Haiti WT/TPR/S/99
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I. ECONOMIC ENVIRONMENT
(1) MAJOR FEATURES OF THE ECONOMY
1. The Republic of Haiti is situated in the Caribbean, approximately 1 200 kilometres from the
United States coast, on an island whose eastern part is occupied by the Dominican Republic.  Its total
area is 27,750 km2, which represents about one third of the island.  The climate is tropical or semi-arid
depending on the region.  Haiti is regularly subject to drought and heavy storms because it lies withinthe hurricane belt.  It became independent in 1804.  The official languages are Creole and French.
2. The major cities are Port-au-Prince, the capital (1.2 million inhabitants), and Cap Haitien
(0.6 million inhabitants).  In 2001, the population wa s estimated at 8.1 million, of which 40 per cent
are less than 15 years of age.
1  The rate of population growth is around two per cent.  Haiti's
population is predominantly rural, with around tw o thirds working in activities related to the
agricultural sector.  This is reflected in the geographical distribution of the population, of which only
36 per cent live in urban areas.  Nevertheless, since the early 1980s, the urban population has
continually increased.  Moreover, there is large-scale emigration and one Haitian in six lives abroad.2
3. With a per capita gross domestic product (GDP) of US$555 in 2000, Haiti is one of the
least-developed countries (LDC) according to the United Nations classification.3  This situation is the
result of lengthy periods of stagnation or even economic recession.  The per capita GDP has fallen
over the past three decades and dropped by an average annual rate of 5.2 per cent between 1985 and
1995.  More than 80 per cent of the rural population lives below the poverty threshold4, and the
unemployment rate hovers around 60 per cent.
4. Haiti's socioeconomic problems are clearly related to its particularly unstable political history,
which to a large extent explains its apparent inability to take advantage of its development potential or
the financial resources made available to it through various types of international aid (see below).The prospects for economic progress are not very encouraging because of the continuing political
problems, the weakness of State institutions, the notably low level of education among the population
and the high costs of production due, inter alia , to the poor state of the infrastructure and the high
charges for telecommunications, energy (with frequent power cuts), water (a scarce resource) and
transport.
5. 45 per cent of the working population is involved in the agricultural sector.  Agriculture
mainly consists of small-scale subsistence farming.
5  The agricultural sector's contribution to real
GDP is, however, only around 29 per cent, which reflects the low level of productivity in agriculture
due, inter alia , to agrarian problems, the use of rudimentary growing techniques (including the
inadequacies of the irrigation network), as well as climatic hazards, especially the frequent droughts.
                                                     
1 Estimate by the Institut haïtien de statistique et d'informatique  (Haitian Institute of Statistics and
Information Technology).
2 United States Department of State (2001). Information available from:
http://www.state.gov/r/pa/ei/bgn/1982.htm.
3 Haiti is the poorest of the Caribbean basin and Latin American countries, which had an average per
capita GDP (at purchasing power parity) of US$3,840 in 1999 compared to US$460 for Haiti (estimate by the
World Bank (2001)).
4 World Bank (2002).
5 Haitian Institute of Statistics and Information Technology (2000a).WT/TPR/S/99 Trade Policy Review
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With the exception of mango and banana growing, other plant production fell between 1999 and 2000
and the agricultural sector as a whole contracted by around 1.5 per cent.6
6. The manufacturing sector accounts for some 7 per cent of real GDP (Chart I.1).  Growth in
this sector remained fairly stable throughout the period 1995-2000 at an average of two per cent
annually.  The services sector accounts for approximately 63 per cent of real GDP.  The non-market
services sub-sector accounts for 17 per cent of real  GDP and mostly involves services provided by the
State, non-governmental organizations and non-profit-making entities.  The construction and public
works sub-sector sector (13.3 per cent of real GDP in 2000), strongly affected by public sector
investment7, is a major catalyst for economic activity because of its rate of growth (almost 10 per cent
yearly on average during the period 1995-2000).
Chart I.1
Sectoral breakdown of real GDP, 1995 and 2000
1995 2000
Agriculture
32.2%
Manufacturing
7.3%Services
60.5%Agriculture
29.4%
Manufacturing
7.2%Services
63.4%
Source: WTO Secretariat, based on information provided by the Haitian authorities.
7. The crafts industry is highly developed in Haiti.  A large part of the population paints either
as a hobby or purely for profit.  The rise of urban unemployment has been accompanied by the
emergence and expansion of the informal sector.  Informal activities are a widely used alternative to
unemployment and are part of a mass phenomenon of precarious self-integration into the production
structure for large segments of the population.  In 2000, more people were working in the informal
sector than in agriculture.8  The informal sector probably employs around 92 per cent of the non-
agricultural working population and 51 per cent of the total working population.9  A majority of
women work in this sector, mainly in small-scale trading.
                                                     
6 Banque de la Republique d'Haïti  (BRH) Bank of the Republic of Haiti (2001).
7 Bank of the Republic of Haiti (2001).
8 Haitian Institute for Statistics and Information Technology (2000a).
9 United Nations Development Programme (2000).Haiti WT/TPR/S/99
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8. Haiti's relatively liberal trade policies make it one of the most open economies in the
Caribbean basin and Latin America (Chapter III).  The role played by foreign trade is, however,
modest and in 2000 exports and imports of goods and non-factor services only represented 11.3 per
cent and 27.3 per cent of GDP respectively.  The efforts made to liberalize foreign trade contrast with
the slow pace of structural reform, in particular the privatization of State enterprises and the
Government's withdrawal from certain production activ ities.  This restricts Haiti's capacity to become
integrated in a competitive international environment and take full advantage of its opening up to
trade.
9. Haiti receives a large amount of international aid and remains highly dependent on foreign
assistance, particularly for the financing of its development and structural adjustment programmes.  In
1995, official aid amounted to US$409.9 million, a nd US$293.1 million in 1996, US$221.9 million in
1997, US$222.6 million in 1998, US$256.8 million in 1999, and US$193 million in 2000.  These
funds are mainly in the form of bilateral aid.10
10. For the Haitian Government, aid is an important source of financing.  In 1999, over 12 per
cent of the central Government's overall budget deficit was financed by foreign donations in cash.  In
2000, foreign aid accounted for almost 5 per cent of GDP and offset almost 25 per cent of the deficitin the current balance, not including unrequited transfers.
11  Haiti's external debt is kept under control
and the debt burden is at a reasonable level.  The debt servicing ratio has fallen regularly, from
29.3 per cent in 1994 to 10.7 per cent in 1999.12  This explains why Haiti is not eligible for debt
restructuring under the Heavily-Indebted Poor Countries (HIPC) Initiative.
11. The exchange rate for the gourde is determined by the market and since 1996 the Government
has maintained a floating exchange rate mechanism.  On 22 December 1953, Haiti accepted the
obligations under Article VIII of the Articles of Agreement of the International Monetary Fund (IMF).Until 1999, the gourde/US$ exchange rate remained  around G17 to US$1.  The gourde then dropped
sharply and in September 2000 the exchange rate was G28 to US$1.
12. In recent years, Haiti's economy has also been characterized by a "dollarization"
phenomenon.
13  In June 2000, deposits in United States dollars amounted to 38 per cent of all deposits
while 41 per cent of the loans granted by the commercial banks to the private sector were also indollars.  This trend is the result of a number of factors, including the uncertainty regarding the
political and economic situation and hence the stability of the Haitian gourde, and the use of certain
monetary policy tools, including the requirement to have a particularly high coefficient of reserves for
deposits in gourdes compared with deposits in foreign currency.
(2) 
RECENT ECONOMIC DEVELOPMENTS
13. During the 1980s, Haiti's economy showed a steady downward trend, with real GDP
shrinking at an annual average of around 1 per cent between 1980 and 1991.  The mediocre economic
                                                     
10 The major donor countries are, in decreasing volume of aid, the United States, Canada, France and
Japan.
11 Bank of the Republic of Haiti (2001).
12 Ratio between payments in capital and interest and exports of goods and non-factor services.  The
trend in the ratio is due, inter alia,  to the fall in exports during the embargo (this kept the ratio at a high level)
and the increase in exports in subsequent years (together with the annulment of part of the debt in 1995, this has
helped to lower the ratio).
13 Dollarization means situations in which a substantial amount of the assets and liabilities of domestic
operators are with commercial banks or the operators undertake some of their domestic transactions (in goodsand/or services) in foreign currency, usually the United States dollar.WT/TPR/S/99 Trade Policy Review
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performance essentially reflects the unstable political environment since 1986, with six different
presidents following each other between 1988 and 1991.  The economic decline gathered considerable
momentum in 1991 following the overthrow of the democratic regime by a military coup d'état and
the subsequent imposition of sanctions by the international community in the form of a trade and
finance embargo and the majority of the external aid given to Haiti was suspended.14
14. Between 1991 and 1994, real GDP fell by around 20 per cent and the rate of inflation rose
from 12 per cent to 51 per cent.  The public deficit increased from 1.3 per cent of GDP in 1991 to
3.31 per cent in 1994.  This deficit was mainly financed by the central bank, the  Banque de la
République d'Haïti  (BRH) (Bank of the Republic of Haiti).  In addition, exports of goods and services
fell from US$224.2 million in 1991 to US$67 million in 1994, while at the same time imports of
goods and services dropped from US$531.9 million to US$235.4 million.  Investment as a whole
decreased from 13.8 per cent of GDP in 1991 to 6 per cent in 199415;  the fall in public investment
accentuated the deterioration of Haiti's infrastructure.
15. With the return to democracy and the end of sanctions in 1994, an economic policy
programme aimed at restoring macroeconomic stability and based on the liberalization of trade, the
privatization of State enterprises and decentralization was initiated.  In March 1995, a standbyarrangement for a sum of 20 million special drawing rights (SDR) was signed with the IMF in order
to underpin Haiti's economic reconstruction efforts.  In October 1996, a three-year programme was
approved by the IMF, allowing Haiti access to the enhanced structural adjustment facility (ESAF).
16. Between 1995 and 2000, Haiti's economy showed an  average annual real rate of growth of
around 2.5 per cent, with a virtually steady decline from 4.4 per cent in 1995 to 1.2 per cent in 2000
(Table I.1 and Chart I.2).  The main reason for this economic growth was the marked expansion of the
construction and public works sub-sector as a result of the repairs carried out on highways leadinginto some major agricultural production zones and the restoration of open spaces in the metropolitan
area.  It is also due to a significant increase in exports by manufacturing firms and certain agricultural
producers.  Between 1996 and 2000, exports of goods experienced an average annual rate of growth
of around 18 per cent, despite the poor results of the past year (section 3(i) below).
16
17. The growth in the Haitian economy has, however, been mitigated by political deadlock (since
June 1997), which has resulted in a reduction in international aid17, and by a fall in coffee and cacao
prices, leading to a decrease in export earnings.  The devastation caused to agricultural plantations by
hurricane Georges towards the end of September 1998 also accelerated the deterioration in domestic
production that was already precarious.  In 2000, agricultural production was also affected by a
serious drought that greatly contributed to the reduction (of around 1.5 per cent) in the sector.
                                                     
14 Humanitarian aid was not subject to the embargo.
15 Bank of the Republic of Haiti (2001);  IMF (2001a).
16 In the fiscal year 1999/2000, the value of exports fell by around 7 per cent.  This drop is due to
diseases that affected the coffee harv est, a fall in coffee prices and a slowdown in American demand for Haitian
textile products.
17 During the fiscal year 1999/2000, the construction and public works sub-sector showed growth of
around 4.6 per cent, which is a noticeable decrease in comparison with previous years.Haiti WT/TPR/S/99
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Table I.1
Main economic indicators 1995-00a
1995 1996 1997 1998 1999 2000
GDP at market prices (US$ millions) 2,634 2,955 3,462 3,839 4,307 4,415
GDP at market prices (Gmillions) 35,265 42,744 51,578 59,055 68,550 79,464
Per capita GDP (US$) 367 403 462 502 552 555
Real GDP (percentage variation) 4.4 2.7 1.4 3.1 2.2 1.2
Consumer prices (percentage variation) 17.26 17.01 16.95 8.27 9.92 15.32
Monetary Sector (percentage variation)
Narrow money (M1) 91.9 -2.2 6.1 9.0 17.4 19.7
Global monetary resources (M2) 20.5 1.6 11.3 11.4 14.1 18.5
Interest rateb8.8 10.5 10.5 11.0 9.6 10.5
Exchange rate (G/US$)c14.51 16.13 16.23 16.90 17.00 19.62
Share of real GDP (percentage)
Agriculture 32.2 31.2 30.2 29.9 29.8 29.4
Industryd7.3 7.2 7.2 7.2 7.1 7.2
Services 60.5 61.6 62.6 62.9 63.1 63.4
Government finance (percentage of GDP)
Public deficit (-) or surplus (+) (central government) -4.3 -2.5 -0.6 -1.1 -1.3 -2.2
National accounts (percentage of GDP)
Public and private consumption 108.3 104.0 103.1 102.5 102.2 102.2
Gross fixed capital formation 13.8 14.7 12.5 12.9 13.0 12.7
Exports of goods and non-factor services 10.9 12.3 11.5 13.2 13.2 12.5
Imports of goods and non-factor services 33.0 31.0 27.1 28.6 28.4 27.4
Foreign trade indices
Trade in goods (in percentage of GDP) 30.5 27.4 26.2 29.2 29.9 30.1
Unit value of exports 100.0 96.4 90.4 88.7 87.2 81.8
Unit value of imports 100.0 101.0 93.2 87.1 90.9 98.1
Terms of trade 100 95.5 96.9 101. 8 95.9 83.4
Memorandum:
International reserves (in US$ millions) 216.0 215.6 265.7 292.7 329.2 272.5
International reserves (in weeks of imports) 12.8 12.5 14.5 13.8 13.5 10.3
a All the indicators are taken from the Annual Report of the BRH, with the exception of the unit values for exports and imports and
the terms of trade, taken from the IMF Report
b Six-month deposit nominal rate, December each year.
c Average for the period.
d Essentially manufacturing industry as the mining sector is not developed.
Source:  Bank of the Republic of Haiti (2001),  Annual Report  2000;  and IMF (2001), IMF Staff Country Report No. 01/04 ,  Haiti Selected
Issues.WT/TPR/S/99 Trade Policy Review
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0100020003000400050006000
1970 72 74 76 78 80 82 84 86 88 90 92 94 96 98 2000020040060080010001200Chart I.2
Trend in real GDP, 1970-2000
Source :   WTO Secretariat, based on information provided by the Haitian authorities. Real GDP, millions of gourdes 1975/76Real GDP per capita
(gourde, right hand scale)
18. The purpose of the budgetary policy reforms undertaken over the past few years was to
diminish the imbalances following the years of embargo.  The major reforms have been undertaken
within the context of the IMF-backed programme and are intended to limit the public deficit to 1.7 percent of GDP and to facilitate ex ternal financing that should help to move ahead with economic
reform.  These reforms should help to reduce the monetary financing of the central Government's
deficit and the IMF programme is supplemented by a cash management programme agreed between
the BRH and the Ministry of the Economy and Finance (MEF) for the purpose of achieving harmony
between budgetary expenditure and fiscal earnings.  In terms of budgetary policy, the efforts madehave mainly focused on controlling the wage bill,  improving cash flow management procedures and
programming expenditure, strengthening the capacity of the Government tax collection entities and
broadening the basis of certain taxes.
19. Budgetary performance has been satisfactory in general as the central Government's deficit
has been reduced and kept within reasonable limits.  Between 1995 and 1999, it decreased from4.3 per cent to 1.3 per cent of GDP.  The year 2000, however, saw the deficit rise to 2.2 per cent of
GDP due to the fiscal losses in revenue from petroleum products
18, the low level of external financing
                                                     
18 In order to maintain prices at the pump, the State modifies the amount of taxes levied in the form of
variable or fixed excise duties.  Consequently, if th e c.i.f. price of petroleum products increases, the fiscal
revenue from these products decreases.  At the beginning of the 1999/2000 fiscal year, taxes, levies and dutieson petroleum products ranged from 41 per cent to 45 per cent.  In May 2000, following the rise in the price ofpetroleum products as a result of the increase in global petroleum prices and the depreciation of the gourde, theauthorities decided to grant tax credits on the sale of kerosene and diesel fuel in order to maintain the stability ofHaiti WT/TPR/S/99
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and the spending incurred by organizing elections in a tense electoral climate.  As a result, the
monetary financing of the public deficit exceeded the objectives in the cash management programme
and, for the year 2000, amounted to G2 billion, some 2.5 per cent of GDP.
20. The main aim of the monetary policy is to control inflation and stabilize exchange rates.
Under the programme agreed with the IMF, the target is an inflation rate of between 9 and 10 per
cent.  To achieve this, the monetary policy is designed to maintain a constant ratio between the moneysupply and nominal GDP.  Although this objective was reached in 1998 and 1999 (in which the
inflation rates were 8.2 per cent and 9.92 per cent respectively), in 2000 the rate was 15.32 per cent.
This price escalation can in part be attributed to the rise in the price of food and petroleum products
aggravated by the depreciation of the gourde.  To tackle this rise in inflation and the depreciation of
the gourde, the BRH made use of its three banking liquidity management tools, namely, interventionin the exchange market, increasing the level of the commercial banks' mandatory reserves for
liabilities in gourdes and in foreign currency, and raising interest rates on BRH bonds and the
securities repurchase (repo) rate.  Because of monetary overhang and the decrease in the BRH's
exchange reserves, the impact of these measures has nevertheless been limited.
21. Following these interventions, in December 2000, the figures for mandatory reserves for
liabilities in foreign currency were set at 21 per cent for commercial banks and 19 per cent for savings
banks and building societies.  For liabilities in gourdes, the figures were 31 per cent for commercial
banks and 19 per cent for savings banks and building societies.  The BRH also sold the equivalent of
US$16.75 million on the exchange market and US$15.175 million to the MEF for petroleum
importing companies.  Lastly, the interest rates on 7, 28 and 91–day instruments were raised from
6.85 per cent, 9.72 per cent and 11.3 per cent to 14 per cent, 16 per cent and 26.7 per cent
respectively, while the average monthly interest rate in the banking system was 27.5 per cent for loansin gourdes and 14.25 per cent for loans in foreign currencies.
19
22. The Government also began to privatize a certain number of State enterprises and to limit
State intervention in production activities.  A Presidential Commission on Growth and Modernization
was set up in 1994 for this purpose (Chapter II(2)).  Only slight progress has been made in
privatization however, and there have been many delays in implementing the programme(Chapter III(4)(iv)).
(3) 
TRADE PERFORMANCE AND INVESTMENT
23. Since 1995, Haiti's trade in goods has amounted to around 30 per cent of GDP (on average),
which is a fairly low volume of trade for such an  open economy as Haiti's.  The Haitian economy is a
net importer of both goods and services (Table I.2).  The goods and services balance shows a chronicdeficit which, between 1995 and 2000, accounted for an average of 17 per cent of GDP.  This deficit
is offset in part by net current transfers, which have helped to limit the current account deficit,
(Chart I.3).
20  The vast majority of these remittances come from the private sector (an average of
60 per cent between 1997 and 2000), more specifically from Haitians living abroad.21
                                                                                                                                                                    
prices at the pump.  As a result, the taxes, levies and duties on petroleum products fell to around 17 per cent and
23 per cent, equivalent to a fiscal loss estimated at G1,079 million.
19 Bank of the Republic of Haiti (2001).
20 Between 1995 and 2000, the current account deficit accounted for an average of 0.3 per cent of GDP.
21 Bank of the Republic of Haiti (2001).WT/TPR/S/99 Trade Policy Review
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Table I.2
Balance-of-payments, 1995-2000
1995 1996 1997 1998a1999a2000a
Current account -22.5 -46.1 -36.3 52.6 6.4 -86.0
Balance on goods and services -544.7 -497.9 -500.6 -542.3 -654.7 -773.2
Credit 256.9 329.3 379. 12 479.3 518.2 497.5
Debit -801.7 -827.2 -879.7 -1,021.6 -1,172.9 -1,270.7
Balance on goods -364.3 -328.7 -497 .83 -522.7 -590.9 -687.3
Credit 152.8 169.9 205.5 299.4 348.7 327.1
Debit -517.2 -498.6 -703.3 -822.1 -939.6 -1,014.4
Balance on services -180.4 -169.2 -2.8 -19.6 -63.8 -85.9
Credit 104.1 159.4 173.7 180.0 169.6 170.4
Debit -284.5 -328.6 -176.4 -199.6 -233.3 -256.3
Balance on income -30.6 -10.7 -13.6 -11.65 -12.6 -11.8
Credit .. .. .. .. .. ..
Debit -30.6 -10.7 -13.6 -11.65 -12.6 -11.8
Net current transfers 552.9 462.5 477.9 606.5 673.6 699.0
Credit 552.9 462.5 477.9 606.5 673.6 699.0
Debit .. .. .. .. .. ..
Including private transfers .. .. 256.0 327.3 422.0 506.0
Capital account 0.0 0.0 0.0 0.0 0.0 0.0
Credit 0.0 0.0 0.0 0.0 0.0 0.0
Debit 0.0 0.0 0.0 0.0 0.0 0.0
Financial account 137.5 78.2 79.1 187.8 103.47 -24.2
Direct investment 7.4 4.10 4.0 10.8 30.0 14.1
Other investment 130.1 74.1 75.1 177.0 73.5 -38.3
Central government sector (net) 119.0 67.9 55.2 37.7 71.8 26.3
Banking sector (net) -10.9 -5.1 15.9 -1.7 -3.9 -62.3
Non-banking sector (net) 22.0 16.0 20.0 140.0 -15.0 -8.0
Other assets and liabilities (net) .. 215.6 -16.0 1.0 20.6 5.6
Net errors and emissions 70.3 -78.7 -12.5 -205.9 -88.4 64.6
 Overall balance 185.4 -46.6 30.4 34.5 21.4 -45.7
Financing -185.4 46.6 -30.4 -34.5 -21.4 45.7
Reserve assets -175.6 48.6 -50. 16 -29. 10 -33.6 57.1
Use of IMF credits and loansb -6.3 -3.9 18.2 -5.3 11.5 -15.5
Other liabilities c 2.4 -2.6 1.6 -0.1 0.7 0.2
Changes in payment arrearsd -118.8 4.4 0.0 0.0 0.0 4.0
Rescheduling obtained 112.9 0.0 0.0 0.0 0.0 0.0
Memorandum:
External assistance 557.1 377.5 295.3 311.6 335.0 203.8
Official grantse444.4 310.5 221.9 279.2 251.6 193.0
Net loanse112.8 67.0 73.4 32.4 83.4 10.8
.. Not available.
a Provisional data.
b Changes in gross reserve assets.  The sign (-) indicates an increasec Short-term commitments to international financing organizations
d No sign equals accumulation; (-) = repayment
e Government transfers (term used in the former editions of the BOP manual) now recorded under the heading current transfers.
Source: Bank of the Republic of Haiti (2001), Annual Report 2000.Haiti WT/TPR/S/99
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(i) Trade in goods and services
24. In recent years, the trend in Haiti's exports has been towards goods rather than services.  The
latter's share in exports of goods and services fell from 41 per cent in 1995 to 34 per cent in 2000,mainly due to the slowdown in tourism activities.  Ea rnings from the export of goods increased at an
average annual rate of growth of around 17.6 per cent over the period 1995-2000.  This increase can
mainly be attributed to the strong growth in exports of textile products, the assembly industry and
certain agricultural products such as mangoes.  The fiscal year 1999-2000, however, saw a sharp fall
and the value of exports decreased by almost 7 per cent over this period.  This reduction was due,
inter alia , to the impact of certain diseases that affected  the coffee harvest, the fall in coffee prices (of
around 8 per cent), as well as the slowdown in American demand for textile and assembly productsfrom Haiti.
25. Haiti's principal exports are manufactured goods, especially products of the textiles and
assembly industries.  Their share of the total value of exports of goods is regularly increasing and rose
from 38 per cent in 1995 to 76 per cent in 2000.  The share of agricultural exports, on the other hand,
fell from around 62 per cent in 1995 to 24 per cent in 2000.  This trend can be explained by thedecline in agricultural production (section I (2)), the increase in non-official trade with the Dominican
Republic, the replacement of cash crops by food crops, a higher percentage of domestic consumption
in the overall production of certain goods such as coffee, and the rise in the share of manufactures as a
result of tax and customs concessions.
26. Over the past five years, Haiti's imports of goods and services have seen a sustained increase
at an average annual rate of growth of around 10 per cent.  The vast majority of imports are goods,
whose share of total imports was around 80 per ce nt on average during the period 1995-2000.  The-800-600-400-2000200400600800
1995 1996 1997 1998 1999 2000Chart I.3
External balances, 1995-00
Source: WTO Secretariat, based on information provided by the Haitian authorities.US$ millions
Current accountCurrent transfers, net
Current account, with the exception of unrequited transfersBalance on goods and servicesWT/TPR/S/99 Trade Policy Review
Page 10
principal imports are food products, whose share is decreasing (they still currently account for almost
31 per cent of imports of goods), followed by manufactures (28.5 per cent of the value of imports in
2000), whose share is continually rising.  The share of imports of machinery and equipment remains
fairly stable at an average level of around 23 per cent.  The same applies to mineral fuels, which
accounted on average for 13.5 per cent of the value of imports of goods during this period, with the
exception of 2000, during which their share rose to around 25 per cent because of the increase in theprice of petroleum products.
27. Haiti's major trading partner is the United States.  Exports of goods to the United States have
steadily increased and in 1995 their share of the total was 65 per cent, rising to around 90 per cent in
2000.  The other major partners are the European Union (EU), with a share of 5 per cent in 2000, and
the Dominican Republic (4.2 per cent).  Imports of goods into Haiti essentially come from theUnited States, whose share of total imports is nonetheless on the decline, falling from 63 per cent in
1995 to 54 per cent in 2000.  The other principal sources of imports of goods are the Dominican
Republic (11 per cent in 2000) and the EU (9 per cent).
22
28. The services balance shows a structural deficit (Table I.2).  During the period 1995-2000,
exports of services covered up to around 70 per cent of imports, although there were markedfluctuations.  Since 1998, there has been a downward trend in the rate of coverage.  This is due to
higher expenditure on travel because larger numbers of Haitians are leaving the country due,
inter alia , to political instability and insecurity.  It can also be explained by the higher freight and
insurance costs caused by the increase in imports of goods.
(ii) Investment
29. Gross fixed capital formation accounted for around 13 per cent of GDP during the period
1995-2000.  The annual average rate of growth in investment was approximately 2.5 per cent.  Publicinvestment remains relatively high.  It has mainly b een in infrastructure projects, particularly in the
transport sector, and has involved a higher level of financing.  The private sector accounted for 50 per
cent of total investment in 1999.  In Haiti, private investment is to a great extent hampered by the
factors described above, which act as obstacles to the economy’s growth (section I(1)) and by
administrative problems.  Table I.3 shows the structure of investment in Haiti in 1999.
30. The share of foreign investment in the total is small due to the reasons mentioned above.  The
flow of foreign direct investment (FDI) has fluctu ated from year to year, with US$4 million in 1997;
US$10.76 million in 1998;  US$30.01 million in 1999;  and US$13.2 million in 2000.
23
31. In recent years, foreigners have mainly invested in the supply of telecommunications services,
importation and distribution of petroleum products, ba nking services, and the assembly industry.  The
inflow of foreign direct investment comes mainly from American (Texaco, Esso, Citibank  inter alia )
or European (Shell, Elf, inter alia ) firms.
                                                     
22 International Monetary Fund (2001b).
23 Bank of the Republic of Haiti (2001).  The amounts given for 1999 and 2000 are provisional.Haiti WT/TPR/S/99
Page 11
Table I.3
Structure of investment, 1999
Investments Amount
In G millions
Domestic investment
Total 7,942
Private 3,781
Public 4,161
Including:  central Government 1,724
In US$ millions
Foreign direct investment
Total 30.01
Source: Ministry of the Economy and Finance (2000), Bilan économique, exercise 1998-1999  (Economic performance
1998-1999).
(4) OUTLOOK
32. The economic outlook for Haiti depends on the establishment of a domestic environment that
is conducive to work and investment.  Such an environment should allow the ongoing implementation
of reforms to underpin development plans.  This should help to achieve annual economic growth of
over 4 per cent in the medium term and a reduction in the unemployment rate from 60 to 45 per cent.Such a performance would also assist poverty reduction.
33. The macroeconomic stabilization component of the reforms should allow the budgetary
deficit to be brought down to 1 per cent of GDP over a period of five years.  This budgetary
performance could be achieved by increasing fiscal pressure to 10 per cent by improving the
collection of public revenue, broadening the tax base, and modernizing the Fiscal and Customs Codes.The reduction in the budgetary deficit should help the Central Bank to control the supply of money
and, combined with economic growth, it would allow th e annual rate of inflation to be kept at under
10 per cent, as well as stabilizing the Haitian gourde in comparison with the United States dollar.
34. The economic performance forecast also depends on giving renewed impetus to agriculture,
tourism and trade ( inter alia ), and on lowering production costs.  To achieve this, it is planned that a
large share of tax revenue and earnings from privatization will be used to finance public investment in
the highway, port and airport infrastructure, as well as in education and health.  It is also planned to
improve the population’s access to drinking water, to generate more electric power and reduce losses,
and to improve the school attendance and literacy rates.
35. The reform of the Commercial Code, including investment, and the establishment of a
mechanism to facilitate investment should attr act both domestic and foreign capital, thereby
supporting economic growth.
24
                                                     
24 This section was prepared on the basis of information contained in the following:  Government of
Haiti (2001), Memorandum submitted to the Third United Nations Conference on Least-Developed Countries,Brussels;  and Republic of Haiti (2001).