Gangs, political crises, global inflation: Haiti’s economy is at risk of implosion

The Haiti economy, subsidized without a positive impact on growth by an unjustified government weakened by gang crimes, is today at risk of implosion in the face of the effects of the war in Ukraine. ..

Global rises in fuel prices will occur at the worst of times for Haitian authorities. The rise in pump prices they ordered in December has not yet been digested by the population.

In Haiti, this strategic market is regulated by the country. To buy social peace, successive governments usually avoid touching this sensitive file.

The rise in fuel prices before December dates back to May 2017.

For six months, liters of gasoline and diesel will be paid by consumers 56 cents and 78 cents, respectively.

-Unsustainable fuel subsidies-

It is the responsibility of the authorities to repay the difference to the oil companies that import and sell in Haiti. This is a memo that has become too steep in the outbreak caused by the conflict in Ukraine.

“These fuel subsidies have increased by more than 200% this year, at a cost of about 18 billion Gould,” said economist Kessner Farrell.

This amount, which is twice the amount of money allocated to the Ministry of Health, does not mitigate the misery of 60% of Haitians living below the poverty line.

“It’s a general subsidy, so it’s socially useless. We don’t target the most disadvantaged people,” Farrell analyzes.

“In December, a mechanism was mentioned to support only the public transport sector, but due to the lack of efficiency in the state, it has not been done so far,” he laments.

Also, as island nations import five times as much food as they export, rising sea shipping costs exacerbate inflation. Inflation was already over 25% at the beginning of the year.

“The major trading partners, the United States and the Dominican Republic, are also suffering from import inflation due to high inflation. Domestically, it could reach 30% this year,” Kesner Phalel warns.

Concerns about a food riot in 2008 are imminent in Haiti as wheat prices have skyrocketed due to the Russian war in Ukraine, a major grain-producing country.

-30% expensive flour-

“This is beginning to affect the production of all industrial products that have already experienced an increase of more than 30% after the war, such as flour and pasta from Haiti’s wheat,” said Etzer, an economist who recalls Haiti. Emile emphasizes. We import twice as much rice, wheat and corn as locally produced.

According to the National Bureau of Statistics, Haiti’s households spend 60% of their income on food, but food insecurity had already affected 4.5 million people in the country before the war broke out in Europe.

“At breakfast this morning, the kids asked for bread, but we can’t buy it. Even if they don’t like it very much, we replace it with cassava pancakes.” Says Michelle, who lives in Port-au-Prince. His mother, sister, and three nephews.

“I can’t buy rice as much as I used to, and now that I’m out of rice, I’m thinking about buying it,” the young woman confesses.

These economic challenges arise when territorially acquired gangsters suck up the population through the ransom demanded during daily kidnappings, primarily in the capital.

-Business flight in the Dominican Republic-

According to government optimism, armed groups, in the face of the sway they have imposed on industry, constitute yet another obstacle to the recovery of Haiti’s economy in the recession since 2019, only 0.3% this year. May stay in growth.

“More and more businesses are closing stores and unemploying more people in violent and difficult areas,” says Etzer Emile.

This economic plunge in Haiti has already brought great benefits to neighboring countries.

“Dozens of Haiti entrepreneurs have already emigrated to the Dominican Republic, where we’re just floating boxes,” said Gregory Brandt, Chairman of the Franco-Haiti Chamber of Commerce.

“During the 2021-202 fiscal year, Haitians invested $ 250 million in the Dominican Republic,” laments the businessman.