Fiscal Policy

Despite irregularities in the allocation of funds under the François Duvalier regime, government revenues traditionally equaled, or surpassed, budget outlays, technically yielding balanced budgets. Jean-Claude Duvalier's unprecedented intervention in the economy in the 1980s, however, broke this tradition. The public sector under Duvalier established, or expanded, its ownership of an international fishing fleet, a flour mill, a cement company, a vegetable-oil processing plant, and two sugar factories. Duvalierist officials based these investment decisions primarily on the amount of personal profit that would accrue to themselves, to Duvalier, and to the rest of his coterie. They ignored the potential negative impact on the economy. Poorly managed, the state's newly acquired enterprises drained fiscal accounts, causing the overall public-sector deficit to reach 10.6 percent of GDP in fiscal year (FY--see Glossary) 1985, despite sharp reductions in spending on already meager social programs in accordance with an IMF stabilization program. In July 1986, the Ministry of Finance, under the CNG, revamped fiscal policies through tax reform, privatization, and revisions of the tariff code. Although the CNG greatly increased spending on health and education, the reform measures served to lower the government's deficit to 7 percent of GDP by FY 1987. General Avril's FY 1989 budget attempted further to curtail deficit spending, but that prospect remained unlikely without stable flows of economic assistance.

Data as of December 1989