8884: Re: 8880: Clothing Assembly Industry in Haiti (fwd)

[Bob Corbett <corbetre@webster.edu>]

Please post this anonymously. Many thanks.
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1. The clothing assembly industry never ceased in
Haiti. However, it is a mere shadow of its former
self. Some companies have continued to manufacture
goods that you can find at Target (like Florestal saw)
or at Macy's and other department stores. 

2. To assume that a rebirth of that industry would
somehow mark the bottoming out of the economic crisis
is naive at best. Unless that industry were able to
create at least 250,000 new jobs, any gains in
employment will barely affect the economy of the
country (which is pretty abysmal right now.)

3. The economic situation of the country is declining,
no matter what the optimists say. What is especially
scary is that we are witnessing a depreciation of the
gourde at a time when it should be stable or
appreciating (last heard that the $ trades at around
26). Normally, at this time of the year, there is an
infusion of dollars from the influx of Haitians form
abroad who come "home" for the "fèt champèt." This
year, they are coming in record numbers and spending,
yet the gourde is not holding up. I suspect that the
lack of foreign aid, given our nonexistent domestic
production and microscopic exports, is the probable
culprit.

4. Is there a consensus on the development of an
economic policy? I don't know. However, Minister of
Finance Gustave and his people have been noticeably
silent on the issue. Instead, they are complaining
left and right about the absence of foreign aid while
making sure to tax everything in sight. What is wrong
with this picture?

5. I pity the new Central Bank team. They are
inheriting a terrible economic situation, with limited
monetary policy tools and dwindling foreign reserves.
If they even think about raising reserve requirements,
interest rates which are already high will go through
the roof and choke credit (which is already rationed
anyway.) Not good for business development and
expansion! Many people are complaining about gourde
interest rates that range between 27% and 30% p.a. The
double whanmmy of rising interest rates and increasing
energy costs does not bode well for most businesses. 

6. Last I heard, the Central Bank had less than $100
million in reserves. I am not sure what it represents
in terms of imports, but my guess is that they do not
have more than 4 or 5 months of imports in foreign
reserves. Furthermore, there is no way they can defend
the gourde against any type of speculative attack by
the banks and any other group that "specializes" in
foreign exchange speculation. The previous team tried
that several times, but to no avail.

All in all, I would like to share the optimism
implicit in Jean-Marie Florestal's questions, but I
just don't see how we can talk about an economic
rebirth today.