PORT-AU-PRINCE, Dec 4 (Reuters) - The World Bank's special envoy to Haiti voiced concern on Wednesday about how the government was using public funds generated by cut-rate Venezuelan petroleum imports, saying a lack of transparency was the biggest obstacle to the country's economic development.
The surprising public criticism of the government's handling of its finances came at a press luncheon in the capital. The director of the World Bank's office in Haiti, Mary Barton-Dock, cited Venezuela's Petrocaribe program, which allows beneficiaries to buy fuel from the oil-rich South American nation at favorable rates and easy payment plans.
Under Petrocaribe, Haiti pays only 40 percent of the oil bills in the short term, while the rest are reimbursed over a 25-year period during which the government is free to spend the funds more or less as it pleases.
The Petrocaribe funds, worth about $300 million a year to Haiti, are one of the main sources of income for the Haitian government, and "require a wise use," said Barton-Dock.
The World Bank would like to see better communication about the use of Petrocaribe funds, said Barton-Dock, addressing reporters in French.
"So far, transparency in the use of Petrocaribe funds is minimal," she said, adding that the management of the Petrocaribe investment budget needed to be improved as well as a system of arbitration to determine the most profitable and important investments for the country.
"We are very surprised by the comments of the special envoy, who has never requested any documents regarding use of Petrocaribe funds," said Salim Succar, special adviser to Haitian Prime Minister Laurent Lamothe.
The envoy's comments are "out of touch and in complete disregard of what this administration is and has been doing," he told Reuters in an email.
"The donor country, Venezuela just completed an audit that resulted in finding Haiti's management of that fund as being one of the most transparent of all Petrocaribe member countries," he added.
Succar said all Petrocaribe funds were published online at the Ministry of Finance website, www.mef.gouv.ht
A spokesman for the Venezuelan state-owned oil company, PDVSA, was unavailable.
Barton-Dock said that since the country's devastating 2010 earthquake that killed more than 200,000 people, most government contracts had not been open to competition. She said a lack of competitive bidding resulted in the government paying a higher price for contracts.
"In the past, the government justified this lack of competitiveness by the urgency of investments. I think now, they agree the need to strengthen the system of procurement and the need for these contracts to be awarded according to the rules of competition," she said.
But Succar said all non-emergency contracts already went through a "rigorous" bidding process.
Barton-Dock's comments echoed growing criticism of the administration of Haitian President Michel Martelly, and its use of non-compete contracts, including accusations it distributes public funds for partisan and populist goals.
Opposition protests have increased in recent weeks amid complaints of government cronyism. Thousands of people marched last Friday in Port-au-Prince to demand Martelly's resignation.
Some economists have warned that Haiti is too reliant on Petrocaribe at a time when Venezuela is seeking to change its financing arrangements because of domestic cash flow constraints and product shortages.
Guatemala recently withdrew from the Petrocaribe oil alliance after the Central American nation failed to negotiate favorable rates for purchases and financing.
Haiti owes Petrocaribe more than $1 billion and has been servicing the debt at only 1 per cent interest. When Haiti joined Petrocaribe, it received a three-year grace period that expires in 2014 when the country will begin to repay principal on the debt.
Haiti ranked 163rd (out of 177 countries) on Transparency International's annual Corruption Perception Index published on Tuesday, two places higher than last year.
The World Bank has poured more than $500 million into Haiti since the 2010 earthquake, including support for education, agriculture, sanitation, and disaster risk management. (Additional reporting by David Adams; Editing by David Adams and Peter Cooney)