Haiti Shows Macroeconomic Discipline Under IMF Program Despite Crisis, Violence, and Shocks

Haiti faces a severe security and humanitarian crisis, with ongoing economic contraction, high inflation, and collapsing state capacity. Despite this, the IMF notes strong policy discipline under its program, including zero money printing and higher reserves, though recovery hinges on security and external support.

The International Monetary Fund, working closely with the World Bank and in coordination with the United Nations and the Organization of American States, finds Haiti facing one of the most severe crises in its history. Widespread gang violence has weakened the state, disrupted daily life, and forced more than 1.4 million people from their homes. Roads, ports, electricity infrastructure, and schools are frequently shut down or attacked, while half the population struggles with hunger. Political uncertainty remains high, with elections planned for 2026 but heavily dependent on whether security can improve. International partners have stepped up engagement, including the UN-backed Gang Suppression Force and regional initiatives led by the OAS, but the report stresses that restoring stability will take time and sustained support.

An Economy Still Shrinking

Haiti’s economy continues to contract after years of decline. Real GDP fell by an estimated 3.1 percent in fiscal year 2025, the seventh straight year of negative growth, and is expected to shrink again in 2026. Inflation remains very high, at around 32 percent, largely due to supply shortages, insecurity, and weak domestic production. External shocks have made matters worse. Changes in U.S. policies, including the end of Temporary Protected Status for Haitians and the expiration of trade preferences for textile exports, are expected to reduce remittances and export earnings. Hurricane Melissa in late 2025 caused additional damage to agriculture, infrastructure, and housing, increasing humanitarian needs and putting further pressure on the economy.

Strong Performance Under the IMF Program

Despite these difficult conditions, Haiti’s performance under the IMF’s Staff-Monitored Program has been encouraging. All key targets were met by mid-2025. Most importantly, the government continued a strict policy of zero monetary financing, meaning the central bank did not print money to cover government spending. This has helped contain inflation and rebuild trust in economic management. International reserves increased sharply, supported by strong remittance inflows from Haitians abroad. Net reserves reached nearly US$1.5 billion, providing a buffer against external shocks. The exchange rate remained broadly stable, giving the economy a clear price anchor even in a highly uncertain environment.

Weak Public Finances but Rising Social Support

Fiscal policy shows mixed results. The overall budget was roughly balanced in 2025, but mainly because spending was lower than planned, not because revenues were strong. Government revenues remain extremely low as a share of the economy, among the weakest globally, reflecting limited tax collection capacity and widespread informality. Budget execution is slow and uneven, especially for investment projects, due to insecurity and administrative weaknesses. At the same time, social spending increased significantly. Emergency funds from the IMF helped finance cash transfers, food assistance, and education support for vulnerable households. Public debt remains very low, at about 12 percent of GDP, but the IMF warns that this does not mean Haiti is financially safe, given its weak economy and heavy dependence on external support.

Reforms, Risks, and the Road Ahead

Reform efforts are moving forward, though often with delays. A key achievement was the publication of the IMF Governance Diagnostic Report, which lays out a roadmap to reduce corruption, improve public financial management, and strengthen accountability. Progress has been made in publishing audits, fiscal reports, and central bank accounts, but capacity constraints remain severe. Revenue reforms, especially the digitalization and linking of tax and customs systems, are advancing but behind schedule. Because of these challenges, the authorities requested, and the IMF supports, a nine-month extension of the Staff-Monitored Program to September 2026.

Looking ahead, the outlook remains fragile. Economic recovery depends heavily on security improvements. Inflation is expected to fall only gradually, and growth is projected to remain weak in the near term. Risks are clearly tilted to the downside, including worsening violence, falling remittances, reduced foreign aid, political instability, and future natural disasters. The IMF concludes that Haiti’s authorities have shown strong commitment to discipline and reform under extreme pressure, but lasting progress will require continued reforms, better governance, and strong international support, preferably through grants rather than loans, to help Haiti stabilize its economy and rebuild trust in the state.