In a final review of the country’s performance under the Extended Credit Facility (ECF) arrangement, the Washington-based financial institution said that the programme contributed to maintaining macroeconomic stability, and there was progress on structural reforms.
“The authorities intend to request a successor arrangement under the ECF,” the IMF said, but noted that uncertainty remains on the timing of elections, even though a new finance minister was appointed in April last year.
“Preliminary data suggest that GDP (gross domestic product) in financial year 2014 grew by 3.5 to four per cent, while inflation increased slightly to about five per cent. An increase in fuel prices in October should result in fiscal savings of at least one per cent of GDP during financial year 2015.”
The IMF said the March performance criterion on net international reserves (NIR) was met, but although the deficit was lower than projected, the performance criterion on net central bank credit to the central government was missed.
The Fund warned that downside risks are significant and include a pull-back of Venezuela-related flows, a resumption of political tensions, and vulnerability to weather events.
It said that as a result of the review, Haiti has become eligible to draw down a total of SDR 1.638 million (One SDR =US$0.697 cents), bringing total disbursements under the ECF to SDR 40.950 million.
The IMF is recommending that Haitian authorities adopt a new policy mix that should come from a lower fiscal deficit rather than from a tighter monetary policy.
In addition, it said that for the 2015 financial year, the fiscal deficit should be reduced to mitigate financing risks as part of a medium-term plan to restore fiscal sustainability and that the Central Bank should let the exchange rate adjust more to market pressures.
It said “intervention should be parsimonious, geared at avoiding excess volatility and disorderly movements in the exchange rate” and that “it should be guided by fundamentals in the medium term.
The IMF said that a possible new ECF arrangement “would entrench macroeconomic stability and promote policies to generate sustained GDP growth”.