dimanche 29 août 2010

Haiti economy: Painfully slow to rebuild, economist.

August 27th 2010

FROM THE ECONOMIST INTELLIGENCE UNIT

Seven months after a devastating earthquake claimed well over 200,000 lives and levelled much of the capital, Port-au-Prince, the international community has not been able to boast of any great success in aiding Haiti. This is despite its impressively swift response in the tremor's immediate aftermath. By mid-July, only 2% of a promised US$5.3bn in reconstruction aid had materialised and an equally small amount of rubble had been removed from the capital and its environs. Among the US$1.1bn collected by 23 major charities in response to the earthquake, only 2% had been released, with only 1% used on actual preparations.

Ban Ki Moon, the secretary-general of the UN, which currently has nearly 9,000 peacekeepers in the country, has been critical of the slow pace of the disbursement of aid money, stating that nations should "immediately" deliver the aid they had pledged. And with little recovery of overall economic activity, the Economist Intelligence Unit expects that Haitian real GDP will contract by 8% during the fiscal year 2009/10.

Housing is critical problem

By July only a small share of the 1.5m Haitians rendered homeless by the quake had found permanent shelter. Only 206 of 1,241 displaced person camps had been officially recognised, according to the UN Office for the Co-ordination of Humanitarian Affairs (OCHA). The Corail-Cesselesse camp north of Port-au-Prince, once thought of as something of a show piece and home to around 7,000, was battered by a summer storm in mid-July that destroyed tents and knocked solar-powered lights from their moorings, leaving nearly 2,000 without shelter.

Although the UN has set aside up to US$13m as emergency funding in the event of a humanitarian crisis during the hurricane season, the blow to the Corail-Cesselesse camp and small-scale flooding around the northern city of Gonaïves served perhaps as a worrying omen of things to come. In and around Haiti's capital there were signs of growing tension between displaced people and those on whose land they reside, some of whom have used armed men to evict squatters in a process of questionable legality.

Government criticised

A June report by the Foreign Relations Committee of the US Senate assailed Haiti's president, René Préval, for what it called a lack of leadership in the face of the crisis, writing that "the government has not done an effective job of communicating to Haitians that it is in charge and ready to lead the rebuilding effort".

However, criticism has not only been reserved for the Haitian government, which was weak even before losing one-sixth of its staff and many of its buildings. The 26-member body tasked with organising Haiti's reconstruction and official aid distribution, the Commission Intérimaire pour la Reconstruction d'Haïti (CIRH, the interim reconstruction committee), succeeded in holding only one meeting in the six months following the earthquake, during which it approved US$50m in projects. The CIRH, which is co-chaired by Haiti's prime minister, Jean-Max Bellerive, and former a US president, Bill Clinton (1993-2001), plans to start work in earnest in the coming months but, although Mr Clinton has been omnipresent in the media, doubts seem to be growing in Haiti and abroad as to how effective a tool the CIRH will be in helping to rebuild the devastated country.

Indeed, with hundreds of streets in the capital (which before the earthquake accounted for 65% of Haiti's economic activity) still blocked with rubble, it has been impossible to make any headway with economic development plans. A proposed regional development plan touted by Haiti's government to look at building and zoning standards and the terms of land use and development, for example, has thus far made little progress.

Debt cancellation helps

One positive trend has been foreign debt cancellation. The IMF announced in July that it was going to cancel Haiti's outstanding debt, worth US$268m. This follows US$774bn in cancellations from the Inter-American Development Bank (IDB) and Venezuela in the aftermath of the earthquake, and the US$1.4bn worth of debt cancellations in June 2009 under the terms of the enhanced heavily indebted poor countries (HIPC) initiative. Haiti's total external debt is now estimated to equal around US$400m, or 6% of GDP.

The IMF has also announced that it will extend a US$60m, three-year loan to the Banque de la République d'Haïti (the central bank) under a new Extended Credit Facility (ECF). The loan will boost Haiti's international reserves and help the BRH manage potential currency volatility. IMF technical support will be focused on helping the Haitian government to support economic growth and manage aid flows. In a change from the past, the strategy to improve the fiscal accounts, which recorded a deficit of 2.9% of GDP in 2008, will focus on boosting revenue collection rather than cutting spending.

For its part, the World Bank's International Finance Corp (IFC) has begun training sessions for employees of the BRH and some private financial institutions, including Unibank, Sogebank and Capital Bank, to increase capacity for credit and risk management. Increasing credit to the private sector (especially small and medium-size businesses, or SMEs) will be key to the development of the economy.

Corruption is a major obstacle

With all the talk of rebuilding, Haiti's long tradition of corruption remains a significant obstacle, even if the international community can come together and deliver on its promises of aid. There are doubts as to how much Haiti will be able to take advantage of the aid inflows.

Although the president has by most accounts run a fairly straightforward administration—at least compared with his predecessors—the ease with which government monies can be plundered was illustrated by the June sentencing of Robert Antoine, the former director of international affairs for Telecommunications d'Haïti (Teleco, the state-run telecommunications company) during much of the corruption-riddled second term of the former president, Jean-Bertrand Aristide (2001-04). Mr Antoine was sentenced to four years in a US prison on money-laundering and bribery convictions connected to his tenure at the company. Worries about corruption and uncertainties surrounding the result of November elections will further complicate the rebuilding process.

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"La vraie reconstruction d'Haïti passe par des réformes en profondeur des structures de l'État pour restaurer la confiance, encourager les investisseurs et mettre le peuple au travail. Il faut finir avec cette approche d'un État paternaliste qui tout en refusant de créer le cadre approprié pour le développement des entreprises mendie des millions sur la scène internationale en exhibant la misère du peuple." Cyrus Sibert
Reconstruction d'Haïti : A quand les Réformes structurelles?
Haïti : La continuité du système colonial d'exploitation prend la forme de monopole au 21e Siècle.
WITHOUT REFORM, NO RETURN ON INVESTMENT IN HAITI (U.S. Senate report.

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