI 8. timely data and continue to collaborate closely with the IMF technical teams in designing and implementing policy measures. 9. We will not introduce or intensify exchange and trade restrictions and other measures or policies that would compound Haiti 's balance-of-payments difficulties. We will also limit foreign exchange intervention only to smoothing excess volatility. 10. We authorize the IMF to publish this letter and the accompanying Executive Board documents immediately upon consideration by the IMF's Executive Board of our request for a purchase under the Food Shock Window under the RCF. Please accept, Madam Managing Director, the expression of our highest consideration. Js/ /s/ Michel Patrick Boisvert Jean Baden Dubois Minister of Economy and Finance Governor of the Central Bank of Haiti INTERNATIONAL MONETARY FUND 29 --- Page 33 --- MONETARY FUND INTERNATIONAL HAITI UNDER THE RAPID CREDIT REQUEST FOR DISBURSEMENT SUSTAINABILITY ANALYSIS FACILITY-DEBT January 6, 2023 by Staff of the International Monetary Fund and Approved By Prepared Alonso-Gamo the World Bank. Patricia (WHD) and Andrea Schaechter (SPR); Manuela Francisco and Robert Taliercio (IDA World Bank) Haiti: Joint Bank-Fund Debt Sustainability Analysis' Risk of external debt distress High? Overall risk of debt distress High sustainable Debt is Granularity in the risk rating of protracted Yes: High probability Application of judgment threshold breaches on external debt under a 20-year horizon from FY2035 and important risks and vulnerabilities to debt outlook. conducted at the time of the SMP approval in June 2022, This DSA updates the analysis Haiti's risk of debt distress is assessed as with the overall assessment largely unchanged. sustainable. Haiti is a Fragile and Conflict-Affected "high" but overall public debt remains the World Bank fragility, conflict, and violence, as defined by State (FCS) or affected by that its debt risk rating remains vulnerable and the IMF, and tailored stress tests suggest frequent. Nevertheless, the level of natural disaster shocks, which are statistically to large of its profile such as its relatively long maturity of public debt, a few characteristics of some structural reforms external debt and investment base, and the implementation point to a sustainable public under the SMP baseline scenario, that boost growth potential Andrea Schaechter (SPR); Manuela Francisco and Robert 1, Approved by Patricia Alonso-Gamo (WHD) and Taliercio (IDA World Bank). and is based on the Bank' S 2021 CPIA and the October Index (CI) is estimated at 2.767 The current Composite capacity remains medium. 2022 WEO. Haiti's debt carrying its relatively long maturity of public debt, a few characteristics of some structural reforms external debt and investment base, and the implementation point to a sustainable public under the SMP baseline scenario, that boost growth potential Andrea Schaechter (SPR); Manuela Francisco and Robert 1, Approved by Patricia Alonso-Gamo (WHD) and Taliercio (IDA World Bank). and is based on the Bank' S 2021 CPIA and the October Index (CI) is estimated at 2.767 The current Composite capacity remains medium. 2022 WEO. Haiti's debt carrying --- Page 34 --- HAITI debt. Although debt ratios have improved, this assessment remains subject to downside risks as Haiti continues to face important economic, policy, and institutional fragilities, and exceptional vulnerability to natural disasters and debt data limitations are also present. lt will be essential for the government to follow through key reforms to mobilize additional revenues and improve efficiency of government expenditures, develop domestic markets, and growth enhancement policies to allow for a higher potential growth, about 1.5 percent currently assumed in this DSA. 2 INTERNATIONAL MONETARY FUND --- Page 35 --- HAITI Public Debt Coverage local governments, A. DSA covers the central government and debt used for this Electricité d'Haiti (EDH), Coverage. Gross public electricity company External debt 1. organisms the state-owned (Text Table 1). extrabudgetary autonomous d'Haiti (BRH) to the goverment including foreign oil from the Banque de la République and bilateral creditors, basis. No financing BRH and include debt to multilateral debt is defined on a residency data come from the of contingent liabilities. External (SOES), and noncompanies, as well as an estimate to other state-owned enterprises debt, including data are available on guaranted guaranteed SOE debt. 1. Haiti: Public Debt Coverage Check box Text Table X Subsectors of the public sector X X 1 Central government X State: and local government government X Other elements in the general o/w: Social security fund funds (EBFS) sector, including' to SOES) 5 o/w: Extra budgetary other entitiesi in the public and private: 6 Guarantees (to (borrowed on behalf off the government) Central bank debt Reasons for deviatio ons from the default ett tings 81 Non-s guaranteed SOE meganenalo Detault sen Usedfor orthe analytis 11 Th intry'scover of publicdets 00 2percent percento ofGDP OfGDP sts guaran teedby notca ythe cPmnty jove 35 gercento tolpP-sock :E 4ublice eerie Pravatar (guarante CTEEF Parnmenhip ed (PPP) seertador market (the delauite nt Lelcon ralue Aanmee udes nestimate shock 12 ote exterr IGOP a ntr trbiogpreltevd ngent abilities count trie edu thid /Thed ernmer delauits ed negligib ntry tea may including to SOES. Ongoing the debt coverage, of the debt to expanding disclosure is committed the and public 2. The governmenti data collection and preparation Finance Policy debt Development efforts are aimed at improving World Bank. Under the Sustainable and policy by the two performance portfolio review are supported in FY2022 to implementing in the DSA, the Government of Haiti committedi The PPAS are groundedi PPA dealt (SDFP), the fiscal resilience and debt sustainability. policy dialogue. The first actions (PPAS) to strengthen Performance Assessment), and continuous (PPG) non-concessional DEMPA (Debt Management external public or publicly guaranteed and Finance (MEF) and limited new second PPA), Ministry of Economy with debt management (the Both PPAS were With a focus on debt transparency a Debt Portfolio Review. debt to zero. with the objective to develop debt and fiscal staff received TA and training FY2023, the PPAS target managementa debt in FY2022. For guaranteed (PPG) non-concessional tax successfullyi implementedi new external public or publicly from the government sustainability, respectively limiting plan of tax expenditures stemming a rationalization to zero and implementing sector incentive regime. of claims of the overall banking debt is calculated as the sum credits and domestic Gross domestic public sector (NFPS) plus suppliers' 3. the public from the Fund's Standardized the BRH) to non-financial claims data come fund, (including the authorities. The banking Fund. The accounts of the education arrears as reported by by the BRH to the social security funds, Pension Forms 1SR and 2SR Tables reported et Obligatoire (PSUGO), and Report Universelle, Gratuite, Programme de Scolarisation MONETARY FUND 3 INTERNATIONAL and domestic Gross domestic public sector (NFPS) plus suppliers' 3. the public from the Fund's Standardized the BRH) to non-financial claims data come fund, (including the authorities. The banking Fund. The accounts of the education arrears as reported by by the BRH to the social security funds, Pension Forms 1SR and 2SR Tables reported et Obligatoire (PSUGO), and Report Universelle, Gratuite, Programme de Scolarisation MONETARY FUND 3 INTERNATIONAL --- Page 36 --- HAITI with the rest of the NFPS. In the Nationale dAsurance-Vielilese, ONA, are consolidated outside civile and Office debt does not include T-bills and bonds held absence of data, the calculation of domestic public Overdue payments related to current spending sector, which are understood to be negligible. budget and the banking recorded in the subsequent year's and salaries, or goods and services, are effectively are not recorded as on wages the current fiscal year. This is done SO that the payments typically processed (paid) in norms, that is, after such criteria as instead of being added to debt, as per accounting to oil domestic arrearsthis has happened mostly with payments due 90-day delays are assessed?) In the recent past in salary and diplomatic which have been cleared, though, some delayed payments distribution companies following the worsened security. representations were observed last September does not trigger an "in debt distress" rating central bank financing to the treasury serviced but the 4. For now, to about 11.8 percent of GDP in FY2021, is not for Haiti. Government debt to BRH, equal between the BRH and MEF imputed accrued interest July 2022 Memorandum of Understanding (MoU) held by the BRH; this recognition resulted in an debt securities 2021 balance payment on non-negotiable government central government starting with the October increase in the stock of the BRH's net claims on into securities bearing interest converting most of these liabilities negotiable In sheet. The MoU recommends -year period with a grace period of 10 years. rate of 7.57 percent per annum and payable over a fiftyrecommendations on BRH's efforts to implement the 2019 safeguards addition, the MoU supports Adopting the IFRS will provide BRH with greater International Financial Reporting Standards (IFRS). align it with the best international accounting and communication of financial information, the of transparency of how its financial position may impact implementation out practices, and a better understanding the accounting of operations carried by and transmission channels, while harmonizing monetary policy behalf of the Haitian state. treasury and the BRH on B. Background on Debt accounts in 2020 markedly reduced Haiti's public-debt-to-GDP 5. The revision to the national the Haitian Statistics Institute (IHSI) released in ratio. After several years of technical assistance (TA), that led to a 65 percent upward revision in October 2020 re-based and re-benchmarked national accounts informal sector. 4 These revisions lowered debt GDP (FY2019), owing in part to the inclusion of the from 51.9 nominal debt fell to 23.3 percent of GDP in FY2020 ratios substantially. As a percent of GDP, public Credit Facility (RCF) and to 28.5 percent projected in the 2020 DSA under the Rapid but also percent as previously ratios dropped sharply as a result of the rebasing in FY2021.5 At the same time domestic revenue As a of GDP, domestic revenue in revenue administration and collection. percent old because of a real decline and with 10.7 percent under the in FY2021 from 6.2 percent in FY2019 compared an estimated 6 fell to 5.9 percent of goods and services also fell to GDP series. Foreign exchange receipts from exports or from 18.2 percent under the old series. As of GDP in FY2021 from 11.7 percent in FY2019 percent orders created by a public entity responsible for are defined as all payment Since the maturity of 3 Payment arrears on expenditures but not paid 90 days after the Treasury authorizes payment as payment arrears. authorizing expenditure payments the 90-day deadline, they are not accounted overdue payments does not extend beyond 4 Annual data refer to the fiscal year ending September 30. nominal GDP slightly without revisions of national accounts by the IHSI in May 2021 raised 5 Additional minor affecting growth rates. MONETARY FUND 4 INTERNATIONAL 2019 percent orders created by a public entity responsible for are defined as all payment Since the maturity of 3 Payment arrears on expenditures but not paid 90 days after the Treasury authorizes payment as payment arrears. authorizing expenditure payments the 90-day deadline, they are not accounted overdue payments does not extend beyond 4 Annual data refer to the fiscal year ending September 30. nominal GDP slightly without revisions of national accounts by the IHSI in May 2021 raised 5 Additional minor affecting growth rates. MONETARY FUND 4 INTERNATIONAL --- Page 37 --- HAITI trends (and the very low ratios), Haiti's debt service deterioration in revenue evidenced by the ongoing capacity has not improved (Figure 1). the debt relief received after the 2010 earthquake. Haiti 6. Public debt has increased since creditors after the 2010 earthquake, including debt relief of about $1.0 billion from international and $36 million received Debt Relief Trust Fund (CCRT) $268 million from the Fund under the Post-Catastrophe from 19 percent of GDP at end-FY2009 to less World Bank.s As a result, external public debt fell mostly from the After that, debt rose steadily until FY2020, in FY2011 (both using old GDP series). external side, and by than 9 percent PetroCaribe agreement with Venezuela on the driven by disbursements related to the side. The government obtained some financing unremunerated financing from the BRH on the domestic and a loan from Taiwan Province non-financial companies ($123 million) in FY2018 signed I In April 2020, the from domestic although the latter was disbursed in tranches." of China (for $150 million) in January 2019, 81.9 million) under the RCF to help cover needs a disbursement of $111.6 million (SDR $22.6 million (SDR IMF Board approved also debt service relief worth related to the COVID-19 pandemic. Haiti was granted debt service to the IMF falling due 2021 under the Fund's updated CCRT covering 15.21 million) in April Haiti: Structure of Public Debt 14, 2020, to April 13, 2022.9 Haiti also Text Table 2. from April of $224 million at end-2021 benefited from an SDR allocation basis) million) in August 2021 with the central (Fiscal-year in percent tof (SDR157 half to the government for USS millions total debt GDP bank on-lending including that related to the Totall External Debt 2258.3 45.5 12.9 emergency spending, Multilateral creditors 262.8 5.3 1.5 1.0 2021 earthquake recovery.? o/w IMF 175.1 42.9 3.5 0.9 0.2 o/w OPEC 44.8 0.9 0.3 end of FY2021, Haiti's stock of o/w IFAD 0.0 0.0 0.0 7. At the o/w IDA 40.1 11.4 public sector debt totaled $5.0 billion Bilateral creditors 1993.1 1853.0 37.3 10.6 (28.5 percent of GDP). External public debt Venezuela o/w PetroCaribe 1826.2 36.8 10.5 0.2 accounted for 45.5 percent of total public debt o/w BANDES Province of China 140.1 26.8 0.5 2.8 0.8 of GDP), of which 80.8 percent was Taiwan, Restructured debt 2.4 0.0 0.0 (12.9 percent debt arose from oil imports financed by Debt 2708.1 54.5 15.5 Petrocaribe program (Text Table 2). 36.8 10.5 0.2 accounted for 45.5 percent of total public debt o/w BANDES Province of China 140.1 26.8 0.5 2.8 0.8 of GDP), of which 80.8 percent was Taiwan, Restructured debt 2.4 0.0 0.0 (12.9 percent debt arose from oil imports financed by Debt 2708.1 54.5 15.5 Petrocaribe program (Text Table 2). Total Domestic 2063.6 41.6 11.8 Venezuela's from BRH 644.6 13.0 3.7 The remainder was largely concessional debt Other creditors creditors, including from the Total Debt 4966.4 100.0 28.5 multilateral Fund for Agricultural Development Sources: Haitian authorities, and Fund staff estimates. International (IFAD) and the IMF. Public information on private financing from the IDA Crisis Response Window (CRW) to 6 The World Bank also provided $508 million in grant restoration of capacity. support the country's reconstruction and long-term Taiwan Province of China to compensate for the which includes grants from the government of to the loan, is assessed to be 7 The loan package, low fixed rate and the current higher variable rate applicable in FY2022, with the remaining difference between a million has been disbursed sO far, plus $30 million concessional. Of this loan, $82.5 $37.5 million to be disbursed later. and Relief Trust, 2021. 8 See Catastrophe Containment SDRS are used (i.e., when holdings fall below allocations debt directly, when external debt statistics 9 While not contributing to gross public enter the DSA as a long-term debt liability in the gross through on-lending, for instance) the they debt service. rate applicable in FY2022, with the remaining difference between a million has been disbursed sO far, plus $30 million concessional. Of this loan, $82.5 $37.5 million to be disbursed later. and Relief Trust, 2021. 8 See Catastrophe Containment SDRS are used (i.e., when holdings fall below allocations debt directly, when external debt statistics 9 While not contributing to gross public enter the DSA as a long-term debt liability in the gross through on-lending, for instance) the they debt service. and the net interest payments in INTERNATIONAL MONETARY FUND 5 --- Page 38 --- HAITI billion from $2.8 billion in FY2020. 10 unavailable. Domestic public debt eased slightly to $2.7 debt external debt is to the government. This drop in domestic Nearly 80 percent was in the form of central bank financing by over 32 percent against resulted largely from valuation effects as the gourde depreciated million, in U.S. dollars "technical arrears" to Venezuela of about $425.57 the dollar in FY2021. Haiti continues to have about 2 percent of GDP (September 30, 2021)."1 year. As noted above, tax revenue collection The fiscal year 2022 has been another challenging while higher 8. of GDP, partly the result of difficult security conditions, remained particularly low at 5.4 percent deficit, mainly through higher fuel subsidies. The international oil prices contributed to expanding the fiscal with 1.3 percent projected in deficit is estimated at 1.9 percent of GDP in FY2022 compared budget NFPS primary limited mainly to the central bank as external support the July 2022 DSA. Financing sources were been lower after the $80 million provided in lateremained relatively low. Donor support in FY2022 has value of public debt in September of the August earthquake. Thus, the present FY2021 in the aftermath 2022 is estimated at 23.3 percent of GDP,2 Forecasts C. Background on Macroeconomic under a 12-month Staffa assumes normative policy implementation 9. The baseline stability and growth. Nonetheless, growth Monitored Program (SMP) to restore macroeconomic: term and the outlook is for a modest recovery, conservative over the medium and long select reforms projections are very to restore stability, and implementation of sufficient implementation of sound macro policies growth, and real incomes. While the external financing and FDI and raise investment, to help attract some foundation for an eventual upper-credit- -tranche arrangement, Staff-Monitored Program aims to lay the to be modest given the uncertainties predicting after the one-year SMP is assumed of the current reform implementation 2023. An upside risk would be a significant improvement business policy commitment beyond and social costs which would improve the situation and a reduction to its economic and outlooks further while security public investment and raising growth employment climate permitting higher reducing financing pressures. after contracting by 1.5 percent to turn positive in FY2023, to 0.3 percent, 1.8 Real GDP is projected and the COVID pandemic (Text Table 3); by in FY2022, amid a protracted political crisis in FY2019. Growth for FY2023 is being in FY2021; 3.3 percent in FY2020; and 1.7 percent abates. Nonetheless, and as noted percent mild rebound in the service sector as social unrest with fueled by a - the result of political uncertainty above, risks to the growth outlook remain significant- challenges, and prolonged fuel presidential and parliamentary elections, security growth prospects possible structural reforms, medium-term shortages. Moreover, without comprehensive cited in this report are in US dollars unless otherwise indicated. All debt figures Venezuela for debts incurred under the Petrocaribe agreement in 11 Haiti has had difficulties processing payments to For now, debt service payments to Venezuela are being placed owing to issues related to international sanctions. BRH. account in U.S. dollars held at the 2015 and 2020 an escrow with the present value of public debt reported in the GDP has been 12 This number cannot be compared directly to include BRH financing to the government and DSAS since the coverage of debt has changed rebased. 6 INTERNATIONAL MONETARY FUND in US dollars unless otherwise indicated. All debt figures Venezuela for debts incurred under the Petrocaribe agreement in 11 Haiti has had difficulties processing payments to For now, debt service payments to Venezuela are being placed owing to issues related to international sanctions. BRH. account in U.S. dollars held at the 2015 and 2020 an escrow with the present value of public debt reported in the GDP has been 12 This number cannot be compared directly to include BRH financing to the government and DSAS since the coverage of debt has changed rebased. 6 INTERNATIONAL MONETARY FUND --- Page 39 --- HAITI crisis and collapse in investment. Under the remain grim given the protracted political-security and implementation of select reforms, assumes some political stability over the baseline scenario-which growth could reach 1.5 percent including in vocational training to boost productivity- and their effect on growth. 13 the probability of natural disasters medium term, given inflation declined gradually to 13.1 After peaking at 25.2 percent, year on year, in FY2020, reaction to the large gourde by September 2021, partly the result of a lagged the end of September 2022. By percent annual inflation is estimated at 38.7 percent at appreciation. But to drop to 21 percent, with a 12-month periodthe end of 2023, annual inflation is projected the GDP deflator which is projected at rate of 33.4 percent markedly contributing to 25.3 of GDP in average debt is expected to fall to percent 33.4 percent in FY2023. As a result, public 29.4 percent in FY2022. Inflation could FY2023-26.1 percent projected in the last DSA-from is expected to under the moderate growth baseline, as monetary policy decline slowly over time excess liquidity in the banking system and conduct short term liquidity operations to manage medium and long term. A stable real for food and fuel stabilize over the world market prices over the medium term following the gradual exchange rate vis-à-vis the U.S. dollar is assumed driven by inflation differential vis-àin FY2021, with the nominal bilateral rate being depreciation vis the U.S. of of GDP in FY2023 from 2.2 percent of the NFPS is projected to decline to 2 percent to The deficit would increase, and energy subsidies are reduced GDP in FY2022, as fuel tax revenues expenditures. The the fiscal space to boost other recurrent and growth-enhancing will revert to provide to about 2.7 percent of GDP in FY2025. Spending the deficit is expected to expand no change in fuel price policy-given realistic levels and the baseline scenario assumes reform. more likelihood and timing of a fully-fledged fuel price high uncertainty surrounding the fuel taxes and somehow increase tax Declining global oil prices, however, may reduce foregone to average of about 3.3 Over the long term, the deficit is expected to widen gradually, of revenues. cited above and the likely impact percent of GDP, taking into account baseline assumptions gradually in the medium supported by natural disasters. Fiscal revenues are expected to recover progress on revenue efforts to boost revenue collection and meaningful the authorities' the tax and customs systems and enhance mobilization from policy reform to simplify the tax base. Disasters would accountability, and audit capacity, while broadening for reconstruction. transparency, assistance and capital spending raise both current spending for emergency financing, both concessional increase is expected to be financed with external BRH limited The deficit market financing; and financing from the multilateral and bilateral; some domestic to about 2 percent of GDP. exercise, using a neoclassical growth projection is based on a growth accounting for and UN projections 13 The 1.5 percent long-term share of 35 percent, based on staff projections investment the same rate (1.2 production function with a labor during the projection period 2020-25 at real for labor force growth, and assuming that TFP grows Growth of 1.5 percent is 0.1 percent above the average observed percent) as the estimated average for 2013-19. about 77 natural disasters. rate during 2013-19, when Haiti recorded INTERNATIONAL MONETARY FUND 7 is based on a growth accounting for and UN projections 13 The 1.5 percent long-term share of 35 percent, based on staff projections investment the same rate (1.2 production function with a labor during the projection period 2020-25 at real for labor force growth, and assuming that TFP grows Growth of 1.5 percent is 0.1 percent above the average observed percent) as the estimated average for 2013-19. about 77 natural disasters. rate during 2013-19, when Haiti recorded INTERNATIONAL MONETARY FUND 7 --- Page 40 --- HAITI Assumptions Compared to the Text Table 3. Haiti: Macroeconomic Previous DSA 1/ 2028-37 Avg 2022 Previous 2023-27 Current Avg Previous Current Previous Current DSA DSA DSA DSA DSA DSA (annual percentage change, unless otherwise -1.5 indicated) 1.5 1.2 1.5 1.5 Real GDP 26.1 0.3 27.6 13.8 16.3 9.7 9.7 Consumer prices (period average) (in percent of GDP, unless otherwise indicated) 9.7 10.31 8.6 8.1 8.9 9.5 Total revenue and grants 5.8 5.4 6.9 7.2 7.6 13.8 7.81 Of which: Revenue 10.1 10.3 11.6 12.1 13.0 4.5 5.3 Total expenditure 3.5 3.4 3.5 4.1 -3.5 Of which: Capital expenditure -1.5 -2.2 -2.6 -2.6 -3.3 -2.9 Overall balance 0.8 2.4 -0.5 -0.8 -2.0 7.1 6.4 Current account balance 6.6 6.9 6.9 6.4 29.5 24.8 Exports of goods and services 28.9 27.9 29.4 24.9 imports of goods and services Sources: Haitian authorities; and Fund staff estimates therefore, and projections. average presented are conditional to data availability. 1/ The previous DSA forecasted data until FY2043, of GDP is expected in FY2023, narrowing a external current account deficit of 0.8 percent in the trade An before. The reduction owes to some improvement deficit of 2.4 percent the year remittance flows, a key channel to smooth balance despite a rebound in imports. Lower it even more difficult for would reduce foreign exchange income making consumption, The FY2022 deficit reflected lower-than-anticipated households to pay higher food prices. and import growth. With no fuel price official transfers under the SMP, with subdued export out public capital higher fuel subsidies have been crowding reform in the baseline scenario, roads and ports), resulting in lower export spending, including on critical infrastructure (e.g., deficit is expected to stabilize at Over the medium and long term, the current account follow historical trends. growth. inflows projected to about 0.6 percent of GDP, with remittance to be funded mostly by a moderate rise in needs are assumed bank 10. Future gross financing instruments while annual growth of central external concessional financing and domestic debt of GDP or lower. The SMP is is expected to be contained at 2 percent in of lending to the government Nonetheless, percent external financing to fund more capital expenditures. expected to catalyze some could fall over the long term as government steps up financing needs, the share of external financing is expected to increase at gross T-bills. Central bank financing, currently unremunerated, of GDP), borrowing through consistent with low inflation (1.5 percent slightly above a level about 2 percent of GDP every year 2033. The remaining domestic financing would at about 15 percent of GDP by to with total stock projected commercial banks. 14 The latter's share is assumed from short-term debt instruments purchased by deepen the come SMP curbs BRH fiscal financing, the authorities increase gradually in the long term as the for commercial banks to diversify securities, and given only modest opportunities is market for government 15 External debt financing, contracted or guaranteed, their portfolios in a context of fiscal dominance shown in Table 3 reflect unremunerated central bank financing. 14 Real interest rates on domestic debt financing is assumed to be exclusively in domestic currency. 15 Projected internal MONETARY FUND 8 INTERNATIONAL The latter's share is assumed from short-term debt instruments purchased by deepen the come SMP curbs BRH fiscal financing, the authorities increase gradually in the long term as the for commercial banks to diversify securities, and given only modest opportunities is market for government 15 External debt financing, contracted or guaranteed, their portfolios in a context of fiscal dominance shown in Table 3 reflect unremunerated central bank financing. 14 Real interest rates on domestic debt financing is assumed to be exclusively in domestic currency. 15 Projected internal MONETARY FUND 8 INTERNATIONAL --- Page 41 --- HAITI moderately in relative terms in light of the non-concessional and growing only assumed to be mostly implementation of structural reforms. credible. The realism tool shows some differences between past 11. The baseline assumptions are from the impact on debt of the FY2020 external debt dynamics. These are derived partly and, for and projected contraction during the last three years; exchange rate appreciation; from current account surplus; output owing to unremunerated financing debt, from the improved real interest rate dynamics and timing total public the latter was due to the uncertainty about the likelihood the BRH and a larger primary deficit; in public debt to GDP over the past three years reform (Figure 3). More broadly, the change differential, of fuel price deficit, worsened by the real interest rate/growth owes mainly to changes in the primary contributor to the falling debt in FY2020. Under the although exchange rate appreciation was a major the same as in the past, except for real the variables affecting debt ratios remain broadly to resume baseline scenario, and financing sources are expected gradually, GDP growth. Growth is projected to be positive The past forecast error is either similar for spurred by modest reforms under a Fund-supported program. median of other LICS and LMICS (Figure 3). for the public debt ratio than the the external debt ratio or lower adjustment falls outside the top quartile fiscal is realistic. The planned 12. The projected adjustmenti fiscal deficit, suggesting a modest yet credible pace of the distribution of past adjustments of the primary 4). The growth forecast for FY2023 assumes given the uncertainty of fuel price reform (Figure unrelated to any of adjustment and security situation, as witnessed in recent months, some stabilization of the political anticipates a modest resumption of economic fiscal adjustment. The baseline growth projection rise over the medium term. 16 projected four years of contraction. Growth would modestly more activity in FY2023 following fiscal position, which reflects somewhat This growth path is largely independent of the projected and limited additional credit from the BRH stable tax revenues, a gradual increase in external financing, (Figure 4). Classification and Stress Tests D. Country classified as indicator to assess debt-carrying capacity is 2.77, GDP 13. The value of the composite as "weak" if remittances as a share of would be classified "medium. n17 Haiti's debt carrying capacity cut-off (on average during 2013-21) push above the 15.5 percent the were not SO high. Remittances-to-GDP: Capacity Table). Relative to the last DSA, the index above the 2.69 cut-off value (see Debt Carrying 2.77 from 2.81owing to a stronger contribution Indicator (CI) has remained stable at around Composite of reserves and a weaker contribution from growth. from import coverage the risk of debt external and public debt thresholds to assess 14. This classification sets higher as 40 percent of GDP, or 180 percent of The value of external debt can reach as high of GDP before the distress. present value of public debt can hit 55 percent exports of goods and services, and the present due to a more optimistic political and security 16 The DSA forecast for FY23 and FY24 differ from earlier projections outlook that would result in stronger economic activity. the Bank's 's 2021 CPIA and the October 2022 Index (CI) is estimated at 2.77 and is based on 17 The current Composite capacity remains "medium." WEO. Haiti's debt carrying INTERNATIONAL MONETARY FUND 9 reach as high of GDP before the distress. present value of public debt can hit 55 percent exports of goods and services, and the present due to a more optimistic political and security 16 The DSA forecast for FY23 and FY24 differ from earlier projections outlook that would result in stronger economic activity. the Bank's 's 2021 CPIA and the October 2022 Index (CI) is estimated at 2.77 and is based on 17 The current Composite capacity remains "medium." WEO. Haiti's debt carrying INTERNATIONAL MONETARY FUND 9 --- Page 42 --- HAITI for external debt service are 15 percent of exports model-based risk of distress increases. The benchmarks and 18 percent of fiscal revenue (Table 1). of goods and services considers the effects on debt of a oneto the standard stress tests, the analysis 15. In addition of frequent major disasters. The shock assumes off major natural disaster, given Haiti's history caused Hurricane Matthew in 2016. While the equivalent to 25 percent of GDP, similar to that by of FY2009 GDP (old damage were estimated at 120 percent damage and losses following the 2010 earthquake and is thus considered a tail risk as hurricanes series), this type of disaster is not as statistically frequent external and domestic debt was updated to contingent liabilities on event. 18 The stress test on combined reflect available data. E. Debt Sustainability External Debt Sustainability Analysis indicators of Haiti's external debt path are projected to 16. Under the baseline scenario, most value of debt to GDP and debt-service-tobreach indicative thresholds except for the present medium term, funded by a gradual (Figure 1 and Table 3). Slightly larger primary deficits over the the present value of PPG revenue concessional financing, amid subdued export growth, bring value of increase in external of debt distress thresholds. The present external debt as a share of exports into the "high" range in FY2022, reaches 189.3 percent in FY2035 debt-to-export ratio, which starts at about 93.6 percent 264.2 by FY2043). the threshold and staying above that thereafter (rising to percent scenario breaching the 180 percent below the threshold of 15 percent under the baseline The debt-service-o-sxpots) ratio remains by FY2043. Breaches in thresholds FY2041, and it hits 16.8 percent until FY2040; it exceeds that threshold by horizon partly reflect subdued export growthof these two key debt indicators over a longer (20-year) capacity and competitiveness during the attributable to Haiti's institutional fragility, reduced productive vulnerability to large natural subsidization of petroleum products, protracted political crisis, prolonged Meanwhile contrary to previous DSA, the debt-service-todisasters, and the impact of climate change. revenues would recover gradually in the medium revenue ratio is below the threshold until FY2043 as fiscal progress on revenue authorities' efforts to boost revenue collection and meaningful threshold due to the external debt to GDP rises steadily but remains below the mobilization. The present value of increase to 10.4 percent by FY2033 from 6.5 percent in indicating debt distress. lt is projected to gradually of external in FY2043. This projection is based on a gradual resumption FY2022, reaching 18.3 percent which in turn is associated with improved political stability borrowing to finance public investment projects, and policy implementation?. from oil the realism of the baseline scenario. Debt arising 17. The historical scenario highlights during 2012-18. If the key financed by Venezuela's Petrocaribe program rose rapidly historical averages, the imports baseline were replaced by their 10-year macroeconomic variables in the projection and unrealistic debt accumulation, including of external debt would yield a much larger resulting path Change Role for the IMF, " IMF, December 2016. to Natural Disasters and Climate 18 See "Small States' Resilience 87. 19 Debt Sustainability Framework (DSF) guidance note, paragraph 10 INTERNATIONAL MONETARY FUND . The historical scenario highlights during 2012-18. If the key financed by Venezuela's Petrocaribe program rose rapidly historical averages, the imports baseline were replaced by their 10-year macroeconomic variables in the projection and unrealistic debt accumulation, including of external debt would yield a much larger resulting path Change Role for the IMF, " IMF, December 2016. to Natural Disasters and Climate 18 See "Small States' Resilience 87. 19 Debt Sustainability Framework (DSF) guidance note, paragraph 10 INTERNATIONAL MONETARY FUND --- Page 43 --- Table 1. Haiti: Debt Carrying Capacity and Thresholds Emtamenemmrest Thresholds Country County.Code Haiti Debl.Camying Capaciy Medium Applicable thresholds Final Caseicationg basedon current vintage CALMCIONDERTO the on Cassicatong nbasedo APPLICABLE Medium Medium prevoussntage Iwoprevous Vintages on.the Medum 2.81 Medium EXTERNAL debt burden thresholds APPLICABLE PV of debt in %of TOTALE public debt benchmark Exports GDP PV oftotal public debtir percentafGbp Calculation oft the Clindex Exponts Debts service in %of Components Revenue Coelicients( (A) 10-year Realg CPIA values(8) raverage CIS Score componer ents (in growihrate percent) 0.385 2.749 (A"B):(C) Contribui tion ents w Import coverage olreserves 2.719 1.06 38% Iramework Import (in percent 0.405 0.01 coverage (in percent) olreservesn2 4.052 43.991 0% Weak Cut-off values Remitlances (in -3.990 19.352 1.78 64% Cl< World economic percent) -0.77 Medium 2.69 (in percent growth 2.022 13.588 0.27 -28% Strong 2.69 SCIs CIScore 13.520 3.050 10% CI> 3.05 3.05 0.41 CIrating 15% 2.767 100% Reference: Thresholds Medium byCassiciaton ETTUIERSIENE PV ofdebti in %of nt threshold Weak Exports le GDP Stron Debts service in %of economic percent) -0.77 Medium 2.69 (in percent growth 2.022 13.588 0.27 -28% Strong 2.69 SCIs CIScore 13.520 3.050 10% CI> 3.05 3.05 0.41 CIrating 15% 2.767 100% Reference: Thresholds Medium byCassiciaton ETTUIERSIENE PV ofdebti in %of nt threshold Weak Exports le GDP Stron Debts service in %of TOTALDUBI Exports debtbenc Revenue e 2VaTSBIpUbICO coetinpurceme OfGDP 18 15 Weak lediu --- Page 44 --- HAITI indicators of PPG external debt. Under the SMP threshold breaches for many earlier and more prolonged external financing would resume gradually baseline, which excludes another Petrocaribe-type program, threshold only over a longer (20-year) low base, leading to breach of the debt-to-export from a relatively horizon. remittances and to natural disasters. A tests confirm the vulnerability of debt to lower one standard 18. Stress decline in both current transfers and FDI inflows by flows (ie, a threshold much shock to non-debt-creating value of external debt above the 180 percent-of-export deviation) would raise the present the 15 percent threshold after seven years (2029). earlier (2025) and the debt-service-to-expoft ratio above natural disaster shock has a sizable impact on in remittances would pose a more severe shock. A its threshold (Table 4). A drop also the edtemal-debt-to-export ratio above the external debt trajectory, bringing Public Sector Debt Sustainability Analysis scenario. Total public debt is projected at about Public debt is sustainable under the baseline debt would 19. FY2043. In present value terms, public 27 percent of GDP until 2027, rising to 48 percent by below the corresponding benchmark of GDP in FY2043, some 13 percentage points in particular: peak at percent characteristics of the debt profile help limit potential vulnerabilities, (Figure 2, Table 3). A few its relatively long maturity to multilateral creditors, denominated in gourdes (about 57 percent), and a relatively high share base, consisting mostly of public agencies. the investment has funded its gross financing needs. Debt service appears Thanks to these features, Haiti's government from the BRH, a significant portion of public debt somehow moderate over a 10-year horizon, as financing short term. But repayment of the BRH and interest payments), are not serviced in the attached to its (including principal due to the conditions financing will raise debt service over the long run substantially, fiscal deficit, higher domestic debt reimbursement (see paragraph 4). As a result, despite a moderate at about 15.4 percent of run could lead to gross financing needs projected reimbursement over the long FY2023. With about 90 percent of these gross financing FY2033 compared to 2.4 percent of GDP in would likely be GDP by domestic borrowing and project loans, rollover risk needs expected to be covered by and financial deepening reflecting an increased mitigated. Moreover, improved tax revenue collection, would help fund Haiti's annual gross financing demand for government securities by domestic banks, needs over the medium and long terms. below its benchmark for all stress test scenarios, 20. While the public debt ratio remains largely extreme natural disaster scenario, the present vulnerable to natural disasters. Under the most after it is highly 55 percent over a longer horizon (20-year) value of the public debt-to-GDP ratio barely approaches in the aftershock to 44 percent in 2025 of the shock (Table 5). Nonetheless, it grows by 60 percent a tail effect over a longer the year before declining steadily. The ratio exhibits (against the 23.3 percent baseline) about FY2041, reflecting a higher probability of natural approaching the threshold by horizon, slightly 12 INTERNATIONAL MONETARY FUND vulnerable to natural disasters. Under the most after it is highly 55 percent over a longer horizon (20-year) value of the public debt-to-GDP ratio barely approaches in the aftershock to 44 percent in 2025 of the shock (Table 5). Nonetheless, it grows by 60 percent a tail effect over a longer the year before declining steadily. The ratio exhibits (against the 23.3 percent baseline) about FY2041, reflecting a higher probability of natural approaching the threshold by horizon, slightly 12 INTERNATIONAL MONETARY FUND --- Page 45 --- HAITI to the threshold over a longer horizon warrants disasters over the longer term (Table 5). This proximity consideration. F. Risk Rating and Vulnerabilities to risks and vulnerabilities. Public debt is expected 21. The debt outlook for Haiti remains subject modest economic recovery expected under of GDP in the near term-owing to the to stabilize as a share 3). Potential growth and external financing SMP the risk impact of natural disasters (Table by the the despite in revenue collection is underpinned would be stronger if reforms are sustained. The improvement tax code in December 2022 and revisions of of tax reforms such as the adoption of a new continued BRH implementation 2022. Rollover risk is low, assuming customs codes and tariffs also adopted in December central bank financing of the fiscal the next four-five years. Over the long term, however, T-bills. In financing over replaced by issuance of short-term deficit is expected to stabilize at 2.0 percent of GDP, gradually debt-to-GDP ratio is projected to be although the present value of the external public the value of this environment baseline, two indicators of external debt (e.g., present below its indicative benchmark under the would breach their indicative benchmarks by 2035 the debt-to-export ratio and debt-senvice-o-exports) A drop in remittances or a natural disaster and FY2041 respectively, owing to subdued export growth. debt ratios and breaches in Matthew would also bring higher shock similar in magnitude to Hurricane is also vulnerable to a drop in thresholds of external debt indicators. External debt service capacity to the some transfers and FDI, as illustrated by the debl-senvice-o-revenue proximity from official and private classification has remained "medium, unchanged threshold (Table 4). Haiti's debt-carrying capacity mobilization and reforms to raise the last DSA. This calls for stepping up efforts to strengthen revenue run, it will be essential for the by the SMP. In the long investment and growth, as recommended mobilize additional revenues and improve efficiency of government to follow through recent tax reforms to linked to the IMF Staff Monitored Program government expenditures through ongoing PFM reforms iv) avoid non-concessional external domestic markets, ii) growth enhancement policies, assumed in (SMP), ii) develop growth, about 1.5 percent currently These reforms will allow for a higher potential financing. this DSA. nearly halved the remains "high. " Although the GDP rebasing 22. Haiti's debt distress risk rating external concessional financing, in place of some debt-to-GDP ratio, the outlook assumes increased deficits over the medium term amid financing by the BRH, to fund slightly higher primary results in threshold breaches, monetary revenue mobilization. This combination subdued export growth and weaker the baseline, the most likely baseline scenario in the previous DSA. Looking beyond debt as observed under the of natural disasters show that external debt and external stress scenarios linked to the high probability natural disaster or fall in remittances would service would breach some thresholds. Another major horizon. Thus, consideration of these debt dynamics, even over a 10-year the substantially worsen public the risk of debt distress as "high." The DSA underscores vulnerabilities in the DSA justifies maintaining supported by the SMP and to prepare for the authorities' economic reform program need to implement effects of natural disasters. and manage the adverse INTERNATIONAL MONETARY FUND 13 disasters show that external debt and external stress scenarios linked to the high probability natural disaster or fall in remittances would service would breach some thresholds. Another major horizon. Thus, consideration of these debt dynamics, even over a 10-year the substantially worsen public the risk of debt distress as "high." The DSA underscores vulnerabilities in the DSA justifies maintaining supported by the SMP and to prepare for the authorities' economic reform program need to implement effects of natural disasters. and manage the adverse INTERNATIONAL MONETARY FUND 13 --- Page 46 --- HAITI Authorities' Views 23. The authorities agreed with the thrust of the debt sustainability analysis and its conclusions. They viewed staff's baseline scenario as realistic but emphasized the potentially positive impact of increased tax revenue mobilization and exports if several important sectors of Haiti's economy rebound faster with further political stabilization. They cited Haiti's lower ratios of debt to GDP as a result of GDP rebasing and agreed that the country's risk of debt distress merits a classification of "high" while its debtcarrying capacity should remain at "medium. " They noted that increased investment is critical for raising potential growth, which could widen the current account deficit over the medium term. The BRH highlighted some implications of reforms related to its governance and the ongoing transition to IFRS-9, which could alter the accounting of the central bank's advances to the government, as well as interest payments. Moreover, the BRH noted that efforts to deepen financial markets, and to develop the market for government debt securities in particular, could help gradually reduce monetary financing to the government. 14 INTERNATIONAL MONETARY FUND --- Page 47 --- HAITI Figure 1. Haiti: Indicators of Public and Publicly Guaranteed External Debt Under Alternatives Scenarios, 2023-43 PV of Debt- -to GDP Ratio PV of Debt- to- Exports Ratio - 5 Most extreme shock is Natural disaster Most extreme shock is Natural disaster 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 0 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 Debt Service- to- Exports Ratio Debt Service- to- Revenue Ratio Most extreme shock is Exports 2 Most extreme shock is Non-debt flows 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 Baseline Historical scenario Most extreme shock 1 Threshold Customization of Default Settings Borrowing Assumptions for Stress Tests* Size Interactions Default User defined Shares of marginal debt Externall PPGI MLT debt 100% Tailored Tests Terms of marginal debt Combinedi CLs Yes Avg. nominali interest rate on new borrowing in USD 1.6% 1.6% Natural Disasters Yes No USDI Discount rate 5.0% 5.0% Commodity Prices 21 n.a. n.a. Avg. maturity (incl. grace period) Market Financing n.a. n.a. Avg. graceperiod Note: "Yes" indicates any change to the size or Note: All the additional financing needs generated by the shocks under the stress tests interactions oft the default settings for the stress are assumed to be covered by PPG external MLT debt in the external DSA. tests. "n.a." indicates that the stress test does not of marginal debt are based on baseline Default terms 10-year projections. apply. Sources: Country authorities; and staff estimates and projections. 1/1 The most extreme stress test is the test that yields the highest ratio in or before 2033. Stress tests with one-off breaches are also any), while these one-off breaches are deemed away for mechanical signals. When a stress test with a one-off breach happens to be presented the (if extreme shock even after disregarding the one-off breach, only that stress test (with a one- -off breach) would be presented. most 2/1 The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook the IMF research department. prepared by INTERNATIONAL MONETARY FUND 15 test is the test that yields the highest ratio in or before 2033. Stress tests with one-off breaches are also any), while these one-off breaches are deemed away for mechanical signals. When a stress test with a one-off breach happens to be presented the (if extreme shock even after disregarding the one-off breach, only that stress test (with a one- -off breach) would be presented. most 2/1 The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook the IMF research department. prepared by INTERNATIONAL MONETARY FUND 15 --- Page 48 --- HAITI Figure 2. Haiti: Indicators of Public Debt Under Alternatives Scenarios, 2023-43 PV of Debt- to- GDP Ratio Most extreme shock is Natural disaster 2023 2025 2027 2029 2031 PV of Debt to- Revenue Ratio 2033 2035 2037 2039 2041 2043 Debt Service- to- Revenue Ratio Most extreme shock is Natural disaster Most extreme shock is Natural disaster 2023 2025 2027 2029 2031 2033 2035 52037 2039 2041 2043 Baseline 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 Public debt benchmark Most extreme shock - Historical scenario 1/ Borrowing Assumptions for Stress Tests" Shares of marginal debt Default User defined External PPG medium and long- term Domestic medium and long term 15% Domestic short-t term 0% 15% Terms of marginal debt 85% 0% External MLT debt 85% Avg. nominal interest rate on new Avg. maturity (incl. grace period) borrowing in USD 1.6% Avg. grace period 1.6% Domestic MLT debt Avg. real interest rate on new borrowing Avg. maturity (incl. grace period) 0.0% Avg. grace period 0.0% Domestic short- term debt Avg. real interest rate "Note: The public DSA allows for domestic shocks under the stress tests in the public financing to cover the additional -10.6% -10.6% projections. DSA. Default terms of marginal debt financing needs generated by the are based on Sources: Country baseline 10-year authorities; and staff estimates and 1/1 The most extreme stress test is the test projections. one- -off breach is also (if that yields the highest ratio in or before a stress test with a one-off presented breach any), while the one-off breach is deemed 2033. The stress test with a breach, only that stress test (with happens to be the most extreme shock away for mechanical signals. When a one off breach) would be presented. even after disregarding the one- -off 16 INTERNATIONAL MONETARY FUND --- Page 49 --- HAITI Figure 3. Haiti: Drivers of Debt Dynamics-Baseline Scenario External Debt Gross Nominal PPG External Debt Debt-creating Flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) Current DSA OF Residual Previous DSA proj Interquartile DSA 2016 range (25- 75) aPricea and exchange rate 2 Real GDP PPG growth 0 Changein debt 3 A a Nominal -2 A interest rate Median D Curr rrent 4 account FDI Changein 6 -10 Contribution of Distrib ior acro OSS UCS 2/ PPGdebt 3/ 5-year 5-year unexpected historical projected 15 changes change change Public Debt Debt-creating Flows Unexpected Changes in Debt 1/ Gross Nominal Public Debt (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) BResidual 20 Current DSA Previous DSA proj. Interquartile DSA- 2016 Dother debt range (25- 75) creatingflows 10 of Distrib ior acro OSS UCS 2/ PPGdebt 3/ 5-year 5-year unexpected historical projected 15 changes change change Public Debt Debt-creating Flows Unexpected Changes in Debt 1/ Gross Nominal Public Debt (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) BResidual 20 Current DSA Previous DSA proj. Interquartile DSA- 2016 Dother debt range (25- 75) creatingflows 10 BReal Exchange rate aEiOgon A Changein debt growth - a - - a Real interest - - rate -10 OPr rimary deficit -5 -20 Median -10 Change indebt 5-year 5-year Contril Distribution across LICS 2/ historical projected unexpected -15 changes change change 1/1 Difference betw een anticipated and actual contributions on debt ratios. 2/1 Distribution acros SS LICs for which LICI DSAS W ere produced. 3/ Given the relatively low private external debt for average low -income countries, a ppt change in PPG external debt should be largely explained by the drivers of the external debt dynamics equation. INTERNATIONAL MONETARY FUND 17 --- Page 50 --- HAITI Figure 4. Haiti: Realism Tools 3-Year Adjustment in Primary Balance Fiscal Adjustment and Possible Growth Paths 1/ (Percentage points of GDP) Distri ribution 1/ Projected3 3-yr adjustment 3-year PBa adjustmento greater than 2.percentages points ofGDPI approx. topquartile E 00 a aE -30 a ia a a 8 a 10 1 2 N a E 2017 2018 2019 2020 2021 2022 2023 2024 Baseline lult tiplier 0.2 lul ltiplie Multipliers 0.6 - -Multiplier =08 1/Data cover Fund-s supportedp programsf forl LICS (excludinge emergencyf financing) approved since 1/Bars refer to annual projectedfi fiscala adjustment(right.h -hands sides scale) andl lines show 1990.7 Thes size of 3-year adjustmentf fromp programi inceptionis isf found ont the horizontala axis; the possible real GDPE growth paths under differentf fiscal multipliers (left- -hand sides scale). percent ofs samplei isfoundo ont thev verticalaxis. Public and Private Investm nent Rates Contribution to Real GDP growth (percent of GDP) (percent, 5- year average) 2.0 excludinge emergencyf financing) approved since 1/Bars refer to annual projectedfi fiscala adjustment(right.h -hands sides scale) andl lines show 1990.7 Thes size of 3-year adjustmentf fromp programi inceptionis isf found ont the horizontala axis; the possible real GDPE growth paths under differentf fiscal multipliers (left- -hand sides scale). percent ofs samplei isfoundo ont thev verticalaxis. Public and Private Investm nent Rates Contribution to Real GDP growth (percent of GDP) (percent, 5- year average) 2.0 0.0 Projected/Prev. DSA) -0.5 -10 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Gov.I Invest. Curr. DSA Contribution of other factors Priv. Invest. Curr. DSA Contribution of government capital 18 INTERNATIONAL MONETARY FUND --- Page 51 --- HAITI Table 2. Haiti: Structure of Public Debt and Debt Service (Fiscal-year basis) Debt (at end-2021) Debt Service In percent of 2021 2022 2023 2021 2022 2023 US$ million-total debt GDP USS millions In percent of GDP Total 4966.4 100.0 28.5 119.5 122.3 126.8 0.7 0.6 0.5 External 2258.3 45.5 12.9 119.5 122.3 126.8 0.7 0.6 0.5 Multilateral creditors 262.8 5.3 1.5 15.8 18.8 23.4 0.1 IMF 175.1 3.5 1.0 7.5 10.6 0.1 0.1 OPEC 15.3 0.0 0.1 0.1 42.9 0.9 0.2 5.2 5.1 5.0 0.0 0.0 IFAD 44.8 0.9 0.3 3.1 3.1 3.1 0.0 0.0 0.0 IDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Bilateral creditors 1993.1 40.1 11.4 103.7 103.5 103.3 0.6 Paris Club 0.5 0.4 Non-Paris Club 1993.1 40.1 11.4 103.7 103.5 103.3 0.6 0.5 0.4 Venezuela 1853.0 37.3 10.6 96.6 96.5 96.5 0.6 0.5 PetroCaribe 1826.2 36.8 10.5 94.5 94.5 94.5 0.5 0.5 0.4 BANDES 26.8 0.5 0.2 2.1 2.0 2.0 0.0 0.0 0.0 0.4 Taiwan, Province of Chin 140.1 2.8 0.8 7.1 7.0 6.8 0.0 0.0 Bonds 0.0 Commercial creditors Other international creditor 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Restructured debt 2.4 0.0 0.0 Domestic 2708.1 54.5 15.5 Held by non-residents, total Held by residents, total 2708. 1 54.5 15.5 Loans, total 2708. 1 54.5 15.5 BRH 2063.6 41.6 11.8 Other creditors (incl.T-Bil 644.6 13.0 3.7 Memo items Collaterized debt Contingent liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Nominal GDP (US$ millions) 21016.8 0.0 Sources: Haitian authorities, and Fund staff estimates. INTERNATIONAL MONETARY FUND 19 54.5 15.5 BRH 2063.6 41.6 11.8 Other creditors (incl.T-Bil 644.6 13.0 3.7 Memo items Collaterized debt Contingent liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Nominal GDP (US$ millions) 21016.8 0.0 Sources: Haitian authorities, and Fund staff estimates. INTERNATIONAL MONETARY FUND 19 --- Page 52 --- E Debt Sustainability Framework, Baseline Scenario, 2020-2043 Table 3. Haiti: External (In Percent of GDP, unless otherwise indicated) Actual Projections Average 8/ Historical Projections 2020 2021 2022 2023 2024 2025 2026 2027 2028 2033 2043 11.0 11.2 12.1 17.0 22.7 13.2 12.9 Definition of external/domestic debt Residencyt based Externale debt(nominal) 1/ 10.5 12.9 12.9 :d 112 11.2 10.8 10.8 11.0 11.2 12.1 7.0 2.7 13.2 12.9 sthere naterial difference bet the No 10.5 E ofwhich: publicondp publicly guaranteed(PPG) vO criteria? -5.3 2.4 0.1 -1.7 -0.1 -02 0.1 0.2 0.8 Change in external debt 1.0 4.0 0.0 0.0 0.2 0.2 0.3 1.5 0.5 lentified netd debt-creating flows 1.2 -0.6 : : 0.4 0.5 0.8 1.1 .9 .3 2.4 1.7 Non-interest current account deficit 22.0 18.7 21.0 18.7 18.4 18 18.4 18. 21.4 18.4 Defcitinbalance of goods and services 7.0 6.0 6.9 6.1 6.3 6.4 5.5 6.9 Debt Accumulation Exports 29.0 24.7 27.9 24.8 24.7 24.8 24.9 25.2 24.8 4.8 24.8 3.5 Imports -22.9 19.1 -18.5 -17.6 17 -17.5 16.9 0 4. citinbalance of goods and services 7.0 6.0 6.9 6.1 6.3 6.4 5.5 6.9 Debt Accumulation Exports 29.0 24.7 27.9 24.8 24.7 24.8 24.9 25.2 24.8 4.8 24.8 3.5 Imports -22.9 19.1 -18.5 -17.6 17 -17.5 16.9 0 4. -15.0 -18.6 -16.2 Net current transfers ne egative inflow) -0.9 -0.6 2.5 2.2 -0.2 -0.2 0.2 0.5 1.0 3.0 of which: official -0.3 0.2 -0.3 -04 0.5 -0.5 0.5 0.5 0.5 0.4 0.5 Other current account flows (negative et inflow) 0.2 0.2 -0.4 -0.4 0.4 0.6 0.9 -0.8 Tol(negative -inflow) 0.4 3.2 ad 0.1 0.0 0.1 0.1 0.1 debt dynamics 21 0.1 0.1 0.1 0.1 0.1 0.1 0.1 FEe Contributiont fromn nominali interestr rate 0.5 0.1 0.1 0.2 00 -0.1 -0.2 -02 0.2 -02 -0.2 0.3 Contribution from real GDP growth -0.2 3.4 0.3 1.5 Contribution fromp price and exchange rate changes -4.3 6.4 2.7 2.1 0.1 -0.2 0.0 0.0 .5 1 -0.9 -0.2 Residual3 0.7 -0.5 0.4 0.0 0.0 0.0 00 0.0 00 0.0 0.0 1.0 ofwhich exceptional finoncung 0.5 Sustainabilityi indicators 6.5 5.7 5.6 5.6 10.4 18.3 PVofP PPG external debt- -to- -GDP ratio 93.6 92. 4 88.0 88.7 102.7 162.3 264.2 PV of PPGe external debt- -to- -exports ratio 7.6 10.5 16.8 2023 2025 2027 2029 2031 2033 PPG debts service- -to- -exports ratio 14.1 12.5 9.6 9.5 11.2 8.8 8.0 8.5 7.3 6.7 .3 5.9 6.6 8.5 14.1 PPG debt service- e-to-revenue ratio 49.9 527.6 208.2 131.0 208.0 213.0 258.3 685.3 837.2 Rate of Debt Accumulation Gross external financing need (Million of US. to- -exports ratio 14.1 12.5 9.6 9.5 11.2 8.8 8.0 8.5 7.3 6.7 .3 5.9 6.6 8.5 14.1 PPG debt service- e-to-revenue ratio 49.9 527.6 208.2 131.0 208.0 213.0 258.3 685.3 837.2 Rate of Debt Accumulation Gross external financing need (Million of US. dollars) ant -equivalent financings of GDP) Grant element of new borrowing (%6 rights cale) Key macroeconomic: assumptions Real GDP growth (in percent) 1.5 3.3 47.5 2.1 GDP deflator inUS dollar terms (chand nge percent) 0.8 0.9 1.0 0.8 External debt (nominal) 1/ Effective interest rate (percent) 4/ 0.9 1.5 3.7 5.2 mof which: Private Growth of exports of G&S (US dollar terms, in percent) -41.5 23.8 1.5 3.7 3.7 3.9 Growth of imports of G&S (US dollar terms, in percent) 18.5 23.5 0.9 0 10.0 36.3 34.3 2.9 36.8 Grante element of new public sector borrowing (inp percent) 6.2 5.9 7.9 Government revenues (excluding grants, inpercent ofGDP) -6542. 2155.3 5265 603 714.6 976.8 1599.3 Aid flows (in Million ofUS dollars)5/ 2.6 2.8 2 3.8 2.9 12 Grant- equivalentf financing (inp percent of GDP) 6/ 36.0 86. 80. 7 73 69 70.3 76.9 Grant- equivalentf financing (inp percent of externalfi financing).6/ 14,508 21,017 20,223 236 128 19 28,054 28,920 78 49,375 Nominal GDP (Million of US dollars) 44.9 3.8 19.8 3.9 3.8 3.4 3.7 4.9 5.1 Nominal dollar GDP growth Memorandumi items: 5.9 6.6 10.4 18.3 PV of external debt 71 93.6 92 90 88.0 102.7 162.3 2642 In percent of exports 12.5 9.5 8.8 8.0 7.6 8.0 10.5 16.8 Total external debt service -to exports ratio 1306.4 1376 1425. 1567 166 8.9 1903.8 3585.0 9024.4 PV of PPG external debt( (in Million of US dollars) 0.3 0.2 0.8 1.3 2023 2025 2027 2029 2031 2033 (PVt-F PVt- 1)/GDPt- 10 (in percent) 40 -3.0 4 0.7 0.6 0.9 2.0 2.6 Non- interest cur rent account deficit that stabilizes debtr ratio Sources: Country authorities, and staffe estimates and projections. Includes both public and private sector external debt. debt ratio, with nominal interestr rate; 9 ealGDP growth rate, growth rate of GDP deflator inu U.S. dollar terms, E-nominal appreci on of the 2/Derived as.Ir 9 p(1 +g) Ea (1-0V01-g*p*gp) times previous period localc Icurrency, and a= share oflocal currency -denominatede external debt in total external debt For alsoi includes contribution from price and exchange rate changes. 3/includes exceptionalf financing (ie, changes arrears and.debtrelief); changes gross foreign assets; and valuation adjustments. ; 9 ealGDP growth rate, growth rate of GDP deflator inu U.S. dollar terms, E-nominal appreci on of the 2/Derived as.Ir 9 p(1 +g) Ea (1-0V01-g*p*gp) times previous period localc Icurrency, and a= share oflocal currency -denominatede external debt in total external debt For alsoi includes contribution from price and exchange rate changes. 3/includes exceptionalf financing (ie, changes arrears and.debtrelief); changes gross foreign assets; and valuation adjustments. projections 4/Current-yeari interest payments divided by previous period debt stock. 51 Defined as grants, concessionall loans, and debtr relief. new borrowing between the face value and the PV ofr new debt). 6/ Grant-e equivalentf financingi includes grants provided directly to the gover nment and through (difference 71 Assumes that PV ofprivate sector debtis equivalentt to its face value. are over the first year ofp projection and the next 10y years. 8/ Historicala averages are generally derived over thep past 10) years, subject to data availability, whereas projections averages --- Page 53 --- Scenario, 2020-2043 Framework, Baseline Public Sector Debt Sustainability 4. Haiti: otherwise indicated) Percent of GDP, unless (In Average 6/ Projections Actual 2027 2028 2033 2043 Historical Projections Residency2022 2023 2024 2025 2026 48.0 24.9 29.0 Definition of debt based 2020_ 2021 25.5 25.9 26.6 12.1 md 22.7 13.2 12.9 external/domestic 23.3 28.5 25.3 11.1 10.8 11.0 RA Isthere material 1/ 11.2 R Publicsectordebr 10.5 12.9 1.0 1.4 1.0 difference between the two No otwhid exteraldebt 0.2 0.4 0.7 0.8 0.5 0.5 criteria? 26.6 12.1 md 22.7 13.2 12.9 external/domestic 23.3 28.5 25.3 11.1 10.8 11.0 RA Isthere material 1/ 11.2 R Publicsectordebr 10.5 12.9 1.0 1.4 1.0 difference between the two No otwhid exteraldebt 0.2 0.4 0.7 0.8 0.5 0.5 criteria? 3.2 5.1 0.9 0.2 0.4 0.8 0.9 :d 4.0 2.1 2.6 debt 5.4 3.5 4.4 2.8 2.6 2 9.9 Change in public sector 2.3 3 1.8 2.3 2.5 10.0 10.4 113 9.7 Public sector debt 1/ dentifieddebt creating flows 2.1 9.1 9.5 98 9.9 2.3 2.5 3.0 Primary deficit 7.5 8.2 8.1 2.5 2.3 2.2 2.2 12.6 13.4 15.2 11.8 12.5 ofv which: local- currency denominated Revenue and grants 2.3 10.0 28 10.9 11.5 11.9 12.5 12.5 1.7 1.6 1.6 29 ofwhich: gronts 9.6 10.5 6.2 2.1 2.0 2.0 1.6 a which: foreign- -currency dend ominated Primary (noninter est) expenditure 7.5 1.2 4.1 -2.0 20 1.9 17 1.1 nasmate@mnonamee 3.5 4.4 1.7 .6 1.5 0.4 1.3 -0.4 0.5 Contributiont from interestr rate/growth diferential rate 4.0 0.1 0.3 0.4 0.4 ofwhich: contribution from average real interestr 0.9 0.4 0.4 0.0 0.0 0.0 30 of which: contribution from real GDP growth -6.6 3.0 -0.5 .0 0.0 0.0 0.0 0.0 Contribution from real exchangerated depreciation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 00 0.0 flows 00 0.0 00 0.0 00 0.0 0.0 0.0 0.0 0.0 C7CCTrentd 0.0 0.0 0.0 0.0 0.0 : Prvatizatont receipts (negative) bank 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Recognition of contingent liabilities (e.g. .0 0 .0 0.0 00 0.0 flows 00 0.0 00 0.0 00 0.0 0.0 0.0 0.0 0.0 C7CCTrentd 0.0 0.0 0.0 0.0 0.0 : Prvatizatont receipts (negative) bank 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Recognition of contingent liabilities (e.g. recapitalization) 0 0.0 0.0 0.0 0.0 00 0.0 1 9 0.1 -0.2 Debt relief (HIPC and other) 0.0 0.0 00 1.4 0.0 .1 0.2 0.1 Other debt creating orreducing flow (please specify) 2.2 1.6 .1 2023 2025 2027 2029 2031 2033 Reuidual 21.6 22.3 23.1 28.2 42.0 23.3 20.1 20.3 20.9 225.8 231.3 272.4 372.7 Sustainability indicators 220.7 221.9 220.9 221.1 87.2 119.8 193.1 of which: held by residents PVofp public debt-t -to- GDP ratio 2/ 286.4 6.9 24.2 41.4 59.1 73.8 9.9 11. 15.4 25. PV of public debt to revenue and grants ratio 13.5 10.1 10.2 4.5 8.5 which: held by non-residents Debts service -to-revenue and grants ratio 3/ 3.1 2.7 Gross financing need 1.5 1.5 1.5 0.6 0.7 and fiscal assumptions -33 .8 0.3 0.8 0.8 0.9 0.9 1.0 1.0 0.8 -10.6 Key macroeconomica 0.8 0.8 79 -6.5 -5.5 Real GDP9 growth (in percent) debt( (in percent) 1.0 0.9 -20.2 4.4 -10.4 9.3 1.3 Average nominali interestr rate on external percent) -15.9 13.7 Average real interest rate on domestic debt (in -40.7 28.9 12.9 0 -3. Real exchange rate depreciation(in percent, indicates depreciation) 20.6 19.3 27.6 5.6 3.0 2.2 Inflation rate (GDP deflator, percent) GDP deflator, percent) -5.5 6.9 5.9 0.0 0.0 (defated by 5.3 2.9 0.0 2029 2031 2033 Growth of realp primary sperding 5/ 0.0 .0 2023 2025 2027 Primary deficit that stabilizes the debt- -to -GDP ratio debt) 0.0 0.0 PV of contingent liabilities (not included in public sector Sources: Country authorities; and staff estimates and projections. of external debt Residency-t based. of depending on exchanger rates projections. 1/Coverage of debt The general government Definition the public DSA differs from the externalo DSA with the size differences 21 The underlying PV ofe external debt-to- GDP ratio under ofmedium and long term, and short- term debt. oft the last period and other debt creating/reducing flows. 3/Debts service is defined as the sum of interest and amortization plus debt service plus the stock of short- -term debt atthe end the debtra ratio only the year inquestion. Gross financing needi is defined as the primary deficit debt- -to- GDP ratio a primary surplus), which would stabilizes are the firsty year ofp projection and the next 10) years. DSA with the size differences 21 The underlying PV ofe external debt-to- GDP ratio under ofmedium and long term, and short- term debt. oft the last period and other debt creating/reducing flows. 3/Debts service is defined as the sum of interest and amortization plus debt service plus the stock of short- -term debt atthe end the debtra ratio only the year inquestion. Gross financing needi is defined as the primary deficit debt- -to- GDP ratio a primary surplus), which would stabilizes are the firsty year ofp projection and the next 10) years. as deficit minus change in the public to data availability. whereas projections averages overt 5/1 Defined primary over the past 10 years, subject 6/ /Historical averages are generally derived E N --- Page 54 --- HAITI for Indicators of Public and Table 5. Haiti: Sensitivity Analysis Key Publicly Guaranteed External Debt, 2023-2043 (In Percent) Projections 1/ 2041 2042 2043 T 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2038 2039 2040 PVof debt- -to GDPr ratio 6 6 17 18 18 Baseline Alternative Scenarios 13 14 15 15 16 17 17 18 20 21 21 22 Keyv variables their historical 2023- -2033 2/ B. Bound Tests 81 RealGDP growth B2. Primary balance B3 Exports B4 Other flows 3/ 85. Depreciation B6. Combination B1 85 C. Tailored Tests C1. Combined conting jent liabil es C2. Natural disaster C3. Commodity price C4. Market Financing Threshold tio 189 199 Baseline A. Alternatives Scenarios 106 117 130 167 203 215 226 238 249 259 265 275 285 295 301 06 312 Key var iables their historical 033 2/ B. Bound Tests B1 RealGDPg growth Primary al lance B3. Exports B4. Other flows 3/ B5. Depreciation B6. Combination.ol B1- B5 C. Tailored Tests C1. Combined contingenti liabilities C2 Natural disaster C3. Commodity; price C4. Market Financing 180 180 Threshold 180 180 180 Debt service- to- exports ratio Baseline A. Alternative Scenarios Key vari riables at heir historical ave ges B. Bound Tests B1. RealGDP growth B2. Primarybalance B3. Exports B4. Otherf rfows 3/ B5. Depreciation B6. Combination B1 85 C. TailoredT Tests C1. Combined contingent liabilities C2 Naturaldisaster C3. Commodity; price C4. Market Financing Threshold Debt viceBaseline 2 A. Alternative Scenarios Key var riables heir historical averages 2023- -2033 2/ B. Bound Tests B1. RealGDP growth B2 Primary balance B3. Exports B4. Other flows 3/ B5. Depreciation B6. Combination ofB1 -B5 C.T Tailored Tests C1. Combined contingent liabilities c2 Natural disaster C3. Commodity price C4. Market Finank cing Threshold Sources Countrya authorites: ands staff estimates andprojections. 1/Abold value indicates abreach ofthet threshold. ebt flow 2/ Variables include real GDP growth GDP deflator (in us. dollar terms), non Includes official and private transfers andFDI 22 INTERNATIONAL MONETARY FUND B4. Other flows 3/ B5. Depreciation B6. Combination ofB1 -B5 C.T Tailored Tests C1. Combined contingent liabilities c2 Natural disaster C3. Commodity price C4. Market Finank cing Threshold Sources Countrya authorites: ands staff estimates andprojections. 1/Abold value indicates abreach ofthet threshold. ebt flow 2/ Variables include real GDP growth GDP deflator (in us. dollar terms), non Includes official and private transfers andFDI 22 INTERNATIONAL MONETARY FUND --- Page 55 --- HAITI for Indicators of Public Debt, 2023-2043 Table 6. Haiti: Sensitivity Analysis Key Projections 1/ 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 PV of Debt- -to- GDP Ratio 20 21 22 22 23 24 25 26 27 28 30 31 32 34 35 37 38 39 41 42 Baseline A. Alternative Scenarios 20 21 21 21 20 20 19 19 19 19 19 19 19 19 19 19 19 19 19 A1 Key var riables their historic cal ages 2023- -2033 2/ 20 B. Bound Tests B1 RealGDP growth B2. Primary balanc B3. Exports B4. Other flows 3/ B5. Depreciation B6. Combination ofB1-B5 22 22 22 C. Tailored Tests C1. Combined contingenti liabilities c2. Natural disaster C3. Commodity price a C4. Market Financing 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 Public debt benchmark PV of Debt- to Rev ue Ratio 2 221 222 221 221 226 231 238 245 2 254 46 355 361 Baseline A. Alternative Scenarios 206 202 199 197 196 195 194 195 196 192 193 194 196 195 194 193 A1 Key variables at their historic cal ages 2023- 2033 2/ 221 222 218 213 210 B. Bound Tests 221 233 249 255 265 275 286 298 311 324 337 352 367 382 389 403 418 434 444 454 165 79 B1. RealGDP growth 221 235 244 241 243 247 252 258 266 275 283 294 305 316 321 331 342 354 362 371 B2. Primary balance 221 231 46 250 255 261 268 275 284 292 301 312 322 326 335 345 358 365 372 80 B3. Exports 221 45 66 264 268 274 280 286 292 300 307 315 325 335 337 346 355 366 372 379 86 B4. Othert flows 3/ 21 223 15 13 13 213 214 217 221 226 231 238 246 254 257 264 273 283 290 297 B5. Depreciation 221 226 227 221 226 231 238 245 254 263 272 283 295 307 311 322 333 346 355 364 B6 Combination ofB1-85 C.1 Tailored Tests 221 297 283 274 272 273 276 81 288 296 304 314 325 336 340 350 C1. Combined contingent liabilities 221 481 438 407 390 81 376 76 379 384 390 398 408 418 420 430 C2. Natural disaster na C3. Commodity price a na na na C4. Market Financing na Debt Service to- Revenue Ratio 24 41 59 74 87 95 2 101 2 107 113 120 125 132 140 144 150 156 164 Baseline A. Alternative Scenarios 42 59 72 82 87 89 90 91 92 92 94 95 94 94 94 94 95 96 98 A1. Key variables at their historic ical avera ages 2023- 2033 2/ B. Bound Tests 119 128 135 180 187 195 204 213 224 236 B1. Real GDP growth 153 59 B2. Primary balance 113 120 125 132 140 144 150 156 164 Baseline A. Alternative Scenarios 42 59 72 82 87 89 90 91 92 92 94 95 94 94 94 94 95 96 98 A1. Key variables at their historic ical avera ages 2023- 2033 2/ B. Bound Tests 119 128 135 180 187 195 204 213 224 236 B1. Real GDP growth 153 59 B2. Primary balance B3. Exports B4. Other flows 3/ BS. Depreciation 73 83 93 B6. Combination.ofe B1- B5 C. Tailored Tests 100 102 106 112 114 116 118 22 127 131 175 185 C1. Combined contingent liabilities 208 187 74 163 155 150 14 150 195 206 C2. Natural disaster C3. Commodity price na C4. Market Financing Sources: Country authorities, and staffe festimates and projections. 1/Abold valuei indicates abreach oft the benchmark. 2/ Variablesi include real GDP growth GDP' deflator and primary de ficit in pe erc ce ent of GDP 3/ Includes official and private transfers and FDL INTERNATIONAL MONETARY FUND 23 --- Page 56 --- Executive Director for Haiti and Mr. Statement by Mr. Bevilaqua, and Ms. Florestal, Advisor to Saraiva, Alternate Executive Director, for Haiti the Executive Director January 23, 2023 thank the Managing Director, WHD On behalf of our Haitian Authorities, we their continuous support to Haiti. Our the mission chief and her team for between mission chiefs and management, thankful for the seamless handover for the authorities are particularly Assistance operations. These actions allowed the granting of well-targeted Technical Review of the SMP that was approved in June completion, this past December, of the first repeated shocks, and rising of discussions within the realm of uncertainty, and her team 2022, after years thankful to the current mission chief challenges. The authorities are also very disbursement under the Food Crisis Window of this request for our and the for the timely preparation in close collaboration with authorities (FSW) of the Rapid Credit Facility (RCF) and Finance (MEF) and the Central Bank of technical teams of the Ministry of Economy staff and the SMP Monitoring Committee of held between Haiti (BRH). The weekly dialogue mutual on social and has been instrumental to build a understanding MEF and BRH outlook and on how to make progress developments as well as on the near-term economic towards achieving SMP objectives. Haitian authorities managed to Despite multiple, compounding challenges, our the course on the reform agenda, stability and stayed taken maintain overall macroeconomic the SMP. They have broadly satisfactory progress in implementing and financial stability achieving ensure macroeconomic commendable steps to strengthen governance, resources. Long outstanding and efficiency in the use of public of central budgetary and enhance transparency in the Single Treasury Account reforms such as the consolidation Framework and a substantial reduction bank accounts, the Medium-Term Budget Haiti adopted and agencies' subsidies have been completed. Additionally, of unsustainable fuel code. Beneficial owners of public published a new tax code and associated procedure On the financial front, the BRH procurement contracts are now regularly published. supervision and further strengthening continues to make progress towards a risk-based taken to bring the ALM/CFT policy framework. Steps are also being under the FATF's the monetary standards and to implement the Action Plan law to international International Cooperation Review Group. and a substantial reduction bank accounts, the Medium-Term Budget Haiti adopted and agencies' subsidies have been completed. Additionally, of unsustainable fuel code. Beneficial owners of public published a new tax code and associated procedure On the financial front, the BRH procurement contracts are now regularly published. supervision and further strengthening continues to make progress towards a risk-based taken to bring the ALM/CFT policy framework. Steps are also being under the FATF's the monetary standards and to implement the Action Plan law to international International Cooperation Review Group. --- Page 57 --- implement the SMP as a foundation The authorities are determined to successfully path. Engagement with the Fund and inclusive growth an to rejoining a sustainable assistance has been maintained throughout through policy dialogue and technical immediate priority is to achieve a minimum extremely challenging context. Now, the to create the conditions for a more political, and social stability degree of economic, the authorities have renewed their commitment structured medium-term program. Hence, to build the pre-conditions and establishing the one-year track record required Going to continue Credit Tranche (UCT) financing arrangement. to allow Haiti to access an Upper will remain paramount for Haiti the Fund's intensified support and signaling and social forward, medium-term financing to support economic growth benefit from adequate development. in line with the 2019 BRH will continue to implement reforms to its organic The to finalize amendments recommendations. Notably, they are committed mandate, and autonomy arrangements, act with a view to strengthen governance by the Council of Ministers. To safeguards, and submit a revised act for consideration the BRH stands ready to use all and exchange rate volatility, out foreign address inflationary pressures while phasing interest rates and reserve requirements, situations. tools at hand including FX interventions to disorderly repurchase requirements and constraining foreign exchange, as exchange the Central Bank will also purchase Following the recent practice, levels of net international reserves (NIR). conditions allow, to secure adequate after four successive years of GDP Haiti's balance of payments (BOP) is under pressure and energy prices, limited external combined with the recent surge in food the United Nations contraction, remittances. Moreover, last year, Food assistance, and decreasing recorded in Haiti for the first time. The World warned that catastrophic hunger was levels of food insecurity in the (WFP) considers Haiti to have one of the highest In addition, the WFP and Program not having enough to eat. world with nearly half the population rank Haiti at a catastrophic level on the the Food and Agriculture Organization (FAO) Therefore, support under the FSW is Phase Classification Index. integrated Food Security critical relief to the most vulnerable. needed to help close the BOP gap and provide urgently conclusion of the first review on the signaling effect of the The authorities are counting the FSW to help catalyze needed donor funds. of the SMP and the disbursement under households through cash transfers and of the FSW will be used to support poor social The proceeds strategy to tackle food insecurity and strengthen food rations within the government's vulnerable households are also listed in the FY23 safety nets. Additional measures to support jobs in agriculture, environment protection, We underscore the creation of temporary programs and Budget. as vocational training as well youth the and public sectors countrywide buses. The latter will also help mitigate transit subsidy programs for registered public impact ofincreased fuel prices. bursement under households through cash transfers and of the FSW will be used to support poor social The proceeds strategy to tackle food insecurity and strengthen food rations within the government's vulnerable households are also listed in the FY23 safety nets. Additional measures to support jobs in agriculture, environment protection, We underscore the creation of temporary programs and Budget. as vocational training as well youth the and public sectors countrywide buses. The latter will also help mitigate transit subsidy programs for registered public impact ofincreased fuel prices. --- Page 58 --- transparency and safeguards authorities are fully committed to implement to The to strictly enforce governance arrangements measures. The authorities have pledged resources and to follow good contracts awarded on the spending of emergency of social procurement (PFM) practices to monitor the implementation public financial management and audit capacity in the spending of emergency programs. They are upgrading transparency that the law governing the Supreme Court of resources and working towards ensuring currently under review, guarantees the Auditors and Administrative Disputes (CSCCA), institutions. In addition, comprehensive monthly standards applicable to supreme audit no later than 45 days after the end of will be published reports on the budget implementation will continue to work towards implementing remaining each month. The Central Bank Assessment and accelerate the transition to recommendations of the 2019 Safeguards The authorities have also called for a International Financial Reporting Standards (IFRS). will be considered among the reforms for Governance Diagnostic whose recommendations the second review ofthe SMP. devised to further inclusion and social Innovation and digitalization are being innovative tools with the Both fiscal and monetary authorities are exploring cushion the impact of shocks on programs. of the WB and the IDB to leverage digital tools to The BRH that the CBDC support by enhancing financial inclusion. hopes channels the population including facilitate the diversification of the currently in testing stage- will eventually helping address financial inclusion which public transfers are distributed, through weaknesses in the rural area. concerted efforts with the which requires nationally Haiti is at a critical juncture, to break the vicious cycle of poverty, fragility, backing of the international community taken to quell gang violence, fight violence. In this regard, accelerated steps are being the Haitian and institutions. During the past two months, anticorruption and strengthen public arrests of high-profile gang leaders. The National Police (HNP) has multiplied embezzlement of public funds, money corruption unit is also intensifying its action against board of the Economic and Social laundering and other illicit transactions. The governing social programs, has which implements most of the government's Assistance Fund, started publication of its quarterly operations report. reconvened its regular meetings and instructions to financial institutions on a Also, in November 2022, BRH issued detailed following the UN Security Council's sanction regime against gangs and criminal activities finance them. resolution targeting gang leaders and those who crises, the Haitian economy is displaying tentative Amid persistent, multi-dimensional remains elevated. The near-term signs of stabilization and recovery, but uncertainty to quell insecurity, for on the ability of the Haitian government elections outlook is highly dependent from the international community. General which they are requesting assistance the full functioning of democratic institutions. planned for end-2023 should help restore in FY23 and domestic revenue collection to Growth is expected to return to positive territory senior members of management of the customs strengthen. In fact, after the replacement of in revenue collection has been registered administrations, significant increase and and revenue to further increase domestic resource mobilization and the authorities are taking steps but uncertainty to quell insecurity, for on the ability of the Haitian government elections outlook is highly dependent from the international community. General which they are requesting assistance the full functioning of democratic institutions. planned for end-2023 should help restore in FY23 and domestic revenue collection to Growth is expected to return to positive territory senior members of management of the customs strengthen. In fact, after the replacement of in revenue collection has been registered administrations, significant increase and and revenue to further increase domestic resource mobilization and the authorities are taking steps --- Page 59 --- 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 restore help 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.