Business & Tech

Fuel price riots in Haiti lay bare budget woes

Setting a budget is not the easiest exercise for wealthy countries in the best of circumstances. In impoverished Haiti, where proposed fuel price increases sparked deadly looting and arson attacks, it's nearly impossible.

Anger over proposed fuel price hikes exploded into deadly violence and looting  in Haiti's capital Port-au-Prince
Anger over proposed fuel price hikes exploded into deadly violence and looting in Haiti's capital Port-au-Prince (AFP)

Setting a budget is not the easiest exercise for wealthy countries in the best of circumstances. In impoverished Haiti, where proposed fuel price increases sparked deadly looting and arson attacks, it's nearly impossible.

The decision to scrap the price hikes amid the weekend spasm of violence means the government will have to find another way to come up with the $300 million the move would have generated.

It's not an insignificant amount -- the total is more than 11 percent of the 2018-2019 budget presented to parliament in June for debate.

Now, the government of President Jovenel Moise has to get creative in a bid to appease all sides -- consumers demanding his resignation, politicians with varying interests and the International Monetary Fund,

It won't be easy.

The streets of the capital Port-au-Prince were strewn with barricades over the weekend, bringing activity in the chaotic city to a halt. Dozens of shops were looted and burned and cars were set ablaze. At least four people were killed.

For motorcycle taxi driver Luckner Michel, the proposed price hikes -- 38 percent for gasoline, 47 percent for diesel and 51 percent for kerosene -- are simply unworkable.

"Gasoline was already too expensive, and life here is generally too expensive -- they are simply trying to kill us," Michel told AFP.

"Even if I could pay that much, I would have to hike my fares, and people don't have the means to pay more. So I would be out of business."

Guichard Dore, an aide to Moise, insists "new priorities" for the budget will be set after the fuel price riots.

"We have realized that there were not enough resources to address social problems," Dore said. "For years, social financing of the economy has not been assured."

'Revised strategy'

Haiti is desperately poor: around 60 percent of its people live on less than two dollars a day, and they are extremely sensitive to even minor increases in prices of just about anything.

In February, Haiti signed an agreement with the International Monetary Fund, the Washington-based global crisis lender, in which the country committed to carrying out economic and structural reforms to promote growth.

One of those conditions was to eliminate petroleum product subsidies, prompting the doomed price hike proposal.

The accord also called on the government to keep inflation under 10 percent.

Since 2015, inflation has been running at between 13 and 14 percent annually. And the budget blueprint submitted to the legislature in late June still foresaw a rate of 13.6 percent.

On Thursday, the IMF suggested "a more gradual approach" to ending fuel subsidies.

"We will continue to support Haiti and collaborate ...as they develop a revised strategy," IMF spokesman Gerry Rice said, noting that ending subsidies would free up funds for other programs like education.

How to build a budget

Crafting that revised strategy -- and divvying up Haiti's meager budget resources -- will be a delicate task.

Each year, parliament -- which can defy the government -- carves out a big slice for itself, at the expense of other institutions.

As it stands, the current budget proposal allots $100 million to the two chambers of the legislature -- compared to $32.8 million for the judicial branch.

And in a country where more than half of the population is under age 20, the ministry of youth affairs, sports and civic action has to get by on just $16 million.

The relatively large amount of money going to parliament angers everyday Haitians because lawmakers also receive a variety of subsidies over the course of the year and do not have to report how those funds are spent.

More than 200 years after gaining independence from France, Haiti is still ranked by the World Bank as having one of earth's most unjust societies.

Over the weekend, that inequality was cited furiously by protesters demanding the resignation of Moise, who they accused of caring only about those who are well off.

"We are suffering through sheer misery here. We cannot withstand a hit" like the fuel price hikes, said Claudy Altidor, who lives in the Port-au-Prince suburb of Petionville, where many businesses were destroyed in the looting.

"People work and work, and in one day, they lose everything. That makes a lot more people poor."