UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001037

SIPDIS

STATE FOR WHA/CAR
EB/IFD/ODF
WHA/EPSC
STATE PASS AID FOR LAC/CAR
TREASURY FOR MAUREEN WAFER
USDOC FOR 4322/ITA/MAN/WH/OLAC (SMITH, S.)

E.O. 12958: N/A
TAGS: ECON EFIN PGOV HA
SUBJECT: Haiti: Announcement of Economic Revival Program



1. SUMMARY: On March 31, Minister of Economy and Finance,
Henri Bazin, announced the Interim Government of Haiti's
(IGOH) USD 50 million economic revival program (PROREC), a
short-term development program to fill the breach until
donor money flows. PROREC has three main components: a)
improvement of basic infrastructure, b) government
decentralization and social welfare, and c) assistance to
the private sector, particularly production-related small
businesses. PROREC could help stimulate economic growth,
and shore up the image of the IGOH in the eyes of Haitians,
however its design is cumbersome, and its feasibility is in
doubt. END SUMMARY.

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Economic Recovery Plan Announced
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2. On March 31, the Interim Government of Haiti (IGOH)
released its USD 50 million broadly targeted economic
development plan, PROREC (Programme de Relance Economique).
The IGOH calls PROREC a stop-gap development program that
will stimulate economic growth until donor money begins to
flow. As of early April 2005, the Haitian Central Bank,
which tracks disbursements, said only slightly under one
quarter of the USD 1.2 billion pledged in July 2004 had
been spent.

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Infrastructure: Roads, Agriculture and Health
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3. PROREC allocates USD 30.5 million for infrastructure
construction and maintenance in inter- and intra-urban
roads (USD 26.2 million), irrigation and protection of
agricultural lands (USD 2.1 million), and hospitals and
health centers (USD 2.2 million). Through PROREC, the IGOH
plans to rehabilitate 190 km of main roads and construct
bridges and drainage canals. The IGOH also plans to use
PROREC to fix and maintain irrigation canals, manage
runoff, plant seedlings, and provide credit to farmers.
Finally, the IGOH intends to open nearly 1500 hospital beds
by rehabilitating three university hospitals in Port-au-
Prince and regional hospitals throughout. The IGOH
estimates that these projects will create 2,190 health care

jobs, and that 1.7 million hours of work will be required
daily for the duration of the road work.

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Decentralization and Local Initiatives
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4. PROREC also provides funding for projects addressing
local development initiatives (USD 2 million), support to
municipal governments (USD 1.3 million), and social
programs (USD 2.4 million). Locally, PROREC funds will
finance income generating micro projects such as incentives
and support for small businesses. In addition, PROREC
calls for reinforcing local government capacity and moving
services from the central government to the municipal
governments. PROREC's main social-services goal is to help
local governments provide services such as housing to the
poor, aged and infirm. The IGOH estimates that this aspect
of PROREC will cost USD 5.7 million, create 10 to 30
thousands new jobs and inject USD 13 21 million into the
Haitian economy.

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Targeting the Production Oriented Private Sector
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5. In order to support small and medium sized production-
oriented businesses, PROREC will establish a micro-business
fund to reinforce institutions that already cater their
financial services to small and developing businesses.
IGOH money will fund feasibility studies, business start-up
loans and loan guarantees. The IGOH has allocated USD 13.2
million for private sector development: USD 1.1 million for
feasibility studies; USD 2.6 million for start-ups; and USD
9.5 million for loan guarantees.

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Heavy Administrative Structure
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6. Three administrative bodies will jointly oversee the
coordination and evaluation of the program. The
Ministerial Pilot Committee (MPC), chaired by the Minister
of Economy and Finance, will oversee program strategy. The
Central Bureau of Program Coordination and Management
(BUCOGEP, Bureau de Coordination et de Gestion) will ensure
the implementation of the program and report to the MPC.
Finally, departmental bureaus will be established to help
coordinate and monitor PROREC. The IGOH has allocated USD
485 thousand to cover PROREC's administrative costs.


7. COMMENT: In many Haitian's eyes, the IGOH has failed to
improve living conditions in Haiti. If properly
implemented and publicized, PROREC could demonstrate that
the IGOH is both committed to and effective in helping
Haitians live better lives. While it is good to see the
IGOH taking matters into its own hands, its inability to
administer programs in conjunction with donors is good
reason to doubt its ability to administer its own
development program. It remains to be seen if Haitian
money and Haitian administration will be able to produce
results. END COMMENT.