DESTRICTE DII be. 40 aI I a %F I & W

Report 1o. WH-110a

This report was prepared for use within the Bank. It may not be oublishednor may it be quoted as representing the Bank's views. The Bank accepts noresponsmily Tor ne accuracy or compoefnss OT he conTenTs or The report.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

CURRENT ECONOMIC POSITION AND PROSPECTS

OF HAITI

September 8, 1961

Department of OperationsWestern Hemisphere

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CURRENCY EQUIVALENTS

U. S. $1 = 5 GourdesGourde 1 = U. S. 20 centsGourde 1 million = U. S. $200, 000

TABLE OF CONTENTS

Page No.

BASIC DATA

SUYMARY AND CONCLUSIONS i

I. TRODTTCTTON 1

II. ECONOMIC GROWTH 3

TTT BA;Tr RERTTnR 10

IV. FINANCIAL DEVELOPMENTS 12

V.TRATSnlDEWELRNNT

VI. THE BALANCE OF PAYMENTS

TTTT UnnvTnMT nVnM CDITTTOUV L.L I UlUilLU1l _u.L "LA -QL U: CU

APPENDIX I

Prospects for Foreign Exchange Earnings

A nnrnTnlTrV T-

DUaU.LsU-LLa- T---'e

ZA,dt±~jbLd± au-Lj - ±

PAqTr T)ATA

~~ ~V*'~--L%j. IJV,2 OqUC IQ-, J±.JL

1960: 3.7 million

OSS IIjI=L. L~ULICdj. F.UUULU ; U :Pt VLL-L-11 ,51

1954 345

1960 (Prov.) 255

Per Capita G.N.P.:

1960 $69

Balance of Payments: U.S. $ million1959 1960

-.Exports f.o.b.) 25.9 38.1Imports (c.i.f.) -31.5 -33.3Earnings from tourism 6.6 7.0Other current items (net) -1.6 -7.7

Current Balance -0.4 4.1

Donations 10.8 5.6Capital inflow -4.0 1.9Errors and omissions -9.0 -9.2

Surplus/Deficit -2.6 2.4

Composition of Exports by Value:

CoffeQ Sisal Sugar

1959 50% 19% 1%1960 54% 12% 10%

Foreign Exchange Reserves:(net): A $ 11oUe.jo o million

Denmbr 1949 -1 -4

1960 0.9

Government Revenues and Expenditures: Millions of gourdes

1959 1960 1961(Rro-vi sinnal (Buelpt)

Budget revenues 105.6 130.0 110.0Other revenues 59.h L1.1 5h.0

Total Revenues 165.0 171.1 114.0Budget exDenditures 1)I 1T3.0 IA6-AOther expenditures 42.1 37.7 36.0

Deficit

Price Index, 1959: Cost of Living (1953=100) : 107

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PUMMARY AND .nr.T.TJFOTnM.

1. 1. W ai, wit alos 3TA p3 Anc+ Ceo Qns pe ri Iquarem miIe, is. t.he mos de + n velyVsettled of the Latin American republics. It is also the poorest and thelae+ Arranve A .,4+I-, +I 1_tr_+ a.n4+ .rm,+. (41n ToAAV +I-,h

lowest per capita income (less than $70 in 1960) and the highest rate of

2. Ha-; ti i Qs an . agri; cutua .14,,,.,1-nt 07. 00 of a h pe + paa, Lul ati+on Mr ,, cnrort-n-

try dwellers, making their living off the land and agriculture produces:-4"oA.1 Me thn 0/0 "./o ofJ exports L IJI .. U onras Lio ± teJpoor, .largel ruraIl,

population, there is a small urbanized clite enjoying relativelyLJ.l1 LV .4L6 C)VLJALL 1AO 10 UVVL1.I L .L LL kjJ.:'.Lt_LL16, ULIV J.CL.rV tUOLL1UOO ~LiJ

prises and playing a prominent role in the professions and in Government.

3. Subsistence production is the primary concern of the bulk of thejpopL uiL.LVt, _Lt WLt! P1-LLULJJCL.L t-,&PU1-U~ LUP P.LOV_LU_L11r' UVL L1L O I.tL.J

exports. It is grown by the peasants for whom it is the main source ofcah income. Sisal is grown on large estates, and tere hs been in morerecent years a relatively rapid development of tourism and of mining,witu vauxite ana copper being produced for export to the uned aUcoe.

4. Over the first post-war decade, Haiti benefitted greatly fromthe rise in prices of her principal exports, coffee and sisal. Betweenl945 and 195, the value of exports trebled. Coffee growers obtained themajor share of the rise in coffee prices and enjoyed a substantial risein real income. Their prosperity spread through the economy. Governmentrevenues reached unprecedented levels, public and private investment roseand the expansion of the domestic market provided the stimulus for theestablishment of new manufacturing industries. By 1954, per capita incomeis estimated to have reached 100.

5. With the decline in the prices of Haitian coffee from 1954, theperiod of relative prosperity came to an end. Coffee production had notincreased in response to the earlier rise in prices and with no increasein export volumes, the value of exports fell by 30% between 1954 and 1960.Falling exports brought declines in income, Government revenues and in-vestment, and renewed political instability in the past four years addedto the difficulties of the economy. Tourism declined, private investmentfell, and with a flight of capital the country was left without foreignexchange reserves despite the imposition of austere fiscal and monetarypolicies. As a result, the authorities could not take measures to off-set the effect of declining exports on income and employment and it isestimated that per capita income during this period fell by approximately30%.

6. This decline in income has been sustained notwithstanding thecoming to fruition in recent years of some major investment projects,financed largely from abroad, and the receipt of substantial technicaland economic assistance from the United States and international organ-izations.

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the Haitian people will depend largely on their own subsistence production,

arrested and reversed, an expansion in production for the market will benecesay, an present ex-&pe-Ucationsb, the: Va-LUe: ofeprsUhoglcuating from year to year, will show no appreciable upward trend in thenext five years, and while some steps are Veing taken uo expand pruonfor the domestic market, the resulting growth of income will be modest.

8. In the subsistence economy continuing erosion and impoverishmentof the soil will, unless checked, bring declining yields and falling out-put. With a rapidly growing population, the decline in subsistence pro-duction could not be allowed to continue but the task of reversing thistrend will be one of great difficulty. The density of settlement, the lowlevels of education and technical skill, the insecurity of land tenure,the traditions and outlook of the people are all factors hampering theadoption of new techniques, without which agricultural production cannotbe increased. The resources made available so far for rural education,agricultural extension, and soil conservation have been totally inadequateand, indeed, the task is beyond the capacities, both technical and finan-

cial, of the Haitian Government.

9. In these circumstances, increased foreign aid will be required ifthe growth of production is to be accelerated in order to permit even a

modest rise in per capita income. As the domestic market is small, the

expansion of production should initially be oriented towards the exportmarket, and it will depend primarily on Haiti's ability to increase agri-cultural exports. To achieve this, a substantial increase in technical

and financial assistance to farmers will be necessary, and at the sametime the transportation system, particularly highways, must be further

improved. If growth in the export sector pan be achieved, a renewed

expansion of production, especially of manufactures, for the domesticmarket may be expected, particularly if the Government takes the stepsnecessary to restore the confidence of private investors in Haiti, andif impediments such as the present serious shortage of electric power inPort-au-Prince can be overcome.

10. It is not possible at present to estimate precisely how much exter-nal aid Haiti could use effectively in the next five to ten years, but it

is clear that the need could not be met by borrowing on conventionalterms. Haiti has not met in full its obligations on the external publicdebt. The service on the existing debt (exclusive of payments of pastarrears) will represent about 15% of estimated budget revenues and 9%of estimated foreian exchange earnings in 1962. the peak year. By 1966,

service on the existing debt will represent about 6% of estimated foreignexchanLe earninos. If settlements are reached on debt service paymentsin arrears, the total debt service may be significantly increased, but itis unlikely that the debt service ratio will exceed 10% in the foreseeable

future, except possibly in 1962. Nevertheless, for a country as littledevelPd a Hait. -vith qn InNr a pr anita income and such limited growthprospects, the service on the existing external debt already constitutes

a hevy urdn o foeignexcang eanins,nnd there isq c-learlyv little

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room for ne -y borrow"ngson uonvuvnuional termto during the next five yecrseAid from abroad should, therefore, take the form rai.ly of grants and"oft" loans, anu if it is to be used effctively, t so essenvial thatt

it be associated with appropriate technical assistance to the Haitianagenies turough which the adu is cuanneleu,

I. INTRODUCTION

1. The Republic of Haiti occupies the western third of the islandof Snn+o noming, thue ,manrn 1'o' +. lnr rf .hp Chribben- The coun-

try is mountainous with three principal and many secondary ranges whichtogether- _ 4+1 r +Jc, +rn+.01ni a nf~ 10-700 qur

miles. The rugged topography, with elevations reaching nearly 9,000Pe - 4 n 4- 4 - -. -,- ~-., - ~ AA-r ,--;~+Nr v..* *o i f~ nrrAiiir m 7P t

L _LL U11-l Sol i4 -h ~VLL L~

vatiations in rainfall, with precipitation ranging from 20 to more tlan

A L .L - -ir r -------- - . ___ -4 4 -1 1 Tin- vq+pI-kU bL1 -)V UtLZj.U i, Ullte JJUPU_Lc.LU-VL1 VVCO *)-J L L.Lh'~L f*

of natural increase is not known exactly, but it is thought that the

population may now U Letwee alU _?,U 1;"L±L_L1, WiULL6aI Wi um

is as high as 4.0 million. A population of 3.7 million would mean an

average rate of grownth 0 1. 7o per annum,and an average deunsiy of the

order of 350 persons per square mile, the highest in any Latin American

republic.

3. Haiti is an agricultural country: 90% of the popuLauUi ilIcountry dwellers making their living off the land and agriculture provides

more than 907% of exports. In colonial times Haiti was the largest exzor-

ter of sugar in the world and a major exporter of coffee. After the coun-

try achieved its independence in 106o, the large estates were bpi-U Up

into a great number of small holdings by the former slaves and the produc-

tion of export crops, particularly sugar, gave way before the neeas 0.1 Un

population to produce food for their own subsistence. Exports of sugar

ceased but coffee continued to be grown by the peasants in mountain areas

and for most of the past hundred and fifty years has been the chief export

of the country.

4. The patterns of land holding and land usage established at the

time of independence have remained largely unchanged until today. Subsis-

tence production has continued to be the primary concern or the people.

Production techniques have changed little and the growth of population,which has increased seven-fold, has meant an increasing density of

gettlenent, in the highlands after the fertile plains had been occupied.,Cultivation of mountain lands by primitive techniques and the continuingremoval of tree cover has in turn resulted in serious erosion and inpcver-

i3hment of the soil.

5. The mass of the people are very poor. Average per capita income

is estimated at only $65-$70 but peasant incomes are lower than this.Standards in education and health are low: approximately 90% of the rural

population are illiterate; malnutrition is wide-spread; malaria is preva-

lent; and there is a heavy incidence of tuberculosis.

6. In contrast to the large rural population, which is mostly very

poor, there is a small urbanized "elite", enjoying relatively high standards

of living, owning or operating the larger business enterprises and playinga

prominent role in the professions and in Government. This grou has been mostly

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dependent on the production of export crops by the peasants although in

recent years the degree of dependence has been lessened with the devel-opment of cultivation of sisal on large estates and of the country'stourist trade. Government operations have also been primarily dependenton revenues derived from taxes on peasant production or consumption.Notwithstanding this dependence, few measures have been taken to promotethe expansion or improvement of peasant production. As a result, outpdthas slowly declined and export volumes have apparently never surpassed

the levels achieved at the end of the colonial period.

7. A major factor contributing to this decline has been the inabil-ity of successive governments to establish and carry through effectiveprograms to improve agricultural productivity. This failure has beendue in part to the lack of qualified personnel in Government servicebut, more important, to the waste of human resources which has resultedfrom repeated changes of personnel for political reasons. There is noestablished civil service in Haiti; civil servants change with changesin the government. A long history of political instability has meantfrequent disruption of the administrative machine, and standards ofpublic administration have in consequence been very low.

8. This situation has affected not only the agricultural servicesof the Government, but also the development of other basic economicservices. Roads have been built but not maintained, and even the mainhighways have often become impassable some years after construction. Nosubstantial imorovements have been made at the wharf of Port-au-Princesince it was built about 50 years ago. A telephone system was installedin the cnnital but for nractieal nurposes it is now useless. Whileelectric power is produced by a private company, Government policieshave so hampered the conanv' operations that there is now a severepower shortage, particularly in the area of Port-au-Prince.

9. In contrast to the generally poor performance in public admin-istration, the Naioa Bank, which opeate both as t.he central bank

and the largest commercial bank in Haiti, has been well managed, and thefiscal deartment of .he Itank, which collects Government revenues from

import and export taxes, has also operated effectively.

10. The sound management of the National Bank has been one legacyof +he help given b +he United States during the neriod of the AmpriTanoccupation (1915-1934). Much greater assistance - both technical andfinancial " has been provided by the United States during the past tenyears. From 1950 to 1959, U.S. aid totalled more than J60 million, ofwhich just less than half was in the form of loans for specific develop-ment projects. Of the remainder, a third was spent on technical assis-

administrationj a half was special assistance including budget supportgrants an .UUI U~IL ~d the~ balanc was food prvie une P.L. 48.

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I1I Add1rio nnl ni.d hncas ben p--ridedob thei+h Unite N.rlATins i n hepast decade. Over this period more than one hundred experts in a

stationed in Haiti by different agencies of the United Nations, andgrantsIdA hav been1 madeLU to enabUle~ _"UY 1da-LULar~is to. s,Luuuy CIVIO~CIL0 VILtIC211

cial assistance has been made available also in the form of a loan ofqy. .'d 11I1.J.L Lrom,I LI the LJ CUIU UU1I-Ur ULlt: YcdLOU J.ULL.L ~YCC%J.Z 0 . CL DULL'

of standby arrangements with the IMF.

12. The assistance from the United States and international organi-za[ious has unuouubeuy uougnu - uusanu-a- vueo- uo na±. A majorirrigation project has been developed in the valley of the Artiboni.te,naiUiPs largest river; a campaign againsu yaws, organizeU by the oUrLHealth Organization has been almost completely successful; progress hasbeen made in rural and adult education; roads have been improveU anU aroad maintenance organization established. These are some of the bene-fits received.

13. Nvevertheless, aid on the scale provided has not been suificientto make a substantial impact on the structure of the Haitian economy,nor on the living standa:ds of the people. A greater impact was madeby the increase in export values resulting from the rise in the pricesof coffee and sisal in the years following the Second World war. ineextent of this increase and its effects on the economy are consideredin the following sections.

II. ECONOMIC GROWTH

14, The fifteen years ending in 1954 brought a dramatic rise inHaiti's income from foreign trade. The value of exports rose from anaverage of $6.6 million in the thrae years before the Second World Warto almost $49.0 million from 1951 to 1954. In the immediate post-Waryears a rapid expansion in banana production contributed most to thegrowth of exports, but after 1947 continued growth resulted from theexpansion of sisal production and the rise in nrices of sisal and coffee.The most important of these factors was the great rise in coffeprices:with a moderate increase in volume the value of coffee exports rose from

$3.6 million in 1939 to $12.0 million in 1947 and 44 million in 1954,and coffee regained the dominant role in the composition of exportsthat it had held until the mid-1930's.

15. Booming exports and the favorable change in Haitits terms oftrade brought a substantial rise in the living standards of the people.Coffee producers,who obtained the major share of the rise in coffeeprices, increased their consumption but invested little in expandingproduction. Their prosperity spread through the economy, imports rose,Government revenues reached unprecedented levels and the expansion of

the domestic market provided the stimulus for the development of newmanufacturing industries producing textiles, clothing, soap, edibleoils and cement.

16. The Government which took office in 1950 embarked on an expandedprogram of public works in which the main emphasis was on road construc-tion and the development of the irrigation project in the ArtiboniteRiver Valley. Public investment expenditures rose from $6.5 million in1951 to $27 million in 1955. The greatly expanded public works programand the investments in new industries and tourist facilities in theprivate sector brought grc s investment in the years 1953-1955 to thehighest levels yet recorded. Nevertheless it is estimated that invest-ment still represented less than 9% of the Gross National Product duringthese years. and the major part of the increase in real income whichHaiti enjoyed during the first ten years after the War was devoted toexpanding consumption.

17. The rapid expansion of the economy was not maintained after 195h.The prices of Haitian coffee have declined almost continuously since1954 and prices of sisal have remained much below the levels of theboom years of the Korean war. Thevalue of exports has fluctuated withthe biennial cycle of good and bad coffee crons but the trend in the nastsix years has been downwards: for 1960 exports were estimated at $38million by comnarison with 45.5 million in 1950.

180 Wile eorts have heen falling, inteornal ativity has alsodeclined. A rapid expansion of Bank credit to the Government in 1955and 1956 led to fears for the stability of the Gourde and a flight ofcapital which gained momentum in 1957, a year of acute political insta-bility.* By the end of that year foreign exchange reserves were exhaus;ed,The Government was forced to take drastic measures and in cooperationwrith +h+ Tn+erna+inal M anet+- Fn n+ tArceA austerity oprog+am

which has been maintained since then. Government expenditures were

The cut in Government expenditures fell most heavily on investment;ppkax-t Xrr a.-JJ roa cosruto an1 AI~11.IL 4UIdi maI itenance.. proU1gam, undert± akwen,~ wVi-.11

the help of a loan from the IBRD, and some further work on the ArtiboniteAU.ley) ro~ject, speing.4. on now publi worksLL has.~ v1dirQAl ceasU~.LJ ed. With4

a declining internal market and continuing political uncertainty, private

Product are.available for recent years, but the evidence points to a

a decline of the order of 25% between 1954 and 1960, and a drop in percapita income from approximately Ou0 to less than $70 over this period.

Agriculture

19. Coffee is naitis principal export crop providing about 507 oftotal foreign exchange earnings. It is estimated that there are about150,000 peasant producers, each producing on the average between 20 lbsand -40 lbs of coffee, depending on the season. The coffee trees growmore or less wild, yields are very low, and there are great fluctuationsin the size of the crop. In recent years a regular pattern has emergedof one good crop being followed the next year by a crop little morethan half as large.

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20. While accurate production figures are not available, the long-term trend of coflee exports has been downward. Irom 1900 to 1910,average exports were slightly above 30,000 metric tons a year as com-pared with an average of 26,000 tons between 1950 and 1960. This de-cline reflects some increase in internal consumption; production mayhave remained approximately constant or may even have increasedslightly., The volume of exports has also declined slightly in the pastten years, and exportable production is currently below the level ofHaiti's quota under the International Coffee Pgreement.

21. As coffee plays so crucial a role in the Haitian economy,attempts have been made from time to time, so far with little success,to expand plantings and increase yields. At present, the coffee expor-ters, under pressure from the Government,are preparing a program to growcoffee in demonstration plots using modern techniques, in the hope thatthe peasants will be encouraged to adopt the same methods. The scaleof the program as envisaged at present is small and its impact is likelyto be quite limited, but should the program be enlarged and prove suc-cessful, an expansion in production might be expected after four orfive years.

22. A substantial increase in the returns on coffee would resultfrom improvements in quality. This depends in part on the processingmethods emloyed. At present only 10% of the crop is orocessed inmodern "washing" plants, although a price differential of the order of5 U.S. cents per lb.-or 16% of the current market price of Haitiancoffee,exists between washed and unwashed coffee. New plants havebeen established in the nast year. but the remoteness of most coffeegrowing areas, the lack of adequate transportation, and the conservatismof the neasants are serious obhtacles to further imnrovement.

231. Tn nontrasqt to the- donwnwa-rdl tKrend3 in roffpe 5ex-nnot.s- nrcitinnLof sisal, Haiti's second principal export, has risen from a few thousandtons during the Ol93 1 s to an avora of 30,000 tons a veaqr dring thepast ten years. Sisal is grown mainly on large estates, and one producer,the Plnntntion Dannhin_ nmnrnrec nnraximately hlf the mtnnut of the

country. The major expansion in production occurred in the late 1940'sin rponnnse to the sharn rise in ricet Pt.hat. time The fall in

prices after the Korean war brought some reduction in output, but in the

maintained, new sisal plantations are being established and plans are

twine, for export to the United States.

24. Cacao has been exported from Haiti for many years. Like coffee, it

cessing techniques are poor and the quality of much of the crop is low.4,, -b ,~,,,- ,.,- years--.- "e a.r,veraged,, -- o-- t 0 000 tonsr a

year, higher than in the 1930's but lower than in the early years ofotpus ctTy. ther arment hofve e p North, the IC. mis t Hai

output. In the Department of the North, the .C. mission to Haiti

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adoption of improved cultivation techniques, and is establishing modernprocess±ing p.lants. VI1 Uld LdbS±3 01 IALL6 1*JZQ81';U1, itL -L,- UAPiet;U UII±dt

cacao exports can be doubled in volume by 1966 and the quality of theproduct should be greatly improved.

S. Sugar was naiti's major export in colonial times; it is esumatedthat exports at the end of the eighteenth century were approximatelyou,uuu tons a year. After independence, the lands were used to growsubsistence crops, the irrigation works fell into decay, production wasgreatly reduced and exports during the nineteenth century virtuallyceased. The stimulus to recovery was given in the early years of thiscentury when the Haitian American Sugar Company built a mill near Port-au-Prince. Exports increased slowly during the 1920's and by the middle1930's exceeded 30,000 tons. This level was again reached in the early1950's. A second mill was built by Cuban interests in 1953 but withadverse seasons in some recent years and a growth in domestic: consump-tion, exports have declined. In no year has Haiti been able to fillher export quota of 44,000 tons in the world market. In 1960, however,a favorable season enabled her to take advantage of the opportunity toexpand exports to the United States in excess of her quota of 9,000tons following the cessation of sugar imports from Cuba. As long asthe ban on Cuban sugar continues, market prospects for Haitian sugar inthe United States are likely to be favorable, and there is a large poten-tial for expanding sugar production in Haiti. It is uncertain, however,how long sugar can be exported in quantity to the United States market,and it is doubtful whether an expansion of production would be profitableon the basis of the present world sugar price. For these reasons, a sus-tained expansion in sugar exports appears unlikely.

26. Production of cotton in Haiti reached its peak of 6,000 tons inthe years 1L932-±935 after a steady build-up during the 1920's. The wholeoutput at that time was exported. A perennial variety of cotton wasgrown and when infestation by the Mexican boll weavil started in 1935the proolem of control proved unusually difficult. No effective stepswere taken by the Government or the industry to control the spread ofthe pest and production declined. Subsequently, with the establishmentof a domestic textile industry after the Second World War, increasingquantities of cotton were used at home. The effect has been to reduceexports to only a few hundred tons in recent years, and in the currentseason cotton may have to be imported to meet the needs of the textileindustry. Expert opinion appears to be agreed that a recovery of cot-ton production could be achieved if an annual variety were to be grownand if measures were to be taken to control the boll weavil. There isno program, however, for assisting the peasants to plant new varietiesand adopt improved techniques so that no recovery in production can atpresent be expected.

27. Exports of bananas increased steadily during the 1930's afterthe Standard Fruit Comnanv established nlantations in Haiti. Besidesoperating its own plantations in the Artibonite river valley, the Com-n,nv hid the sole ripht tx exncrt banannas grown by other nroducers.

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The market offered by the Company provided a stimulus to production bypeasant producers, and although exports declined during the SecondWorld War., they expanded rapidly to a peak of 7.3 million stems in1946-1947, when bananas represented 20% of Haiti's total exports. Sub-sequently. the Government refused to renew the Company's contract,dividing it between a number of Haitian businessmen. The company with-drew from Haiti: the new contractors were unable to ship and market thebananas satisfactorily, exports declined even more rapidly than theyhad risen., and by the late 195O's. were less than 50.000 stems a year.Some recovery in production is, however, now possible. In the past twovears the West Tndia Frit and Rtpmmrnphin Comnwnv has established new

banana plantations in the Department of the North. Disease, inadequate

and owing to difficulties of securing land, it appears at present unlikelythat the noprat.inn ill anal in sie that.r +.of t +.andard Frit Cnmnany.

Production of bananas from the 1,100 acres already planted is estimatedto be about- AA_,A0 stems and -with additional are still to be planted,production might reach about 650,000 stems in two years from now. The

eX_ S e.Ce of th nemT M'..,t ng cl.&J ±Mel ^-rfA.W"n UJ tDLSr +1in lLjCfS r.ILC.J mn% n 1-

stimulate increased production by peasant producers. On the other hand,unl e ba - afl p-4 - ste ngthen a

4l- n p r oductJoA, n d -AAP-C-icult-i -s .~ 1-4- ,r

encountered are quickly overcome, it is possible that the Company will

and potatoes. Accurate figures are not available on the trends in produc-tioor of these crops, bUt it isb YIVoWL tiat the ProuctionLU1 ofL iLtc%hasincreased substantially with the development of the irrigation projectin the Artibonite River valley. Tnis project is the largest in naiti;

an Export-Import Bank loan helped to finance the damming of the riverand the construction of primary irrigation and drainage canals for anarea of 45,000 acres. Subsequently secondary and tertiary canals werebuilt to serve rather less than half this area: they were not wellplanned, and land settlement in the area was not adequately coordinatedand controlled, so that the potential of the project has been onlypartly realized. Plans are in hand, however, to develop the projectfurther. With the help of a loan from the DL made in 1Y59, primaryirrigation and drainage canals are to be built to serve a further 30,000acres, and the new work is expected to be completed by July 1962. Ricehas been the principal crop produced so far, and output is sufficientto meet the demand in Haiti.

29. Notwithstanding the expansion in rice production, output of foodgrains in recent years has not been sufficient to meet the needs of thepopulation in all parts of the country, and foodstuffs have been importedinto some areas by CARE and various church organizations for free distri-bution. These areas were those most severely damaged by the hurricane"Hazel" in 1954 and more arid parts of the country which have sufferedin recent years from adverse seasons.

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,U. Local snortages 01 1000 graing are likely o coninue -uniessmore active steps are taken to increase production in areas liable todrought, or to reduce the heavy losses of grains which result from

poor storage. Experts of Point IV believe that if these losses couldbe substantially reduced, a surplus of grains would result. They areworking on a program to improve storage facilities, and are hopingthat it will be possible to use the expected grain surpluses in thedevelopment of the livestock industry. At present income levels, it

is doubtful whether the domestic market could absorb a significantexpansion in meat production, but there is a possibility of exportingmeat to some neighboring countries and a modern abattoir, built recentlyin Port-au-Prince, could be employed in this trade. Grain surplusesmight be used also in the development of the dairy industry. Productionof dairy products for the market is at present small and imports havebeen valued at more than $1.0 million in recent years.

Forestry

31. Haiti used to have very large timber resources which were ex-ploited for domestic use and for export. From the late 1880's to the1920's there was a substantial export of logwood (campeche) which duringthis period held third place in Haitian exports. Subsequently demand.overseas declined and with a depletion of supplies, exports were greatlyreduced. Timber resources have also been seriously depleted by cuttingfor domestic uses, particularly for fuel and construction purposes.Accurate figures are not available, but it is probable that over thepast hundred years timber lands have been reduced from well over two-thirds to less than a fifth of the total area of the country.

32. Apart from the exploitation by the peasant population, sawntimber is being produced for the domestic market from pine forests inthe southeast of the country. Output is at the rate of 8-10 millicnboard feet a year, which appears to be adequate to meet the local demandfor unworked timber.

Fishing

33. The fish catch in Haitian coastal waters has been estimated atabout 4 million lbs. a year. This is small in relation to the localdemand, and imports of preserved fish, mainly cod and herring, haveamounted in years of prosperity to the equivalent of approximately30 million lbs. of fresh fish. Even in lean years, imports have beenequal to about half this amount and have been valued at almost $1 million.

34. There is little doubt that with improved techniques the localfish catch could be greatly improved, and the United Nations providedtechnical assistance to enable the basis for expanding production to beworked out. The trpes of local fish most readily marketable in Haitiwere deterriined,'and a program ias started to select the waterswhereThee tVnes 74(re most Trolific. Subseauently there was to be a selec-tion of the most appropriate methods for preserving the fish for transport

-9-

tO inland markets* 7nfortuiate ly, n W'u- Udoance u :..Z7

i!withdrain in the spring of 1961, an the w-Tork came to a stop.

35. An expansion of fish production could come also from the devel-opment of fish culture. Demonstration projects have proved successful,and a number of rivers and ponds have been stocked. Little progresshas been made, however, in the marketing of fresh water fish, and pro.-duction is still small.

36. There is at present a small export of lobsters to the UnitedStates. This trade could expand as there is a considerable potentialfor increasing production.

Mining

37. No comprehensive survey of Haiti's mineral resources has yetbeen made, but deposits oflignite, bauxite, copper and manganese havebeen found. Of these, bauxite and copper are being exploited at present.The Reynolds Metals Corporation has been mining bauxite near Miragoanein the southern peninsula for the past four to five years, and produc-,tion is currently at the rate of 350,000 metric tons a year. The oreis marketed in the United States.

38. Production of copper concentrates started in October 1960. Thecompany concerned is an affiliate of Consolidated Halliwell Ltd. ofToronto, Canada. Production is expected to be 25,000 short tons ofconcentrate in the first year of operation, rising to an annual rate of36,000 tons thereafter. The value of exports of these two minerals to-gether is exoected to be of the order of .4 million annually.

Manufacturing

19. Manufacturing industry in Hiti has been .aqed mainly on theprocessing of local raw materials for sale in the domestic market. Themost notable exenption to thiq has been th -igar industry but in more

recent years, an increasing share of sugar production has been consumedlocnly qnd trnort. now nnount for much less than hqlf total outnut-

ho- Othe r majonr industq+ries of t.he cour.vyp re.hose produciiing cemnt,+wheat flour, and cigarettes, and the complex comprising oil expressingand refining, oann making and manufa nr of nt.nn +.V+ile The oil

expressing industry was started thirty years ago by the major cottonRYnnrtArR to nrnnez nntfnn qpH hiut. with +.h,- d3n1inn in ,ton nrnt.fn

tion, the industry has turned increasingly to importing crude and semi-re,finedi oils_ fonr finnl pronncssing. The great epan%inn of' them domest.imarket in the post-war years stimulated the entry of these same firmsinrtrn +.hc, rel' +. fi cide of eman manuf tnv andr +ha ne, Ao +4ciov rvf rr+tr.,

textiles, and they now supply approximately half the domestic requirementsof soap and between 10% and 1' % P of the countt --conmp+on of cotton

cloth. Both the cement plant and flour mill have also been establishedAn aonnc + m +h ewar+ nt +rr An er+4 m + an + res+ +nn prong

Aart from the few larger enterprises, there are small factories producing

- 10 -

for the local market, clothing, Plastic articles, aluminum and enamel house-hold utensils, and building materials; essential oils and unsweetened choco-late are produced for exports. The export market also provides the mainoutlet for the considerable output of handicrafts.

41. Although the Government has assisted industries by granting taxconcessions, reductions in customs duties. and protection in certain cases.political -uncertainties appear to be inhibiting further private investmentin industry at nresent. Relizinv the reluctance of nrivate investors tostart new enterprises, the National Bank is promoting a number of projects,of which the most imnortant is one to nrnnoin Athi'h'p nil.- frTm lonlly crron

eil seeds. The domestic market for such oils is large, imports being valuedin recent. ears a0+..0A000700nn annnully. The National Bankis nrsenthas two parts: the construction and operation of the oil expressing plantand the stimn,Oation of production of Suitable nil cds T the nrojct insuccessful, a further development might be the production of hycirogenated

ve-etabl fats; ,~ - a annua J-prso ri 1 p nc )iqrp Inn %rmli ii in I-nren1:> n- . An lble _ _Im _ b e l --+ hd in _e nt

years at. well over $1.0 million. The National Bank is also financing theconsruct,n - of n + "nna-r'r 4 , Po -PI,e nnA 4 - c+.iiel-rinry +1in nnc2Qih4i1i+.-r

of utilizing sisal waste and other waste materials to produce cellulose for

Touu-rnihsmat te e ou i - ha eo e a -;Im s

important source of foreign exchange earnings. The growth in the tradewasd. espeUcally raiL -n U " -L' L.,V WLVZiI UUJ,VJUV UVUL.LZ UZ V± L_Lt,-L 1I"lL C"11LVZ)U

six times as many as in 1950. Income from tourism rose from $1.5 milliontO MiLilio OU±U ver ULLIS Period.

h3.L Ths rapi g Awt wasLLULU_ no anane fe 95.Pltc l i' tbility deterred potential tourists and earnings from tourism declined to$uU llion in 19U, but bnere has Ueen some recovery in the past Uwoyears. In recent months, however, renewed political difficulties haveagain deterred visitors,and some of the better hotels have been forced toclose. As a result, tourist earnings are likely to fall in the currentyear. AIny subsequent recovery,which coul be quite rapid, wUill epenUmainly on an improvement in the political climate in Haiti.

MI. BASIC SEVICES

Transportation

44 Transportation in Haiti is principally by road. Railway traffic,apart from the carriage of cane over the lines of the Haitian AmericanSugar Company, is negligible. There are in all more than 3,000 Kilometersof roads of which 1,100 kilometers have been gravelled and 400 kilometerspaved. The improvement of roads was one of the main objectives of thedevelopment program initiated in 1951, and during the past ten yearsmore than t9.0 million has been borrowed from abroad, $2.0 million of itfrom the IBRD, for road construction and maintenance. In addition, the

- 11 -

Haitian Government has contributed substantial sums from its own resour-ces to the road program, which has consisted largely of reconstructingor improving existing roads, especially those linking the principaltowns of the country. Until recently, however, there has been no ade-quate road repair and maintenance organization, and roads have rapidlydeteriorated, in some cases becoming partly or wholly impassable a fewyears after construction. The loan from the IBRD was designed to asbistin establishing a road maintenance organization which has now been oper-ating effectively for about three years. It has reopened and maintainedthe main road from Port-au-Prince to Cap Haitien, the principal port on.the north coast, as well as other roads in the northern and central sec-tions of the country. It has not worked in the southern peninsula wherethe roads have deteriorated so seriously in recent years that many ofthem, including the main road from Port-au-Prince to Les Cayes, theprincipal port on the south coast, are now impassable. In 1960 the DLFmade a loan of $300,00C to finance engineering studies for the reconstruc-tion of the road to Les Caves and it is expected that the DLF will soongive consideration to financing the reconstruction of this road.

Port-au-Prince is the nrincinal nort of Haiti, handling about 70%of the external trade of the country. The pier was built some fifty yearsago and mair rePairs were made in 19l. Tt ann anonnmdatP medium sizeships, but the facilities provided at the pier are such that efficienthandling of raoe is very diffinnr+. R+iaifn-V +.ho r nm+.rnation orenlargement of the pier were made in 1956 and again in 1958, but no fi-

pier are clearly necessary, much could be done to speed the flow of

the handling of goods by the customs authorities.

46. Apart from Port-au-Prince, Cap Haitien on the north coast is the'JILL IJ~± V VLLV. a CE DL'. U11, U[JJ9.P1.J OV IdVOI VLJ U11V X,101 V VJ.V~1LJVV.'

in 1953 and its capacity is more than sufficient for present needs. Atall.1 other ports loading andunloading i done.ylheg.

14 ( kILL.L.L1= 1JIU Uua LOJLI oA. VJ t i..~ L 11 .LL J.J-. U LLC% t- JL'J.V'Jk_ I.d..IUi.y .11

recent years, the consumption per capita at 18 kwh in 1958 was among the1.4- f T . Z- A----'.... - - -

L-u. LIU 'p1JIoU.Lpca puwa Un1Uaita.1g Lz a privave coIfjumpaly Zjervin1g roru-au-Prince and Cap Haitien. The generating capacity of the company'sinstallations is 13,300 KW of Wih rather less tan ha-L has been in-stalled in the past ten years. Power costs per unit sold are high, partlyas a result of very large thefts of power which at present amount to about40% the current sent out. The company's concession expires in 1971, whenall its assets pass to the Haitian Government without compensation. Partlyfor this reason and partly becadse of its unfavorable financial position,,the company has been unwilling to invest in major additions to capacity inspite of a growing power shortage. Studies of the power market made byconsultants in 1956 indicated a demand in the city of Port-au-Prince and

- 12 -

its environs of approximately 18,000 kw by 1960. This compares with apresent effective capacity in Vort-au-Prince of less than 11,000 kw.

49. Haiti has no natural fuels (the present generating plants useimported diesel oi but with its rugged topography and good rainfall ithas the opportunity of developing hydroelectric power. The dam built atPeligre as part of the Artibonite irrigation project was designed topermit the subsequent construction of a hydroelectric power plant. Sucha plant would, in the view of consultants, probably provide the mosteconomical way of meeting the power needs of the capital and other adja-cent areas, but no progress with the project has been possible becausethe Government hasapparently been unable to decide whether to undertakeit itself or allow the power company to do so.

IV. FINANCIAL DEVELOP'MNTS

50. The Haitian banking system consists of the Government-ownedNational Bank, three private commercial banks, two of which are branchesof foreign banks, and the Haitian Agricultural and Industrial CreditInstitute.

51. Until the Second World War, bank lending was confined mainly tothe financing of foreign trade. Credit advanced directly to producers wasvery small. This pattern of lending reflected the economic structure ofthe country. Production of primary products both for export and for domes-tic consumption was overwhelmingly in the hands of small peasant farmers,who had neither the skill nor the resources to utilize bank credit; therewas very little manufacturing industry and the borrowing powers of theGovernment were severely limited in torms of' the agrement with the U.S_Government concluded in connection with the dollar loan of 1922. Withthis nattorn of nrodntion and of hank lnrira_ the mrnev qiinn1v was deter-mined primarily by changes in foreign trade and payments. The systemn noly -n-nmat.l-ur _naliv* -"ic onr f-qll in Pvr-r+._ mriel in nirrohni ini'

power was soon reflected in a rise or fall in imports. Apart from seasonalfluict,ation c * eXchMge M-eM,_rs w.ere -- nnt--ied atahg erel; th e.

change rate remained stable at five gourdes to the dollar, the rate fixedin 1919* and +.no time s there nod for oehance onntrol.

tion of the U.S. dollar loan of 1922, the restrictions on the Government's

mission to Haiti recommended the greater use of bank resources for devElop-

term capital through a new development institution. In 1951, the HaitianAgiutrland InuUstria.l CredLi _InsitutLLLe was estUablisOhJd, With U1capitl L-

subscribed by the Government and the National Bank. The Institute has lentmedium- and long-term capital to agricultural and industriaJ enterprJsesand also invested heavily in new tourist hotels.

53. From 1950 the commercial banks and especially the National Bankadopted expansionary policies. Wnith the growth in foreign trade and theestablishment of new manufacturing enterprises credit to the private sectormore than doubed between l950 and 1956. During this tine also, theGovernment embarked upon an ambitious development program which it wasunable to finance solely from current revenues and external assistance.It therefore borrowed fron the National Bank, and creait to the public

- 13 -

sector expanded almost sevenfold between 1950 and 1956. These changesare shown in the following tAble

DOMESTIC CREDIT OUTSTINDING - 1950-1960(million gourdes)

End of September

1950 1956 1960

To Government (net) I98 92-1 97.To other public sectors (net) - 3.5 -1.4To nrivntp qpt.or 91A 0 . A11Net unclassified assets -8.4 -19.8 -24.3

27.0 126.1 132.6

5h. gotwithRtnndin the rnnii ennn.qin of rrlit. hpt:vPn 1QO qni

1956, foreign exchange reserves were well maintained, averaging .511.0million over the n-.riod- ni the n-ri level incrPn.r very moderntely.This was due in large part to the accumulation of savings through thebanking qv.t..m nnd to the sorption h th Prinnmy of incrPAsina nmniintsof cash. Nevertheless the credit expansion had brought a great increasein 1liniiiHri t.i --nl T.Than nnnf-i c,=nf- in +1io Tnr- rla .Tn w nrLnm0rc1e in 1 Ql (

and the political situation deteriorated in the following year, there wasaq fl igcht. of cap-nita +.n TAi r0n -ricnti ng+ Pvi --r n-v- 1i n" ' ~ ve w r ± 1. : T

to zero. Since 1957, under the guidance of the IMF, more conservativecredit policies have 'been fo'llowred T-I - - 4n~ 'IQAr)960credit to the public sector hardly changed and although with the private

sector increased by 20%, the average annual credit expansion was in4 0.. .L V V.LC, MkJ.L C V1ILOI .Lo.) I I"-LILALL1 JUL t O CLO I. ILI-)

4 cx VV "- 1 0J I . C. A

of 16.5 million gourdes in the preceding six years.

55. The policy of credit restraint has been reflected in an improve-menu in Lfle vaance o1 paymen±us on curreau EaKcoUL1U noUUw±tUiuenLEaLug ULnesubstantial decline in the value of exports in recent years. The exchangevalue of the gourde has remained stable,and complete freedom of foreignpayments has been maintained. There has, however, been a continuingflightvi. capia a nu neU LO-ULgn exAcIange re6ve nave Lucreaseu only fractUn-ally. Had it been possible to control the outflow of capital, a moreLberal credit poicy Iigh neve been followea, with the oueU U temper-ing the decline inincome and employment which resulted from the sharp fallin export earnings. Under hauLan conditions, nowever, an effective controlof capital movements would be very difficult to operate in practice, so thata credit policy different from that actually followed would hardly havebeen feasible.

V. FISCAL DEVELOPMENTS

Trends in Public Finance

56. Balancing of the budget was a principal objective of the fiscaladministration established during the period of the United States Occupation.The Haitian authorities agreed that during the currency of the 1922 dollarloan the service of the loan should constitute a first charge on Government

- 14 -

revenues, and that the public debt should not be increased, except inagreement with the U.S. Government. The balance of the 1922 loan wasredeemed in 1947 and the Government was then free to adopt a more flex-ible financial policy, but until that time, and even for several yearsthereafter, expenditures were closely adjusted to current revenues, withsmall deficits in some years being balanced by surpluses in others.With the exception of a loan of $).5 million imade by the Export-ImportBank in 1938 to finance public works projects, and a small loan from theNational Bank in 1947, current revenues were the only resources availableto the Government. A marked change in policy came about in 1951 when thenew administration embarked upon an expanded economic development program.By 1955, expenditures at 285 million gourdes had nearly doubled by com-parison with 1951. but current revenues had increased by only 13%. Inthe five years ending in 1956, the Government incurred a cumulative currentdeficit of' 220 million gourdes which was financed partly with foreignborrowings (61%), partly by borrowings from the National Bank (38%), anipartly by a small increase in the floating debt.

q7. In snite of th. ranid changes of governments in 19 7 and the ac-companying administrative disruption, under the influence of advisers from-i ntprnt±i nnnl rn-'rnni 7.qti nr ne- nnri t.iivP- .pr qThnrnl-, -nrip+rl h,-.1 n-w thp

levels of preceding years, and a small surplus was achieved. Since then,with the es+blishmen+.. of clo wr.king "altnnhin with the TVP t.he

Government has been under pressure to reduce expenditures in response tothe clin1 in. ri 'nnn,rfern,mt n

1n-~ -,iob r-11++ 7n11lie-~

investment expenditures sharply reduced, the urgently needed expansion in

suspended. As a result, Government expenditures were reduced by about :30%

years, the 1960 deficit was reduced to only 10.5 million gourdes, lessawO uL epeud-Itures, auu te three year c-muL-nav veUvoya o± tu mILzOn

gourdes was very much smaller than in the earlier period; it was financedmainly by budget support grants from neuneu uates and by an increas ein external borrowing (see Table 15).

58. In addition to the decline in revenues in recent years the budget-ary problem has been made more udificult by the sharp revenue fluctuationswhich have reflected the year to year variations in coffee exports. AboutoU0 of fisca. revenues are uerived from import anu export duties andvariations in the size of the coffee crop affect Government revenuesdirectly thrcugh the export duties on coffee, and indirectly through theireffects on imports and on receipts from import duties. In 1958, a year ofa good coffee crop, fiscal revenues were about 30% greater than in 1959when the crop was poor. U.S. budget support grants filled the gap in 1959and in the 1961 fiscal year, with another small coffee crop, the U.S.Government has provided further budget support aid of more than 20 milliongourdes, which will be sufficient to cover about two-thirds of the expecLedoverall fiscal deficit.

59. The budgetary problem has been eased slightly in recent years bythe slow increase in the proportion of revenues derived from sources otherthan taxes on foreign trade, and revenues could be increased by raising

- 15 -

increasing selected taxes without adversely affecting production. Never-

and taxes on exports, particularly on coffee, are probably already toohigh. For these reasons, no substantial inraei eene slkl

in the next few years, and without a continuation of U.S. budget supportgrants the fiscal position in poor* cuJt year, WuU vU LrivaLe

Patterns of Revenues and Expenditures

0. Before considering the pattern of revenues and expenditures, itis necessary to distinguish between the budgetary (or "fiscal") and non-budgetary (or "non-fiscal") operations of the Government. The formerinclude the bulk of tax proceeds, income from public land and publicenterprises, fees, all of which together have contributed about four-fifthsof total Government revenues in recent years. Budgeted.. expendituresinclude the spending of the Government departments, contributions to inter-national organizations and to programs undertaken jointly with externalagencies, certain transfer payments and part of the public debt service.

61. Non-budgeted revenues include contributions from the State Lottery,the State tobacco monopoly and the National Coffee Office, and allocationsfrom the budget. Expenditures cover, inter alia, certain health, educa-tion and public works projects, and some pensions and subventions. Someexoenditures financed from foreign loans and floating debt are reflectedneither in the "fiscal" nor "non-fiscal" accounts, nor are the proceedsof a number of taxes, most notably the special coffee tax of $4 per bagwhich is paid direct to the National Bank for servicing certain Governmentbond issues. Owing to the paucity of data, it is not possible to obtaina clear picture of non-budgetary operations and in the following para-graphs the discussion is limited to budgeted revenues and expenditures.

62. Indirect taxes yield more than 70o of the budgetary revenues ofthe Government. Import duties alone contribute about 40%, export taxes20% and excise duties 10% of revenues. By comparison direct taxation onthe incomes of businessmen and individuals yields less than 8% of budgetrevenues and of this amount individual income taxes yield only one-fifth.Statistics are not available on the distribution of personal incomes inHaiti, but it is clear that the burden of direct taxation on the wealthierclasses is very light.

63. On the other hand. the burden of indirect taxation falls mostheavily on the poor. Taxes on coffee, which are passed back to the pro-ducers, represent almost 30% of the current f.o.b. price. Coffee taxesdo not vary with variations in the market price so that the share takenin taxation rises as the market nrice falls. At nresent levels. coffeetaxes are most probably a disincentive to production. With regard toimport duties and excise taxes. the maior nart of nroeeds comes fromtaxes on foodstuffs (notably flour, sugar and edible oils), textiles,soan. nigarettes and soft drinks. which are t-onsimPd minlv by th no-nrpyclasses. In 1959, excise duties on flour, sugar and edible oils aloneaccoiinted for three-frtr-hsq of thei vield of all eisedutie in t.hat+

- 16 -

vaxr Mrnver, thes +nvae n nn+ renpresnt.+he full bnrden on conmers,

for in case of tobacco, soap, edible oils and flour, Government-sponsoredmonoponIJer 'haver beenn eQstab h -jli which wiea l substa!nt+il q* reinue tomiic t%+hstate.

64. On the side of budget expenditures, the armed forces absorb the

fall in total expenditures in the past four years,recorded mid.tayspending

proportional decline in spending on economic development and public works,wn. i.Ac h . ow a c t f -LJ -- -111(all _LkJ/Q 01J DUGIV in-.jJEL4 I U. C" VA t,JCI- t~ AAJ.

more than 25% from 1952 to 1956. This decline indicates a sharp fall in'JL± _L£ V il LlILIV yAJIU4 U _L L41= t ~L U'Vt.;.Ll1U1Ut=LI1U, L)LLL',± IlUliS Wlt-, LL"LJ1L 1 .L%JA1£

available, it is not possible to determine precisely what investment expen-%ALL" UD LICtV Z ULJZ%,i L11 ZL, t:Il CU 0 * . Pt:j11IU_Lir U11 6 Lt. ULU " ctL. OUI V-LLU -, LICE0

increased slightly and, together with the contributions to agriculturalprj±uect Ludertak-Ven. wdLl a0Z'Si±.LdOUJL L_1U U11U UlLLUt:U Jl.aUt::Z, noUW alUOUIU6

for about 12% of the total. Health and education services together absorbabout one-fourth of budgetary expenditures, a somewhat higher proportionthan in the past.

65. With regard to the broad pattern of revenues and expenditures.,the resources available to the Government are very limited in relation tothe level of public services which would be desirable, and no major reduc-tions in taxation can be contemplated. On the other hand, in view of theprogram for expanding coffee production and of the expected further declinein coffee prices, a gradual lightening of the coffee tax is desirable, andit should be possible to make up for the consequent loss of revenues byincreasing direct taxation on individuals and businesses. On the side ofexpenditures, priority should be given to promoting increases in agricul-tural productivity, upon which Haitils future well-being will primarilydepend. It is necessary, therefore, that greater emphasis should be givenin the budget to expanding agricultural services and those basic services,such as transport, without which production cannot expand. At a time whenthe prospects for an increase in resources are poor, unless additional aidis received from abroad, this can be achieved only if allocations to otherservices are cut. In this connection the increase in spending on the amedforces is disquieting, and the relative increases in expenditures on socialservices is perhaps difficult to justify in spite of low health standardsand a high rate of illiteracy, while inadequate provision is being made!for agricultural extension and road construction. Some re-allocation ofGovernment expenditures is, therefore, desirable, but it must be recog-nized that under Haitian conditions such a re-allocation by itself wouldachieve little, unless it were accompanied by a marked improvement instandards of administration and technical competence in the services ofthe Government.

External Public Debt

66. The consolidation of external debt undertaken in 1922 with anissue of $23.7 million of dollar bonds, enabled Haiti to settle almost allof its existing obligations. No new borrowing occurred until 1938 whenthe Export-Import Bank made a loan to the Government of $5.5 million tofinance public works. In 1941 the Export-Import Bank made a further loan

- 17 -

of $5.0 million to SHADA, a Government-owned corporation,for agriculturaldevelonment, and in 19hA n lon of $h.2 million for thp revPlnment nf the

Artibonite irrigation system. The second of these loans was subsequentlyincresed b starges to 427 mil-on adin _j .,T-n H

external debt. After 1950 new debts were incurred through commitments to

Appendix II, Table 1), amounted in total to .12. 6 million and, being short-tm, impo-sed a heaT burden on (,overnment fLinanCes B0Dy Wim t5ju u± o- '

the total external public debt amounted to 113.2 million, which includedthe loan of 2 .6 million from theI TnTln for- ro_a aitennc . 1-

folloiring year a loan of '.0 million was obtained from Cuba, and two loansVU 4.\ IIILL.LU11 Wt ULdL1tU I Ufl UiuI LL 11 1 ;0 ) al7 u i UU. iIle

last two are repayable in local currency. By the end of 1960, the externalpublic 4.4 -.- deb to Ale <.h. n_ 1- -_ mi n ,n April -161 th nfnter -mericaDevelopment Bank agreed to lend 93,6 million to finance agricultural and

ndustr4a' development projects. In-s loan is also repayable in localcurrency.

. n -S UCou u1 GeO Sevce Wasg UL e guru ui ui.

By that time, difficulties had been experienced in servicing the Export-impor Bank loan to SlAkA and the terms of repayment were re-negotiatea in

1951 and 1952, interest beirgwaived for a period of ten years. The termsof repayment of the $27.0 million Export-import Bank loan for the Artiboniteproject were also re-negotiated in 1956. The revenues yielded by the pro-ject have, however, been very small in the absence of hydro-electric powerdevelopment, and its contribution to foreign exchange earnings has beennegligible. Notwithstanding the easing of the debt service burden, there-fore, Haiti has not met in full its obligations on the Eximbank loarsinrecent years, and payments on some suppliers' credits are also in arrears.The extent of the arrears is shown in the following table:

ARREARS OF DEBT SERVICE PAYIMENTS AT DECEMBER 31, 1960

(U.S. $ thousands) Interest Principal

Eximbank loans 853 600

Suppliers' credits

Undisputed by Haitian Government 500 300Disputed by Haitian Government ? 2,400

1,353(?) 3,300

Some interest payments have been made on the Cuban loan but there has beenno repayment of principal, as no requests for payment have been receivedfrom bondholders. Interest Dayments on the loan from the IBRD have so farbeen met. The first amortization payment is due on July 1, 1961, and al-thouah no nrovision for this navment has been made in the 1960/61 budaet.assurances have been received that the payment will be made.

68. If debt service were to be resumed in full, service payments onHaiti's external nnulin rbt. wuld amountt+.o AL- million in 1QAP the

peak year, excluding any payments of arrears of interest and principal.iQ 'LMtIAA IErvcttr+ ̂ -ht,i 1 n c---+nrl f'i ortl "n-fa,ni-Q in +.'nt.

- 18 -

+Ar A1-%ht an-vrr-in ianivll f 'nll -ni +c -n ii l-vr +., §~9-A millinn in

1966 and to $2.0 million in 1970, again excluding payments of past arrears.

T rUV n/IT AKTl r1 DAVNTMCPQ

is shown in the table below:

SUMMARY OF THE BALANCE OF PAIENTS(Two-year averages - U.S.' millions)

1951/-5z I-Z3/54 _1555/56 1957/58 1959/60

Exports (f,o.b.) 51.2 46.7 h0.7 37.5 32.0Imports (c.i.f.) -47.2 -46.1 -51.7 -42.5 -32.4Foreign Travel Earnings 1.4 2.2 6.6 6.3 6.9Other (net) -6.o -6.1 -5.3 -1.6 -4.7

Current Balance -0.6 -3.3 -9.7 -0.3 1.8

Donations: Private 0.1 -0.3 -0.2 -0.3 1.2Official 0.9 0.7 4,5 3.9 7.0

Capital: Private (including 2.5 -1.7 -6.8 -8.4 -10.6errors & cmissibns)Official -0.3 4.0 9.1 1.5 0.5

Surplus or Deficit +2.6 -o.4 -3.0 -3.7 -0.1

wat necU 11 prce U.L coUe eLU sis l _aUaUer Ly4y, exporUs were a

high levels during the early 1950's. Imports responded to the rise inexports, and the period of the boom, as indicated earlier, brought an in-crease in investment, financed largely from foreign loans. During theseyears, imports of capital goods accounted for approximately a fifth of totalimports, almost double the proportion of the late 1940's.

70. Although exports fell sharply after 1954, with heavy drawings onforeign loans and rising earnings from tourism, imports rose further inthe next two years. Subsequently, the decline in exports was accompaniedby a fall in receipts from tourism and foreign loans, and witn the exhaus-tion of exchange reserves in 1957, the need to reduce imports became urgent.The policy of fiscal and monetary austerity then introdaced was purspedwith vigor; imports fell by approximately 40% between 1955/56 and 1959/60,and the adverse balances of payments on current account which had character-ized the years 1952/57 were changed to small surpluses in 1958 and 1960.In spite of these efforts, and notwithstanding an increase in grant aid fromabroad, there has been little recovery in exchange reserves. This appearsto have been due primarily to a continuing flight of capital at a ratewhich may have been of the order of $5.0 million a year. The loss of capi-tal on such a scale has deprived Haiti of vitally needed investible resourcesat a time of a sharp decline in economic activity, and through its effectson the foreign reserve position has prevented the authorities from attemptingmeasures to offset this decline.

- 19 -

I-L.1,V. ULI Ui JLIL I L IL L ;,AJ±IIZ I~I~~ .L Z; V Z; _"I~7 I , IIC"V O U5 1

assistance in the form of a standby agreement with the IMF. Standby~~agreet's hiave been conc111Ued in tea--11 bUO5t;4U _I1U jYed±II ~ULIL1 VJ_L',II ,l1%:

current agreement which expixes on 30th September next. Haiti drew $5.4rilI±on betwee[n ,yt an - y- y and has repurcasea I.-.. m-Irnin. - Mcurrent agreement makes available a further $6.0 million.

72. For the future, export earnings will continue to depend primarilyon coffee whose snare in total exports is unlikely to fall below u% ingood crop years. With the expected downward trend in coffee prices, thevalue of coffee exports will drop by perhaps one-eighth within five years,but this decline should be slightly more than offset by increased exportsof sisal,, cacao and copper concentrates. By 1965/, total exports arelikely to be somewhat greater than in 1959/60 but on present expectationsit seems quite unlikely that exports will recover to the high levels of1952 and 1954 in the foreseeable future.

73. Earnings from tourism and other invisibles will probably riseover the next five years, provided that there is a reasonable measure ofpolitical stability and, as shown in the table below, total foreignexchange earnings are estimated to be 13% above the 1959/60 level by1965/66. The rate of growth of exchange earnings will, however, be small,and the increase over the next five years is not expected to be sufficientto make good the decline which has occurred since the mid-1950's.

BALANCE OF PAYMENTS - CURRENT ACCOUNT

(Two-year averages - U.S.$ millions)

-I/ 2! o

1955/56 1959/60" 1961/62t 1965/66~

Exports 40.7 32.0 33.0 34.0Earnings from tourismand other invisibles 12.0 13.7 13.5 17.0

Total 52.7 45.7 46.5 51.0Debt service -1.0 -1.0 -4.5 -3.5Other service payments -9.6 -10.5 -8.0 -9.9

Balance availablefor imports 42.1 34.2 34.0 38.5

Actual imports 51.7 32.4

Current balance -9.7 1.8

I 4 . ; 1 1 A - 1J. 1.L 0/ J IS~4.

- 20 -

7J, Tf Prren+. srvice nn the external nblic debt is met in the next

five years, and if efforts are made to pay off past arrears, these charges

million in 1965/66. After deducting other expenditures on current services,ther'e wo%1 d -- earr to b1e room Jr I1 M9 A n fo arsmalIj increrans in i YnrMo?+.s

over the level of the past two years, and for a sizeable increase by 1965/.NeverthelesS, vd-thu+ SubStntial ai d from anro- a imti wold hte able

to import the capital and consumer goods required to sustain more than amod'Anest , incr-s-se in ~v, incme i.rn, n t+ie fu,ie, a. ndA+i thl dr-,-:Ini c. .1-1 p-e i,4..ncm

of the past four years could hardly be made good before the end of thisdecade TP cie ,+4n n4~n 4A4- n.I n

4 n, t'n i., A inn n

rapid, but much of the benefit of this aid might be lost if capital flight.~LF..J.L. LJJ UAi L .. U L~ULUL _L Ul I ~ UL!, scale of theii !JLU* J.L J I LL

reason, it is of great importance that the Haitian Government should takestp uo resorue the confidence1of ri vaue UU~ii - U-Lk; .JAIVCO LUJ 0 C%1"IUCLLI CLU~

climate favorable to the investment of private savings in new productiveent-e.se-J

VII. FOREIGN DEBT SERVICE

75. The service on Haiti's external public debt in the peak year 1962,will amount to 4-3 million (exclusive of payments of past arrears). Thiswill represent almost 9% of estimated foreign exchange earnings in thatyear. By lyo, the service on tne existing debt (again excluding paymentsof past arrears) should represent about 6% of foreign exchange earnings.Recent loans from the DLF and the IADB will be repayable in local currencyand will not add to the external debt service. Some settlements will pre-sumably have to be reached in respect of debt service payments in arrears,which may add significantly to the total foreign debt service over thenext five years. It seems unlikely, however, that the ratio of debt serviceto foreign exchange earnings will exceed 10% in the foreseeable futureexcept possibly in 1962. Nevertheless, for a country as little develcpedas Haiti, with so low a per capita income and such limited growth prospects,even a debt service ratio substantially less than 10% would represent a con-siderable burden on foreign exchange earnings, and it is clear that the bulkof the aid from abroad which Haiti will need if she is to achieve any sig-nificant rise in per capita income over the next decade could not take theform of borrowings on conventional terms. Aid from abroad shoula tal-ethe form mainly of grants and "soft" loans, at least during the next fewyears or until the burden of servicing the existing external public debtis substantially reduced.

APPENDIX I

PROSPECTS FOR FOREIGN EXCHANGE EARNINGS

Merchandise Exports

1. While coffee will continue to be Haiti's principal export in theforseeaole fuLure, accounting in good crop years for about UO% of totalexport earnings, with the expected growth in exports of sisal, copperconcentrates and cacao, and with the expected decline in coffee prices,the share of coffee will slowly fall.

2. Production prospects for coffee have been discussed in Chapter II.The average export price of Haitian coffee is expected to decline gradu-ally to about 28 cents a pound (f.o.b.) by 1966 as compared with thepresent price of approximately 35 cents a pound. This decline is expectedto be partly offset by a modest increase in productign and some improve-ment in the quality of the crop. There has been some recovery in worldmarket prices of sisal in recent months, and market prospects are suchthat this recovery is expected to be maintained for several years ahead.Prices of cacao on the other hand have fallen sharply in recent months.The future course of prices is very hard to predict, but in view of theprobable increase in world production, no significant recovery in priceshas been assumed. On the other hand, Haiti should obtain a price advan-tage from improvements in quality as a result of the introduction ofimproved varieties.

3. As indicated in Chapter II, sugar exports from Haiti will dependgreatly on the opportunity of selling in the United States market. Theprospects are very difficult to predict, but some decline in exportsfrom the level of $3,6 million in 1960 has been assumed on the basis thatthe advantages arising from the Cuban situation may not continue.

4. In relation to the newer exports, it has been assumed that theNew York price of refined copper willweaken from the present level duringthe early 1960's, but will subsequently recover to about 30 cents a poundby 1965 or 1966. The price of Haitian bauxite has, on the other hand,been assumed to remain approximately stable.

5. small increases in minor exports have been assumed for the nextfive years.

6. The value of past and prospective merchandise exports is shownin the following table. Two year averages have been calculated in orderto even cut good and bad coffee crops.

- 2 -

MEPC.UMA)EUb EAXURS

(U S _; mnilIirnn f -n-

MetallicYear Coffee Sisal Sugar Cacao Ores Other Total

1957/58 25.8 5.7 1.6 0.9 3.5 37.51959/60 166 417 20 1.2 7. '2.01961/62* 16.2 5.2 3.4 1.0 3.6 3.6 33 O1965/66* iIn 6.21 9 1-7 5.0 nAj 3_.n

-Estimated

Invisibles

7. In recent years the most important sources of foreign exchangeearnings on accountnd~ have been---. Uhr

receipts from transportation services and expenditures by foreign diplo-~ ~L.L J UL~4 ~IL.~~AJIO* L L L- kCIDUD LIIUIV LA(2VV V MJ~L %AO~E\ ~ ~ VL~.J

in past years. If political conditions are stable, an increase in tourist

crease in receipts from transportation services Some increase inspending by loreign missions, particularly those of the unued States,seems likely,

8. The estimated growth in current receipts in non-merchandiseaccount is shown below:

RtULIT Uil NUN-HE'UATHDlE AUNUUUN

V.S. $ millions)

Year Foreign Transportation ExpendituresY and by Foreign Niscell. TotaL

1v insurance Missions

1957/58 6.3 2.1 2.0 0.4 10.81959/60 6.9 3.4 2.7 0.7 13.71961/62* 6.8 3.3 2.8 0.6 13.51965/66* 9.0 3.9 3.3 0.8 17.0

* Estimated

9. The total earnings of foreign exchange on current account areshown in the following table:

- 3 -

TOTIAL CUFRENT FOREIGN EXCHANGE EARNINGS(U.S. ( millios)

Year Merchandise Non-Merchandise Total

1957/58 37.5 10.8 48.3

1961/62* 33.0 13.5 46.5965/*t34.017

*Estimated

APPMTY TT

.qTåTP'TrTAT. TåRTRq

LIST OF TABLES

Table No.

External Public Debt

1. Summary of External Public Debt2. Service on External Public Det, 1961 - 1975

Trade and Balance of Payments

3. Foreign Trade: 1938 - 1960I Valu oi Eri nrtc hy nmmndities* 19i1 - 1960

5. Volume of Principal Exports by Commodities: 1951 - 196061 Unit Pricre of Prinrinal Tport .Cormmoditie * 191 - 1960

7. Exports by Country of Destination: 1952 - 1960Principa Tmpof+e. 1950 O

9. Imports by Country of Origin: 1952 - 195810A Touim: 1Ofl I00

11. Balance of Payments: 1951 - 1960

1951 - 1958

Government Finance

14. Government Revenues and Expenditures: Fiscal Accounts:

15. Government Revenues and Expenditures: Fiscal and Non-Fiscal;

rinancia and rice Statist.ics

.Lo. Summary Accounts of the Banking System: 1950 - 196117. Domestic Prices: 1951 - 1959

TABLE 1

HAITI - 7STTIATED EX'r-!RNAL FULIC DEBT(TTrPQmAKTWTA TY-07.17 7r 1AO

(In thousands of U.S. dollar equivalents)

Outstanding Outstandingincluding net ofarrears arrears

TOTAL DEBT INCLUDING CONTINGENT LIABILITY 13,813 M38,7

Total debt excluding contingent liability 39.813 1T.7hh

Debre+oirr0 7nQa Arh O00 77

0h,000,000 to Banco de las Colones,

51,00,000 Plantation Dauphin y%,

7J 2 , ) L 7 %. . c L , . L 4 7 . L 4 4 7

2,b.00,000 to Societe des Grands1radvau.x Ut:, f'1dE'L IIt: _3/0,

1955-1968 1,537 1,162n Ln4 ,lr. -1. r' T-%

)~I7L~ LL U U ,_ L tjt.L '.bILL; Ul

Coventry, 4%, 1954-1960 2,306 -9UUV,uuu to lupI-pagm-le Suariere

des Cayes, 1956- 30 -

wl,3o9,u:L, no ±wau-on, Ziegele,Marhoffer International, 1952-1956 230 -

%>,uuu,uuu to Compagnia deIndustrias Maritimas 31%,

85,932 to Freeman H. Horton,

1 ,802,628 to Caribbean ConstructionSupply Corp., l95- 8

!BRD loan.2,6oo,ooo, WYbf, 1956-1967 2,600 2,6c

Export-Import Bank loans 27,50 26,86785,000,000, 37, 1941-1972 3,225 3,050$25,029,933, 3,%, 1948-1986 24,279 23,817

Contingent liability /b

'10,000,000 Emprunt Exterieure(series B) 5%, 1954-1964 b.coo L-.000

/A MoInpnf +f' hi- dipbtis tepchnica1lir in n-rreanrc_, sincennsaraenprovided for service whenever the bondholders can be located.

b Part of this bond issue is believed held by a New York bank to theaccount of various Haitian creditors and would become external debtwere it transferred to non-Haitians.

Source: TBRD Economic Staff

IABLE 2

HAII - ESTIMATED SMRVICE PAYENTES ON ETRNAL PUBLIC DEBTOUTSTADING DECEMER 31, 1960 (NET OF ARREARS)

(In thousands of U. S. dollar equivalents)

Total debt excluding contingent liability-- Contingent Liability

Debt out- Payments during year Service Payments by ppe of LoanYear .evc Paymets by-ype-f-Loastanding Amorti- In- Privately IBRD Export- Debt ServiceJanuary 1 zation terest Total placed loan Import Bank Outstanding Pay-

debt loans Jan. 1 ments

1961 3.,744 1,735 1,226 2,961 925 308 1,728 4,oo 1 2001962 33,009 3,173 1,175 4,3h8 2,062 500 1,786 3,000 1,1501963 29,836 2,234 1,171 3,ho5 9)43 500 1,962 2,000 1,1001964 27,602 2,365 1,078 3,bh3 981 500 1,962 1,000 1,0501965 25,237 1,754 997 2,751 289 5oo 1,9621966 23, 83 1,811 939 2,750 288 500 1,9621967 21,672 1,620 880 2,500 288 250 1,9621968 20,052 1,415 836 2,251 288 1,9621969 18,637 1,228 734 1,962 1,9621970 17,09 1,270 692 1,962 1,9621971 16,139 1,314 648 1,962 1,9621972 114,825 1,275 603 1,878 1,8781973 13,550 1,064 564 1,628 1,6281974 12, 486 1,102 526 1,628 1,6281975 11,384 1,140 488 1,628 1,628

a/ Includes service on all debt included in Table 1 prepared March 6, 1961

TABLE 3

FOREIGN TRADE

(U.S. M Millions: Fiscal year to September 30)

Exports Imports Balance of Trade

1938 6.9 7.6 - 0.71939 7.2 8.2 - 1.01940 5.4 7.9 - 2.51941 6.6 7.4 - 0.81942 8.5 8.4 0.11943 10.6 9.8 0.81944 16.1 16.0 0.11945 17.1 13.2 3.91946 22.8 15.9 6.91947 31.5 27.2 31948 30.8 32.2 - 1.41949 31.0 31.4 - .41950 38.4 36.2 2.21951 49.6 44.0 5.61952 52.9 50.4 2.51953 37.8 44.6 - 6.81954 55.6 47.6 8.01955 34.9 52.1 -17.21956 46.5 51.4 - 4.91957 32.9 40.8 - 7.91958 42.1 44.2 - 2.11959 25.9 31.5 - 5.61960 38.1 33.3 4.8

Source: National Bank of Haiti and International Monetary Fund.

TABLE 4VALUE OF ETORTS BY COMMODITIES

(U.S. $ millior8 - Year to September 30)

1951 1952 1953 1954 1955 1956 1957 1958 1959 1960

coff 26co 32c7 25e1 _3p6 23.0 33Ji 20.2 31. 13.0 :20.1

Sisal 12.1 10.3 4.7 4.9 5.h 6.3 5.8 5.6 4.9 4.4

Sugar 4.0 3.3 2.3 1.2 1.,2 2.5 2.4 0.7 0.3 3.6

Molasses 0.6 0.6 0.3 0.2 0.12 0.4 0,6 0.3 0.1 0.3

Cacao 1.3 1.2 1.2 2.0 1.2 0.6 0.6 1.3 1.2 1.1

Essential oils 1.0 1.2 0.6 0.8 1.0 0.8 0.5 0.6 0.6 1.2

Cotton fibre 0.6 0.6 0.8 0.6 0.9 0.2 0.1 0.1 0.3 -

Castor oil seed C.9 0.8 0.8 0.5 0.4 0.3 0.3 0.1 0.1 0.2

'Bananas 1.0 0.4 0.3 0.2 - 0.1 0.1 - - -

Handicrafts 0.9 1.2 1.3 1.0 1.0 1.2 0.9 1.0 0.9 1.6

Other 2.0 0.9 0.8 1.7 0.6 0.7 1.4 1.0 4.5 4.8

Total 50. 53.2 38.2 56.7 34.9 46.5 32.9 42.1 25.9 37.4

Source: Fiscal .Departmntet,- National Bank of Haiti

TABLE 5VOLUME OF PRINCIPAL EXPORTS BY CCMMODITIES

(Thousand netric tons: year to September 30)

1951 1952 1953 1954 1955 1956 1957 1958 1959 1960

Coffee 25,.4 31.3 23.1 31.8 19.6 31.1 17,5 34.6 16.7 28.2

sis al 31,3 25.9 20.0 23.9 31.2 35.9 36.5 37.5 31.2 22.7

Sugar 34.4 32.14 28.5 15.4 16.4 32.8 24.3 6.5 3.2 31.2

Molasses 17.3 18.2 .17.1 13.3 15.6 20.8 23.1 16.o 5.9 27.5

Cacao 1.9 1.9 2.1 2.2 1.5 1.2 1.6 1.9 2.0 2.0

Scource: F scal Departient, National Bank of Haiti.

TABLE 6IJNIT PRICES OF EXPORT C 00f40DITIES

(Gourdes per kilo: year to September 30)

1951 1952 1953 1954 1955 1956 1957 1958 1959 1960

Coffee 5.12 5.22 5.44 6.85 5.85 5.35 5.78 4.53 3.91 3.57Sisal 1.93 1.98 1.18 1.03 0.86 0.88 0.79 0.75 0.80 0.97

Sugar 0.60 0.51. 0.b. 0.40 0.32 0.38 0.50 0.57 0.54 0.58

Molasses 0.18 0.17 0.08 0.07 0.07 0.07 0.14 0.10 0.07 0.06,

Cacao 3.28 3.05 2.77 4.38 2.33 2.31 2.26 3.55 3.18 2.75

3x)urce: Fiscal Department, National Bank of Haiti.

TABLE 7

EXPORTS BY COUNTRY OF DESTINATION

(Percentage shares: Year to September 30)

1952 1954 1956 1958 1960U.S.A. 58.o 45.3 33.6 49.4 50.9

Belgium 22.7 22.2 20.4 18.2 13.2

Italy 8.0 8.0 17.9 17.5 17.4

Holland 5.2 5.0 5.3 23.5 3.3

Germany 0.6 0.6 2.5 2.2 1.8

U.K. 0.9 2.1 2.0 0.8 0.3

France 0.3 10.8 9.5 3.6 5.9

All others 4.3 6.0 8.8 4.8 7.2

Total 100.0 100.0 100.0 100.0 100.0

Source: Fiscal. Department, National Bank of Haiti

TABLE 8

PRINCIPAL IMPORTS, 1950 - 1958(U.S. 8 millions)

Fiscal Year1950 1952 1954 1956 1958

Wheat flour 3.2 5.3 5.1 4.7 5.4Other foods 3.6 6.1 5.8 6.0 5.9

Cotton cloth 7.8 7.9 7.4 7 2Other textiles 3.4 5.0 1.9 3:1 ) 9.2Shoes 0.5 1.2 0.7 0.8 0.6

Soap 1.3 1.6 1.8 0.8 0.9Chemicals and

Pharmaceuticals 1.0 1.2 2.5 1.2 2.0

Oil Products 1.4 2.3 2.0 2.0 2.6

Iron and Steel 1.9 2.9 4.1 3.6 2.4Machinery 2.1 6.0 5.3 5.92.Vehicles 1.3 2.1 2.3 2.7 2.3

Cement 0.6 0.7 0.6 - -

All Other 8.2 8.4 7.7 13.9 8.3

Total 7i-+.. 36.2 50.7 07.2 51.9 L2.T

Source: Fiscal Department, National Bank of Haiti

TABLE 9

IMPORTS BT COUNTRY OF ORIGIN

(Percentage shares: Year to September 30)

1952 1954 1956 1958

U.S.A. 69.4 63.2 61.9 63.2

U.K. 4.4 4.4 3.5 3.8

Germany 2.6 3.6 4.5 4.2

Belgium 2.7 2.7 2.5 2.1

Canada 6.4 8.2 6.6 4.7

Curacao 3.5 3.5 3.8 3.9

France 1.8 2.4 2.9- 2.6

Holland 1.4 2.4 2.0 2.2

All others 7.8 9.6 12.3 13.3

100.0 100.0 100.0 100.0

Source: Fiscal. Department, National Bank of Haiti

TABLE 10

TOURISM

Fiscal Year Numbers of Tourists Gross Income from Tourism(hotsanc U.S (U. $ millions)

1951 16 .9 1.5

1952 21.1 1.3

1953 34.4 1.9

195L 48.1 25

1955 54.9 5.9

1956 65.8 7,.

1957 6o.h 6.71958 57.9 6.0

1959 67.1 6.8

Source: Institut Haitien de statistiques and International Monetary Funde

TABLE lBALANCE OF PAYMENN

(U,S. $ milions-)

Fiscal Year ending September 30**

_>_1951 1952 1953 1954 1955 1956 1957 1958 1939 1960

A. Goods and Services 0.4 - 14 -12.5 5.9 -17.1 - 2.4 - 2.9 2.4 - 0.4 4.1Exports, f.ob. ~ ~2.9 37.8 ~ ~3T~9 ~k. 32.9 "T2.1 7¯9 ~~--~Imparts, c.i.f. -44.0 -50.4 -44.6 --47.6 -52.1 -51.4 -40.8 -44.2 -31.5 -33.3Foreign Travel Earnings 1.5 1.3 1.9 2.5 5.9 7.4 6.7 6.0 6.8 7.0Investment Income - 5.5 - 3.8 - 5.8 .2.6 - 1.7 - 2.7 - 0.8 - 1.13 - 1.7 - 1.6Other (net) - 1.2 - 1.4 - 1.8 - 2.0 - 4.1 - 2,2 - 0.9 0.3 0.1 - 6.1

B. Private Donations - 0.2 - -_0.6 -_0.1 - 0.2 - 0.4 - 0.3 1.8 0.6

C. Private Capital 4.7 1.6 4.4 1.1 0.8 - 0.1 - 4.5 - 1.6 -3 0.5Long-tem apital (net) ~~67~~ 5.7 ~~271 ~2.~1 ~~2.7 2.0 1.0 - 0.5 ~~.Short-term Capital (net) - 1.5 - 3.1 - 1.3 -- 1.3 - 1.3 - 2.8 - 6.5 - 2.6 - 4.0 -

D. Official Donations 1.0 _.8 0.9 0.6 4.9 _ .5 4. 3.4 9.0 5.0

E. Official Long-Tenn Capital - 0.3 - 0.2 3.4 4.6 12.6 5.6 - 1.2 h.1 - 0.5 1.4Official foreign loan drawings ~. 0 3 1~3 h 9 3.0 9.~ 1.9 1. 1.2 ~~¯Officiai foreign loan Repayments - 0.9 - 0.5 - 2. -- 4.8 - 0.4 - 4.0 - 1.7 - 0.5 - 0.8Gold Subscription to IMF and

dollar subscription to IBRD - . - 0.5 - - - - 1.4 - 0.1 - 0.9

F. Net Errors and Omissions - 1.7 0.1 - 2.1 _6.6 -_5.8 -_8_. - 2.9 - 7,9 - 9.0 - 9.2

G. Reserve Movements (increase -,) - 4.1 - 1.1 5.9 -- 5.0 h.7 1.3 7.5 - 0.1 2.6 - 2.4Monetary Gold (increase -) - 0- - - 1.3 - 07.1Depo5its Abroad (increase -) - 4.0 - o.1 4.6 - 5.3 2.3 0.4 4.1 0.9 - 1.0 - 0.3U.S. Currency (incroase -) - - 1.0 0-.5 0.6 o.4 0.4 1.0 - 0.2 0.1 - 0.1Liabilities to Foreign Banks (increase +) - - 0.3 - 0.3 2.1 0.5 1.0 - 2.9 - - 0.7Liabilities to IF (increase +) - - - - 2.0 3.4 - 1.3

* provisi onal. Source: International Mlore tary Fund and National Bank of Haiti

TAT. 19

GOLD AND FORETGN EXCHANGE RE3ERVES

(Net International Reserves of the Banking System)

End of Fiscal Year U.S.0millonw RaWU of Reservesto :mport3s(C.i.f.)

1950 9.2254

1951 13.3 29.7%

1952 14.4 28.V1.

1953 8.5 18.8%

1954 13.5 28.3%

1955 8.8 16.9%

1956 7.5 1.6%

1957 0.0 -

1958 0.1 0.2%

1959 -2.5 -6.9%

1960 0.0

Source: I.M.F. and National Bank of Haiti

TABLE 13

SELECTED PRODUCTION STATISTICS

1951 1952 1953 1954 1955 1956. 1957 1958

Industrial Production

Sugar: COO metric tons 58 58 55 46 56 59 57 46

Cement: COO metric tons - - - - 26 46 28 36

Cotton textiles: million 3.2 2.7 2.3 2.8 2.8 2.8 3.4 4.1square yards

Cigarettes: million 238 245 259 310 334 397 - 363

Power

Electrical eneray - . , ,million kwh - 15.b 10.2 20.0 Z3.4 zb0 4.0 jU 4.3

Source: U.N. Statistical Yearbook, 1959Unpublished study: The Haitian Cotton and Cotton Textilesindustries

by Dr. William B. Gates, Jr.

TABLE Il AGOVEM1NT R-VL1U-S AND EXP17NDITURES - FISCAL ACCOUNTS L

(millions of gourdes : year to 30 Septedber)

Provis-Bud-1919 1952 193 19Th 195 1956 1957 1958 1959 jrisn aBut

1960 1961

RevenuesImport Duties 66.2 75.7 70.3 82.4 70.9 81.5 69.2 72.7 47.0 52.5 h8.oExport Duties 25.9 29.8 22.5 36.1 19.9 29.0 18.9 26,4 13.0 26.0 1t.5Other CustomsDuties 1.2 1.3 1.3 2.2 2.0 2.2 2.0 2.1 1.4 1.5 1.5

Internal Taxes 2L.6 33.5 33.3 31.5 32.2 32.2 31.h 32.3 39.5 L5.5 h1.0Other Revenues 7.4 6.0 9.0 11.2 9.7 12.4 18.h 6.8 4.6 4.5 $.0

Total 125.3 146.3 136.4 163.4 134.6 157.1 139.9 14o.3 105.6 130.0 110.0

Expenditures

General Adminis-tration /2 27.9 27.2 32.7 39.3 4o.1 44.2 33.7 41.2 37.4 38.8 33.6

Defence 19.2 21.7 26.5 25.8 25.5 27.0 27.9 30.8 33.5 32.,0 31.5

Social and Cult-ural Services 23.4 29.2 33.4 36.2 37.4 37.7 38.1 bl1l 35.5 32.8 33.1

Education 12.1 14.7 16.0 17.1 18.0 19.5 20.0 20.2 15.3 14.2 14.4Health 9.9 12.3 15.7 16.8 16.9 15.6 16.0 17.6 16.o 15.3 15.5Labor 0.7 1.0 0.8 1.2 1.1 1.3 0.9 2..1 3.0 1.9 1.8Religion 0.7 1.2 0.9 1.1 1.4 1.3 1.2 1.2 1.2 1.h 1.4

Public Works andEconomic Develop-ment 32.8 55.1 40.9 49.2 42.2 56.7 24.6 26.8 17.4 19.8 19.0P1,blic Works 0 7 9.2 12 0 1n0 7 c 13 o 19 13 6 A R n f6 A7

Economic Develop-ment 18 b1 0 2).7 2. 90 17 37 71 7 ,-

National Econory 1.0 1.3 1.3 1.6 1.5 2.2 2.3 - - - -

Asri multure 3.9 I LL 2J 9 3 A 33 31 29 P Q o0 9 01

Tourism - - - - - - - 1.9 - - 1.2

Debt Service 9.5 8.5 6.2 7.0 l1,8 16.3 11.8 10.5 15.4 8.6 3.0

Other ExpendituresContributions i-o

co-operative pro-ipr-ts Andi it=r-mational agencies7.3 7.7 12.4 17.5 16.5 12.7 9,8 7.7 9.1 11.0 16.1

Total 120.1 1,5-0.41 1-52.1 175.0 173.5 194.6 1145.9 153.1 14~8.3 143.0 :136.3

A The Fiscal Accounts reflect about four-fifths of governmEnt receipts andexpenditures. They are presented here to show the principal sources ofrevenue and to indicate the division of expenditures between departmentsof government. The totals of this table, with one ad.ius*ment are shownin table No. 15.

/2 Balancing itemSource: Fiscal Department, National Bank of Haiti

TABLE 15GOV RNM N1\iT h VIUS AND EXPE\DlTURES

(rillions of gourdes : year to 30 September)

195h 19_4 116 1917 o) 1O Provisional Projected- 1960 1961

1. Revenues 203.9 169.9 2012 171.9 174.86 L65.0 171.1 164.0

1. Fiscal Revenues 163.4 134.6 157.1 139.9 140.3 105.6 130.0 110.02. Non-f iscal Rlevenues :22.7 23.9 27.9 22.1 2L.7 26.0 22.6 22.03. Special coffee export tax 15.8 1.4 16.2 9.9 9.8 3. 4 9.5 6.oh. Other special revenues - - - - - - 11.0 5.05. Budget support grants

fr-om j.S. - - - - - 30.0 5.0 21.0

2. Expenditures 229.1 285.3 245.8 171.6 190.6 183.2 176.6 17 4.0

1 . Fiscal Expenditur esexcluding debt repayment 168.9 164.3 184.3 135.3 148.7 139.1 138.9 138.0

2. Non-fiscal Exnenditures 145.2 84.0 49.0 31.0 24.1 31.1 22.2 22.03. Eapen d tures financ ed by

foreign loan drawings 14.0 35.0 10.5 2.5 16.0 6.0 7.0 7.54. Other extra-budgetary

expendi. tures 1.0 2.0 2.0 2.8 1.8 7.0 8.5 6.5

3. Surplus or deficit (-) -25.2 -115.4 -h.6 O.3 -15.8 -18.2 .SS -lo.Finan ced by:

Net NatioLnal Bank credit (increase-) 6.4 -56.0 -115 2.8 - 6.9 - 8.o 8.1 ~ 5.0Other internal credit (increase -) - 1.6 - 1.5 - 3.6 - 1.2 - 1.0 - 5.0 - 6.5 - 3.0Net externaL borrowing (inc:rease-) -22.8 -62.9 -28.1 - 1.1 -21.0 - 4.2 - 6.8 - 5.. 5Special Governmnit deposits - - - - 3.5 3.5Statistical discrepancies - 7.2 - 5.0 - 1.4 - 0.2 13.1 - 1.0 - 3.8 -

Source: National Bank of Haiti a-id International Monetary Fund

TABLE 16SUIMARY ACCOUNTS OF THE BANKING SYSTEM

(nti.lions of gourdes)

1950 1956 1957 1958 1959 1960 1960 1961Sep. Sep. Sep. Sep. Sep. Sep. Feb. Feb.

I. National Bank

Net f oreign reserves 39.5 25.5 -2.6 -2.7 -15.6 -1.3 -1.1 0.3

Domestic credit 16.2 106.4 102.9 1oh.0 107.2 100.5 109.6 106.91 . To the Government (net) 7.-3 ~. 0 ~.7 78~ 3 ~~6~~9

a. Glaims en Govemment (17.5) (91.9) (92.8) (96.1) (103.1) (94.h) (93.7) (92.6)b. Government deposits (-10.2) (-8.3) (-12.0) (-8.3) (-7.4) (-6.8) (-5.4) (-5.7)

2. To other public sector (net) - 3.9 -1.8 2.6 0.9 - 0.3 -.0.7a. Claims an other public sector(-) (h.0) (4.0) (4.3) (2.h) (1.0) (2.2) (3.7)b. Othe. offidal deposits (-) (-0.1) (-5.8) (-1.7) (-1.5) (-1.0) (-1.9) (-h.h)

3. Undisbursed ICA grant funds - -o.0 -1.5 -8.6 -14.3 -12.5 -11.1 (- .)4. To IHCAI - 1.3 1.5 1.5 1.8 1.8 1.8 1.85. To private banks - 0.6 0.6 0.5 0.6 - 1.0 -6. To the private sector 17.14 26.4 28.3 25.4 21.6 21.3 28.7 28,87. Net unclassified assets -8.4 -8.h -5.0 -5.1 0.9 2.3 0.6 1.5

Liabilities to banks 1.2 7.2 13.0 12.4 11.6 10.4 13.5 15-3i. To IHCAI 82 1.9 ~-~ 27 2.~5 ~22. To private banks 1.2 l.4 10.2 10.5 10.2 7.7 12.0 L.1

Liabilities to private sector 54.6 124.7 87.3 88.9 80.0 88.8 95.0 91.91. Currency in circulation 31.97 31.»U 59^362. Dernand deposits lh.1 30.9 11.4 14.0 12.0 13.1 12.2 L2,93. Savings deposits 7.1 22.7 l.1 14,6 12.3 12.4 12.8 12.84. Other private clainis 1.6 h.3 .1 3.8 3.9 4.3 4.7 4.8

TABLE 16 - cont. SUI Y _CCOUNT3 CF THE B '1KING_SYST l - cont.(milions of gourdes)

1950 1956 1957 1958 1959 1960 1960 1961Sep. Sep. Sep. Sep. Sep. Sep. Feb. Feb.

II. Haitian Agricultura'l and Industrial Gredit Institute (IHCAI)

Reserve deposits and currencyholcIs 5.9 2 1.8 1.L! 2.6 1.2 i

Domestic cred:it -- 2.2 6.0 4.8 5.0 3.8 4.7 1.81. To the Government (net) ¯0793 0 1.¯ -.~22. To other public sector (net) - -0.4 -,.1 -0.2 011 -2.9 -4.2 --.86. To the private sector - 13.9 18.8 20.2 20.5 20.8 20.7 21.17. Net unclassified assets - -11.8 -13.2 -15.5 -15.7 -15.7 -15.8 -15.3

Liabilities to the National Bank - 1.3 1.5 1.5 1.8 1.8 1.8 1.8

Liabilities ix Private sector - 6.8 7.1 5.1 4.6 1.6 4.1 4.1. Other private clais 1.7 2.5 2.5 .~

5. Bonds in circulation - 5.1 4.6 2.7 2.1 1.1 1.h 1.h

III. Private Banks

Net foreign reserTes 6._4 12.2 2.7 3.4 3.1 1.6 2.h 1.9

Reserve d eposits and currency 1.2 1.4 10.4 10.5 10.2 8.-4 12.0 l1.9holdings

Dcmresi r edit 4.2 10.7 14.5 16.9 18.2 21.8 19.-4 23.01. To the Goverment (net) - ¯ 1.9 ~ 1.9 1.9 2.16. To the private sector 4.2 10.1 12.2 15.2 15.0 18.9 16.6 :19.47. Net unclassified assets - 0.6 2.3 1.7 1.2 1.0 0.9 1.5

Liabilities to piývate sector 11.8 :24.2 27.5 30.9 31.5 31.8 33.8 36.8.Demanddeposits -7~6 T1~¯ .9 15. -14.7 U--F.7 15.T.

3. Savings deposits 4.2 7.7 10.2 12.8 14.6 15.8 L5.6 17.7h. Other private claims- - 0.7 0.2 .L 0.5 0.6 0.55. Cap itai and surplus 1.3 1.8 1.8 1.8 1.8 1.8 2.5

TABLE 16 - cont. SUM4RY ACCOUN'[S OF THEI BANKING SYST=M - cont'di.

.(millions of gourdes)

1950 1956 1957 1958 1959 1960 1960 1961Sep. .SepP eP. SePP Sep Sep___ Feb. Feb.

IV. Treasuiy

Domestic credit 6.5 8.1 7.2 7.2 7.2 7.7 8.1 8.01. To the dovernment (net) 6~3 7.2 7~2 7.2 7.7 ¯ 7~u)

Liabilities to private seetor 6.5 8.1 7.2 7.2 7.2 7.7 8.1 8.01. urrey in cire~ulation B.~° 7~2 7.~ 7~7

V. Banking System (I+II+III+IV)

Net fordlgn reserves '45.9 37.7 0.1 0.7 -12.5 0.3 1.3 2.2

Domestic credit 27.0 126.1 129.1 131.3 135.8 132.6 139.7 138.71. T, the Government (net) 1, ~2.1 .95.3 10Z.9 -3~~ ~W.~E -7.~62. To other public seetor (net) 3.5 -1.9 2.4 1.0 -2.9 0.1 -5.53. Undisbursed ICA grant funds -1.0 -1.5 -8.6 -1.3 -12.5 -11.14/5 In-terbank float - 0.6 0.6 0.4 0.6 0.6 0.7 0.86. To the private sector 21.6 50.3 59.3 60.9 57.1 61.o 66.0 69.37. Net unclassified assets -8.4 -19.4 -15.9 -18.9 -13.5 -12.4 -14.5 -12.3

Liabilities to private sector 72.9 163.9 129.2 -132.0 123.3 132.9 141.0 140.91. Currency in circulation 3B~. ~77 ~Tm.9 63.7 59.-0 66.7 ¯73 69.42. Demand deposits 21.7 146.2 26.3 29.4 26.7 26.8 28.0 29.03. Savings deposits 11.3 .30.4 24.3 27.4 26.9 28.2 28.4 30.64. Other private claims 1.6 6.1 7.3 7.0 6.8 8.0 8.0 8.05. IHCAI bonds in circulation - 5,l 4.6 2.7 2.1 1.4 1.4 1.46. Capital and surplus- 1.3 1.8 1.8 1.8 1.8 1.8 2.5

Source : Balance shee÷s of the binks and I

TABLE 17

DOMESTIC PRICES

Year Cost of Livirg Index

19~1 101

19-2 103

1953 100

1955 106

l956 110

1957 112

1958 112

1959 107

Source: International Financial Statistics