Preval Opts for Structural Adjustment

By Ives Marie Chanel, IPS, 1 February 1996

PORT-AU-PRINCE, Feb 1 (IPS)—The question of an economic structural programme (SAP) for Haiti and the privatisation of state companies are back on the front burner as the country's new president Rene Preval prepares to assume office.

Preval takes over from outgoing President Jean Bertrand Aristide on Wednesday (Feb 7) and must tackle the SAP issue immediately, political analysts said.

They pointed to the disturbed state of the Haitian economy and opined that any of the new government's policies would be bound to fail without foreign aid—which lending agencies have made conditional on acceptance of SAP reforms

Preval is well aware of this. In a recent interview with IPS he admitted that even if Treasury revenues were doubled, his new government could not balance the state budget without investments from the private sector, contribution of foreign capital, support for Haiti's balance of payments position and the financing of public investments by the principal international multilateral lending agencies.

Estimate expenditure s in fiscal 1996 totals around five billion gourdes (more than 300 million dollars). But if no new measure is adopted, revenues will only amount to 2.7 billion gourdes, according to forecasts, says Preval.

Preval noted that expenditure in the 1996 budget are non-reducible, and the deficit enormous.

Considering the present low level of salaries in the civil service, if we should have to reduce them any further we would have to dismiss close to 14,000 functionaries immediately. This is a measure we simply cannot contemplate. It would paralyse the public administration. Even if we succeed in doubling fiscal revenues, we would still have to find funds outside the public sector.

In expectation of eventually closing down certain ministries - which he has yet to confirm—Preval advocates a reallocation of these resources, since today's supply of services in the public sector is insufficient. Sources close to the new government, however, forecast a reduction in the number of ministries from the present 17 to 10.

Conditions laid down by the International Monetary Fund (IMF), are aimed at increasing fiscal revenues, rationalising public expenditures, making public enterprises economically viable, and applying a macroeconomic policy which would encourage the resumption of investments.

Taken outside of its context, privatisation has become a pejorative term, Preval told IPS. I am not of the opinion that the State should become a simple tax collector, as certain people have let it be understood in the past.

Privatisation for me means the participation of the private sector in the activities of public enterprises. Such participation could take the form of a rent contract, participation in the capital or of a management contract, said the President-elect.

He anticipates that the position of state companies would be studied individually—case by case—at the same time admitting that the current position of some of these corporations is nothing less than catastrophic. By way of example he cited the case of the National Electricity Company, which cannot even charge for 50 percent of the power it generates and supplies—this is how bad things stand.

We would not be obliged to negotiate if we had no problem with these state companies. But the fact is we do have problems, we have certain needs, and we are going to negotiate to get the maximum advantage out of the situation, Preval maintains.

Concerning the risk to his popularity the moment he actually applies the IMF recommendations, Preval says that he has been engaged in consultations with those unions which are the most intransigent on the issues of privatisation and structural adjustment. He believes the situation must be fully explained to the populace—debated and discussed with all sectors.

On another level, president-elect Preval anticipates reinforcing Haiti's relations with its main partners—the United States, which is the country's main trading partner and its principal supplier of funds, its neighbour, the Dominican Republic and the European Union.

The president-elect also referred to the necessity of strengthening South-South relations, particularly with Caribbean and Latin American countries.

He wants to reactivate the San Jose Treaty by which Haiti was supplied with petroleum products at a preferential rate. The renewal of this agreement, whose benefits were suspended at the time of the military revolt in September 1991, will enable Haiti to recover 20 percent of the amount it has been paying for its oil, equivalent to nearly five million dollars a month.

Preval also revealed had received an invitation from President Bill Clinton to visit the United States and said he wait for a suitable moment during the U.S. presidential campaign before making the trip.

Preval showed assurance regarding his future relations with the Haitian parliament. Should the new budget, which is one of the main points of disagreement between the outgoing government and parliament, be voted on before his investiture Wednesday, he would ask for amendments—if necessary, he said.

The president-elect will adopt a new approach to budgetary questions by backing the decentralisation and devolution of decision-making powers on the estimates, as well as by throwing his support behind the autonomy and reinforcement of the various local territorial administrations.

He believes it essential, however, to strengthen the national government's control over the modernisation of regional, provincial and municipal structures so as not to simply decentralise corruption.

Preval refuses to bring charges, without proof, against officials of the present government accused publicly of embezzlement by those close to the Aristide administration. On hearing speak of these accusations, the president-elect says he cannot justify them. But if the rumours prove to be true, he assures that the law would be applied, regardless of who happens to be involved.