Who is on Haiti’s side?

After 200 years as an Independent nation, Haiti, the most impoverished nation in the Western Hemisphere continues to struggle economically as political crises one after the other continue to impede its potential to reach full development. The political instability is also threatening the reform programmes that were put in place last year by the international financial organisations that returned to Haiti after aid was suspended because of the country’s inability to meet loan payments. The tense political situation was triggered with the killing of several people in recent months when increasingly large anti-government marches were attacked by supporters of President Jean Bertrand-Aristide. The government blames the opposition for the bloodshed while demonstrators accuse Aristide of corruption and human rights violations and have called for his immediate departure. Last June, the International Monetary Fund (IMF) reached agreement with the Government of Haiti on a macro-economic programme to limit the country’s budget deficit, improve transparency and curb inflation.

With this agreement in place and Haiti’s clearance of its arrears to the Inter-American development in July, the IDB board reactivated Haiti’s loan programme and approved a US$50 million Investment Sector Loan. The IDB has also made available four previously approved project loans totalling US$146 million to support reform programmes in health, education, rural roads and water and sanitation; four key sectors for sustainable development and poverty reduction in Haiti. In November, the IDB approved an additional US$202 million in new loans that must now be approved by the Haitian Government. The IDB became one of Haiti’s principal sources of financing after the country returned to democratic rule in 1994, disbursing more than US$326 million in support of social and agricultural programmes and infrastructure reconstruction projects. Successful performance by the Haitian government under its International Monetary Fund Staff Monitored Programme and clearance of World Bank arrears are also needed for future IMF and World Bank lending. Although the World Bank suspended its disbursement of loans in 2001 due to Haiti’s arrears, the Bank continued its donor coordination role, most recently holding a donor meeting last December.

The World Bank also assists Haiti through grants from the Post-Conflict Fund and has already disbursed part of the US$5 million that it had planned for grants for the country. With emphasis on political stability to help Haiti’s economic dilemma, America which up to recent years tried to bring a measure of stability to Haiti now seems to have now passed on that responsibility to the Caribbean Community (CARICOM) of which Haiti is a member. The US also insists that it has not given up on Haiti although it has put a freeze on aid to the Haitian Government. According to Adolfo Franco, assistant administrator for Latin America and the Caribbean at the US Agency for International Development (USAID), the US will continue to assist the Haitian people, “as long as there is a need.” Franco said the US is Haiti’s largest donor and contributed US$71 million in humanitarian aid to that nation in 2003. President Bush has singled out Haiti as a “priority country” for preventing mother-to-child transmission of HIV/AIDS, resulting in US funding of several million dollars each year to help mothers and children, he said.The US is also providing food and related assistance to 650,000 poor Haitians.

According to a World Bank overview, Haiti is one of the most densely populated and poorest countries in the Western Hemisphere. With a GDP per capita of US$460 (1999), its economic and social indicators compare unfavourably with those of many sub-Sahara African countries and are far lower than the average for Latin America and the Caribbean. Income distribution is highly skewed and poverty is widespread with about 80 percent of the rural population living below the poverty line. Life expectancy is only 54 years compared to a regional average of 70. The total fertility rate is 4.8 compared with a regional average of 2.8. Infant  mortality is 71 per 1,000 live births, more than twice the regional average. Malnutrition affects about half of the children under the age of five, and half of Haitian adults are illiterate. “And rising poverty in Haiti is directly linked to long periods of economic stagnation, “according to the World Bank. Per capita GNP has stagnated during the past four decades and actually fell at an average annual rate of 5.2 percent between 1985 and 1995. “Recurrent political instability has slowed down Haiti’s democratisation efforts and prevented the country from taking full advantage of its development potential, “the bank said.

In a letter to Horst K?hler, Managing Director of the International Monetary Fund (IMF) last June, Haiti’s Minister of Economy and Finance, Faubert Gustave and Venel Joseph, Governor, Bank of the Republic of Haiti outlined the stark economic challenges to generate sustained economic growth and reduce widespread poverty. “Unfortunately, economic conditions have deteriorated sharply over the last three years, reflecting a difficult political situation, weak private sector confidence and investment and shrinking official foreign assistance other than humanitarian aid, “the Haitian officials said. However, the government took significant corrective action in early 2003 to help stabilise the economy. A flexible domestic fuel pricing system was adopted that entailed large price increases, the 2002/2003 budget adopted by parliament sought to lower the fiscal deficit significantly while the central bank tightened monetary policy. Based on these measures, inflationary pressures started to ease and net international reserves and the foreign exchange market stabilised. “The letter was sent to the IMF to get support from a staff-monitored programme, an informal and flexible instrument for dialogue between the IMF staff and a member on its economic policies. But loan, grants and reform economic programmes and projects will all come to nought if Haiti’s continuing political instability does not end soon.