Haiti is grappling with an unprecedented multidimensional crisis that spans humanitarian, economic, social, and security challenges. The economy is hindered by a low tax base and a large informal sector, heavily dependent on volatile remittance flows. Since the last Article IV consultation in 2019, Haiti has endured a series of shocks, including the pandemic, a devastating earthquake in 2021, cholera outbreaks, and the economic repercussions of the war in Ukraine, which led to a food crisis and acute hunger. The severe deterioration of security in recent years has exacerbated these issues, resulting in a surge of displaced people and a significant decline in potential growth.

Haiti’s macroeconomic outlook remains challenging and highly uncertain. The ongoing security crisis continues to impact growth and fuel inflation. Fiscal revenues, crucial for rebuilding basic infrastructure and addressing extensive development needs, are recovering slowly. While remittances continue to support consumption, they also reflect an exodus of human capital, potentially undermining sustainable recovery. Growth is projected to be barely positive in 2025, stabilizing at only 1.5% over the medium term, contingent on improvements in the security situation.

Executive Board Assessment

Executive Directors concurred with the staff appraisal, acknowledging the severity of Haiti’s multidimensional crisis, which stems from security, economic, and humanitarian shocks, as well as the ongoing political transition. This crisis has significantly impacted the well-being of the Haitian population. The outlook remains uncertain, with deteriorating security and low expected growth. Despite these challenges, Directors recognized the authorities’ efforts in implementing reforms to strengthen economic resilience and restore macroeconomic stability.

Directors emphasized that normalizing security is essential for improving economic prospects and highlighted the critical role of international support in this regard, as well as in supporting reform efforts and rebuilding critical infrastructure. They called for continued engagement with the Fund, particularly through capacity development guided by the Strategy for Fragile and Conflict-Affected States, and welcomed the authorities’ interest in a new Staff Monitored Program as a useful policy anchor.

Directors commended the timely passing of the budget and efforts to increase fiscal revenue. They stressed the importance of advancing the revenue mobilization agenda to address Haiti’s significant development needs, notably through the implementation of a new tax code to broaden the tax base. Directors encouraged ongoing efforts to enhance the quality, efficiency, and transparency of public spending and called for strong scrutiny and prompt audits of resources provided through the Fund’s Food Shock Window. They emphasized the need to preserve debt sustainability by avoiding non-concessional lending and strengthening social safety nets to protect the most vulnerable and alleviate widespread poverty, alongside continued efforts to foster gender equality.

Directors underscored the importance of implementing structural and governance reforms to boost potential growth. They welcomed efforts to strengthen governance and anti-corruption frameworks and leverage digitalization. They urged the publication of the governance diagnostic assessment and accompanying action plan as soon as finalized. Building resilience to natural disasters and fostering financial inclusion are also key priorities. Directors strongly encouraged improvements in data adequacy for surveillance purposes, while prioritizing the quality and timeliness of monetary and reserve assets data.

Source: (International Monetary Fund)