Output grew 4.5 percent in 1995, but slowed to 2.3 percent in 1996 after the Preval Government adopted restrictive monetary and fiscal policies to stabilize the economy. As a result of these measures, the inflation rate fell from 30 percent in 1995 to 16 percent in 1996, international reserves increased, the Gourde strengthened, and the fiscal deficit virtually disappeared. The Haitian economy has achieved a tenuous stability, but growth is still weak. Unemployment and flagging public support for reform remain significant concerns. Nevertheless, considerable donor resources have been mobilized and should begin to disburse in the months ahead.
Business confidence remains weak.
Progress on privatization has picked up considerably in the past six months after initial vacillation. Haiti's fiscal adjustment has been harsh. In part, this is caused by delayed disbursements of external budget support and the sharp limitation on public spending to one-twelfth of last year's nominal level in the absence of a budget approved by Parliament. This has represented a real reduction in government spending since October 1996, notwithstanding increased revenues. A combination of factors may enable higher growth in the second half of 1997.