The Inter-American Development Bank today announced the approval of a $5 million soft loan to Haiti to strengthen public sector institutions in charge of revenue collection, budget formulation and execution and government procurement.
"The goal is to reinforce Haiti's capacity to launch key reforms to improve economic governance," said IDB project team leader Roberto Camblor. "By improving the efficacy of its budget, revenue and spending control systems, the Haitian government will avoid losses and have more resources to invest in poverty reduction."
A more efficient and transparent management of public resources will also encourage the international community to maintain its support for Haiti's political, economic and social recovery, Camblor added.
The new operation will build on the activities financed with more than $27.5 million in loans and grants approved since late 2002 as part of the IDB strategy in Haiti to support public finances reforms and help rebuild the government's management capacity.
Those programs and projects supported the formulation and implementation of a new budget law with deadlines and rules for preparing and publicizing the budget bill; a drastic reduction of the use of discretionary accounts on the part of the public sector; the shaping of strategic plans to modernize the customs and tax bureaus and the establishment of an anti-corruption unit.
The new operation, which has four components, was prepared in close coordination with specialized agencies of donor countries and multilateral institutions that support Haiti's Interim Cooperation Framework, which covers priority sectors for reconstruction and short- and medium-term development.
- Revenues: two of the components are aimed at increasing public sector revenues by strengthening Haiti's tax and customs bureaus. They will finance analyses of both agencies' legal and regulatory frameworks and the design of new structures; the modernization of their information technology, training for officials and agents and the fight against customs fraud and other crimes.
- Procurement: another component will strengthen procurement management capabilities at the ministries of Public Works, Agriculture, Education, Health and Justice. Among other activities, it will support a reorganization of internal procedures; training for staff involved in procurement activities; the implementation of system to supervise contracts and the establishment of a system to control the quality of procured goods, services and civil works.
- Financial management and controls: the coordination between the Ministry of Economy and Finance and the five other ministries will be strengthened, as well as their financial management and controls systems. The use of an automated system of public expenditure management will be extended to key government agencies and staff will be trained to strengthen their analytical skills.
The new loan is for 40 years, with a 10-year grace period and an annual interest of 1 percent during the first decade and 2 percent thereafter. Local counterpart funds will total $45,000.
IDB support for Haiti
The IDB has the largest portfolio of loans in execution in Haiti, with some $330 million to finance economic and social development projects. Besides the public finances reforms, the IDB is supporting programs in priority sectors such as transportation, agriculture, health, basic education and job training, water and sanitation, local development and small productive projects across the country.
Other loans under preparation totaling around $250 million will finance projects involving rural development, rural roads, environmental management and flood warning systems, urban center upgrading, access to credit for small and medium-size enterprises and deepening economic governance reforms.