(MENAFN- Caribbean News Global)
Management of the International Monetary Fund (IMF) approved the first review of Haiti's Staff-Monitored Program (SMP). The SMP will help the government restore macroeconomic stability and lower inflation – a key goal given the burden of high inflation on the poor. The SMP seeks to advance decisive governance reforms to enhance accountability. In particular, it emphasizes greater accountability through stronger public finance management, revenue administration, transparency, and anti-corruption measures. The program comprises realistic measures suited to Haiti's fragility to help the authorities build a track record of policy implementation.
WASHINGTON, USA – Management of the International Monetary Fund (IMF) approved on December 21 the first review of Haiti's Staff-Monitored Program (SMP). Discussions for the review took place during October-December, 2022. The SMP takes into account Haiti's fragility and capacity constraints. It was designed to support the authorities' economic policy objectives and build a track record of reform implementation.
Haiti is mid-way through a SMP that has been an important anchor for Haitian policymakers, despite one of the most challenging economic environments in many years. Haiti is faced with many difficulties, which have been worsened by higher food and fuel prices stemming the war in Ukraine, which have increased its economy's fragility. The external shocks and deterioration of the security situation have resulted in a macroeconomic outlook worse than at the time of the program's approval by IMF management in June 2022.
Despite the more difficult macroeconomic conditions and downside risks, recent data and progress on structural reforms suggest that the authorities are making meaningful efforts to ease the country's multiple challenges. In this difficult context, the authorities have committed to continue implementing policies that would begin to restore macroeconomic stability and growth, strengthen governance, and to provide relief to the most vulnerable households. The SMP has been instrumental in catalyzing forthcoming external financing and its implementation has been broadly satisfactory, despite obstacles in meeting quantitative targets due to a less favorable environment than initially anticipated.
The Haitian authorities have adopted a budget for FY2023 that is consistent with agreed targets under the SMP and in the context of a medium-term budget. They ensured that a meaningful budget allocation is used to protect the most vulnerable and are implementing public financial management systems to monitor the use of public funds. The authorities are committed to reduce central bank financing of the deficit to levels consistent with low inflation and limit foreign exchange intervention to smoothing excess volatility.
In line with the reforms under the SMP, the authorities took measures aimed at raising domestic revenues, approving in December a new tax code and following through with the adoption of the customs and tax administration reforms. In particular, the tax code – a primer in the country's history – entails the rationalization and simplification of the personal income tax and corporate income tax, including through the broadening of the tax base and elimination of many exemptions.
Progress on governance is key to ensure inclusive growth. The authorities have taken steps to strengthen accountability in the collection and use of public resources and have boosted the transparency of public procurement for emergency resources. They are working to bring AML/CFT laws up to international standards supported by Fund's capacity development.
IMF staff will continue to work closely with the authorities to support implementation of their program and help them build public support. Indeed, most elements of the authorities' program are underpinned by ongoing IMF technical assistance. The Fund will also continue to coordinate closely with Haiti's other development partners to leverage efforts in support of common objectives. SMP are only subject to formal IMF management review.
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