Events In Venezuela Could Affect Haiti’s Economic Growth – IMF

Venezuela: Classic Clash Between Right, Left
Venezuelan protesters

AFRICANGLOBE – The International Monetary Fund (IMF) says Haiti’s dependence on remittances and its increasing vulnerability to developments in Venezuela could affect the French-speaking Caribbean Community (CARICOM)’s economic growth in 2014.

The IMF said that Haiti’s three-year multi-million dollar programme under the Extended Credit Facility (ECF) expires on August 29, this year and that macroeconomic performance during the 2013 financial year was favourable.

The Washington-based financial institution said that gross domestic product (GDP) growth was 4.3 per cent, up from 3.4 per cent and headline inflation fell from 6.5 to 4.5 per cent amid a modest depreciation of the gourde.

The IMF said that while international reserves remained at over five months of imports, the overall fiscal deficit widened, reflecting larger-than-programmed investment spending and subsidies to the electricity sector.

“Performance under the ECF-supported programme 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,” the IMF said, adding that it supports the granting of a waiver for the nonobservance of the PC. The IMF said that the programme for the 2014 financial year aims at consolidating macroeconomic stability and sustaining progress in structural reform.

It said GDP growth is expected to reach three to four per cent 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.”

But the IMF said that risks to the programme 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.

Opposition groups have been staging street protests in Caracas in a bid to force the downfall of the Nicolas Maduro government.

Naduro has described the protest action as a “revolt of the rich” predicting it would fail because the country’s “Bolivarian revolution” was more deeply rooted than when it had seen off an abortive US-backed coup against then president Hugo Chávez in 2002.

Haiti is among CARICOM countries that benefit from Caracas’s PetroCaribe oil agreement that allows regional countries to purchase oil and petroleum products on conditions of preferential payment.