Haiti : Seventh Review Under the Extended Credit Facility, Requests for Waiver of Nonobservance of Performance Criterion, and Modification of Performance Criteria-Staff Report; Press Release; and Statement by the Executive Director for Haiti

KEY ISSUES Program. A three-year arrangement under the Extended Credit Facility (ECF) in an amount of SDR 40.95 million (50 percent of the quota) was approved on July 21, 2010. The arrangement was extended for one year on August 2, 2013, with no augmentation of access. The program expires on August 29, 2014. Macroeconomic performance in FY2013 was favorable. GDP growth was 4.3 percent (vs. 3.4 percent in the program) and headline inflation fell from 6.5 percent to 4.5 percent (y/y), amid a modest depreciation of the gourde. International reserves remained at over five months of imports. However, the overall fiscal deficit widened, reflecting larger-than-programmed investment spending and subsidies to the electricity sector. Performance under the ECF-supported program was broadly satisfactory. All but one performance criteria (PC) for end-September 2013 were met as well as one out of the three indicative targets, and progress was made in key structural reforms. A contracting of repos by the Central Bank led to the breaching of the continuous PC on the contracting or guaranteeing by the public sector of non-concessional external debt with maturities up to and including one year. Staff supports the granting of a waiver for the nonobservance of the PC. The program for FY2014 aims at consolidating macroeconomic stability and sustaining progress in structural reform. GDP growth is expected to reach 3–4 percent, and inflation to remain in single digits, with gross official reserves covering more than five months of imports. Supporting policies include continued prudent monetary policy, the stabilization of the overall fiscal balance, and the continuation of structural reforms in the areas of public financial management, international reserve management, and the electricity sector. Risks to the program stem from Haiti’s dependence on remittances and foreign assistance, including increasing vulnerability to developments in Venezuela, as well as from the fragile socio-political environment. In view of the program performance, staff recommend the completion of the seventh review under the ECF arrangement, the modification of performance criteria, and the granting of a waiver