Americas

Haiti World Bank report: Time for a social contract

Students pose for a photo in their classroom before the start of the flag ceremony to mark the first day of the new school year at Lycee National in the Petion-Ville suburb of Port-au-Prince, Haiti, Monday, Sept. 7, 2015.
Students pose for a photo in their classroom before the start of the flag ceremony to mark the first day of the new school year at Lycee National in the Petion-Ville suburb of Port-au-Prince, Haiti, Monday, Sept. 7, 2015. AP

As Haiti’s presidential campaigning slowly gains momentum amid continuing uncertainty about the fate of the country’s scheduled Oct. 25 elections, a new World Bank report calls for a social contract to improve the lives of all Haitians.

The report notes that natural disasters and political instability have greatly affected Haiti’s anemic economy and contributed to the 6 million Haitians living in poverty on less than $2.25 a day. At the same time, a bad business environment has not encouraged private investments, while insecurity in the urban centers has sharply increased with the crime rate in metropolitan Port-au-Prince reaching critical levels.

“Policies to ensure more inclusiveness are needed,” the report said.

Growth is faltering and will not be sufficient for Haiti to achieve its vision of becoming an emerging economy by 2030

Mary Barton-Dock, World Bank Special Envoy in Haiti

The call comes as the International Monetary Fund estimates that the Haitian economy only grew between 1 and 2 percent this fiscal year, and Haiti’s Finance Minister Wilson Laleau concedes that it has been difficult to finance the upcoming budget. Foreign assistance is down to less than $500 million from $1.5 billion, Laleau said, and there is less available financing under Venezuela’s PetroCaribe discounted-oil program because of low oil prices.

“These allotments have really tightened the budget constraints of the government,” said Raju Singh, a World Bank economist and author of the Haiti: Toward a New Narrative report unveiled Tuesday . “One big challenge for the future government is to deal with a tighter budget envelope without jeopardizing the progress that the previous governments have achieved to improve human indicators.”

Areas of economic opportunity for Haiti include in agribusiness, light manufacturing and tourism.

Those improvements are in the areas of poverty reduction, primary school enrollment and access to water. Those living on less than $1.25 a day in extreme poverty, for example, has dropped from 31 percent in 2000 to 24 percent in 2012, according to a Bank study.

“These could be jeopardized if suddenly the budget leads to cuts in programs in social areas,” Singh said.

I am confronted by my poor minister of health or my poor minister of education and frankly I have no clue as to how these people could do their job; 60 or 80 percent of the services are done outside their control

Raju Singh, World Bank economist

Bank officials say the report is intended to promote a debate around a new social contract for Haiti to dig itself out of poverty and head to sustainable and inclusive economic growth. But that contract requires the government, to among other things, identify a single vision and program, and do more to finance public spending.

“Government says, ‘Please pay your taxes. In return, I will improve my services, I will provide security. I will improve my fiscal transparency of reporting,” Singh said. “In Haiti, this social contract has either disappeared, never been built or has to be revamped.”

The level of insecurity has increased in Haiti’s urban centers, particularly in metropolitan Port-au-Prince where the crime rate has reached critical levels

Singh said officials didn’t plan for the report’s release to coincide with the electoral cycle, but Port-au-Prince based economist Kesner Pharel says its timing offers an opportunity for the presidential, legislative and local candidates “to better understand the great social and economic challenges, and how difficult it will be to lead and manage this country.”

Anybody comes here, builds a hospital and expects the government to staff it or pay for power or to build a road. It's a nightmare

Raju Singh, World Bank economist

So far, candidates have largely concentrated on the problems rather than proposal for tackling them. The report, meanwhile, highlights three key areas for growth: tourism, agriculture and light manufacturing.

“Following the earthquake, Haiti experienced its best performance in decades with a real growth rate averaging 3.3 percent from 2011 to 2014, partly spurred by high levels of reconstruction aid. However, this growth is faltering and will not be sufficient for Haiti to achieve its vision of becoming an emerging economy by 2030 and improve life for its poorest citizens,” said Mary Barton-Dock, World Bank Special Envoy in Haiti.

But faster economic growth alone will not be enough to bring significant improvements in the living standards of most Haitians, the report said.

Areas of economic opportunity for Haiti include in agribusiness, light manufacturing and tourism.

“There are a lot of people who are active in Haiti. The issue is how do you improve the earnings of these people?” Singh said.

We have to be disciplined to sit around the table and say what is our vision? What is the vision of the authorities, of the government, of the population of Haiti in health, in education, in key sectors? And we all share the same vision and we all try to finance the same vision instead of having a piecemeal approach that doesn’t work,” he said. “On the donor side, we have to finance a single vision, a single program of the government; not a hospital here, a school there.”

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