At the fifth meeting of the Interim Commission for the Reconstruction of Haiti (IHRC) held February 28 in Port-au-Prince, Jacques-Bouhga Hagbe, Resident Representative of the International Monetary Fund (IMF), has presented an overview of the macroeconomic developments and outlook in Haiti.

• Real GDP growth is now estimated to have contracted by about 5 to 6 percent in FY2010

• Inflation is picking up but remains in the single digits

• The exchange rate remained stable with a moderate appreciation

• The current account widened to 3 percent of GDP

• Monetary and financial developments were favorable

  - Net international reserves increased significantly increasing to $1.1 billion at end-December 2010, however,credit to the private sector fell by 4 percent year-on-year.

• The FY 2010 fiscal deficit was about 2 percent of GDP

• higher revenues and favorable budget support (US$225 million)

  - Current spending was contained despite the wage bonus and transfers and subsidies

  - Domestically financed investment spending increased significantly to meet post-earthquake priorities

  - No central bank financing

• The outlook for FY 2011 remains favorable, but downside risks

  - Slippages in the electoral calendar

  - The recent increase in international food and fuel prices, could weigh on the economy

  - Delays in donor support may also affect budget execution and macroeconomic stability

• Real GDP would grow by 8.6 percent

• International food prices would push up inflation to about 9 percent. Inflation could be higher if:

  - The central bank financing of the deficit is not discontinued in favor of T-bill financing

  - International food and fuel price increases are fully passed on to consumers

  - The envisaged public sector wage increases is implemented.

• The FY 2011 fiscal deficit is projected at 2.2 percent of GDP

  - Higher projected revenues

  - Use of donor support, including proceeds from the IMF PCDR debt relief (3.5 percent of 2011 GDP)

  - Total identified budget support commitments amount to US$133 million. However, none of the promised budget support for the second quarter (USD 45.7 mlns) has been disbursed.

  - Timely disbursement of budgetary support will help

  - Higher oil prices could create an additional financing gap and a need for more budgetary support

  - Domestically financed investment is planned to increase by almost 80 percent to about 8 to 9 percent of GDP.

Preliminary information suggest that performance under the ECF program appears to be broadly satisfactory, though some structural measures still have to be finalized. The authorities have significantly enhanced transparency with online publication of various reports on public policy. The support of the international community should be maintained, as significant reforms continue to be implemented.

HL/ HaitiLibre / IMF