Will Haiti Restrict the US Dollar?
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HAITI PREZ WANTS TO LIMIT THE USE OF US DOLLAR IN HAITI
PORT-AU-PRINCE, HAITI –
In a meeting with government ministers on February 27, Haiti’s president Jovenel Moise proposed that all economic transactions in Haiti must be done using Haitian currency only. Haitian businesses will no longer be able to accept US currency as a form of cash payment for goods and services. The Gourdes, Haiti’s only official currency has been in a downward spiral for the last three decades with no end in sight.
This new policy will have serious implications for an already anemic Haitian economy that is barely growing. It is not clear whether the government is considering proposing new legislation to enforce this new policy. Currently, businesses in Haiti accept the US dollar as a form of payment for goods and services along with other currency such as the Euro and the Haitian gourde. The US dollar is ubiquitous in everyday commercial transactions in Haiti. Foreign visitors, aid workers, tourists and Diaspora routinely use US dollars to pay for goods and services; even street beggars often solicit money in US dollars.
This new policy, if taking effect, would force visitors and citizens to exchange their US dollar for local currency before they can pay for goods and services. The purpose of this new policy is not clear. This decision does not appear to sure-up the already devalued Haitian Gourdes. What seems strange, however, is that since the release of a United Nations (MINIJUST) public statement applauding the appointment of a judge to investigate the Petrocaribe theft (in which present and former government ministers have been implicated) the Haitian government has shown a severe case of psychosis. First, the minister of Foreign affairs, Denis Rodrigue recalled the Haitian ambassador to the United Nations. A few days later all ministers were called into a meeting to discuss MINIJUST and other matters resulting in this misguided decision.
At the end of the meeting, the ministers agreed that the US dollar would no longer be accepted as a negotiable instrument for conducting business in Haiti. Whether businesses like hotels and restaurants would be exempt from this new policy is not clear. This policy is ill-conceived and may backfire, further slowing down an already aberrant economy. The decision to limit the use of the US dollar is a step backward from earlier discussions about adopting the US dollar as Haiti’s only official currency.
Last year, this writer wrote several articles arguing that Haiti should adopt the US Dollar as its official currency prompting an email from Mr. Wilson Laleau, the chief of staff of president Jovenel Moise to the writer applauding the idea. He stated that the government is seriously considering the currency adoption as part of its overall economic strategy to fuel the Haitian economy.
Placing limitations on the use of the US dollar is contrary to sound economic policy considering Haiti’s tie to the US. Every year, the Haitian Diaspora remits nearly 2.3 billion dollars to family members in Haiti, the hard currency the Haitian government needs to satisfy its debts. The convenience of using the US dollar anywhere in Haiti provides a little boost to the Haitian economy, but adoption of the US dollar would surely make Haiti more attractive to foreign investors. Additionally, it would cede the monetary policy to Washington, DC, not a bad idea considering that the US dollar is not only a strong currency, but nearly a 100% of world governments have reserves in US dollar.
President Jovenel Moise’s decision to limit the use of the US dollar is just the wrong policy and will plunge Haiti into more economic malaise. Mr. Wilson Laleau, the president’s chief advisor should know better. As an accomplished economist and former economics professor, he is presumed to understand these issues better than most.
