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E.O. 12958: N/A
TAGS: ECON EAID PGOV PINS HA
SUBJECT: GOH APPROVES FY07 BUDGET

REF: A. PAP 1880


B. PAP 1648


1. The GOH approved and published Haiti's FY07 budget
September 30; parliament ratified the budget on September 28
with slight modifications to the original document, including
a reallocation of USD 25 million (ref A). The budget totals
USD 1.65 billion (64.57 billion Haitian gourdes), a 68
percent increase over last year's budget. Revenue collection
represents 34 percent of the budget, with the international
community funding the rest in grants (41.5 percent) and loans
(24.4 percent). Domestic financing accounts for salaries and
operations; all other programs and investments are covered by
international spending. Priority areas of the budget are
security, education, health and construction of roads, as
outlined in the Prime Minister's general policy framework.
FY07 fiscal goals are to achieve a four percent growth rate
and meet the IMF target inflation rate of below ten percent.


2. The budget allocates 96.9 percent of the resources to the
executive branch, .98 percent to the legislative branch, and
.58 percent to the judicial branch. Within this breakdown,
the budget gives each line ministry a ceiling:

-- 48.2 percent of the budget will go to rebuilding the
economy: Ministry of Planning and External Cooperation --
USD 234 million, Finance Ministry -- USD 107 million,
Ministry of Agriculture -- USD 96.9 million, Ministry of
Public Works -- USD 311 million, Ministry of Commerce -- USD
11.5 million, and Ministry of Environment -- USD 21 million.

-- 13.3 percent to advancing the political sector: Ministry
of Justice -- USD 216 million, Ministry of Haitian Living
Abroad -- USD 2.64 million, Office of the President -- USD
15.7 million, Office of the Prime Minister -- USD 12.9
million, and Ministry of the Interior -- USD 43.1 million.

-- 18.9 percent to the increasing social services: Ministry
of Education -- USD 148 million, Ministry of Social Affairs
-- USD 11.7 million, Ministry of Women's Affairs -- USD 2.7
million, and Ministry of Youth and Sports -- USD 6.9 million.

-- and .96 percent is devoted to cultural enhancement:
Ministry of Religious Affairs -- USD 2 million and Ministry
of Culture -- USD 8 million.


3. Comment: The executive, specifically the finance
ministry, viewed the reallocation of USD 25 million
unfavorably but published it regardless, in order to have the
budget finalized by the start of fiscal year 2007, on October
1, 2006. The reallocated funds went to a controversial
feasibility study on the re-establishment of a national
security force and to even more controversial "pork-barrel
politics" (ref A). According to International Monetary Fund
resrep Ugo Fasano, the money may have been allocated for a
feasibility study and other far-fetched programs, but it does
not mean the GOH will come up with sufficient funding. The
GOH has publicly stated their concern and said that it has
"high hopes that the donors will honor their financial
commitments," which account for 65 percent of the total
budget.
SANDERSON