For Michella Louis, summertime in Haiti means dining out with friends and shopping for the latest fashion offerings.
But as Haiti’s domestic currency, the gourde, loses value against the U.S. dollar, Louis, 29, finds herself cutting back on everything — from her social calendar to what she eats and what she wears. She even struggles to find enough gourdes to pay her U.S. dollar-dominated rent.
“The central bank is telling everyone not to panic,” said Louis, a television journalist. “But there are too many reasons to panic: There is a drought that is making it almost impossible to find some foods on the local market; the dollar is scarce. People are raising prices.”
The fiscal problem, economists say, started with the large government deficit of the past two-plus years, resulting in the depreciation of the gourde. The steady but slow depreciation of the gourde over the past year rapidly picked up speed as prices of imports rose, interest rates increased and banks reduced credit. It has resulted in winners and losers: Poor Haitians who receive U.S. $2 billion annually in remittances are now getting more in gourdes, but those who do not are getting hurt as they see prices in their mostly imported staple diet rise.
Middle-class professionals, such as Louis, whose income are in gourdes but make many of their purchases in dollars or pay in dollar-indexed gourdes for everything from cornflakes to cooking oil and clothes to cell phones, are especially being hit hard because salaries don’t stretch as far. Even a recent legislated minimum wage increase hasn’t helped.
In the past 12 months, factory workers, for example, have seen their daily wages increase from 200 gourdes to 240. But with Haiti’s currency devaluing in the same period, they have also been making less in terms of U.S. dollars.
“The money can’t respond to your needs,” sewing machine operator Eddy Jean-Baptiste, 38, said during a lunchtime break at an industrial park.
The financial crunch is being felt throughout Haiti: Often, congested streets and public markets are devoid of traffic, and a government-sponsored mobile food canteen, Ede Pep, attracts dozens of hungry bellies near the razed presidential palace daily.
“The situation is becoming very critical,” said Stephan Coles, the former head of the Private Sector Economic Forum. “The dollar is now becoming just another commodity that you buy and sell.”