VZCZCXRO8657
PP RUEHQU
DE RUEHPU #1345/01 2661845
ZNR UUUUU ZZH
P 221845Z SEP 08
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 8880
INFO RUEHZH/HAITI COLLECTIVE PRIORITY
RHMFISS/CDR USSOUTHCOM MIAMI FL PRIORITY
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL PRIORITY
RUCOWCV/CCGDSEVEN MIAMI FL PRIORITY

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001345 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/EX, WHA/CAR VDEPIRRO, S/ES-O/CMS, S/CRS, 
INR/IAA 
STATE PASS USAID FOR LAC/CAR, OFDA 
SOUTHCOM ALSO FOR POLAD 
TREASURY FOR ERIN NEPHEW 
 
E.O. 12958: N/A 
TAGS: ASEC EAID ECON ETRD EAGR PGOV HA
SUBJECT: HAITI'S ECONOMY HIT HARD BY HURRICANES 
 
REF: PORT AU PRINCE 1314 
 
¶1. (U) This message is sensitive but unclassified.  Please 
handle accordingly. 
 
SUMMARY 
------- 
 
¶2. (SBU) The hurricanes that struck Haiti beginning in August 
have battered the country's economy.  The storm damage has 
reduced projected growth and increased anticipated inflation. 
 The sectors suffering the greatest damage are transportation 
and education infrastructure, and agriculture.  End Summary. 
 
GROWTH REDUCED 
-------------- 
 
¶3. (SBU) Preliminary International Monetary Fund (IMF) 
projected current FY 2007-2008 gross domestic product (GDP) 
growth rates are between 1.5 percent and 2.0 percent.  This 
rate is down from estimates of 3.5 percent made at the 
beginning of the fiscal year, and lower than downward 
revisions (2.5 percent) made subsequent to the April food 
riots.  Ministry of Economy and Finance (MOEF) Department of 
Economic Studies Deputy Director Marie-France Laleau told 
econoff privately that MOEF economists believe growth may 
fall to below 1.5 percent. 
 
¶4. (SBU) The economic impact of the hurricanes will extend 
well into the new fiscal year, which begins October 1 (Note: 
Haiti's fiscal year runs October 1 - September 30.  End 
note.)  IMF notes that FY 2008-2009 growth rates will be 
largely determined by the pace of recovery in agriculture and 
infrastructure -- the sectors hardest hit by the floods. 
 
INFLATION HIGHER, INCREASED GOVERNMENT DEBT 
------------------------------------------- 
 
¶5. (SBU) Year-on-year inflation was 18.8 percent in August, 
according to the Haitian Institute of Statistics and 
Information (IHSI).  Haiti's Central Bank and MOEF 
representatives hesitate to project precise forward inflation 
estimates, but nevertheless believe that inflation is likely 
to increase to a minimum of 20 percent.  The IMF also 
believes that inflation is likely to reach 20 percent, due in 
part to increases in the quantity of imported food. 
Increased imports would put additional pressure on the GOH's 
limited reserves. 
 
¶6. (SBU) The IMF notes that the GOH has already borrowed USD 
20 million from the Central Bank to prepare for the opening 
of school.  Central Bank rep notes that September inflation 
is typically higher than other months due to rising 
expenditures by the public related to school costs (e.g., 
clothing, transport, educational fees, and food).  According 
to the Minister of Finance, school fees are up approximately 
10 percent this year. 
 
¶7. (SBU) Growth in private sector credit has slowed in the 
past few months, from USD 5 million (200 million Haitian 
gourdes/HTG) loans extended in June, compared to USD 2 
million (80 million HTG) by mid-September.  Central Bank 
representatives predict lending rates will continue to be 
restrictive in the short-term.  Ministry of Economy and 
Finance officials told Emboffs they anticipate a rise in 
Haiti's current budget deficit for FY 2008 to USD 130 
million. 
 
AGRICULTURE 
----------- 
 
¶8. (SBU) Although compilation of a national damage estimate 
has  barely begun, it is already clear that flooding has 
inflicted enormous damage to Haiti's agricultural sector and 
further jeopardized Haiti's food security (reftel).  The 
agricultural sector accounts for approximately 27 percent of 
Haiti's GDP.  Destruction of transportation infrastructure 
(bridges, roads, culverts) was compounded by damage to 
croplands and livestock.  All these factors will help to 
boost food inflation -- which has been a political factor in 
Haiti since late 2007.  New Minister of Agriculture Joanas 
Gue the week of September 15 announced an upwardly-revised 
estimate of losses to Haiti's agricultural sector of USD 190 
 
PORT AU PR 00001345  002 OF 002 
 
 
million.  Losses to this strategically important sector will 
further harm Haiti's economy and overall food security.  Much 
livestock and most seed in the current planting season have 
been lost, which will bring further increases in food imports 
and likely push inflation further upward. 
 
INFRASTRUCTURE - TRANSPORTATION 
------------------------------- 
 
¶9. (SBU) Ministry of Public Works and Transportation (TPTC) 
officials on September 16 presented a list of forty-seven 
priority transportation infrastructure projects across the 
country that need immediate attention after the hurricanes. 
The TPTC report estimates these projects' cost at USD 90 
million.  The report noted that the damage to bridges and 
roads exceeds the damage sustained from Hurricane Jeanne in 
¶2004.  The World Bank with other donors will conduct a 
broader infrastructure assessment in October.  It is expected 
that figures derived from the World Bank-led assessment will 
be substantially higher than TPTC estimates of damage to the 
transportation sector -- going into hundreds of millions of 
USD. 
 
INFRASTRUCTURE - EDUCATION 
-------------------------- 
 
¶10. (SBU) Ministry of Education representatives reported 
September 18 that approximately 600 schools were destroyed 
during recent floods and that an additional 600 schools will 
require repair.  The Artibonite Department suffered the 
greatest losses (176 schools destroyed), followed by the 
Nippes Department (110 schools destroyed), and the Western 
Department that includes Port au Prince (84 schools 
destroyed).  Unofficial estimates from the Ministry of 
Education note that approximately USD 98 million (3.92 
billion Haitian gourdes/HTG) will be required to repair these 
educational facilities.  In addition, the Bureau of Civil 
Protection (DPC) reports many schools are currently being 
used as shelters for persons made homeless by the hurricanes. 
 The damage to education infrastructure was the major reason 
the Ministry of Education pushed back the opening of the 
school year to October 6.  Few of the damaged schools will be 
repaired or operational by that date. 
SANDERSON