Poor
governance and corruption under President Michel
Martelly’s regime has bankrupted the Haitian economy.
Thirty years ago, Haiti produced rice, corn, sugar,
coffee, and many fruits. Today this national production
has withered; 75 to 80% of the products Haitians consume
come from abroad.
The devastation of domestic agricultural
production came as Washington forced neoliberal reforms
on Haiti following the Feb. 7, 1986 fall of the Duvalier
dictatorship. Haiti’s national currency, the gourde,
began to lose its value, which for decades was fixed at
five gourdes to $1. Today, for the first time, the
gourde has sunk to 10 times less value, now exchanging
for over 50 gourdes per $1. Worth less than 2 U.S.
cents, the gourde is once again being called ''zorèy
bourik,'' a donkey’s ear.
In 2003, before the kidnapping-coup against
former President Jean-Bertrand Aristide on Feb. 29,
2004, one dollar was worth 25 gourdes. The gourde now
exchanges for less than half that.
On Mon., Jun. 8, 2015, although the Bank of the
Republic of Haiti (BRH) displayed an official reference
rate of 48.40 gourdes for $1, the currency markets were
trading the national currency for up to 53 gourdes,
depending on the amount of the transaction. Many poor
and modest households have been hard hit by the gourde’s
precipitous fall.
In its note on monetary policy issued at the end
of second quarter of 2015, the BRH noted the "continued
depreciation of the gourde in the second quarter of
2015, but at a slower pace... After closing the [2014]
calendar year at a depreciation rate of 2.6%..., the
exchange rate of the dollar against the gourde increased
to 47.17 gourdes to a dollar by Mar. 13 2015, making an
increase of 0.9% compared to its level in December 2014.
The depreciation of the gourde has been contained
because of the interventions of [Haiti’s] monetary
authorities on the foreign exchange market and the
recovery of private transfers in February 2015. In fact,
from January to March 2015 to reduce the pressure on the
foreign exchange market, the Central Bank injected $22.9
million. As for private transfers [...] received from
abroad, they amounted to $241 million between January
and February 2015."
Economic analysts are worried about the Central
Bank’s policy of drawing on foreign exchange reserves in
an effort to shore up the gourde. Some believe that a
healthy exchange rate and trade balance can only be
restored through reviving domestic production to reduce
imports, which now amount to $4 billion a year. The high
exchange rate makes imports more expensive, requiring
more and more gourdes to obtain dollars, which drives up
prices overall. It is the masses who pay the price.
In addition to the destruction of national
production, other factors have contributed to the
gourde’s depreciation. Members of Martelly’s family and
clique have looted state coffers, and many have
transferred their dollars back to the States. The dollar
is also strong compared to other world currencies,
notably the Euro, there is rampant speculation, and
there is great uncertainty brought about by the
irregular, chaotic, and fragile advance of supposed
elections later this year. Political instability, as
always, engenders economic instability.
Even the Central Bank’s former governor, Fritz
Jean, noted that, although the country is going through
a turbulent time, the state and the BRH have reached
their interventionist limits.
Meanwhile, the president of the Association of Haitian
Economists, Eddy Labossière, said that fall of the
gourde was predictable. He remains convinced that there
will be no recovery until the economic model applied in
Haiti is changed. According to him, Haiti’s economy will
know very dark days in the near future if it stays on
its current path. He ridiculed the government’s repeated
announcements trying to reassure the public without
making any of the structural changes that are necessary. |