Haiti Relief and Reconstruction Watch

Own Goal: Fuel Price Increase Generates Crisis in Haiti

1 month ago

It was 2:15 on Friday afternoon, July 6th, when I got the first WhatsApp message. The Haitian government was going to announce that fuel prices would increase the following day by up to 50 percent. It was also somewhere around the 13th minute of the World Cup quarterfinal match between Belgium and Brazil, the national team adopted by most Haitian soccer fans. Eyes across the country were glued to the TV when the official announcement came late in the game’s second half. Minutes later, Brazil had lost the match. And soon after, thousands of Haitians were in the streets, though not because of the game’s disappointing result.

Roadblocks and burning tires went up in smoke throughout the capital, and soon demonstrations had broken out across the country. By Saturday morning the situation had worsened. International airlines canceled flights in and out of Haiti. Parking lots at many private businesses were turned into car cemeteries. Digicel, the leading cell provider in Haiti, said its fiber optic cables were destroyed, blocking international phone calls, internet usage and other services. Helicopters could be seen evacuating individuals from their rooftops. At least three people were killed.

Less than 24 hours after the initial announcement, the government was forced to cancel the price increases. But the aftershocks of that initial decision have continued to reverberate.

The heads of both chambers of parliament (erstwhile allies of the president) as well as the most powerful private business organization have since called for Prime Minister Jack Guy Lafontant, a doctor and political novice, to resign. The Jovenel Moise administration is now facing its most significant test yet. But how the government found itself backed into this corner is about far more than fuel prices, and reveals as much about the failures of the international community as it does those of Haiti.

The price increase was not a surprise. In late 2017, faced with an increasing budget deficit, and a lack of donor funds, the government sought the assistance of the International Monetary Fund (IMF). Before the government could sign a financing deal with the IMF however, it first had to complete a 6-month reform program. If that program was successful, the government could then sign a long-term deal with the IMF, and budget support from other donors would begin to flow again.

On June 20, the IMF issued a statement welcoming “the government's intention to eliminate fuel price subsidies,” a key step in completing the program. The IMF also noted that it “agreed on the importance of implementing key social measures to mitigate the impact of the subsidy reform on the most vulnerable segments of the population.”

According to World Bank research, 90 percent of the benefits from the subsidy go toward the wealthiest segments of the population. But, in a country with 60 percent youth unemployment, a majority of citizens living on less than $2.40 a day, and stubborn double-digit inflation, any increase in the cost of living can be catastrophic. And to make matters worse, kerosene, the fuel that the poor most rely on, was to see the greatest increase.

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Haiti Relief and Reconstruction Watch
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