DOLLARIZATION OF HAITI: WHO BENEFITS?

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DOLLARIZATION OF HAITI: WHO BENEFITS? \

DOLLARIZATION OF HAITI: WHO BENEFITS?

PORT-AU-PRINCE, HAITI – Adoption of the US Dollar as Haiti’s only official currency makes sense because it will change the dynamics of the Haitian economy. The social, political and economic implications would be many and positive. First, It would send a message that Haiti is taking positive steps towards joining the world economy; second, it would remove current barriers to foreign investment and third, willing to submit to international budgetary and banking norms.

Adoption of the American dollar will benefit most Haitians in the short term and every Haitian in the long term with very few drawbacks. Certainly, it would be important for the government to put in place a task force whose job is to study all the implications. But make no mistakes, that there those who would be against the adoption based on misplaced nationalism and sovereignty. Therefore, getting the executive and the legislative branches of government to work together towards such legislation would be an effort in futility. Because of this, I am proposing instead a referendum in 2021, (a campaign under the banner “AYitiPranPye.com) enough time for the Jovenel government to investigate and come up with a report about dollarization. The referendum would allow the people to vote directly on this issue and other issues that are vitally important to Haiti s economic well-being.

The US Dollar is the de facto global currency. Nearly 90% of foreign trading involves the US Dollar, and every government in the world maintains currency reserves in dollars. The US dollar makes up about 65% of all known central bank foreign reserve. This is a no brainer. Why dollarized the Haitian Economy? Dollarization is the process by which one country (Haiti) adopts as its official currency from another country’s (USA) money. This process allows the other country (USA) to dictate monetary policy, and in the case of Haiti, it would be a blessing, not a curse.

Understanding why dollarization of Haiti makes economic sense requires a rudimentary understanding of the Haitian economy. Haiti has nearly as many people as the Dominican Republic, (10.1 million). However, the Dominican Republic s gross domestic product (GDP) is approximately eight times that of Haiti’s 53.1 billion dollars versus 7.3 billion. Foreign benefactors subsidize nearly one-third of the Haitian government’s budget. It is time we take our economic destiny into our own hands. As of 2017, Haiti s currency reserve is at its lowest and adoption of the American dollar would solve that problem instantly.

Haiti’s economy is what many economists would call a “pseudo-economy” composed of importers and consumers. Sandwiched between importers and consumers are wholesalers. In this three-tiered economic engagement, the importers are made up of a few families not more than 10 (commonly known as Haiti’s merchant class) who purchase goods overseas and transported to Haiti tax and tariff free because some of these families have their own private ports by-passing government inspections. Those importers sell to wholesalers who then sell to street merchants commonly known as “street peddlers.” Economists often do not consider the street peddlers as part of the economy. But for all intent and purposes, they are the engine of the Haitian economy. The economic engagement between importers/wholesalers and peddlers often is negotiated in the US Dollar.

There is an important sector of the Haitian economy – the Haitian Diaspora (Haitians who reside in the US, Canada, Europe, Africa, Other Caribbean Nations) remit nearly 2.1 billion dollars to family members in Haiti for the fiscal year 2015-2016. The Haitian Diaspora is the main engine that fuels the peddlers business in Haiti. From the remittance, the Haitian government can purchase US Dollar to pay foreign debtors (The Dominican Republic, USA, and Canada – mainly). It is not by accident that Haiti purchases about 2 billion dollars worth of rice from the United States every year. The money comes in and goes back without much long term economic effect. Adopting the dollar would change that.

The bottom tier of the Haitian economy is considered a sort of underground economic activity because economist and researchers would not count these people as having recognized jobs because they are not registered anywhere. Counting the number of street merchants in Haiti is hard. But any Haitian who ventures near the Boulevard Jean Jacques Dessalines near the Iron market in Port-Au-Prince understands the value of these people.

Those street peddlers must exchange their gourdes in US dollars in order to purchase goods from mid-level merchants or wholesalers. That transaction itself increases the cost of goods by nearly 38% because of the exchange rate. The class which benefits the most is the importer group. The street merchants in order to realize a profit must charge more, thus the rising cost of daily life in Haiti. Adoption of a widely accepted, strong currency would obviate the need for currency exchange. It would balance the economy and allow people to have more confidence knowing their transactions will be conducted in US dollars. It will also affect real property significantly.

The Haitian gourde is a worthless currency because Haiti produces nearly nothing of value that it could sell overseas to balance the trade deficit between Haiti, the Dominican Republic (Haiti’s largest trade partner) and the United States. Ecuador and El Salvador understood the dynamics of global trade and the level of investment that they could attract by adopting the US dollar. Turks and Caicos, a tiny Island recognizes the value of the global currency. Costa Rica and Panama are two countries who experienced increased levels of US investment once the US Dollar became the official currency.

Haiti can do the same. In the short term the importer class would lose, but over time it would balance out. Haiti has nothing to lose and most to gain by adopting the US dollar. Dollarization of the Haitian economy will bring the Haitian economy to the 21st century. Certainly, the process of dollarization will take some time to achieve, but the Jovenel Moise government can begin to study the process and how best to achieve it. We, at Omeganews, remain committed to do our part in that process and welcome the opportunity to work with all Haitians of good conscience.

Emmanuel Roy
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