Root Cause of Problems /Trade Debt Aid. 4

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Trade, debt and aid:Haiti is one of the most open economies in the world, having significantly liberalized its
economy in the 1980s and 1990s.

Principal exports include manufactured goods from the export assembly industry and essential oils. Agricultural products such as coffee, cacao and mangoes are also important, although, as the table below shows, they have been in decline since 1995.
Table 2
1995-2003 ­ an overview of the main exports
(in millions of US dollars)
Product
1995 1996 1997 1998 1999 2000 2001 2002 2003
Coffee
25.34 24.58 19.07 21.75 15.22 7.12
4.79 2.88 3.55
Cacao
5.69 3.74 4.25 7.50 5.98 2.21 1.79 5.54 6.05
Essential oils
10.67 6.99 2.94 6.12 4.04 4.65 3.37 4.81 5.08
Mangoes
7.04 5.03 7.02 5.80 6.74 7.98 4.16 5.46 4.66
Other primary
products
5.86 1.94 9.03 9.53 9.58 12.56 10.47 9.58 9.10
Manufactured
goods
30.00 41.54 53.03 79.58 103.74 100.47 97.94 86.10 108.44
Source: Banque de la République d'Haïti (Haitian Central Bank)
22
According to the classification of the Haitian Central Bank, the four biggest import categories
for the country are currently:
·
food
products
·
fuel
·
manufactured
goods
·
machinery and transport materials.

The import of food products exceeded the other leading categories between 1995 and 2003.
The main food imports are rice, wheat, palm oil, sugar, prepared food, chicken meat, soya oil,
evaporated whole milk and dry beans.

23

As the following table shows, Haiti is a net importer of goods and services and suffers from a
large trade deficit, which has been increasing annually.

Table 3
1995-2003 ­ Haiti's trade deficit
(in millions of US dollars
)
1995 1996 1997 1998 1999 2000 2001 2002 2003*
Total
imports
700.2 687.9 756.2 883.9 1010. 6 1090.7 1061. 5 1054.2 1199.8
Total
exports
152.82 169.92 205.45 294.77 343.29 331.70 305.22 274.43 333.16
Trade
balance
-547.38 -550.75 -550.75 -589.13 -667.31 -759
-756.28 -779.77 -866.64
Source: Banque de la République d'Haïti
* Provisional figures reported for 2003
The US is Haiti's main trading partner in both imports and exports.

Haiti exported around 90
per cent of its goods to the US in 2000, when principal sources for imports were as follows:
24
·
US
54%
·
Dominican
Republic
11%
·
EU
9%

Haiti's increasingly negative trade deficit is a key area of concern.

Given the amount of food
the country is importing, it is reportedly using 81 per cent of the value of its exports for
purchasing imported food.
25
Its chronic overall trade deficit is currently offset by aid flows and
especially the remittances from Haitians living abroad.

Remittances have increased
significantly since 1994, growing from US$51.6 million in 1994 to US$600 million in 2001.
26
There are thought to be 500,000 Haitians living in New York and 380,000 in Miami, and
according to recent estimates, remittances contribute more than 20 per cent of GDP.
27
This
patching up of the trade deficit is sustainable only at the present very low standard of living.

Raising Haiti's living standards is seriously constrained by the export-import balance ­ an
issue that urgently needs to be addressed.

Unfortunately, Haitian foreign currency earnings are put under further pressure by debt
repayments.

In 2004/05, debt service represented 22 per cent of government expenditure.

28
Of Haiti's total debt burden, about 40 per cent is estimated to stem from loans to the Duvalier
family and is classified as odious debt conferred on corrupt leaders ­ it was not used for
development or the benefit of its citizens.

There have been no serious moves to cancel significant amounts of Haiti's debt and there has
been a refusal to address its largely odious nature.

29
The international financial institutions
have instead generally referred to Haiti's debt as `moderate'.

It is only now that Haiti has
recently qualified for debt restructuring under the highly-indebted poor countries (HIPC)
initiative.

Given the chronic deficit levels in the country, Haiti is heavily dependent on
international aid. In 2000, foreign aid accounted for almost five per cent of GDP.

Lionne, April 24 2008, 6:19 PM

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