Identifier
Created
Classification
Origin
06PORTAUPRINCE1376
2006-07-28 18:42:00
UNCLASSIFIED
Embassy Port Au Prince
Cable title:  

HAITI: DONORS REAFFIRM COMMITMENT TO HAITI AT JULY

Tags:  ECON EAID PGOV PREL HA 
pdf how-to read a cable
VZCZCXRO4431
PP RUEHQU
DE RUEHPU #1376/01 2091842
ZNR UUUUU ZZH
P 281842Z JUL 06
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 3642
INFO RUEHZH/HAITI COLLECTIVE PRIORITY
RUEHBR/AMEMBASSY BRASILIA PRIORITY 1145
RUEHSA/AMEMBASSY PRETORIA PRIORITY 0987
RUEHQU/AMCONSUL QUEBEC PRIORITY 0526
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
UNCLAS SECTION 01 OF 03 PORT AU PRINCE 001376 

SIPDIS

SIPDIS

STATE FOR WHA/CAR
EB/IFD
S/CRS
SOUTHCOM ALSO FOR POLAD
STATE PASS TO USAID FOR LAC/CAR
INR/IAA (BEN-YEHUDA)
COMMERCE FOR SCOTT SMITH
TREASURY FOR JEFFERY LEVINE
WHA/EX PLEASE PASS USOAS

E.O. 12958: N/A
TAGS: ECON EAID PGOV PREL HA
SUBJECT: HAITI: DONORS REAFFIRM COMMITMENT TO HAITI AT JULY
25 CONFERENCE

REF: PAP 1267

UNCLAS SECTION 01 OF 03 PORT AU PRINCE 001376

SIPDIS

SIPDIS

STATE FOR WHA/CAR
EB/IFD
S/CRS
SOUTHCOM ALSO FOR POLAD
STATE PASS TO USAID FOR LAC/CAR
INR/IAA (BEN-YEHUDA)
COMMERCE FOR SCOTT SMITH
TREASURY FOR JEFFERY LEVINE
WHA/EX PLEASE PASS USOAS

E.O. 12958: N/A
TAGS: ECON EAID PGOV PREL HA
SUBJECT: HAITI: DONORS REAFFIRM COMMITMENT TO HAITI AT JULY
25 CONFERENCE

REF: PAP 1267


1. Summary: The Haitian Government (GOH) hosted a Donors'
Conference July 25 in Port-au-Prince that resulted in
international commitments totaling USD 750 million over the
next fifteen months (July 2006 to September 30, 2007). The
GOH compiled a "pie in the sky" budget for this time frame of
USD 1.8 billion, but its actual request to the donor
community was USD 540 million, which the donors exceeded.
The largest donors, in priority order, are the U.S. (USD 210
million),the Inter-American Development Bank (IDB, USD 150
million),Canada (USD 127 million),the World Bank (WB, USD
61 million),the European Commission (EC, USD 58 million),
France (USD 28 million),and Spain (USD 25 million). Based
on the pledges, the International Monetary Fund (IMF)
predicts the financing gap for fiscal year 2007 may drop to
USD 14 million from initial IMF assessments of USD 45 to 60
million. (Note: This amount is the lowest of all
predictions. Other estimates are closer to USD 35 to 40
million. End note.) The financing gap for this year remains
at USD 18.5 million, because donors made no additional
pledges, per the IMF. (Note: Including USG budget support of
USD 7 million, the budget gap for this year could drop to USD
12.5 million. End note.) The GOH asserted its role in
defining its priorities and asked that donors align their aid
with GOH objectives and in harmony with each other.
Presenting its Pledging Conference Document, Minister of
Planning Jean-Max Bellerive explained that the GOH's goals
are to modernize the state and generate wealth through
private investment. Finance Minister Daniel Dorsainvil
explained, in general terms, the GOH's longer term objectives
and added that the GOH expects four percent growth for
calendar year 2007 and an inflation rate of ten percent.
Dorsainvil also called for aid to be predictable,
country-oriented and in support of the budget. At the
Conference, donors supported GOH assertiveness, but remained

wary of direct budget support. The follow-up conference will
be held in Madrid on November 20, 2006. End Summary.

Donors Pledge USD 750 million through September 2007
- - - - - - - - - -


2. The GOH's Pledging Conference Document proposed a budget
of USD 1.8 billion through the end of September 2007, which
the GOH described as an ideal figure. The actual request
presented to the donors was the more realistic sum of USD 540
million, which the donor community exceeded with a total
commitment of over USD 750 million for a fifteen month period
from July 2006 to September 30, 2007. The U.S. is the
largest donor with USD 210 million. Other donors, in
priority order, are the IDB (USD 150 million),Canada (USD
127 million),the World Bank (USD 61 million),the EC (USD 58
million),France (USD 28 million),and Spain (USD 25 million).


3. Other major donors include the IMF (USD 23 million),the
Caribbean Development Bank (USD 11.5 million),the
International Fund for Agricultural Development (USD 13
million); Norway (USD 12 million, subject to parliamentary
approval),and Japan and Taiwan (USD 10 million each).

Highlights of the Pledging Session
- - - - - - - - - -


4. The following highlights comments from the pledging
session:

-- Speaking for the U.S., USAID Assistant Administrator,
Adolfo Franco, pledged USD 210 million to be disbursed in the
coming fiscal year, which includes USD 10 million in budget
support. Franco said insecurity hinders Haiti's development
and promised continued USG support of MINUSTAH.

-- IDB President, Luis Moreno, promised continued support
with garbage collection, education, electricity and
infrastructure. In addition, the IDB will work with the GOH
in its efforts to obtain debt relief. He pledged USD 150

PORT AU PR 00001376 002 OF 003


million through September 2007: USD 71 million for economic
governance, 49 illion for economic recovery, and 30 million
for access to basic services.

-- Robert Greenhill, President of the Canadian Agency for
International Development, pledged CAD 520 million (or USD
127 million for July 2006 through September 2007) over the
next five years to contribute to projects in the areas of
democracy, social progress and economic governance.

-- World Bank Caribbean Director Caroline Anstey encouraged
the international community to work in partnership with Haiti
to ensure an improvement in the security situation. She
promised to disburse USD 66 million in arrears from the WB's
2004 pledge and an additional USD 61 million through
September 2007 in budget support for education and community
driven projects, subject to board approval.

-- The European Commission reaffirmed USD 58 million for the
extension of the Interim Cooperation Framework (ICF) through
September 2007 and said it would commit an additional USD 291
million in new money for the five year period from 2008 -

2013.

IMF Estimates USD 14 million Financing Gap for 2007
- - - - - - - - - -


5. According to the IMF, Haiti could receive budget support
for as much as USD 97.5 million for fiscal year 2007, leaving
a financing gap of USD 14 million. (Note: According to the
Ministry of Planning, the budget gap for fiscal year 2007 is
USD 35 million. Other estimates are closer to USD 40
million. The IMF figure includes a HIPC grant of USD 14.2
million, described by the IMF as "very preliminary." End
note.) In order for the Poverty Reduction and Growth
Facility (PRGF) to move forward this October, this gap must
be closed. The IMF will continue to work with the GOH to
prepare for the PRGF, and to find additional budget support.


6. Donors did not make pledges to cover this year's
financing gap; it remains at an estimated USD 18.5 million,
per the IMF using GOH calculations. (Note: Including a USG
budget support of USD 7 million, this figure would drop to
USD 12.5 million.) In the final Conference Document, the GOH
calls for salary arrears for former state employees to paid
by the end of September 2006, with the highest costing
estimates at 700 million gourdes (about USD 17.9 million).
The Document explains this broadly as an increase in social
costs. Per ref, in the weeks leading up to the Donors'
Conference, and prior to the circulation of the final
Document, the IMF estimated this year's financing gap to be
much lower than GOH expectations. The release of the
document with costs for salary arrears possibly explains the
discrepancy between the GOH and IMF. Post will send
additional reporting as the GOH gives more details.

GOH Conference Leadership -- Asserting its Role in Haiti's
Development
- - - - - - - - - -


7. Throughout the Conference, the GOH asserted its role in
defining its priorities and asked that donors align their aid
with GOH objectives and in harmony with each other. In his
opening statement, President Rene Preval stated clearly that
his government will fight corruption, insecurity and tax
evasion, the latter in an attempt to increase fiscal revenues
and move the country from a state of assistance toward
economic and social development. Prime Minister Jacques
Edouard Alexis asked the donors to explore a new kind of
cooperation with Haiti. He called on the donors to be
flexible and allow for integration into the National
Development Plan. In return, he promised a transparent
dialogue with the donor community and more transparent
tracking of donor resources implemented through NGOs, and
said he hoped to reduce delays in project execution. Alexis
also said the state would be willing to establish

PORT AU PR 00001376 003 OF 003


public-private partnerships.


8. Presenting the Pledging Conference Document, Minister of
Planning Jean-Max Bellerive explained that the GOH's goals
are to modernize the state and generate wealth through
private investment. He identified safety and public security
as the most important pre-conditions to the success of the
proposed government plan.


9. Minister of Finance Daniel Dorsainvil prefaced his
elaboration of the Document's objectives by providing some
compelling statistics on poverty in Haiti: 76 percent of the
population lives below the poverty line, and 56 percent live
on an average of 42 cents per day. Poverty in Haiti is three
times higher than the average for the Caribbean. Given these
statistics, the Conference Document has three concrete
objectives: (1) in 25 years, Haiti should no longer be a
Least Developed Country; (2) in 10 years the Haitian economy
should be the most dynamic in the region; and (3) in 5 years,
at the end of this government's tenure in office, Haiti
should replenish its stock of physical and human capital.


10. Dorsainvil added that for calendar year 2007, the GOH
envisions a four percent growth rate and an inflation rate of
ten percent. Currently, internal revenue stands at nine
percent of GDP, which the GOH would like to increase to
fifteen percent. Dorsainvil also called for aid to be
predictable, country-oriented and in support of the budget.

Reginald Boulos Offers Private Sector Truce
- - - - - - - - - -


11. President of the Haitian Chamber of Commerce, Reginald
Boulos, stressed that this is a new beginning for Haiti.
Speaking for the private sector, he welcomed the Preval
government's initiative to fight poverty, reduce inequalities
and spur economic growth. He refuted the view that the
private sector as a group refuses to meet "fiscal
obligations" (i.e. pay taxes),and said that the private
sector sees the government as rife with inefficiency and
corruption. Boulos offered a truce: he said the private
sector wants to help Haiti develop through sound investment
and the creation of long-term employment. However, this will
not be possible without security, justice and respect for
private property.

Next Steps
- - - - - - - - -


12. The next Ministerial level meeting on Haiti will be held
in Madrid on November 20, 2006. Further information on GOH
preparations and expectations will be provided as available.


13. Comment: Throughout the conference, the GOH called for
a leading role in Haiti's development; in return the GOH
promised responsibility and transparency. Donors were
receptive to the assertiveness of GOH officials, however,
they remained wary of direct budget support and unclear
channels for aid. The GOH's call to donors that aid align
with national priorities should be paired with detailed
explanations, which are lacking, for instance, in the
last-minute insertion into this year's budget of payments for
salary arrears. Post will continue to follow-up with
relevant ministries to provide (and encourage) clarity on
spending priorities.
SANDERSON