Haiti: a new paradigm


Working document

Executive Summary

1. Introduction

Haiti has made considerable strides towards economic recovery and political stability since democratic elections were held in 2006. In 2008, the rise in food and oil prices hit the Haitian population disproportionately and led to social unrest and political crisis. Subsequently, the country was hard hit by a succession of hurricanes and storms that left a trail of devastation, destroying livelihoods and infrastructure with damages estimated at 15 percent of GDP. Now, the global recession poses further threats to the country's stability through declining export earnings and remittances.

To address these challenges, the Government of Haiti has embarked on a focused action plan to safeguard the gains already achieved and ensure that the country continues on a path towards economic security. The immediate priorities in order to maintain stability are to address the US$125m financing shortfall in the budget mainly for the reconstruction process from the devastation caused by the last four hurricanes and storms. If the global situation does not stabilize over the budget cycle and fiscal receipts decline, this gap could be greater. Investments in schools, hospitals and adequate water supply, along with measures that promote food security, form the necessary foundation of any forward looking strategy and are indispensable for social cohesion. Reconstruction is still underway and concrete measures need to be taken prior to the 2009 hurricane season to avoid a new humanitarian emergency and to decisively reduce the population's vulnerability to natural disasters. However, while first-order priorities, reconstruction and bridge financing alone will not suffice.

At the heart of the government strategy is a plan to create 100,000 - 150,000 new jobs over two years to raise incomes and lay the foundations for social peace. The majority of new jobs will initially be created in the construction sector through targeted infrastructure projects that lay the groundwork for rapid employment generation in agriculture and manufacturing. Given that each paid worker in Haiti supports, on average, four dependents these new jobs will directly impact up to 600,000 people. The strategy rests on a new partnership between the Government, the private sector and the international community.

The heightened interest in Haiti, brought about partly by the tragedies of 2008, not only showcased the challenges and setbacks, but also the genuine economic potential the country offers. The Hope II Act for example offers a time-bound window of opportunity to garment exporters to access the U.S. market on preferential terms that are exclusive to Haiti. The Haitian Authorities, in frequent consultation with the private sector, prospective investors and independent experts, have identified two sources that can yield significant results quickly: (i) raising productive capacity in agriculture and (ii) harnessing the full employment potential of manufacturing. These pillars are firmly aligned with the priorities of the National Growth and Poverty Reduction Strategy Paper (NSGPR) and the National Post Disaster Assessment (PDNA). A delayed recovery and deviation from the path of stability and economic security would have severe consequences and come at great social costs. The international community is therefore urged to support the Government's efforts. The creation of 150,000 jobs requires concerted action in four areas, namely: 1) strategic infrastructure investments in transport, export zones, electricity and ports, 2) targeted measures to improve economic governance and the business environment, 3) improved provision of basic services, especially in the areas most affected by the 2008 hurricane season, and 4) environmental sustainability.