A mission of the International Monetary Fund (IMF), headed by Mrs. Nicole Laframboise, discussed with the Haitian authorities in Port-au-Prince and Washington in the context of the Article IV consultation
Tuesday, November 26, 2019 ((rezonodwes.com)) – Declaration of Mrs. Laframboise
We warmly thank the Haitian authorities as well as the public servants and employees of the public sector and the representatives of the private sector and civil society with whom we discussed , for their efforts to hold this consultation, despite a very difficult situation in Haiti
Haiti is facing an unprecedented political, economic and social crisis. Repeated deadlocks in November 2018, February, June and September 2019 severely affected economic activity. Growth for the 2019 fiscal year is expected to be around -1.2 percent, while inflation is estimated at more than 20 percent by the end of September, fueling poverty and insecurity and depriving the state of the means
Since March 2019, the absence of a government ratified by Parliament has impeded the IMF's approval of the agreement reached at the technical level for a program under of the Extended Credit Facility (ECF). This also led to the suspension of external budget support.
Our medium-term projections do not envisage major reforms, which it is unrealistic to envisage at this stage, and expect a stabilization of the political situation and GDP during the year 2020 with a very weak recovery of growth around 0.9 per cent in 2021. In this context, it would be difficult to envisage an inflation rate well below 20 per cent per year for the next two years. Similarly, potential growth is estimated at 1.5 percent per year over the longer term.
The continuation of the current political crisis would be devastating for the country with more severe medium-term consequences due to capital losses
On the other hand, a short-term resolution of the crisis could lead to a rebound in economic activity. The appointment of a determined government to undertake reforms and the resumption of support from the international community would ease the budgetary constraint. This would lead to an increase in public spending, especially investment, along with a reduction in central bank financing, thus facilitating a drop in inflation and an increase in growth in the short, medium and long term.
The immediate priority must be the stabilization of the economic situation. In the absence of a budget for parliamentary scrutiny, it is important for the government to prepare and publish, as announced, a budget framework for 2020 as soon as possible. This framework should include measures to contain non-priority spending and improve tax revenue collection, particularly through strengthening of tax administration and reduction of tax exemptions.
We congratulate the authorities for signing and respect for the Economic and Financial Governance Pact between the Bank of the Republic of Haiti and the Ministry of Economy and Finance, which helped stabilize inflation and the exchange rate until the end of September 2019 The renewal of this pact is necessary to limit again the monetary financing of the budget deficit, source of inflation.
We congratulate the authorities for the efforts made to finalize the drafting of a National Protection and Promotion Policy (PNPPS) and encourage the Council of Ministers to formally adopt this policy and to launch a new pilot program cash transfers to vulnerable people. The PNPPS must reduce the fragmentation and overlap of existing programs, a source of inefficiency. Staff recommends that this policy lead to the establishment, under the auspices of the Ministry of Social Affairs and Labor (MAST), of a limited number of cash transfer programs for vulnerable groups of the population.