The Executive Board of the International Monetary Fund (IMF) on Friday approved the disbursement of US$111.6 million to Haiti under the Rapid Credit Facility (RCF) programme.
According to IMF Deputy Managing Director Tao Zhang, “IMF emergency support under the Rapid Credit Facility will help fill the balance of payments gap and create fiscal space for essential health expenditures, income support to workers, and cash and in-kind transfers to households.”
Haiti’s economic outlook has worsened since the spread of the coronavirus pandemic to the French-speaking Caribbean nation. An expected sharp drop in remittance flows, reduction in textile exports, and drop in foreign direct investment will put significant strain on the. Additional direct health and social expenditures, together with a further drop in fiscal revenues will add to the fiscal deficit and financing needs.
With the IMF’s support, the Haitian Government will be able to cover its expenditures and reduces the impact of the virus on the population. In particular, the country can pay salaries of teachers and workers, provide cash transfers and food rations to households, and subsidise the transport and sanitation sectors.
“To address the crisis, scarce budgetary resources will need to be allocated to critical spending on disease containment and increased social assistance to the most vulnerable.”— International Monetary Fund Deputy Managing Director and Acting Chair Tao Zhang
“COVID-19 poses a major challenge for Haiti, a country in a fragile situation with very limited health care services, just emerging from two years of socio-political instability and worsening economic hardship. Measures are being taken by the government to stop the spread of the virus and to cushion the economic impact of the shock,” Zhang stated.
He continued: “To address the crisis, scarce budgetary resources will need to be allocated to critical spending on disease containment and increased social assistance to the most vulnerable. To ensure the appropriate use of emergency financing, the authorities should prepare monthly budget execution reports on COVID-19 expenditures and undertake an ex-post financial and operational audit of COVID-related operations.”
The IMF deputy managing director says the fund plans to increase its support to Haiti through a staff-monitored programme. Just last week the IMF announced that it selected Haiti to benefit from a debt relief programme under the Catastrophe Containment and Relief Trust (CCRT).
Ultimately, the IMF aims to help the French-speaking republic restore macroeconomic stability and sustainability, build a better social safety net, and tackle governance weaknesses and corruption.