From mid-2018 until early 2020, Haiti experienced political instability and intermittent social unrest that paralyzed the economy and impeded the implementation of economic policies. This protracted crisis placed severe strains on the population. Following the conclusion of the Article IV consultation in late January, the authorities began to take steps towards restoring economic stability and were preparing for discussions with staff on a potential Staff Monitored Program (SMP).
Impact of COVID-19. From this difficult starting point, and with Haiti’s limited health services and high levels of poverty, the spread of COVID-19 could prove devastating for the country. Remittances represent over 34 percent of GDP and most textile exports are purchased by the U.S., so the global income shock is expected to have a sharp adverse impact on Haiti’s balance of payments. With demand and fiscal revenues forecast to drop, higher outlays on health expenditures and income support would add to a surge in the fiscal deficit.
Implications of the U.S. Current Account Deficit