WASHINGTON, United States (CMC) — The Executive Board of the International Monetary Fund (IMF) on Friday approved SDR 30.7125 million (approximately US$41.6 million) in financial assistance for Haiti under the Rapid Credit Facility (RCF).

The Washington-based financial institution said the funds, which will be made available immediately, will help Haitian authorities meet urgent balance of payments needs arising from the effects of Hurricane Matthew.

The IMF noted that the strong category four hurricane hit the French-speaking Caribbean country in early October, killing more than 500 people, displacing more than 175,000 into temporary shelters, and putting over 1.4 million in immediate need of humanitarian assistance.

Hurricane Matthew also caused widespread destruction of buildings and infrastructure in the southwestern départements of Grand Anse, Sud and Nippes, the IMF said.

It said preliminary estimates put the total damage and loss at US$1.9 billion, about 23 per cent of Haiti’s gross domestic product (GDP).

“The severe impact from Hurricane Matthew has plunged the country into a new humanitarian crisis, even as Haiti is still recovering from the devastating 2010 earthquake, the lingering impact of a prolonged drought, and a sharp decline in external assistance,” said Tao Zhang, IMF Deputy Managing Director and Acting Chair.

“International relief efforts in response to the hurricane will help Haiti respond quickly to the crisis,” he added. “IMF financing through the Rapid Credit Facility will help meet urgent foreign exchange needs and ease the pressure on the balance of payments.

“Emergency relief and reconstruction costs will significantly raise the overall fiscal deficit, and the increase in imports of goods and services will widen the external current account deficit over the next few years,” Zhang continued.

While preparing for the large increase in spending that will be needed to support reconstruction, Zhang said the Haitian authorities recognise the need to contain risks.

In particular, he said they have affirmed their commitment to limit the non-hurricane budget deficit to about 2.3 percent of GDP in fiscal year 2016/17.

“While increased imports to support the rebuilding efforts will be partially financed by international reserves, gross reserves are anticipated to remain adequate, and the central bank will maintain exchange rate flexibility,” Zhang said.

To maintain the sustainability of public debt, the Haitian authorities have affirmed their intent to sustain prudent financing of the deficit, not enter into any non-concessional loan contracts during fiscal year 2016/17, and avoid the accumulation of public sector arrears, Zhang said.

“The authorities are committed to revising their strategy for growth and social protection to ensure that rebuilding and recovery efforts support the long-term goals of poverty reduction and stronger growth,” he said, adding that the IMF will continue to play a key role in “coordinating and catalysing international support for Haiti’s reconstruction and development efforts.”

In this regard, Zhang said mobilising the assistance of the donor community will be “crucial” to achieving disaster recovery, as well as longer-term development objectives.

“The authorities intend to consult with the IMF in laying out a medium-term economic plan and ensuring sustainability of the balance of payments,” he said.