VZCZCXRO2804
PP RUEHQU
DE RUEHPU #1648/01 2491735
ZNR UUUUU ZZH
P 061735Z SEP 06
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 3956
INFO RUEHZH/HAITI COLLECTIVE PRIORITY
RUEHBR/AMEMBASSY BRASILIA PRIORITY 1209
RUEHSA/AMEMBASSY PRETORIA PRIORITY 1051
RUEHQU/AMCONSUL QUEBEC PRIORITY 0571
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001648 
 
SIPDIS 
 
SENSITIVE 
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 PINS HA
SUBJECT: GOH FY07 BUDGET: MOVING FORWARD BUT SLOWLY 
 
REF: PAP 1483 
 
PORT AU PR 00001648  001.2 OF 002 
 
 
¶1.  This message is sensitive but unclassified: please 
protect accordingly. 
 
¶2.  (U) Summary: President Rene Preval's economic advisor 
Gabriel Verret told econoff Sept 6 that finance minister 
Daniel Dorsainvil is discussing his FY07 budget informally 
with parliament, but has not yet presented it officially. 
Dorsainvil verified August 29 that the budget was in the 
final stages of preparation and that a draft of the budget 
had been already been presented to parliament.  The minister 
of finance presents the government's budget to the 
parliament, which must approve it by majority vote in both 
houses.  Reportedly, because of the ongoing discussions 
between the ministry of finance and parliament during the 
drafting of the budget, the approval process should not take 
the entire three months allotted to parliament by the 
constitution.  Verret expressed some concern about pork 
barrel politics in parliament, but hoped that country-wide 
NGO projects would alleviate it.  The IMF estimates the 
current financing gap for FY07 to be US $9.6 million, which 
IMF resrep Ugo Fasano told Dorsainvil needs to be reduced to 
zero before the budget is presented to the IMF board 
regarding Haiti's Poverty Reduction and Growth Facility 
(PRGF) eligibility.  End summary. 
 
Budget Process 
- - - - - - - - - - 
 
¶3.  (U) The operations portion of the budget is drafted by 
the ministry of finance and the investment portion by the 
ministry of planning, which is presented to parliament by the 
minister of finance.  According to the constitution, the 
chamber of deputies, finance commission approves the budget 
before passing it forward for the entire chamber's approval. 
Then the senate's finance commission must approve the budget, 
followed by the entire senate body.  Should parliament make 
changes to the budget, they return the document to the 
executive for final approval or further changes.  In the 
event that the executive makes further changes, the budget 
will start the process over with the chamber of deputies, 
finance commission.  If, the second time around, both the 
deputies and the senators approve further changes, the GOH is 
obligated to publish the budget as is.  The constitution also 
states that the GOH should present the budget by the end of 
June for parliament's final approval by the end of September. 
 Awaiting the results of the July donors, conference, the 
GOH delayed initiation of the process. 
 
GOH Fears Potential Pork Barrel Politics 
- - - - - - - - - - 
 
¶4.  (SBU) Verret said that GOH officials fear the 
parliamentarians will use the budget to "flex their muscles," 
citing Senator Youri Latortue, who has threatened not to vote 
in favor of the budget unless it includes the creation of a 
national army.  Latortue aside, the parliamentarians have not 
made a lot of noise about the budget: a few have expressed 
reservations in local press reports.  Separately, employees 
at the planning ministry told econoff that they plan to send 
a budget annex to parliament.  The annex will inform 
parliamentarians about country-wide projects which are funded 
by international donors through NGOs, and are not included in 
the GOH budget.  Presumably, this will help cut down on 
potential pork-barrel conflicts. 
 
FY07 Financing Gap Persists at US $9.6 Million 
- - - - - - - - - - 
 
¶5.  (SBU) According to Verret, the FY07 budget financing gap 
is US $9.6 million, which Dorsainvil said he would prefer to 
address during the second half of the fiscal year, if the gap 
persists.  Verret reported that Dorsainvil told the IMF that 
in the event of obvious financing gap mid-year, he will 
request assistance from the donor community or will work to 
 
PORT AU PR 00001648  002.2 OF 002 
 
 
lower GOH expenditures.  IMF resrep Ugo Fasano asked 
Dorsainvil to clarify his plans, and to close the gap, before 
the budget is presented to the IMF board to determine Haiti's 
eligibility for the poverty reduction and growth facility 
(PRGF) this month.  (Verret said it was supposed to be 
presented to the IMF board today, September 6, but that 
Fasano pulled it from the agenda because the budget was not 
ready.) 
 
¶6.  (SBU) Reportedly, Fasano told Dorsainvil he should 
consider closing the gap by delaying the EU disbursement of 
10 million euros until after September 31.  Verret told 
econoff he endorsed this idea because he does not think the 
GOH can usefully spend the 10 million euros by the end of 
this month anyway.  Verret also stressed that government 
revenues have been stronger than ever: 1.8 million Haitian 
gourdes (about US $46,000) for the month of August and an 
estimated 1.5 million Haitian gourdes (about US $38,000 
million) for September.  (Note: The GOH has not clarified its 
plans regarding salary arrears and severance pay as outlined 
in the Social Appeasement Program (Programme d'Apaisement 
Social -- PAS).  This possibly accounts for the discrepancy 
between the IMF and Verret on one hand, and Dorsainvil on the 
other, regarding GOH financing needs before the end of this 
fiscal year.  End note.) 
 
¶7.  (SBU) Comment:  Taking into account the inauguration of 
the new government in mid-May and the donors, conference at 
the end of July, the GOH is moving the budget process as 
quickly as can be expected.  The GOH gave a draft of the 
budget to the parliamentarians in advance of the official 
presentation which should speed up the final approval 
process.  Both Verret and Dorsainvil are confident that 
parliament will approve the budget, if not by the end of the 
month then shortly thereafter, despite the probability that 
the parliamentarians will seek changes. 
TIGHE