Dominican Republic and Haiti: Country Studies

Haiti: The Economy
US$425 million from the United States—in pledges of assistance
by 1999 in exchange for a commitment from the Haitian
government to adhere to a program of economic reform,
trade/ tariff liberalization, privatization, macroeconomic stabilization,
and decentralization. But implementation of these
programs was slowed down by parliamentary bickering, opposition
to structural reform, and public dissatisfaction with the
lack of progress in the stagnating economy. Negotiating an
International Monetary Fund (IMF—see Glossary) offer of
US$1 billion in aid, with stringent conditions relating to structural
adjustment and privatization of nine major state enterprises,
proved to be tortuous. Other attempts at economic and
social reform, such as implementing an increase in the minimum
wage, also proved to be futile.
Faced with popular demonstrations against the controversial
concept of privatization while he was trying to tackle the daunting
challenge of rebuilding his country's crumbling physical
infrastructure, Aristide decided in October 1995 not to proceed
with the privatization of a state-owned cement plant and a
flour mill. As a result, no further progress on privatization was
possible during his term. Moreover, lack of commitment to
civil service reform and other structural reforms tied to loans
from the World Bank and IMF derailed the signing of two
credit agreements with those international organizations and
prompted Aristide's prime minister to resign in October 1995.
Structural Policy
When President Rene Garcia Preval took office in February
1996, he vowed to implement the structural adjustment program
that had been suggested to Aristide. His government initiated
a program to reduce expenditures and eliminate
thousands of civil service jobs occupied by "ghost employees."
Another acute problem was the huge budget deficit caused by
central government support for inefficient state-owned enterprises
and a bloated public sector in general. Parliament eventually
enacted economic reform legislation authorizing the
executive branch to proceed with privatization. The new legislation
allowed the granting of management contracts for forming
joint ventures with private investors through partial
divestiture of state-owned enterprises.
The government also put in motion an Emergency Economic
Recovery Plan (EERP) whose main objective was to
achieve rapid macroeconomic stabilization and to attend to the
371