Republic of Haiti - Public Expenditure Management and Financial Accountability Review (PEMFAR) : Improving Efficiency of the Fiscal System and Investing in Public Capital to Accelerate Growth and Reduce Poverty
After the lost decade 1994-2004, marked by political instability and economic decline, Haiti has reformed significantly and revived growth, especially in the past three years. Macroeconomic policies implemented since mid-2004 helped restart economi...
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| Format: | Integrated Fiduciary Assessment |
| Language: | English |
| Published: |
Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/01/9361209/haiti-public-expenditure-management-financial-accountability-review-pemfar-improving-efficiency-fiscal-system-investing-public-capital-accelerate-growth-reduce-poverty http://hdl.handle.net/10986/7998 |
| Summary: | After the lost decade 1994-2004, marked
by political instability and economic decline, Haiti has
reformed significantly and revived growth, especially in the
past three years. Macroeconomic policies implemented since
mid-2004 helped restart economic growth, reestablish fiscal
discipline, reduce inflation and increase international
reserves. Financial sector stability has been maintained
though weaknesses have emerged. Significant progress was
also achieved in the implementation of economic governance
measures, mainly in the area of legal framework, core public
institutions and financial management processes and
procedures. Notably, basic budget procedures were restored,
the public procurement system strengthened, and
anti-corruption efforts stepped up. Efforts were also made
to improve efficiency and transparency in the management of
public enterprises. These recent political and economic
developments open a window of opportunity to break with
Haiti's turbulent past and create the sound foundations
for strong and sustained economic growth and poverty
reduction. In such an environment, the development challenge
of more dynamic growth in order to reduce poverty requires
bold policy actions across a broad spectrum covering various
areas of Government interventions to: (i) improve security;
(ii) expand and improve the quality of the infrastructure
base; (iii) expand the economic base and (iv) enhance human
capital. But because of Haiti's scarce resources,
prioritizing Government interventions is critical to ensure
that public resources are allocated to their best uses. This
calls for reforms to improve efficiency of public spending.
However, public expenditure reforms would not be enough to
decisively put Haiti on a strong and sustained growth path
unless they are complemented by revenue-enhancing measures.
This implies that the country design a comprehensive fiscal
reform package. Major policy lesson from this experiment is
that strong and sustainable growth depends on the scope and
quality of the fiscal reforms. Fiscal reforms should target
a broad-based fiscal package, which aims at expanding the
fiscal space and improving efficiency in the allocation of
public spending. This package would combine: (a) an increase
in total public investment; (b) a reallocation of public
spending to investment; (c) a crease in the effective
indirect tax rate; (d) an increase in direct tax rate; (e)
an increase in security spending; and (f) a reduction in
collection costs. The Haiti macro-model shows that the
fiscal package tends to have positive impact on growth and
poverty over time. Foreign aid could play a catalytic role
to foster fiscal reforms and help accelerate growth in the
short and medium-term. |
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