Dominican Republic and Haiti: Country Studies

Haiti: The Economy
tion to tighten the eligibility criteria for fiscal incentives under
the investment code. Nor did action occur with regard to initiating
a plan to energize provincial revenue collections. The
intent was not only to broaden the tax base but also to
strengthen public-service delivery in the interior of the country
outside Port-au-Prince, which had been long neglected.
Strengthening local administrations and expanding public services
beyond the capital and a few other major urban areas
remained an objective of the government's decentralization
efforts. Problems related to relocating personnel to rural areas
and scarcity of resources generated locally, however, continued
to present almost insurmountable obstacles as late as 1999.
Balance of Payments
Foreign trade as such has not constituted a major factor in
the Haitian economy in recent decades. However, foreign trade
deficits represent a significant element in Haiti's balance of
payments and will be considered in that context here. Haiti has
traditionally registered substantial trade deficits, a trend that
dates back to the mid-1960s, lasted through the 1980s, and has
continued into the late 1990s. The deficits were partially offset
by generous remittances from the many Haitians working
abroad and by official aid. But such inflows tend to dry up sporadically,
as was the case after the 1987 election violence and in
the wake of the 1991 military coup and the ensuing international
trade embargo. During the three-year embargo, the public
deficit was financed mainly by Central Bank credit and the
accumulation of arrears. Net Central Bank credit to the public
sector rose by an average of 65 percent annually from 1992 to
1994. According to data from the IMF, Haitian exports in 1997
were valued at 1,995 million gourdes, whereas imports cost
10,792 million gourdes, indicating a very unfavorable trade balance
(see table 20, Appendix).
particularly sensitive to
Haiti's balance of payments is
changes in the rate of trade development, import prices, and
the rate of export growth—more so than many other countries
with similar economic problems. For example, if the country's
export growth slows as a result of a decline in a major sector
such as the assembly industry, the overall balance of payments
would register a significant deficit. Similarly, if the terms of
trade deteriorate one year because of lower prices for an
export such as coffee and higher petroleum product prices,
the overall balance of payments would be weaker. This scenario
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