Haiti’s Refueled Rage Resignation

Haiti’s Prime Minister Lafontant resigned before a legislative no-confidence vote as violent protests erupted over a 40% fuel price hike President Moise’s government introduced under the six-month old IMF staff monitored program. The unrest is estimated to cost 2% of GDP, equivalent to projected growth improvement this fiscal year, as the restored police force with the exit of UN troops last year struggled to quell the rioting. Subsidies take one-tenth of public spending and the wealthy receive a large share, and adjustments intend to free cash for social and infrastructure needs. Venezuela’s $300 million bilateral aid for these purposes disappeared with its economic catastrophe, and the President has been unable to deliver on the promise of “shovel ready” projects since winning office with only 20% electoral turnout. The petroleum discounts also encouraged smuggling to the Dominican Republic on the same island, and the President’s party could not beat a censure motion in parliament with its political weakness. He also vowed steady electricity supply, and the Fund in a June visit noted reduced state monopoly losses with the budget deficit shaved to 2%of GDP despite Hurricane Matthew rebuilding costs. Double-digit inflation was already forecast before subsidy withdrawal, and the current account gap will rise on higher capital and consumer goods imports amid flat FDI and remittances. Officials have backtracked on the original plan to maintain tourism inflows in particular at risk if commercial destruction continues. They are expected to unveil a smarter package in content and communications to pave the way for renewed IMF credit, after the previous facility expired with prolonged presidential poll standoff. Haitians granted temporary US protection after fleeing in the aftermath of the 2010 earthquake are due to be deported soon, and the Trump Administration has not targeted the government for additional aid like in the Northern Triangle of Central America where families escape corruption and security threats in waves. Nicaragua may join El Salvador, Guatemala and Honduras at the epicenter as President Ortega unleashes a crackdown on opponents including the church claiming human rights abuses and unpaid social security benefits.

Cuba is contending with its own popular backlash as it moves to recognize private property under a constitutional redraft, but published hundreds of pages of new rules for business operation and taxation. The non-state sector comprises thousands of restaurants, taxis and other product and service providers that employ 15% of the work force. Owners must now open a special bank account for income tracking, and additional bureaucracy will slow consolidation trends that could potentially pose competition to government companies. A non-Castro is at the helm for the first time since the revolution but has yet to articulate a detailed economic platform, as technocrats appear sidelined from major posts. Both Port au Prince and Havana after absorbing aid blows from Caracas will reassess relations with Brazil after October elections there, with the major candidates offering thin foreign policy views. Former President Lula, who championed their cause, remains in prison on embezzlement and the contenders are focused on law and order and economic recovery issues at home, after a massive truckers strike and indicators pointing to possible recession repeat after a fresh team tries to lift the air of resignation.