Event

For weeks, anti-president protests have been calling for current President Jovenel Moïse to resign. The president is ruling by decree and without parliamentary oversight, as most legislators' mandates expired on 13 January 2020 and legislative elections were cancelled. One of the reasons protesters cite for Moïse’s departure is that Moïse’s 5-year mandate already ended, since his presidential term started once former president Michel Martelly left office in February 2016 and not when the current president took office in 2017. Moïse states on the contrary that he will stay until February 2022 – 5 years after he was sworn in. Both the USA and the Organization of American States back Moise's right to rule until February 2022 but stress the importance of elections to be held and a restoration of democratic institutions.

Impact

Moïse is unlikely to resign before February 2022. Moreover, he is planning to launch a referendum to change the constitution by mid-2021. Moïse also stated that following the referendum he will organise general elections. There are concerns, however, that the referendum would allow presidential re-election or the elimination of the Senate, as Moïse’s rule has become increasingly autocratic and corrupt. What is more, in the past year, kidnappings and murders have surged as gangs gained power amid the political instability and economic crisis, infuriating the Haitian population. Hence, violent unrest will pose a constant risk over the next year, driven by policy shifts or events underlining the rising insecurity, likely to trigger a violent backlash. 

Systemic commercial risk (category C/C) is stable. Rampant corruption and a rather low level of legal protection are affecting the business environment. Furthermore, the economy is expected to recover modestly only in 2021 after two years of recession. Indeed, the World Bank (January 2021) only expects a meagre real GDP growth of 1.4% in 2021 after a recession of -3.8% last year. That being said, economic growth projections are vulnerable to the Covid-19 pandemic trajectory (in Latin America, a second wave is ongoing), the effectiveness of vaccination, the pace of inoculations and the vaccination rollout programme (which is very slow) and the ongoing political turmoil. Furthermore, the country’s inflation remains persistently elevated (according to the Central Bank of Haiti it stood at 18.7% in January 2021, year-on-year), depreciation pressure on the Haitian gourde remains high while lending to the private sector has been contracting in the past year. 

Short-term political risk is in category 5/7 with a stable outlook. On the one hand, Haiti enjoys a fairly low short-term external debt level, adequate foreign exchange reserves and a relatively modest current account deficit. On the other hand, the island experiences high political instability and has a high exposure to natural disasters. The island not only sits in the middle of the Caribbean hurricane belt but is also prone to earthquakes and droughts. Lastly, in light of ongoing events, medium- to long-term political risk classification remains firmly in category 7/7.

Analyst: Jolyn Debuysscher – j.debuysscher@credendo.com