The IMF has approved an additional U$26 million to assist Haiti to mitigate the impact of food and fuel prices on the economy of the struggling Caribbean nation.
The Fund completed the third review of Haiti’s economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement and approved (SDR)16.38 million (about US$26.5 million) in additional financial assistance to help Haiti cope with the impact of rising food and fuel prices. The completion of the review will enable the immediate disbursement of 23.98 million special drawing rights (about US$38.7 million).
The PRGF arrangement was approved on November 20, 2006 in the amount equivalent to SDR73.7 million (currently about US$119 million).
The Executive Board also approved Haiti’s request for a waiver for non-observance of two performance criteria, related to the preparation of a plan to recapitalize the Central Bank of Haiti, and to hiring of experts to strengthening program units in key ministries.
Haiti imports much of its food and fuel supply, and the country has therefore been particularly hard hit by the recent increases in world commodity prices.
“Higher fuel and food prices have contributed to weaken Haiti’s domestic currency and pushed up inflation, and are also expected to reduce growth in the current year,” said Andreas Bauer, the IMF mission chief for Haiti. “Despite these shocks, the authorities have done remarkably well in implementing their economic program in recent months, and the program continues to be on track.”
Bauer said the IMF is working closely with the Haitian authorities to develop a policy response that will help the country deal with the negative consequences of higher commodity prices, and support additional spending funded by donors to ease the social costs.
“The economic program for the remainder of this fiscal year has been revised to accommodate measures proposed by the government to help the most vulnerable people. These measures include a temporary subsidy on the price of rice, school feeding programs and public works employment, and steps to stimulate domestic food production. The authorities are also taking monetary action to limit the spillover effect of higher fuel and food prices. This is important because higher overall inflation hurts the poor particularly hard,” Bauer said.