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Haiti – Crisis Deepening

Haiti is once again mired in a political crisis, with President Jovenel Moïse governing by decree in the absence of a sitting legislature, and the opposition insisting that Moïse’s mandate expired on February 7, a position supported by many legal experts. For his part, Moïse contends that his term does not end until February 2022, and he is preparing to hold a referendum in late June to obtain approval of a new constitution that will serve as the basis for two-stage presidential and legislative elections in the second half of the year.
Both the OAS and the new US administration headed by President Joe Biden have recognized Moïse as the legitimate head of state until February 2022, but Washington is applying pressure on Moïse to drop plans for a constitutional referendum and focus instead on ensuring that national elections are held according to schedule in September and November of this year.
Moïse contends that holding elections without revising the structure of governance will inevitably produce a fresh political crisis. His solution is to concentrate executive power in the presidency, a strategy that has understandably aroused the suspicions of the opposition. Ordinary Haitians have organized large protests against constitutional reform, the EU and the US are refusing to help defray the costs of the referendum, and even Moïse’s own party has called on the president to abandon the idea.
There are already worrisome indications that Haiti is approaching a state of chaos. Although there is no evidence of a connection between a recent spike in kidnappings and abrupt resignation of Prime Minister Joseph Jouthe in April, the coincidence underscores the rising instability within both the government and the country at large. The hope is that Moïse will recognize the threat and revise his strategy, but there is no clear evidence he has any intention of doing so.
The government’s fiscal response to the COVID-19 pandemic included increased spending amounting to about 1.5% of GDP, which was far too little to provide much of a stimulus. However, in combination with a reduction in revenues totaling about 0.5% of GDP, the budget deficit widened to 7.4% of GDP. A lack of capacity to efficiently implement an expansionary budget would limit the potential for a strong rebound, even if Haiti could afford such a strategy. Moreover, delays in vaccinating the population will contribute to a persistent risk of fresh waves of infections, dampening the outlook for growth, which is forecast to be flat, at best, in 2021.
Since 1979, The PRS Group Inc., has been a global leader in quant-based political and country risk ratings and forecasts. This commentary represents a sneak peek from our upcoming political risk reports. For more information please contact us at (315) 431-0511 and, or explore a subscription to PRS Online and/or ICRG Online today to receive political risk updates.


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