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#4782: Slavin: On Economy and Reuters080400 Story (fwd)
From:JPS390@aol.com
While I always welcome a wire story on the economy, an important change of
pace from the daily political grind, the 4 August Reuters dispatch really
didn't get into why the gourde has depreciated. But then again, a wire story
is a rough draft of history, a daily development with 300-700 words of
explanation -- not a polished and well-rested academic paper that some on
this list hold them to.
The last time I looked into it earlier this summer, pressures on the gourde
were mounting in part because reserves at the central bank were getting bare,
and President Préval and the Alexis Government were running out of options
to intervene. A reason for the dwindling reserves was that the Government as
of May/June was subsidizing petroleum imports (I don't know what the current
policy is) -- with high global gas prices, prices at the pump remained
unaffected. While a Godsend for Haitian tap-tap and red-ribbon taxi riders,
and chauffeurs, the policy is now being felt yet again by a population who
lived through the currency devaluation of the embargo years. Before the 1991
coup, the rate of exchange was about 7.5 to 1 (and 5 to 1 during decades
leading up to 1986). Today, it's back in the low 20s -- damaging an
achievement of Préval and the governments of his Presidency that had
stabilized the rate of exchange at about 17. While stabilizing the rate of
exchange was important, I don't think economists have yet to tell us what the
radical devaluation since 1991 has truly meant for the Haitian economy.
Patrick Slavin
Patrick Slavin