May 2015 Financial News

IMF predicts 4% growth for Haiti this year

May 29, 2015

WASHINGTON, United States (CMC) — The International Monetary Fund (IMF) says Haiti is expected to record economic growth of four per cent this year.

The Haitian rate is significantly higher than the 1.7 per cent it expects for Jamaica.

In a statement Thursday, the Washington-based financial institution said the French-speaking Caribbean Community (Caricom) country had in December last year, completed an arrangement under the Extended Credit Facility (ECF), which helped to support economic growth and maintain macroeconomic stability after the 2010 earthquake.

But it said a drought that affected agricultural output slowed gross domestic product (GDP) growth to 2.7 per cent last year, from 4.2 per cent, the previous year. The IMF said inflation remained in the mid-single digits.

"The overall fiscal deficit of the central government remained high, in part due to one-off investment related to the Sandy storm. International reserves remained appropriate at about five months of imports," the IMF said, adding that the implementation of structural reforms to support growth underpins the medium-term outlook, which is nonetheless subject to downside risks.

"GDP growth in financial year 2015 is expected to be between two to three per cent, and to increase to three to four per cent in the medium-term. Inflation is projected to remain in the mid-single digits and gross international reserves to be equivalent to between four to five months of imports, thanks to a prudent policy mix"

But the IMF warned that risks are mainly associated with a rebound in international oil prices, a stop in external financing from Venezuela, and weather events.

The IMF commended the Michel Martelly government for maintaining macroeconomic stability in the aftermath of the 2010 earthquake, noting positive growth, moderate inflation, adequate international reserves, and an improvement in Haiti's debt assessment.

"Nevertheless, growth remains insufficient to reduce poverty significantly, and vulnerabilities remain against the backdrop of a challenging domestic and external environment," the IMF said, adding that it agreed that the authorities' new programme appropriately focuses on entrenching macroeconomic stability, and ambitious structural reforms to enhance competitiveness, spur inclusive growth and strengthen policy buffers.

The IMF said that strong ownership and well-coordinated donor support will be important for the success of the programme.

It also welcomed the approval of a revised 2015 budget consistent with reducing the deficit of the non-financial public sector to about 2.5 per cent of GDP over the medium term, in line with debt sustainability and programme objectives.

The financial institution also supported the front-loaded fiscal consolidation, and noted that the adoption of an automatic fuel price mechanism and measures to improve the performance of the electricity sector will help contain fiscal risks, and create space for increased priority social and investment spending.

The IMF said it was also stressing the importance of mitigating the impact of the reforms on the poor and vulnerable.

Source:
Jamaica Observer
Friday May 29, 2015

http://www.jamaicaobserver.com/business/IMF-predicts-4--growth-for-Haiti-this-year_19033868