13400: Slavin: Claude Beauboeuf on Haitian Bank Run

[Bob Corbett <corbetre@webster.edu>]

From: JPS390@aol.com

Haitians Withdrawing U.S. Dollars

By MICHAEL NORTON
.c The Associated Press

PORT-AU-PRINCE, Haiti (AP) - Haitians withdrew millions of U.S. dollars from
banks this week following rumors that the government planned to convert
account balances into Haitian gourdes at below-market rates, officials said
Wednesday.

The rumors which started last week have continued to circulate despite the
government's repeated assurance they are false.

Economists estimated depositors had removed about $20 million by Wednesday,
when the withdrawals appeared to slow down. Observers said it was unlikely
the dollars would return, which caused concern over possible inflation.

``The flight of capital is a reality, and the dollars are unlikely to return
to Haiti when the panic subsides'' because many have lost faith in the
government, Haitian economist Claude Beauboeuf said.

Already, the Haitian gourde has lost about 28 percent of its value in the
past year. On Wednesday, the exchange rate was 32 gourdes to the dollar,
compared to 25 gourdes a year ago.

Government officials have denied rumors it plans to convert some $460 million
in dollar accounts to gourdes, saying such a move would have dire
consequences for investment.

President Jean-Bertrand Aristide denounced the rumor Tuesday as an attempt
``to destabilize the already-sick economy'' and scare off potential investors.

``The economic war is linked to a psychological war'' aimed at tarnishing
Haiti's image, he said.

One of the Western Hemisphere's poorest countries, Haiti has been in a
political crisis since May 2000 elections, which observers said were flawed.
The government and opposition remain in a stalemate.

The international community has blocked hundreds of millions of dollars in
foreign aid until the government establishes a peaceful environment for new
elections.

Central bank officials could not say Wednesday exactly how much hard currency
had been taken from Haiti's 12 commercial banks. Haiti's growth rate has
fallen below zero, and dollars from exports have dwindled.

``The government has destroyed whatever remained of people's trust in it and
in each other. It's like a jungle here,'' Beauboeuf said. ``People believe
the government is so irrational it could do anything, even nationalize dollar
accounts.''

Haitians lost millions in savings this year after the collapse of a
government-endorsed cooperative banking scheme. The government's pledge to
help investors recover their deposits has not been fulfilled.

The fear of inflation after this week's currency flight is compounded by the
central bank's dwindling dollar reserves, which have dropped to $55 million
from $163 million in 2000.

In addition, dollar remittances from Haitians abroad to family members on the
Caribbean island have dropped 15 percent since the Sept. 11 attacks.

10/16/02 18:58 EDT