Rhodner J. Orisma
Zimbabwe is in the process of changing its local currency which has been devalued by almost 100% over the past year. The ZiG is in the process of replacing the old currency, the Zimbabwe dollar, at the end of this month (April 2024). This is the third time in 10 years that this southern African country has changed its currency. Changing currency is not an ultimate choice to fix inflation or the economy, but it is a common solution and indicates the will and conviction of the government trying something good or aimed at facilitating trade and purchasing power of the population.
Economics is not philosophy, nor is it sentiment. This is what reality or market conditions suggest. We must act according to these conditions. In this case, we must expect similar measures in Haiti, either to have a new currency to refix the exchange rate, or to dollarize the country completely to stabilize the economy. If one of these measures has not been called into question over the past three decades, it is because it is quite simply a matter of ignorance or negligence on the part of the State.
Changing our currency or our monetary system is the best way to reduce inflation even if it is for the next 5 to 10 years at least. Yes, it is an alternative because we cannot organize our national production to reduce trade balance deficits. Our leaders have not changed their currency in this situation because they do not have the necessary skills to do so. They don’t care much about the fate of the population or are comfortable with this system which favors a niche to fill their pockets alongside a commercial class which benefits from it.
The system in place makes the dollar a commodity par excellence instead of a simple currency of exchange to enhance the income and purchasing power of the people of the country.
In the 19th century long before, the governments of the time (1861-1870) concerned about revenues had control of the “Zorèy Bourik” currency which required 1000 gourdes for one American dollar. Later, to avoid a resurgence of galloping inflation, during the American Occupation of Haiti (1915-1934) the exchange rate was set at 5 gourdes for one dollar (1919 Convention), which was on the Haitian gourde that it is payable to holders of American dollars at the rate of 5 gourdes per dollar.
In 1991, this rate was no longer maintained due to capital flight and market deregulation. The inflation rate had risen to 50% compared to 6% in 1986 at the time of the fall of the Duvalier regime. Then the parallel market or the black market came to decide about the true cost of the dollar. The Aristide government in a measure of sovereignty through the Standby Agreement rejected the American inscription on the gourde, and as a result the gourde becomes a floating currency.
The inflation rate is indeed becoming more galloping, reaching more than 3000% in 2022. Between a measure of sovereignty and the control of inflation, which did Aristide choose? Who knows? But understanding Aristide, let us see instead that he opted for an autonomous currency without taking into account the economic logic of devaluation. So, even François Mitterrand in 1982 did not take the chance of devaluing the French Franc without relying on a strong currency being the Mark.
Now, we must rethink the situation in Haiti to see what will be the most rational measure to fix this inflation which is of the order of 135 gourdes for one American dollar, or 2600%. On the other hand, Zimbabwe, despite having a rate of less than 100% of its dollar compared to the US dollar, is trying to change its currency to stabilize its economy. While Haiti does not try anything to rescue its economy in the face of inflation of more than 2500%. Otherwise, the purchasing power of each Haitian remains very miserable. Thus, the poverty of Haitians can also be explained.
Rhodner J. Orisma
