WASHINGTON, USA – The executive board of the International Monetary Fund (IMF) approved US$111.6 million disbursements to Haiti and US$327 million in emergency support to Bolivia to address the COVID-19 pandemic.
The approved disbursement for Haiti under the Rapid Credit Facility (RCF) equivalent to SDR 81.9 million (US$111.6 million, 50 percent of quota) to help cover balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
Bolivia’s request for emergency financial assistance of about US$327 million (SDR 240.1 million, 100 percent of quota) under the Rapid Financing Instrument (RFI) to help the country meet the balance of payments need stemming from the outbreak of the COVID-19 pandemic, and support urgently required medical spending and relief measures to protect the well-being of the population.
The pandemic has worsened an already weak economic outlook for Haiti. An expected sharp drop in remittance flows, reduction in textile exports, and a drop in Foreign Direct Investment (FDI) will put significant strain on the balance of payments. Additional direct health and social expenditures, together with a further drop in fiscal revenues will add to the fiscal deficit and financing needs. IMF support will help cover some of this need and allow the government to ease the impact on the population, such as paying salaries of some teachers and workers, providing cash transfers and food rations to households, and providing subsidies to the transport and sanitation sectors.
Following the executive board discussion Tao Zhang, deputy managing director and acting chair, made the following statement:
“COVID-19 poses a major challenge for Haiti, a country in a fragile situation with very limited healthcare services, just emerging from two years of socio-political instability and worsening economic hardship. Measures are being taken by the government to stop the spread of the virus and to cushion the economic impact of the shock. IMF emergency support under the Rapid Credit Facility will help fill the balance of payments gap and create fiscal space for essential health expenditures, income support to workers, and cash and in-kind transfers to households.
“To address the crisis, scarce budgetary resources will need to be allocated to critical spending on disease containment and increased social assistance to the most vulnerable. To ensure the appropriate use of emergency financing, the authorities should prepare monthly budget execution reports on COVID-19 expenditures and undertake an ex-post financial and operational audit of COVID-related operations. While providing adequate liquidity support to the financial sector, the central bank should contain monetary financing of the deficit and limit foreign exchange interventions to smoothing volatility.
“Expeditious donor support is needed to close the remaining balance of payments gap and ease the adjustment burden. The IMF intends to further support Haiti through a Staff Monitored Program to help start the process of restoring macroeconomic stability and sustainability, building a better social safety net, and tackling governance weaknesses and corruption.”
Following the executive board discussion of Bolivia’s request, Mitsuhiro Furusawa, deputy managing director and acting chair, made the following statement:
“The COVID-19 pandemic will have a severe impact on Bolivia. The economic cost will be substantial, as the combination of lower global energy prices, domestic quarantines, and a sudden stop in capital inflows lead to sharp reductions in exports, production, and fiscal revenues. The IMF’s emergency assistance under the Rapid Financing Instrument will help to support urgently required medical spending and relief measures while addressing the country’s balance of payments needs.
“Bolivia’s response to the pandemic has been timely, well-targeted, and appropriate. The authorities have acted to strengthen the ability of the country’s health care system to confront the crisis and have quickly adopted social spending measures to support affected firms and households, particularly the most vulnerable. The central bank has taken steps to ensure continued liquidity and to mitigate the economic impact of the pandemic.
“The authorities have expressed their determination to ensure macroeconomic stability and debt sustainability once the crisis has passed. To this end, they are committed to reaching a sustainable fiscal deficit in the medium term, while continuing to maintain strong support for social spending and to adopt other macro and financial measures as needed.
“Additional support from other development partners will also be critical to help address Bolivia’s fiscal and balance of payment needs.”
