Haiti - Economic development

Although its annual national revenue covers basic necessities, the government supports development programs by encouraging loans and by requiring private enterprises to finance development projects. Aided by the United States and various international aid organizations, the government has supported the construction of tourist facilities, public works, and irrigation and the creation of monopolies in cement, sugar marketing, tobacco and lumbering.

The framework for economic policy in 1996 was determined mainly by the passage of a structural reform program and the agreement signed between the Central Bank and the Ministry of Finance to curtail financing of the fiscal deficit by the Central Bank. Passage of the structural reform program (which forms the basis for international financial support and includes Civil Service Reform and Modernization of Public Enterprises), proved slow and difficult. The Civil Service Reform prescribed the modalities for a reduction of the civil service by 7,500 employees over a period of 18 months. The Modernization of Public Enterprises program established a legal framework for private sector participation in the state-owned enterprises, in the form of either concession, management contract, and/or capitalization.

Macroeconomic stability, structural and institutional reforms, and poverty alleviation are still the main objectives in Haiti's agenda for the future. The administration has demonstrated its commitment through programs with the International Monetary Fund (IMF); the passage of laws pertaining to structural reforms; coordinated efforts with multilateral and national institutions to design the modernization of the state program; and continuation of programs for poverty alleviation such as the IMF's Poverty Reduction and Growth Facility (PRGF) Arrangement. In exchange for the IMF assistance, Haiti in 2003 pledged to reduce spending and stabilize its currency, moves that were expected to pave the way for other financial institutions to release suspended funds to the country (funds were suspended due to flawed legislative elections in 2000, and due to Haiti's state of arrears on its debts). Haiti, the poorest country in the Western Hemisphere, experienced worsening economic and social conditions from 2001–03. About 80% of the population lives in abject poverty. Nearly 70% of all Haitians depend on the agriculture sector, which consists mainly of small-scale subsistence farming and employs about two-thirds of the economically active work force. The country has experienced only moderate job creation in recent years. Failure to reach agreement with multilateral lenders in late 1995 led to rising deficit spending and subsequently increasing inflation and a drop in the value of the Haitian currency in the final months of 1995. Potential investors, both foreign and domestic, have been reluctant to risk their capital. The government will have to grapple with implementing necessary, although unpopular, economic reforms in order to obtain badly needed foreign aid and improve Haiti's ability to attract foreign capital if the Haitian economy is to gain momentum. Haiti will continue to depend heavily on foreign aid in the medium term.

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