The BRH analyzes the negative repercussions of the political situation on bank credit

The BRH analyzes the negative repercussions of the political situation on bank credit in its note on bank credit

The Bank of the Republic of Haiti (BRH) has published a note on bank credit covering the period from September 2022 to September 2023. this note analyzes the evolution of this aggregate over the period from September 2022 to September 2023, with particular emphasis on the role credit as a channel for transmitting monetary impulses to the real sector.

According to the central bank, the objective was also to highlight the sectoral distribution of loans to the economy in order to draw the implications for economic growth. The regional and gender distribution of credit is also analyzed, with a view to identifying perspectives in relation to the implementation of monetary policy and the implementation of the National Financial Inclusion Strategy (SNIF).

“The socio-political context continues to amplify the negative expectations of economic agents, particularly those with an aversion to risk. This climate also weighs on the dynamics of financial intermediation at the level of the Haitian banking system. The deterioration of the economic situation has reinforced the wait-and-see posture of economic players, with negative repercussions on both the supply and demand of credit.

On the evolution of credit, the BRH estimates that in nominal terms, the credit portfolio has fallen by around 10% in 2023, after having recorded growth of 14.1% a year earlier. Apart from an increase in December 2022, private credit rather declined quarterly over the entire 2023 financial year.

This negative variation recorded between September 2022 and September 2023 reflects, according to her, both the behavior of the loan portfolio in dollars and gourdes, which fell by 15.06% and 16.2% respectively. Note that, compared to 2023 GDP, credit to the private sector only represents 5%, which is significantly lower than the regional average of around 45%, underlined the central bank.

As for the credit/deposit ratio, it has remained below 30% since the 2022 financial year and fell to 26% as of September 30, 2023. This reflects an even more marked weakness in banking intermediation and the strengthening of the tendency of financial institutions to direct their resources towards less risky operations, continues the BRH in its analysis to demonstrate the negative effects of the situation on the functioning of the country’s economy.

In terms of prospects, the central bank, after recalling that the evolution of private credit in Haiti is linked to a large extent to the socio-economic and political situation of the country, indicated that it continues to implement policies not conventional methods to reverse the trend.

Indeed, the BRH is in the process of revisiting its monetary agenda for growth and employment with particular emphasis on access to financing and strengthening the resilience of small and medium-sized businesses, she adds. The Institution continues to work towards reducing gender inequalities through technical and financial support aimed at strengthening the competitiveness of businesses run by young people and women.