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Article Artículo

Haiti

Latin America and the Caribbean

World

Own Goal: Fuel Price Increase Generates Crisis in Haiti

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.

Jake Johnston / July 11, 2018

Article Artículo

Affordable Care Act

Economic Growth

United States

Serious Damage? The Story on Auto Insurance and Inflation

At a time when we have a president grabbing kids away from their parents and a Supreme Court about to move even further to the right, the impact of auto insurance on inflation may not seem the most pressing matter. But there are aspects to the issue that are informative about how we measure and think about inflation.

First, the importance of auto insurance in overall inflation seems to have gone largely unnoticed. In the last year, it has passed medical care as a driver of inflation. The motor vehicle insurance component of the consumer price index (CPI), which has a weight of 2.4 percent in the overall index, has added more than 0.21 percentage points to the inflation rate over the last year. By contrast, medical care has added just 0.19 percentage points.

Dean Baker and Matt Harmon / July 11, 2018

Article Artículo

Globalization and Trade

Six Lies on Trade
We need a trade policy that is about raising the living standards of working people in the United States and the developing world, not just giving all the money to the rich. 

Dean Baker / July 09, 2018

Article Artículo

Wage Growth Remains Modest

In spite of another large jump in employment in June, wage growth does not appear to be accelerating. The average hourly wage has increased by just 2.7 percent in the last year.

Dean Baker / July 06, 2018