6765: The GOH's Letter of Intent to IMF (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Max Blanchet <maxblanchet@worldnet.att.net>


November 7, 2000

Mr. Horst Köhler
Managing Director
International Monetary Fund
700 19th Street NW
Washington, D.C. 20431
U.S.A.

Dear Mr. Köhler:

1. During FY 1999/2000 (year ending September 30) the Haitian economy
suffered from the effects of a political crisis that contributed to a
slowdown in external assistance and economic growth. After several delays,
parliamentary and municipal elections were carried out in May and July
(second round), and the new parliament took office in August 2000. The
presidential election is scheduled for November 26, 2000.

2. During the pre-electoral period, government spending increased
significantly, while fiscal revenue declined in relation to GDP, because of
the sharp increase in the world price of oil, and resulting decline in
excise taxes on gasoline, diesel, and kerosene. Despite a considerable
tightening of monetary policy, the gourde depreciated with respect to the
U.S. dollar, inflation rose, and official reserves declined.

3. The government is committed to re-establishing macroeconomic stability
during FY 2000/01 and to restoring inflation to a downward path. The
attached memorandum of economic and financial policies, tables, and
technical memorandum of understanding present the government's macroeconomic
objectives and policies as well as structural measures to be carried out
during FY 2000/01. In support of these objectives, the government requests
that IMF staff monitor and follow up execution of its program.

4. The government will communicate to the IMF all the information needed to
monitor its progress in implementing its economic and financial policies and
the measures required to achieve the program objectives. The authorities
intend to review with IMF staff the progress made in implementing the
program in February, May, and August 2001.

5. Following the presidential election and the installation of a new
cabinet, the government intends to initiate discussions with IMF staff later
in the fiscal year for an economic program that could be supported by a
three-year arrangement under the Poverty Reduction and Growth Facility.


Sincerely yours

/s/
----------------------------------------------------------------------------
----

Fred Joseph
Minister of Economy and Finance
Haiti       /s/
----------------------------------------------------------------------------
----

Fritz Jean
Governor
Bank of the Republic of Haiti



Attachments




Haiti--Memorandum of Economic and Financial Policies for FY 2000/01

I. Economic Performance in FY 1999/2000

1. During FY 1999/2000 the Haitian economy suffered from the effects of a
political crisis that has contributed to a slowdown in external assistance
and economic growth. The first round of parliamentary and municipal
elections was carried out on May 21, 2000, with a high voter participation
rate of 55-60 percent of those registered. The second round of elections to
decide those posts not won by a majority in the first round took place in
July, and the new parliament was sworn into office on August 28, 2000. The
presidential election is scheduled for November 26, 2000 along with election
of eight senators.

2. Economic performance weakened during FY 1999/2000 in the run-up to the
elections. The fiscal deficit increased and, with limited external support,
was financed entirely by an expansion of domestic credit. The increase in
the fiscal deficit, continuing political uncertainties, and the increase in
the world price of oil (Haiti imports all of its petroleum products) led to
pressures on the exchange rate, domestic prices and official reserves. To
combat these pressures, the central bank tightened monetary policy, and
interest rates rose markedly. Investment declined, and economic growth is
estimated to have decelerated to 1.2 percent (2.2 percent in FY 1998/99).

3. The central government deficit increased to 2.2 percent of GDP in FY
1999/2000, compared with 1.3 percent of GDP in FY 1998/99. Government
revenue declined by almost 1 percent of GDP to 7.8 percent of GDP, mainly
reflecting the sharp increase in the world price of oil and the depreciation
of the gourde, and the resulting decline in excise tax collections on
gasoline, diesel and kerosene. Domestic prices for petroleum products were
raised in September 2000 to stem the drain on fiscal revenue. Non-oil tax
revenue performed well as a result of successful efforts to improve tax
administration, and customs revenue also increased owing to the depreciation
of the gourde. Direct income tax revenue increased due to the expansion of
the tax base, as self-employed professionals were required to submit income
tax returns for the first time, while efforts to increase tax revenue from
the provinces led to modest revenue increases. Total spending rose slightly,
mostly on account of an increase in capital spending including on special
public works projects intended to help create a favorable environment for
the elections. This included increased spending on roads, construction of
schools, and improving transport services. The wage bill declined slightly
to 3.9 percent of GDP, with no general wage increase during the year.

4. The central bank sought to slow the depreciation of the gourde by
tightening monetary policy and by intervening in the foreign exchange market
by about US$32 million during FY 1999/2000, including US$16 million in
direct sales of dollars to oil importers. Nevertheless, the gourde
depreciated by 32 percent with respect to the U.S. dollar from end-September
1999 to mid-September 2000. Inflation rose only moderately because of the
sharp tightening of monetary policy and weakening economic activity.
Twelve-month inflation (CPI) rose from 9.9 percent in September 1999 to 12.5
percent in August 2000. Net official reserves are estimated to have declined
by about US$40 million during FY 1999/2000 to US$170 million or 1.8 months
of imports of goods and services (15 percent of broad money).

5. The central bank tightened monetary policy throughout the year, raising
interest rates on its 91-day bonds from about 11 percent in September 1999
to 23 percent in April 2000 and 27 percent in September 2000. In addition,
the central bank raised the reserve requirement on gourde deposits from 26.5
percent to 28 percent in April 2000 and 31 percent in September 2000. It
also raised the reserve requirement on U.S.-dollar denominated deposits from
12.5 percent in November 1999 to 17 percent in April 2000 and to 21 percent
in September 2000.

6. The external current account deficit of the balance of payments (before
grants) is estimated to have declined slightly in FY 1999/2000 to US$295
million (7.1 percent of GDP), despite a doubling in the cost of petroleum
product imports to US$137 million. Non-oil imports in U.S. dollar terms
declined owing to the slowdown in the economy. Export growth (three-quarters
of exports come from the light assembly sector) slowed significantly on
account of orders being held up because of the political situation, fears by
buyers about the reliability of shipments, and a slowdown in sales to the
United States. The capital account surplus declined by about US$65 million
to a level of US$17 million as a result of an increase in banking sector
deposits abroad, a decline in direct investment, and lower project loan
disbursements to the public sector.

7. In the financial sector, the central bank's supervisory capacity and the
regulatory framework continued to be strengthened. Six additional
specialized staff were assigned to the banking supervision department, and
general inspection of four banks was carried out during FY 1999/2000, as
well as specific evaluations of assets and verification of the quality of
capital in several other banks. The minimum capital to risk-weighted assets
ratio was raised as planned, from 8 percent to 10 percent effective
September 30, 2000, and all but one private bank had met the requirement as
of that date. However, some private commercial banks experienced an increase
in their nonperforming loans to total loans ratio as a result of the
increase in interest rates and the depreciation of the gourde, and, for the
banking system as a whole, the capital to risk-weighted assets ratio
declined from 11.9 percent in March 2000 to 11.1 percent in June 2000. The
central bank has also revised prudential regulations concerning risk
concentration ratios for lending to related and to nonrelated borrowers.

8. In July 1999, the central bank, concerned by the growth of U.S.
dollar-denominated loans relative to dollar-denominated deposits, suggested
in a letter to commercial banks to reduce the ratio of their U.S. dollar
loans to U.S. dollar deposits to no more than 50 percent. In practice,
lending in dollars was already slowing, while deposits in dollars continued
to increase, owing to the depreciation of the gourde; the ratio of dollar
loans to dollar deposits declined from 67 percent in September 1999 to 57
percent in July 2000. The banking supervision department issued a regulation
in September 2000 requiring that all banks meet a limit of 50 percent in the
ratio of nonguaranteed dollar loans to dollar liabilities by January 1,
2001.

9. Progress was made in the restructuring of the troubled state-owned bank,
Banque Nationale de Credit (BNC). Downsizing of the bank's employment by
about half (224 employees) was completed in June 2000, with associated
severance benefits of about

G 70 million (0.1 percent of GDP), and one branch office was closed in June
2000. The bank's capitalization and operating results improved mainly as a
result of the placement of government bonds in exchange for nonperforming
loans of BNC that had been guaranteed by the government, and receipts of
about G 70 million from asset recovery.

10. The government continues to fully support international efforts against
money laundering and trafficking in drugs, and has taken significant
additional preventive steps since July 2000. The ministry of justice has
prepared draft laws against money laundering (which, inter alia makes money
laundering a crime subject to incarceration and/or fines), and trafficking
in drugs, respectively. Central bank officials have consulted with staff of
the International Monetary Fund, the United States Treasury, and the
Caribbean Financial Action Task Force (CFATF) concerning best practices and
measures in preventing money laundering. The government of the Republic of
Haiti has formally requested to become a member of CFATF. The central bank
has also developed and promulgated new reporting forms to strengthen the
"know-your-customer" provisions for deposits. A special anti-money
laundering unit has been established at the justice ministry, which will use
electronic data processing to scrutinize the declarations of banks about the
origin of funds.

11. Improvements were made in tax administration during FY 1999/2000. Direct
income taxes were collected from self-employed professionals and all
candidates for the recent elections were required to submit income tax
returns. The large-taxpayer unit carried out 66 on-site audits during the
year and has begun to audit oil importers and commercial banks. Emphasis was
also placed on improving revenue collection from the provinces, and tax
inspectors were assigned to provincial offices.

12. The increase in the world price of oil and the depreciation of the
gourde made it essential to raise domestic prices of gasoline, diesel, and
kerosene, which had not been changed since 1996. The government raised
prices of these products by an average of about 45 percent in early
September 2000. Pricing of these products will be adjusted regularly in line
with the changes in the gourde-converted landed cost, whenever this cost
changes on a cumulative basis by more than five percent, and with a maximum
delay of six weeks. The price of liquid gas will remain freely determined in
the market.

II. Program for FY 2000/01

13. The government is committed to reducing the fiscal deficit in FY 2000/01
so as to eliminate pressure on the exchange rate and to restore inflation to
a downward path by the second half of the year. Monetary policy will be kept
tight until the reduction in the fiscal deficit begins to take hold. The
program aims to contain 12-month inflation in a range from 12 percent to 14
percent in September 2001, and to achieve an increase in official net
international reserves of US$16 million. The program assumes a modest
rebound in real GDP growth to about 2.5 percent during the year, reflecting
some return of confidence and increase in investment following the
presidential elections. At the same time the government will continue with
structural reforms, including in the financial sector, in improving public
expenditure management, in strengthening tax revenue, in restructuring
public enterprises, and in health, education, and justice.

14. The fiscal program aims at reducing the central government budget
deficit (including spending for the presidential and senate elections and
severance payments to workers at the port) to 1.3 percent of GDP in FY
2000/01. Financing by the central bank to the central government would be
reduced to about 0.8 percent of GDP, compared with 2.2 percent of GDP in FY
1999/2000. The government intends to eliminate the stock of domestic arrears
(which amounted to about 0.3 percent of GDP as of October 1, 2000) during
the course of the year by cash payments and the issuance of bonds to the
private sector. Net external financing is projected at 0.8 percent of GDP,
including US$30 million in concessional loans from a special oil facility
agreed with the government of Venezuela. Given the already low level of
public revenue and the need to at least maintain government spending by the
ministries of education, justice, and health, the fiscal program will target
a recovery in central government revenue by 0.7 percent of GDP in FY
2000/01. Most of this increase would come from the full-year effects of the
increase in petroleum product prices in September 2000 and the maintenance
of the system for regular adjustments of these prices whenever cumulative
economic costs change by at least five percent. Customs and sales tax
revenue are also projected to increase as a result of the depreciation of
the gourde.

15. The program envisages continued implementation of the cash management
and monthly budget allocation system so as to limit monthly government
outlays to monthly revenue collections, realized external financing, and
programmed financing from the central bank. The program incorporates monthly
interest payments of G 25 million by the government on its debt to the
central bank. A protocol formalizing these arrangements for FY 2000/01 was
signed by the Ministry of Economy and Finance and the Bank of the Republic
of Haiti on September 20, 2000. The program incorporates hiring of 300
police officers and magistrates to improve security; there will be no other
increase in the number of civil servants. The government will abstain from
granting wage increases in FY 2000/01 in order to keep the wage bill under
control. Steps will be taken to reduce the use of the ministerial
discretionary accounts ("comptes courants"), including returning to the
Treasury all unused non-project and inactive project current account
balances by November 2000. For this purpose, the central bank and the
ministry of finance will classify existing current accounts into categories
to separate operational from inactive current accounts and project from
ministerial or other current accounts.

16. The program is particularly sensitive to the price of oil, over which
Haiti has no control. In the event the world price of oil (West Texas
Intermediate) rises above US$35 a barrel on average for more than three
consecutive months, the government will request a consultation with Fund
staff to discuss the appropriate measures and to agree on adjustments to the
quantitative benchmarks of the program.

17. The program envisages that the deficit of the combined nonfinancial
public sector will be limited to 3.4 percent of GDP in FY 2000/01. The
public enterprises are expected to restrain their capital spending so as to
refrain from using domestic financing, as was the case in FY 1999/2000. It
is expected that about US$73 million of project loans will be disbursed in
FY 2000/01, mostly for road rehabilitation and the social investment fund.

18. The government intends to maintain the floating exchange regime. In this
context, monetary and credit policies will be set in line with the program's
inflation and reserves objectives during FY 2000/01. Accordingly, and
consistent with the program's performance indicators on the central bank's
net domestic assets and net international reserves, liquidity will be
controlled mainly through required reserves and the placement of central
bank bonds at market rates of interest. Assuming that government financing
needs ease in line with the fiscal program, interest rates and required
reserves ratios could decline from present levels later in 2001.

19. The current account deficit (before grants) of the balance of payments
is projected to remain at about US$290 million in FY 2000/01, but would
increase to 7.8 percent of GDP because of the depreciation of the gourde.
Exports are projected to increase by 13 percent, based on recent agreement
by the United States and Central American and Caribbean countries on
textiles and clothing quota increases. Imports and investment would pick up
with economic recovery. Imports of petroleum are projected to increase in
U.S. dollar terms by about 13 percent, assuming an increase in the average
world price relevant for Haiti of about 10 percent. The capital account
surplus would improve to about US$95 million, mostly from public loan
disbursements, including US$30 million from the special loan facility for
oil imports under the San José agreement.

20. The program envisages the further strengthening of the financial sector
through: continued general inspection of banks on a rotating basis; the
application of penalties for nonobservance of the new prudential regulations
on loan concentration and on dollar-denominated loans to total liabilities;
and improvements in offsite assessments of banks. The restructuring
committee for BNC will complete the first stage of its work by December 2000
and the Commission for the Modernization of Public Enterprises (CMEP) will
prepare a plan for its privatization by March 2001. Also, an action plan
will be prepared to restructure the other government-owned commercial bank,
BPH, and an actuarial audit of pension liabilities at the Central Bank, BNC,
and BPH will be carried out by June 2001. Legislation to modernize the
banking system and bring the system into conformity with international
standards will be presented to parliament by March 2001. This will include a
new banking law which will, inter alia, make other financial institutions
such as credit unions and exchange bureaus subject to the prudential
regulations applying to the commercial banks; and a new organic law of the
central bank to give it independence in the conduct of monetary policy.

21. Virtually all of the technical work has been completed toward the
modernization/privatization of the main public enterprises (the electricity,
telephone, and water companies, port, and airport), with assistance from the
World Bank, the Inter-American Development Bank, and USAID. However,
carrying out the final steps toward privatization has been delayed, mainly
because the government does not expect that privatization (either through
management contract or sale of shares through capitalization) can be carried
out successfully under present political circumstances. Progress is most
advanced toward privatization of the port, where the administration of port
facilities has been separated from the port authority, the latter being
temporarily responsible for large excess employment. The government intends
to issue an invitation to bid for management of the port by November 2000.
Downsizing of redundant workers at the port authority will be completed by
June 2001, with severance payments of about 0.1 percent of GDP, as provided
in the fiscal program. The government will submit a draft regulatory
framework for the telecommunications sector to parliament by November 2000.

22. The government will strengthen its efforts to improve the delivery of
services in the areas of justice, education and health. To this end, the
program for FY 2000/01 provides for increases in spending on health and
justice and for maintaining spending on education relative to GDP. Actions
in justice will include securing parliamentary approval of the
anti-money-laundering and anti-drug-trafficking legislation that have
already been prepared in draft form. The special anti-money-laundering unit
will become fully operational. In addition, continued efforts will be
undertaken to reduce the maximum length between imprisonment and trial to
six months and to provide for regular visits to prisons by special
commissaires du gouvernment. In education, the government will seek to
obtain parliamentary approval for legislation to set the standards for
public subsidies to private schools and for licensing private schools. In
health, as part of the government's agreement with the European Union in
January 2000 to improve basic health, some measures have been taken but
others are awaiting parliamentary or prime-ministerial approval, or are in
need of technical assistance from international donors. Also, data from the
survey on mortality, morbidity and use of services (EMMUS-III), which was
published in September 2000, will be analyzed and used as part of the basis
for establishing benchmarks for improvements in these basic indicators in
the development of an eventual poverty reduction strategy.

23. The government will not impose restrictions on payments and transfers
for international transactions, introduce new or intensify trade
restrictions for balance of payments purposes, resort to multiple currency
practices, or enter into bilateral payments agreements incorporating
restrictive practices with other IMF members. Haiti will consult with the
IMF periodically, in accordance with the IMF's policies on such
consultations, concerning the progress made by Haiti in the implementation
of policies and measures designed to address the country's balance of
payments difficulties.

24. To help monitor performance under the program, the government has
established quarterly performance indicators for end-December 2000 and
end-March, end-June, and end-September 2001, as specified in Table 1, on net
international reserves and net domestic assets of the central bank; net
domestic credit to the nonfinancial public sector; net domestic credit to
the central government; arrears on external public debt; and the contracting
and guaranteeing of nonconcessional external loans. Also the government has
established structural benchmarks in the following areas: strengthening tax
revenue; public expenditure management; financial sector reform; and public
enterprise reform; as specified in Table 2.

Table 1. Haiti: Quantitative Benchmarks, December 2000-September 20011


----------------------------------------------------------------------------
----

   Stock at
 Prog. 2001

----------------------------------------------------------------------------
----

end-Sept. 2000
 December
 March
 June
 September


----------------------------------------------------------------------------
----

  (Maximum cumulative change from end-September 2000)
Net central bank credit to the central government   (in millions of gourdes)
 9,583
 280
 430
 620
 750


Net domestic banking sector credit to the nonfinancial public sector

  (in millions of gourdes)
 9,667
 270
 400
 570
 700


Net domestic assets of the central bank
  (in millions of gourdes)
 606
 590
 300
 110
 320


Arrears on external public debt
 0
 0
 0
 0
 0


Publicly contracted or guaranteed nonconcessional external loans

  (in millions of U.S. dollars)
  Up to one year
  Over one-year maturity  ...
...
 0
0 0
0 0
0 0
0

     (Maximum level at end period)


Domestic arrears of the central government
  (in millions of gourdes)
 311
 186
 61
 31
 0


       (Minimum cumulative change from end-September 2000)


Net international reserves of central bank
  (in millions of dollars)
 169
 0
 8
 16
 16


Memorandum items:

Government current revenue
  (in millions of gourdes) 2
 ...
 2,168
 4,209
 6,142
 8,009


   (Maximum cumulative change from end-September 2000)


Government wage bill (in millions of gourdes) 2
 ...
 1,103
 1,931
 2,840
 3,670


----------------------------------------------------------------------------
----

Sources: Ministry of Finance; Central Bank of Haiti; and Fund staff
estimates.


1 Refer to technical memorandum for definitions of quantitative benchmarks
and adjusters.
2 Not benchmarks.




Table 2. Haiti: Structural Benchmarks, October 2000-September 2001

   Timetable
 Status1

Strengthening tax revenue

1. Reform petroleum product taxation and pricing.

2. Place two tax inspectors each at CAMEP, EDH, and Teleco.

3. Tax verification office completes 60 off-site audits per quarter.

4. DGI audits 4,000 tax returns with temporary hired staff.

5. Expand the computerized SYDONIA system to three provincial ports.
 Continuous


November 1, 2000


Quarterly


End-February 2001



June 2001

Public expenditure management

1. Continue weekly programming of expenditure.

2. Return to the Treasury unused nonproject and inactive project current
account balances.

3. Clear G250 million of central government arrears.

4. Clear all central government arrears.

5. Establish sectoral classification of capital expenditure financed by the
central government and by the rest of the nonfinancial public sector through
foreign financing.

6. Increase budgetary allocation for the ministries of justice, health, and
education.
 Continuous


November 2000


March 2001




September 2001

December 2000






FY 2000/01 program

Financial sector reform


1. Secure parliamentary approval of anti-money laundering legislation and
legislation against traffic in drugs.

2. Present the BRH law to parliament.

3. Present the Banking Sector law to parliament.

4. Complete the plan for privatization of the BNC.

5. Complete a plan for privatization of BPH.
 November 2000



March 2001

March 2001


March 2001


March 2001
 Legislation drafted.


Legislation being drafted.

Legislation being drafted

Public enterprise reform

1. Issue invitation to bid for a management contract for the port facility.

2. Start downsizing of employment at the port authority.

3. Complete downsizing of employment at the port authority by 1,000 persons.

4. Submit draft regulatory framework for the telecommunications sector to
parliament.
 November 2000


January 2001


June 2001


November 2000



Negotiations with trade unions for downsizing under way.


Sources: Ministry of Economy and Finance (MEF) and Bank of the Republic of
Haiti (BRH).

1 As of September 15, 2000.



Haiti--Technical Memorandum of Understanding

Definition of quantitative benchmarks and adjustments:

The Ministry of Economy and Finance, the Bank of the Republic of Haiti
(BRH), and Fund staff will use the following definitions of quantitative
benchmarks and adjustments of the quantitative benchmarks to monitor the
quarterly performance under the staff monitored program for October
2000-September 2001 (FY 2000/01).

I. Definitions

A. Net BRH Credit to the Central Government1

1. The change in net BRH credit to the central government is defined as, and
will be measured using:

a. Change in net domestic credit to the central government from the BRH
according to Table 10R of the BRH from the stock of end-September 2000;

b. Change in the stock of special accounts (EU, PL480, rice of Japan, and
U.S.) according to Table "Comptes Spéciaux" of the BRH from the stock of
end-September 2000.2

2. Changes in any other special account maintained or established at the BRH
will be taken into account.

3. The changes will be measured on a cumulative basis from the stock at
end-September 2000.

Ceilings for the Cumulative BRH Credit to the Central Government


(In millions of gourdes)

   2001

December 2000
 March
 June
 September

280
 430
 620
 750



B. Net Domestic Banking Sector Credit to the Nonfinancial Public Sector3

1. The change in net domestic banking sector credit to the nonfinancial
public sector is defined as, and will be measured using:

a. Change in the stock of net domestic credit of the public sector from the
BRH according to Table 10R of the BRH from the stock of end-September 2000;

b. Change in the stock of net domestic credit of the public sector from the
BNC according to Table 610 of the BRH from the stock of end-September 2000;

c. Change in the stock of net domestic credit of the public sector at other
domestic banks; and

d. Change in the stock of special accounts (EU, PL480, STABEX, rice of
Japan, and U.S.) according to Table "Comptes Spéciaux" of the BRH from the
stock of end-September 2000.

2. Changes in any other special account maintained or established in the
BRH, BNC, or BPH will be included.

3. The changes will be measured on a cumulative basis from the stock at
end-September 2000.

Ceilings for the Cumulative Net Domestic Banking Sector Credit
to the Nonfinancial Public Sector

(In millions of gourdes)

   2001

December 2000
 March
 June
 September

270
 400
 570
 700



C. Net International Reserves

1. The change in net international reserves will be measured using:

a. Change in net international reserves ("Réserves de change nettes" of the
BRH Table 10R) from the stock of end-September 2000; and

b. Minus the change in U.S. dollars deposits of commercial banks at the BRH
("Dépôts a vue US$ des bcm à la BRH" of the BRH Table 10R) from the stock of
end-September 2000.

2. Data will be valued at the corresponding end-period exchange rate.

3. For definition purposes, net international reserves are the difference
between the BRH's gross foreign assets (comprising gold, special drawing
rights, all claims on nonresidents, and claims in foreign currency on
domestic financial institutions) and reserve liabilities (including
liabilities to nonresidents of one-year maturity or less, use of Fund
credit, excluding trust funds, and any revolving credit from external
financial institutions). Swaps in foreign currency with domestic financial
institutions and pledged or otherwise encumbered reserve assets are excluded
from net international reserves.

4. The changes will be measured on a cumulative basis from the stock at
end-September 2000.

Floor for Cumulative Change in Net International Reserves

(In millions of dollars)

   2001

December 2000
 March
 June
 September

0
 8
 16
 16



D. Net Domestic Assets of the BRH

1. The change in net domestic assets of the BRH is defined as, and will be
measured using:

a. Change in currency in circulation ("Monnaie en circulation" of the BRH
Table 10R); and

b. Minus the change in the U.S. dollar amount of net international reserves
(program definition according to C above), converted into gourdes at the
program exchange rate.

2. The program definition of net domestic assets of the BRH will use a
program exchange rate of G 26.00 per U.S. dollar for the period September
2000-September 2001.

3. The changes will be measured on a cumulative basis from the stock at
end-September 2000.

Ceilings for the Cumulative Change in Net Domestic Assets of the BRH

(In millions of gourdes)

   2001

December 2000
 March
 June
 September

590
 300
 110
 320



E. External Arrears

1. External arrears are defined as interest and principal payment
obligations to external creditors that are overdue by more than 30 days and
are not formally disputed.

2. The ceiling will be set at zero throughout the program period.

F. Nonconcessional Loans

1. Concessional loans are those loans that provide a grant element of at
least 35 percent based on the corresponding OECD's Commercial Interest
Reference Rates (CIRRs) as of September 2000.

2. The benchmark limits exclude conventional short-term import-related
credits.

3. The ceilings for contracting nonconcessional loans will be set at zero
throughout the program period.

II. Quarterly Adjustments

The quarterly benchmarks will be adjusted for the following amounts:

Adjustment for Shortfall in the Reduction of Domestic Arrears

(BRH Credit to CG and NFPS)

The ceilings for net BRH credit to the central government and the net
domestic banking sector credit to the nonfinancial public sector will be
adjusted downwards for the amount of domestic arrears that exceed the
programmed stock of end-of-quarter arrears specified in tabulation below.

Programmed Stock of End-Period Domestic Arrears of the Central Government

(In millions of gourdes)

   2001

December 2000
 March
 June
 September

186
 61
 31
 0






----------------------------------------------------------------------------
----
1 The central government comprises the presidency, prime minister's office,
parliament, federal courts, treasury, and line ministries. It includes
expenditure financed directly by foreign donors through ministerial
discretionary accounts.
2 Special accounts are transitory accounts of the central government for
specific foreign-financed projects or external assistance.
3 The NFPS includes the central government, the public enterprises (Teleco,
EDH, APN, APP, and Camep), and foreign-financed projects.




IMF Home  Search  Site Map  Site Index  Help  What's New
About the IMF  News  Publications  Country Info  IMF Finances  Standards &
Codes