Economic activity remains subdued but inflation has eased from previous highs

Durrant Pate/Contributor

The Haitian economy has contracted for a seventh consecutive year, the International Monetary Fund (IMF) is confirming from its recently concluded assessment of the country under its Staff-Monitored Program.

Haiti, which is the poorest Caribbean nation, has been involved in a restructuring programme with the IMF designed to support policy implementation, strengthen governance, and lay the foundation for potential financial assistance, all within a context marked by acute security concerns, institutional fragility, and limited administrative capacity.

The IMF assessment shows that economic activity remains subdued with inflation easing from previous highs but remaining elevated, reflecting continued pressures within the economy. At the same time, financial intermediation has weakened, with reduced bank lending and broader disintermediation trends. 

Persistent insecurity and economic shocks 

While capital buffers in the banking system remain above regulatory requirements, the contraction in credit highlights the fragile state of economic recovery. The assessment underscores an increasingly difficult macroeconomic environment. 

The IMF emphasises, “Haiti’s economy continues to face persistent insecurity alongside repeated domestic and external shocks, including the impact of higher global oil prices linked to the Middle East conflict. These pressures have raised fuel import costs and subsidy burdens, further straining an already weak fiscal position.”

The effects of Hurricane Melissa in late 2025, combined with an ongoing political transition, have added to the complexity of the economic landscape. Despite the above mentioned challenges, external stability has been partially supported by strong remittance inflows and adequate international reserves. 

Higher oil prices continue to weigh on the external position, but these effects have been offset by sustained inflows from abroad. As a result, the current account is expected to remain broadly balanced, while exchange rate stability has helped provide a degree of macroeconomic anchoring. Fiscal conditions, however, remain constrained. 

Poor revenue performance

Weak revenue performance, driven by ongoing security issues and institutional disruptions, has limited the government’s ability to respond effectively. Rising oil prices are expected to further increase subsidy costs, intensifying fiscal pressures and forcing difficult policy trade-offs. These constraints highlight the importance of prioritising spending while maintaining support for vulnerable populations.

Looking ahead, the IMF reasons that risks to the outlook remain tilted to the downside. A further deterioration in security conditions or sustained increases in global oil prices could deepen economic challenges, exacerbate humanitarian conditions, and place additional strain on public finances. 

At the same time, uncertainty surrounding international migration policies could affect remittance flows, which are a critical source of external support.

Holding firm on the policy front

Against this backdrop, the reform agenda remains central to stabilisation efforts with priorities including strengthening governance, improving public financial management, enhancing revenue mobilisation, and reinforcing the credibility of monetary policy. 

Efforts are also underway to strengthen financial sector supervision, improve data quality, and enhance institutional capacity, all of which are essential for building resilience in a challenging operating environment.

While Haiti has made progress in meeting program targets and maintaining key macroeconomic buffers, the outlook remains fragile. Sustained reform efforts, combined with continued international support, will be critical to stabilising the economy, addressing structural weaknesses, and supporting a gradual recovery.