VZCZCXRO4431
PP RUEHQU
DE RUEHPU #1376/01 2091842
ZNR UUUUU ZZH
P 281842Z JUL 06
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 3642
INFO RUEHZH/HAITI COLLECTIVE PRIORITY
RUEHBR/AMEMBASSY BRASILIA PRIORITY 1145
RUEHSA/AMEMBASSY PRETORIA PRIORITY 0987
RUEHQU/AMCONSUL QUEBEC PRIORITY 0526
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 PORT AU PRINCE 001376 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/CAR 
EB/IFD 
S/CRS 
SOUTHCOM ALSO FOR POLAD 
STATE PASS TO USAID FOR LAC/CAR 
INR/IAA (BEN-YEHUDA) 
COMMERCE FOR SCOTT SMITH 
TREASURY FOR JEFFERY LEVINE 
WHA/EX PLEASE PASS USOAS 
 
E.O. 12958: N/A 
TAGS: ECON EAID PGOV PREL HA
SUBJECT: HAITI: DONORS REAFFIRM COMMITMENT TO HAITI AT JULY 
25 CONFERENCE 
 
REF: PAP 1267 
 
¶1.  Summary:  The Haitian Government (GOH) hosted a Donors' 
Conference July 25 in Port-au-Prince that resulted in 
international commitments totaling USD 750 million over the 
next fifteen months (July 2006 to September 30, 2007).  The 
GOH compiled a "pie in the sky" budget for this time frame of 
USD 1.8 billion, but its actual request to the donor 
community was USD 540 million, which the donors exceeded. 
The largest donors, in priority order, are the U.S. (USD 210 
million), the Inter-American Development Bank (IDB, USD 150 
million), Canada (USD 127 million), the World Bank (WB, USD 
61 million), the European Commission (EC, USD 58 million), 
France (USD 28 million), and Spain (USD 25 million).  Based 
on the pledges, the International Monetary Fund (IMF) 
predicts the financing gap for fiscal year 2007 may drop to 
USD 14 million from initial IMF assessments of USD 45 to 60 
million.  (Note: This amount is the lowest of all 
predictions.  Other estimates are closer to USD 35 to 40 
million.  End note.)  The financing gap for this year remains 
at USD 18.5 million, because donors made no additional 
pledges, per the IMF.  (Note: Including USG budget support of 
USD 7 million, the budget gap for this year could drop to USD 
12.5 million.  End note.)  The GOH asserted its role in 
defining its priorities and asked that donors align their aid 
with GOH objectives and in harmony with each other. 
Presenting its Pledging Conference Document, Minister of 
Planning Jean-Max Bellerive explained that the GOH's goals 
are to modernize the state and generate wealth through 
private investment.  Finance Minister Daniel Dorsainvil 
explained, in general terms, the GOH's longer term objectives 
and added that the GOH expects four percent growth for 
calendar year 2007 and an inflation rate of ten percent. 
Dorsainvil also called for aid to be predictable, 
country-oriented and in support of the budget.  At the 
Conference, donors supported GOH assertiveness, but remained 
wary of direct budget support.  The follow-up conference will 
be held in Madrid on November 20, 2006.  End Summary. 
 
Donors Pledge USD 750 million through September 2007 
- - - - - - - - - - 
 
¶2.  The GOH's Pledging Conference Document proposed a budget 
of USD 1.8 billion through the end of September 2007, which 
the GOH described as an ideal figure.  The actual request 
presented to the donors was the more realistic sum of USD 540 
million, which the donor community exceeded with a total 
commitment of over USD 750 million for a fifteen month period 
from July 2006 to September 30, 2007.  The U.S. is the 
largest donor with USD 210 million.  Other donors, in 
priority order, are the IDB (USD 150 million), Canada (USD 
127 million), the World Bank (USD 61 million), the EC (USD 58 
million), France (USD 28 million), and Spain (USD 25 million). 
 
¶3.  Other major donors include the IMF (USD 23 million), the 
Caribbean Development Bank (USD 11.5 million), the 
International Fund for Agricultural Development (USD 13 
million); Norway (USD 12 million, subject to parliamentary 
approval), and Japan and Taiwan (USD 10 million each). 
 
Highlights of the Pledging Session 
- - - - - - - - - - 
 
¶4.  The following highlights comments from the pledging 
session: 
 
--  Speaking for the U.S., USAID Assistant Administrator, 
Adolfo Franco, pledged USD 210 million to be disbursed in the 
coming fiscal year, which includes USD 10 million in budget 
support.  Franco said insecurity hinders Haiti's development 
and promised continued USG support of MINUSTAH. 
 
-- IDB President, Luis Moreno, promised continued support 
with garbage collection, education, electricity and 
infrastructure.  In addition, the IDB will work with the GOH 
in its efforts to obtain debt relief.  He pledged USD 150 
 
PORT AU PR 00001376  002 OF 003 
 
 
million through September 2007: USD 71 million for economic 
governance, 49 illion for economic recovery, and 30 million 
for access to basic services. 
 
-- Robert Greenhill, President of the Canadian Agency for 
International Development, pledged CAD 520 million (or USD 
127 million for July 2006 through September 2007) over the 
next five years to contribute to projects in the areas of 
democracy, social progress and economic governance. 
 
-- World Bank Caribbean Director Caroline Anstey encouraged 
the international community to work in partnership with Haiti 
to ensure an improvement in the security situation.  She 
promised to disburse USD 66 million in arrears from the WB's 
2004 pledge and an additional USD 61 million through 
September 2007 in budget support for education and community 
driven projects, subject to board approval. 
 
-- The European Commission reaffirmed USD 58 million for the 
extension of the Interim Cooperation Framework (ICF) through 
September 2007 and said it would commit an additional USD 291 
million in new money for the five year period from 2008 - 
¶2013. 
 
IMF Estimates USD 14 million Financing Gap for 2007 
- - - - - - - - - - 
 
¶5.  According to the IMF, Haiti could receive budget support 
for as much as USD 97.5 million for fiscal year 2007, leaving 
a financing gap of USD 14 million.  (Note: According to the 
Ministry of Planning, the budget gap for fiscal year 2007 is 
USD 35 million.  Other estimates are closer to USD 40 
million.  The IMF figure includes a HIPC grant of USD 14.2 
million, described by the IMF as "very preliminary."  End 
note.)  In order for the Poverty Reduction and Growth 
Facility (PRGF) to move forward this October, this gap must 
be closed.  The IMF will continue to work with the GOH to 
prepare for the PRGF, and to find additional budget support. 
 
¶6.  Donors did not make pledges to cover this year's 
financing gap; it remains at an estimated USD 18.5 million, 
per the IMF using GOH calculations.  (Note: Including a USG 
budget support of USD 7 million, this figure would drop to 
USD 12.5 million.)  In the final Conference Document, the GOH 
calls for salary arrears for former state employees to paid 
by the end of September 2006, with the highest costing 
estimates at 700 million gourdes (about USD 17.9 million). 
The Document explains this broadly as an increase in social 
costs.  Per ref, in the weeks leading up to the Donors' 
Conference, and prior to the circulation of the final 
Document, the IMF estimated this year's financing gap to be 
much lower than GOH expectations.  The release of the 
document with costs for salary arrears possibly explains the 
discrepancy between the GOH and IMF.  Post will send 
additional reporting as the GOH gives more details. 
 
GOH Conference Leadership -- Asserting its Role in Haiti's 
Development 
- - - - - - - - - - 
 
¶7.  Throughout the Conference, the GOH asserted its role in 
defining its priorities and asked that donors align their aid 
with GOH objectives and in harmony with each other.  In his 
opening statement, President Rene Preval stated clearly that 
his government will fight corruption, insecurity and tax 
evasion, the latter in an attempt to increase fiscal revenues 
and move the country from a state of assistance toward 
economic and social development.  Prime Minister Jacques 
Edouard Alexis asked the donors to explore a new kind of 
cooperation with Haiti.  He called on the donors to be 
flexible and allow for integration into the National 
Development Plan.  In return, he promised a transparent 
dialogue with the donor community and more transparent 
tracking of donor resources implemented through NGOs, and 
said he hoped to reduce delays in project execution.  Alexis 
also said the state would be willing to establish 
 
PORT AU PR 00001376  003 OF 003 
 
 
public-private partnerships. 
 
¶8.  Presenting the Pledging Conference Document, Minister of 
Planning Jean-Max Bellerive explained that the GOH's goals 
are to modernize the state and generate wealth through 
private investment.  He identified safety and public security 
as the most important pre-conditions to the success of the 
proposed government plan. 
 
¶9.  Minister of Finance Daniel Dorsainvil prefaced his 
elaboration of the Document's objectives by providing some 
compelling statistics on poverty in Haiti: 76 percent of the 
population lives below the poverty line, and 56 percent live 
on an average of 42 cents per day.  Poverty in Haiti is three 
times higher than the average for the Caribbean.  Given these 
statistics, the Conference Document has three concrete 
objectives: (1) in 25 years, Haiti should no longer be a 
Least Developed Country; (2) in 10 years the Haitian economy 
should be the most dynamic in the region; and (3) in 5 years, 
at the end of this government's tenure in office, Haiti 
should replenish its stock of physical and human capital. 
 
¶10.  Dorsainvil added that for calendar year 2007, the GOH 
envisions a four percent growth rate and an inflation rate of 
ten percent.  Currently, internal revenue stands at nine 
percent of GDP, which the GOH would like to increase to 
fifteen percent.  Dorsainvil also called for aid to be 
predictable, country-oriented and in support of the budget. 
 
Reginald Boulos Offers Private Sector Truce 
- - - - - - - - - - 
 
¶11.  President of the Haitian Chamber of Commerce, Reginald 
Boulos, stressed that this is a new beginning for Haiti. 
Speaking for the private sector, he welcomed the Preval 
government's initiative to fight poverty, reduce inequalities 
and spur economic growth.  He refuted the view that the 
private sector as a group refuses to meet "fiscal 
obligations" (i.e. pay taxes), and said that the private 
sector sees the government as rife with inefficiency and 
corruption.  Boulos offered a truce: he said the private 
sector wants to help Haiti develop through sound investment 
and the creation of long-term employment.  However, this will 
not be possible without security, justice and respect for 
private property. 
 
Next Steps 
- - - - - - - - - 
 
¶12.  The next Ministerial level meeting on Haiti will be held 
in Madrid on November 20, 2006.  Further information on GOH 
preparations and expectations will be provided as available. 
 
¶13.  Comment:  Throughout the conference, the GOH called for 
a leading role in Haiti's development; in return the GOH 
promised responsibility and transparency.  Donors were 
receptive to the assertiveness of GOH officials, however, 
they remained wary of direct budget support and unclear 
channels for aid.  The GOH's call to donors that aid align 
with national priorities should be paired with detailed 
explanations, which are lacking, for instance, in the 
last-minute insertion into this year's budget of payments for 
salary arrears.  Post will continue to follow-up with 
relevant ministries to provide (and encourage) clarity on 
spending priorities. 
SANDERSON