Haiti - Economic recovery : performance, issues and prospects

Report No. 7469-HA Economic Recovery in Haiti: Performance, Issues and Prospects December 23, 1988 Latin America and the Caribbean Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Gourde (G) G 1 = US$0.20 US$1 = G 5 The Gourde has been pegged to the U. S. Dollar since 1919 at the rate of G 5 = US$1. WEIGHTS AND MEASURES Metric System 1 carreau = 1.29 hectares 1 hectare = 0.78 carreau FISCAL YEAR October 1 - September 30 This report uses FY for fiscal year. Thus FY87 refers to the period from October 1, 1986 to September 30, 1987. This report is based on the findings of an economic mission which visited Haiti in April-May 1988 and additional findings obtained in September 1988. The members of the economic mission were Hassan Fazel (macro-economist and Chief of Mission), Pedro Geraldes (infrastructure), Jacques Hallak (education), Maryvonne Plessis-Fraissard (health), Kanella Vasiliades (industry), Marc Botti (Consultant, education) and Warren Enger (Consultant, agriculture). Salma Cellier provided secretarial support and coordinated the printing of the report.  FOR OFFICIL USE ONLI TITLE : ECONOMIC RECOVERY IN HAITIt PERFORMANCE, ISSUES AND PROSPECTS COUNTRY : HAITI REGION : LATIN AMERICA AND THE CARIBBEAN SECTOR : COUNTRY ECONOMIC REPORT TYPE CLASSIF MM/YY LANGUAGES 7469-HA CEM Restricted 12/88 English, Fr.-ch PUBDATE : 8812 ABSTRACT : This report reviews economic developments in Haiti during the country's fiscal years 1986-88 (FY86-88), focusing on the contents and the outcome of an adjustment and recovery program that was initiated early in 1986 following a major change of political regime. An impressive array of economic policy reforms and an improved economic performance in FY86-87 were followed in FY88 by a profound economic setback, including suspension of some vital external aid, brought on by recent political events. Taking into account the currently depressed domestic economic situation and external aid environment facing Haiti, the report recommends a program of short-to medium-term policy and expenditure priorities aimed at averting a further economic backslide. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ECOPlO14IC RECOVERY IN HAITI: PERFORMANCE, ISSUES AND PROSPECTS TABLE OF CONTENTS Paxe No. ABSTRACT GLOSSARY MAPS COUNTRY DATA SHEET EXECUTIVE SUMMARY SUMMARY AND CONCLUSIONS ................................... ........ i I. INTRODUCTION: THE BACKGROUND TO RECENT DEVELOPMENTS ............. 1 A. Overview ........................... ................. 1 B. The Previous Report: A Background ... .................... 2 Economic Deterioration in 1980-85 ....................... 2 Determinants of Declirse and Disequilibrium ............... 2 Major Policy Recommendations ........ .... ................ 5 II. ECONOMIC POLICIES AND PERFORMANCE, 1986-88 ................06* 7 A. The Setting ......... ... ... o..................... 7 The Initial Policy Environment ............................ 7 The Advent of New Policies. ............................ . 8 B. Recent Economic Developments ..................... ...... 8 Macroeconmic Trends .................. .. ........ ......8 Output and Employment .................................. . . 9 Public Finance ........ ... ....... .......... ...... .. 16 Money and Credit ..........PRIORITIES............................. 20 PrA cesonmc *dusmn and Reovery o r.................... 22 Balan ce of Payments and..nst....n...........2........... 34 Conclusion Impemntaio.......... .... ....0 . ............ 29 III. DEVELOPMENT POLICIES AND PRIORITIES .......................................... 30 A. Economic Adjustment and Recovery Program .................................... 30 Program Objectives and Instruments ............................... . .. 30 Program Implementation ............................................ 30 B. Current Issues and Priorities ............ * ......... 32 Priority Economic Objectives and Strategy................ 32 C. Macroeconomic Policies ........ ... .................... . 34 Trade Promotion ........ 0.............. 34 Domestic Resource Mobilization ......................... 36 Monetary Policy .............................. . .. 38 D. Selected Sector Policies ......... .... .. ............ . 39 Agriculture ..... * ........... *.... 39 Industry ..........0 .......*.. 41 Infrastructure ....... 9 ... oo............. *.so*............... 42 Human Resourceseeso ................. ................... *oo...... 47 E. Conclusion and Summary of Recommendations ................. 51 IV. MEDIUM-TERM GROWrH AND BALANCE OF PAYMENTS PROSPECTS ........... 54 STATISTICAL APPENDIX .. ............ ... .... . . .... ..... 62  GLOSSARY AAN Autorite A;roportuaire Nationale (National Airport Authority) APN Autorite Portuaire Nationale (National Port Authority) BCA Bureau de Credit Agricole (Agriculturpl Credit Bank) BCI Banque de Credit Immobilier (Mortgage Bank) BNC Banque Nationale de Credit (National Credit Bank) BNDAI Banque Nationale de Developpement Agricole et Industriel (National Agricultural and Industrial Development Bank) BRH Banque de la Republique d'Haiti (Bank of the Republic of Haiti - Central Bank) CAMEP Centrale Autonome Metropclif;aine d'Eau Potable (Metropolitan Water Authority) CIF Cost, Inaurance and Freight EdH Electricite d'Halti (Electricity company) ENAOL Entreprise Nationale des Oleagineux (edible oil company) EPPLS Entreprise Publique des Logements Sociaux (Publlc Housing Agency) FDI Fonds de D;veloppement Industriel (Industrial Development Fund) FOB Free on Board FY Fiscal Year GDP Gross Domestic Product GNP Gross National Product ha hectare HASCO Haitian American Sugar Company ICA International Coffee Agreement ICOR Incremental Capital Output Ratio IDA International Development Association IHSI Institut Haltien de Statistique et d'Informatique (Haitian Institute of Statistics and Data Processing) ILO International Labor Organization IMF International Monetary Fund MARNDR Ministere de l'Agriculture, des Ressources Naturelles et du Developpement Rural (Ministry of Agriculture, Natural Resources and Rural Development) MSPP Ministere de la Sante Publique et de la Population (Ministry of Public Health and Population) NFS Nonfactor Services OFATMA Office d'Assurance--Accidents du Travail, Maladie et Maternite (Workers' compensation, sickness and maternity insurance agency) ONA Office National d'Assurance (Social Security Agency) ONAC Office Nationale de l'Aviation Civile (National Civil Aviation Office) OPRODEX Office de Promotion des Denrees Exportables (Commodity Export Promotion Agency) POCHEP Postes Communautaires d'Hygiene et d'Eau Potable (Community Health and Drinking Water Posts)  SEN Societe d'Equipement National (Construction) SEPPRN Service d'Entretien Permanent du Resseau Routier National (National Road Maintenance Organization) SOFIHDES Soci;te Financiere Haltienne de Developpement S. A. (Haitian Development Finance Company) SNEP Service National d'Eau Potable (Natioaal Water Service) SONAPI Societe Nationale des Parcs Industriels (National Industrial Park Company) USAID United States Agency for International Development USN Usine Sucriere du Nord (Nati.onal Sugar Refinery at Citadelle) USND Usine Sucriere Nationale de Darbonne (National Sugar Refinery at Darbonne) TABLES AND SYtBOLS Totals in tables do not always equal the sum of their components due to rounding. Not available Zero or insignificant NA Not applicable  #, ,.aisorece IBRD 211431 USA _ -0 .2- -20- 1o, Port de Pcix CUbA --e-n, Rpbe- -- o----- DOMINICN R.A o ton. 0 REPUBLIC M.le St N-I,C,// . H-AI II IJIII P-t \ t \_ortMorgont0 Cop Hoitien JAMAICA PuER1O - tICO 0-mnb /Oeee Rn-rb-dop.lin'0 B... d. He--nc--e Ft. L,Bivt6 _______________________________mbudoooisov_____