IMF: Haiti’s Business Environment “Needs to Be Strengthened”

Above: Port-au-Prince (CJ Photo)

By the Caribbean Journal staff

Haiti has a business environment “needs to be strengthened,” the International Monetary Fund said following approval this week of a $7.4 million disbursement by its Executive Board.

The move comes after the IMF completed the fifth review of Haiti’s performance under the Extended Credit Facility arrangement, bringing total disbursements under the programme to date of about $54.1 million.

“Accelerating the pace of structural reforms will be important to enhance competitiveness, safeguard external stability and achieve higher and more inclusive growth,” Shinohara said. “Efforts should focus on enhancing the business environment, particularly by removing infrastructure bottlenecks, increasing transparency and improving governance, and deepening financial intermediation.”

Haiti’s ECF arrangement was approved in July 2010, along with full relief of its outstanding debt to the IMF of about $268 million.

The relief, along with IMF financing, are part of what the fund called a “broad international strategy to support Haiti’s longer-term economic reconstruction plans following the devastating earthquake of Jan. 12, 2010.”

But Haiti’s performance under the programme continues to be “broadly satisfactory,” according to Naoyuki Shinohara, IMF Deputy Managing Director and Acting Board Chair.

“Sound policies have contributed to safeguard macroeconomic and financial stability,” Shinohara said. “However, economic activity remains subdued, reflecting limited absorptive capacity, a business environment that needs to be strengthened, and frequent natural disasters.”

Shinohara also said Haiti should also focus its efforts on “optimizing fiscal policy for higher and inclusive growth, particularly by expanding fiscal space for development spending, improving the execution rate and quality of capital spending, and strengthening public financial management.”