US embassy cable - 05PORTAUPRINCE1037

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001037 
 
SIPDIS 
 
STATE FOR WHA/CAR 
EB/IFD/ODF 
WHA/EPSC 
STATE PASS AID FOR LAC/CAR 
TREASURY FOR MAUREEN WAFER 
USDOC FOR 4322/ITA/MAN/WH/OLAC (SMITH, S.) 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, PGOV, HA 
SUBJECT:  Haiti:  Announcement of Economic Revival Program 
 
 
1. SUMMARY: On March 31, Minister of Economy and Finance, 
Henri Bazin, announced the Interim Government of Haiti's 
(IGOH) USD 50 million economic revival program (PROREC), a 
short-term development program to fill the breach until 
donor money flows.  PROREC has three main components: a) 
improvement of basic infrastructure, b) government 
decentralization and social welfare, and c) assistance to 
the private sector, particularly production-related small 
businesses.  PROREC could help stimulate economic growth, 
and shore up the image of the IGOH in the eyes of Haitians, 
however its design is cumbersome, and its feasibility is in 
doubt. END SUMMARY. 
 
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Economic Recovery Plan Announced 
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2. On March 31, the Interim Government of Haiti (IGOH) 
released its USD 50 million broadly targeted economic 
development plan, PROREC (Programme de Relance Economique). 
The IGOH calls PROREC a stop-gap development program that 
will stimulate economic growth until donor money begins to 
flow. As of early April 2005, the Haitian Central Bank, 
which tracks disbursements, said only slightly under one 
quarter of the USD 1.2 billion pledged in July 2004 had 
been spent. 
 
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Infrastructure: Roads, Agriculture and Health 
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3. PROREC allocates USD 30.5 million for infrastructure 
construction and maintenance in inter- and intra-urban 
roads (USD 26.2 million), irrigation and protection of 
agricultural lands (USD 2.1 million), and hospitals and 
health centers (USD 2.2 million).  Through PROREC, the IGOH 
plans to rehabilitate 190 km of main roads and construct 
bridges and drainage canals.  The IGOH also plans to use 
PROREC to fix and maintain irrigation canals, manage 
runoff, plant seedlings, and provide credit to farmers. 
Finally, the IGOH intends to open nearly 1500 hospital beds 
by rehabilitating three university hospitals in Port-au- 
Prince and regional hospitals throughout.  The IGOH 
estimates that these projects will create 2,190 health care 
jobs, and that 1.7 million hours of work will be required 
daily for the duration of the road work. 
 
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Decentralization and Local Initiatives 
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4. PROREC also provides funding for projects addressing 
local development initiatives (USD 2 million), support to 
municipal governments (USD 1.3 million), and social 
programs (USD 2.4 million).  Locally, PROREC funds will 
finance income generating micro projects such as incentives 
and support for small businesses.  In addition, PROREC 
calls for reinforcing local government capacity and moving 
services from the central government to the municipal 
governments.  PROREC's main social-services goal is to help 
local governments provide services such as housing to the 
poor, aged and infirm.  The IGOH estimates that this aspect 
of PROREC will cost USD 5.7 million, create 10 to 30 
thousands new jobs and inject USD 13  21 million into the 
Haitian economy. 
 
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Targeting the Production Oriented Private Sector 
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5. In order to support small and medium sized production- 
oriented businesses, PROREC will establish a micro-business 
fund to reinforce institutions that already cater their 
financial services to small and developing businesses. 
IGOH money will fund feasibility studies, business start-up 
loans and loan guarantees.  The IGOH has allocated USD 13.2 
million for private sector development: USD 1.1 million for 
feasibility studies; USD 2.6 million for start-ups; and USD 
9.5 million for loan guarantees. 
 
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Heavy Administrative Structure 
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6. Three administrative bodies will jointly oversee the 
coordination and evaluation of the program.  The 
Ministerial Pilot Committee (MPC), chaired by the Minister 
of Economy and Finance, will oversee program strategy.  The 
Central Bureau of Program Coordination and Management 
(BUCOGEP, Bureau de Coordination et de Gestion) will ensure 
the implementation of the program and report to the MPC. 
Finally, departmental bureaus will be established to help 
coordinate and monitor PROREC.  The IGOH has allocated USD 
485 thousand to cover PROREC's administrative costs. 
 
7. COMMENT: In many Haitian's eyes, the IGOH has failed to 
improve living conditions in Haiti.  If properly 
implemented and publicized, PROREC could demonstrate that 
the IGOH is both committed to and effective in helping 
Haitians live better lives.  While it is good to see the 
IGOH taking matters into its own hands, its inability to 
administer programs in conjunction with donors is good 
reason to doubt its ability to administer its own 
development program.  It remains to be seen if Haitian 
money and Haitian administration will be able to produce 
results. END COMMENT.