Haiti is going through a financial crisis that is difficult to explain. I am sharing this post from an American veterinarian and friend that lives and works in Haiti, Kelly Crowdis. This is the best explanation I have come across.
This is from a businesswoman and friend
Haiti and the exchange rate US$ – Gourdes (part 1)
In a normal situation, the exchange rate is a matter of DEMAND and AVAILABILITY. It is known that Haiti needs a lot more US$ than it actually has available.
IMPORT: The vast majority of products available in Haiti are imported from the USA and sold in Haitian Gourdes, but need to be paid in US$ (DEMAND)
EXPORT: Haiti hardly exports anything, so naturally not many US$ coming in. (AVAILABILITY)
This has created over the last few years a high demand to find US$ on the local market, pushing the exchange rate up (you need more Haitian Gourdes to get a US$ as US$ is hard to find, so having you pay more Haitian Gourdes to get a US$)
PS. since about a year and a half, even tourism and mission teams (those bringing in US$) has gone down a lot, due to peyi lock, (mass demonstrations that kept the country locked down for months), Covid-19, and overall insecurity.
In August the BRH (National Bank) decided that they wanted the exchange rate to go down. Their solution was to put 360 million US$ on the market by September 1st. This immediately created a change in the exchange rate, as US$ were suddenly AVAILABLE. BRH has taken \’control\’ of the exchange rate, leaving all banks no choice (even giving huge fines to some banks!) than to follow suit.
This all resulted in the exchange rate US$ vs Gourde going down from about 120 (end of August) to about 65 (end of September)
But… during the 1st weeks of September, we haven\’t seen prices on the local market going down accordingly because of \’old stock\’ (paid at a higher exchange rate). This past week overall prices have gone down. Note: not for diesel or gasoline, which would be a major factor for any merchandise spending.
Make sense?
Haiti and the exchange rate US$ – Gourdes (part 2)
Now it is October:
Prices of gasoline and diesel still the same, meaning transportation costs haven\’t gone down (major factor in Haitian economics) Prices of daily food, etc have gone down some, but not at the same rate as the decrease of the exchange rate.
Several factories in SONAPI have already decided to close down: they are working on the franchise, they receive \’raw\’ product, assemble and then export again. Their main costs are electricity (whether EdH or fuel for generators, both prices have not gone down!) and payroll!! The huge change in the exchange rate during this last month means 50% or higher payroll costs.
With the current exchange rate, they can not compete with labor costs in countries like Mexico and Guatemala and many Asian countries.
So the very small export income of US$ Haiti gets is going down even more.
There is no short term outlook of increased tourism or mission teams coming to Haiti (again less income in US$)
BRH (National Bank) has their \’goal\’ to bring down the exchange rate to 1:50, even willing to put more US$ on the market by the end of 2020.
This all can be crucial for many businesses, organizations and missions to continue their work or not.
So what is the solution to all of this? I have some ideas but I\’m not ready to share those yet. I\’m just thinking we all are in for some VERY difficult months.
PS. maybe a little off-topic, but any foreigner living in Haiti, please STOP comparing prices to US$ !! :
1. This is Haiti, and Haiti\’s currency is the Gourde!!
2. You live in Haiti, your salary should be LEGALLY in Haitian Gourdes!!
3. If you paid 600 Gourdes last month for your \’special item\’ in the supermarket, and the price right now is still 600 Gourdes. There has been no decrease nor increase, stop complaining!
4. The people that should be complaining are the lower and middle-class Haitians, they know about the exchange rate, they know prices in Gourdes should go down. They experience every single day that they pay the same for transportation to get to work, they haven\’t seen major change when they go to the market to buy all their necessary daily needs.