Announcement of 2.6 Million Dollars Loan to Haiti on May 7, 1956

WOIILD • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W.J WASHINGTON 25 1 D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE I\iO. 41.i.3 SUBJECT: $2.6 million loan to Haiti May 7, 1956 The World Bank today made a loan of $2.6 rn:tllion to Ha:_ti to help finance a t:hree-year highway irnprovemEmt program. Under the program, a highwe.y main- tenance section will be organized, equipped and staffed to rehabilitate and repair 725 miles of pri.L1:.ary and secondary roe.ds and to provide continuing main- tenance on all public highwa:?S a:ad roads in Ha.i ti. Improved roads ·will expeco.te the deli very of &.gricul tural g~ocls from f.9rms to markets and will better serve Haiti's growing tcurist industry • • The Royal Bc'Ulk of Canada is participating in the loan, without the World Bank's guarantee, to the extent of ;ii;413,00Q> representing the first three maturities which fall due from July 1, 1959 through July 1, 1960. This is the first time that a Canadian bank has participated in a World Bank loan. Hai ti has 1,875 miles o.f' ro.2.ds, of which all but about 325 miles are dirt roads. Most of the roads were built in the 1920 1s and because of inadequate maintenance have so deteriorated in places tha.t motor travel is difficult and sometimes unsafe. The most pressing need is to put existing roads in good condition a.nd provide for their routine maintenance; the program being undertaken with the help of th~ Bank loan is directed t01-rard this end. The establishplent of an efficient maintena!lce organization will be the first step toward the development of an adequately staffed and qualified highway department, capabl0 • of supervising construction r.,;rork and eventually of carrying out important con- struction itself. In the past, arrangements for the financing, design and construction of roads has usually been lef't to outside contractor~ with the result that the building up of the government I s 01m road construction and  -2- • maj_ntenance orgaru.zation has been retarded. The triree-ye&.r :prof;ram will 'be c,0.rried ou.t by the Public Works Department under the -:iechr..:.cal dir8c:iion of consu:i..ttng er.;gineers to be engaged abroad by the Haitian Government. The Ma5.ntenance Section of the Department's Highway Service wi11 be orgerJ.i~ed., staffed and equi!=>1.:-,ed so as to be capable of effici~ntly carrying out continuous maintenaY1ce of all public highways and roadso Personnel will be selected a.ncl trained to fill the technical, admi!listrative ancl super- visory positions created in the lfaintena"'1ce .Sei::tion, and skilled la.bar will be trai:t:.ed in modern mainten2.nce methods and in the operation, servicing and repair of equipment11 The rehabili taticn of the 725 miles of highway will include improvements to the base, surfacing, shoulders., bridges and culverts; widening and limited align.111.ent will be 1.mderta}:en where necsssary. • The total cost of the pro 6ram is estimated at the equivalent of $3,980,000 • The Bank I s loe.n will pny for the necessary imported equ.i..pment, materials and services; the l~?al curren.cy costs, equivalent to ~1,380,000, will be met by the Haitian Governm•::.mt41 Roa.ds are the chief r.:eans of transport in Haiti!. Because the cotmtry is predominantly ag-ricul tural, an adequate road network is essential if agricultural produce is to be marketed effici.ently. At present, difficulties of road trans- portation greatly handicap Haitian agricul t.ure. For the ri1ost part crops are grown by primitive methods on sma.11 fF..trms and are carried long distances to market on wor.ien' s heads and donkey's backs. Goods are passed from smaller to larger markets in this same way. Even e~ort crops pass through many successive and costly steps before they finally arrive at o~e of the two major comm.ercia1 centers, Port-au-f::dnce or Cap-Haitien. • Remedying the difficulties of highway tr~"'lsport can be expecty~ to give an incentive to increased agricultural production. It should have a beneficial effect on the Hai t:...an economy as a w11ole by reducing food imports and increasing tJ. -3- foreign exchange earnings through 1,.r[;er oxports of Ha:.ti I s cormnerc:Lal crops. Of growing importance to the Hai t:1.an economy also is the tourist industry, rf which has. become seqond only to coffee as a source of foreign exchange earni.r.lgs. Easier motor travel through Haiti I s beautiful and pig~ul)esque cotmt,ryside can be expected to give a further impetus to this developme11t. Today's loan is the first made by the Bank to Haiti. It is for a term of 10 years a,nd bears interest of 4-1/2% including the statutory 1% commission charged by th1i Bank. Amortization will begin July 1, 1959. After having been approved by the Bank's Executive Directors, the loan docu- ments were signed by His E.."Ccellency Mauclair Zephirin, Haitian .Ambassador in the United States, on behalf of the Gov-ernrnent of Haiti and by £'.fr. Eugene R. Black., President, on behalf of the Bank. Mr. James Muir$ President of The Royal, .Bank • of Canada, was present at the signing ceremonies • •  -4- --. STJ?PLR'-IEl'J'rAL S.rf1.TIIf:ENT , ............__....,,.-~..........,....~ 1 ........ ON HAITIAN ECONOMY Itai ti :is a small mou..11tair1011S country occt~pying the western thj_rd of Hispanj_ola, secorJ.d largest of the Caribbean Islands, which it shares with the Domirtican Republic. Haiti covers ah area of 10,700 squn:re miles -- about the size of Be1gii.1m or the state of Maryland. Wi+1h an estimc1.ted population of JS million; al.most entirely descendants of the slaves of the colonial period; it is the most densely populated of the American Republics. The only large town is the capital, Port-au-Prince. The official language is French, but the great majority of the people speak only Creole, a derivative of the Norman French of seventeenth century sailors with borrowings from Spanish, English and African sourcese • Haiti was once very prosp-erous; toward the end of the 18th century it was knmm as 11 the pe&.rl of the Antilles." It was the world's leading producer of sugar, and its abundant y:,rocluct:Lon of other crops as well made it France ts richest colony. With the win._11.ing of independence in 1804, however, the highly organized colonial economy broke down. Tl-:1e large plantations were broken up into a mul- titude of very small holding,s. 'rhe good roads and elabora.te irrigation systems built during the colo:1ial period detieriorated through lack of maintenance, Nost of the Hai ticm people have since been engaged in farming small tracts of 1 and in very prim.i_ tive ways, growing some crops for export, but producing mostly subsistence crops~ The principal export cro~ is coffee, followed by sisal and sugar. Coffee grows more or less wild on highland slopes and the yields are lower thru.1 in most coffee producing countries. Sisal and sugar are the only crops grm,-m on large connercial plantatJ.ons as well as on the small holdings. • The density of popui ~tion, the lack of virgin land and the erosion of much of the area under cul t1.vation, together with the difficulty of achieving technical advances in agriculture .under t,he present system of proprietorship, have kept the Haitian economy relatively static. Increases in incomes since the war have been  • -5- due almost entirely to high coffee prices rather than to increase of output. In recent years, however, tJ.~e Government has increasingly directed its elf toward finding ways of overcoming the obstacles to development. Public invest- ment has been largely directed toward t~e extension of the road network and the improvement of irrigation. With the assistance of the Export-Import :Bank of Washington, nearly $30 million is being invested in a large irrigation and flood contJ:·ol scheme, now nearing completion, in the Antibonite Valley in Central Haiti. This P]'Oject will als.o make a.vailable a considerable hydroelectric potential. The Haitian Institute of Agricultural and Industrial Credit, a subsidiary of the National Bank of Hai ti, has been effective in promoting agricul tura.l development, partictiJ.arly throw;)h the establishment of cooperatives which have proved a useful method of counteracting the excessive subdi1!.ision of land owner- • ship. The Institute has also, by financing hotel construction, contributed substantially to the expansion of tourism, which in the last year or two has displaced sisal as Hai ti I s second largest earner of foreign exchange. The Govern.ment has received extensive technical assistance in all these activities from the United States and the United Nations, l'iining is gaining in importance; the export of bauxite on a substantial scale is expected to begin in 1957, and copper exploration has yielded prorni$jni:: . esults. 1 The country's first cement factory began production in 1955~ Haiti i!1 abid to meet a considerable proportion of its soft wood needs f:com pine forests growing at an elevation of 4-5,000 feet in the southeast of the iountry. The economy received a severe setback when a hurricane struck Haiti in October 19.51..i.. The coffee crop wa$ reduced by about 2.5?t., and roads and irriga- tion systems we·re seriously damaged~ 'I'he reduction of coffee e,cports came at •_:,. the same time as a decline of prices, so that the value of coffee exports fell from $43.5 million in 1954 to $23.0 million in 1955. The dependence of Haiti on coffee exports was clearly demonstra.ted when, in consequence, total exports I, • " -6- 41 fell from $55.5 million to i34.9 million. Ha:i ti has enjo;;red a stable monetary syste1-:i for many years. The Haitian currency is the gourde, which circ,.il.ates freely along with the United States dollar and is convertible into dollars at the fixed rate of 5:1. The main- tenance of this convertibility has depended on the ability of the Go~rernment and the National Bank to avoid undue expansion of internal credit. Under Ha.iti •s monetary and credit system, a fall in exchange earnings is quickly reflected in a decline in the demand for jJnports, w:iich fell from $4 7. 2 million iP 1954 to $39.2 million in 1955. The Gove.:':'nrnent I s revenues are derived larEely from im~Jort and export duties and are thus sensitive to .fluctuations of external trade. Total revenue fell from $32n2 million in 1954 to $29.5 million in 1955, when the bud&;et showed a • df . ·t e ici ... 01 ' aoout··~ ·b mJ·11· ...._-1..ionl> In order to achieve fu..11 recovery from the budgetary and balance of payments strains which followed the 1954 disaster, the Government- is for the time being severely limiting its expendi tu:r·es. Its task has been eased by substantial Uni fod States assistance in re.pairing the damage done to :coc:.ds and irrigation by the hurricane. Also encouraging are the facts that exports have returned to normal levels and that there has been a greater influx of tourists in the current season than ever before • •  • • • '·" If ' • ~ ~ A TL ANTIC OCEAN HIGHWAY DEPARTMENT HIGHWAY MAINTENANCE PROGRAM HAITI 0 10 20 30 40 50KM I I I I ....a! Ii] ' GENERAL OFFICE @ DISTRICT HEADQUARTERS - - - - - - DISTRICT BOUNDARY • ----- SECTION HEADQUARTERS SECTION BOUNDARY GULF OF GONAVE G, GENERAL WORKSHOP 0 DISTRICT WORKSHOP SPECIAL MAINTENANCE 8 SUBSEQUENT ROUTINE MAINTENANCE Boutiller 1 f ~ '·~u U ,---- Ken,cofl Fo~.olposse :J / /---·--- I I 1 Fodslon • gJ II II - - -- - - I ' " a_ W Blockho,,J ---/--- '- er 1 "-. I/ • ~OJACMEL . I ' - - - - -- - - - .._ 2 ..... / I SJS Monoot/ . Th,ote u - - - - • <( . 2 1 - I• ~ 0 \ 0 ~ CARIBBEAN SEA DECEMBER, 1955 IBRD-226