The Haitian Dollar, Then and Now – How the US dollar affects the Haitian economy
Have you ever wondered how the US dollar affects the Haitian economy? I just realize life in Haiti is NOT more expensive then it was before, it’s just the US dollar that is to high… Read this and you will understand…
Now in Haiti there is another currency that is commonly used. Its called the Haitian Dollar. It’s conversion rate is fixed at 5 gourdes per Haitian Dollar. This is not a legal currency – there is no Haitian Dollar bank note – its just commonly used. I never new why. I was recently told that when the UN first came to Haiti – the American dollar was worth about 5 gourdes – so the people started using the Haitian Dollar as an equivalent to the USD. The common currency of the common people is the Haitian Dollar. But’s its illegal. However many stores and especially small businesses and street vendors still operate and price using Haitian Dollars.
Depending on the store, the currency may be in USD, Haitian Dollars or Gourdes. Most markets and street vendors work in Haitian Dollars. Kinda confusing – I know.
The native Taino – who inhabited the island of Hispaniola when it was discovered by Christopher COLUMBUS in 1492 – were virtually annihilated by Spanish settlers within 25 years. In the early 17th century, the French established a presence on Hispaniola. In 1697, Spain ceded to the French the western third of the island, which later became Haiti. The French colony, based on forestry and sugar-related industries, became one of the wealthiest in the Caribbean but only through the heavy importation of African slaves and considerable environmental degradation. In the late 18th century, Haiti’s nearly half million slaves revolted under Toussaint L’OUVERTURE. After a prolonged struggle, Haiti became the first post-colonial black-led nation in the world, declaring its independence in 1804. Currently the poorest country in the Western Hemisphere, Haiti has experienced political instability for most of its history. A massive magnitude 7.0 earthquake struck Haiti in January 2010 with an epicenter about 25 km (15 mi) west of the capital, Port-au-Prince. Estimates are that over 300,000 people were killed and some 1.5 million left homeless. The earthquake was assessed as the worst in this region over the last 200 years. President Michel MARTELLY resigned in February 2016 and was replaced by Interim President Jocelerme PRIVERT. President Jovenel MOISE won the November 2016 elections and assumed office in February 2017.
Haiti is a free market economy with low labor costs and tariff-free access to the US for many of its exports. Two-fifths of all Haitians depend on the agricultural sector, mainly small-scale subsistence farming, which remains vulnerable to damage from frequent natural disasters. Poverty, corruption, vulnerability to natural disasters, and low levels of education for much of the population represent some of the most serious impediments to Haiti’s economic growth. Remittances are the primary source of foreign exchange, equivalent to more than a quarter of GDP, and nearly double the combined value of Haitian exports and foreign direct investment.
Currently the poorest country in the Western Hemisphere, with close to 60% of the population living under the national poverty line, Haiti’s GDP growth rose to 5.5% in 2011 as the Haitian economy began recovering from the devastating January 2010 earthquake that destroyed much of its capital city, Port-au-Prince, and neighboring areas. However, growth slowed to below 2% in 2015 and 2016 as political uncertainty, drought conditions, decreasing foreign aid, and the depreciation of the national currency took a toll on investment and economic growth. Hurricane Matthew, the fiercest Caribbean storm in nearly a decade, made landfall in Haiti on 4 October 2016, with 140 mile-per-hour winds, creating a new humanitarian emergency. An estimated 2.1 million people were affected by the category 4 storm, which caused extensive damage to crops, houses, livestock, and infrastructure across Haiti’s southern peninsula.
US economic engagement under the Caribbean Basin Trade Partnership Act (CBTPA) and the 2008 Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE II) have contributed to an increase in apparel exports and investment by providing duty-free access to the US. The Haiti Economic Lift Program (HELP) Act of 2010 extended the CBTPA and HOPE II until 2020, while the Trade Preferences Extension Act of 2015 extended trade benefits provided to Haiti in the HOPE and HELP Acts through September 2025. Apparel sector exports in 2016 reached approximately $850 million and account for over 90% of Haitian exports and more than 10% of the GDP.
Investment in Haiti is hampered by the difficulty of doing business and weak infrastructure, including access to electricity. Haiti’s outstanding external debt was cancelled by donor countries following the 2010 earthquake, but has since risen to $2.6 billion as of December 2017, the majority of which is owed to Venezuela under the PetroCaribe program. Although the government has increased its revenue collection, it continues to rely on formal international economic assistance for fiscal sustainability, with over 20% of its annual budget coming from foreign aid or direct budget support.
$31.62 billion note: data are in 2017 dollars (2020 est.)
$32.72 billion note: data are in 2017 dollars (2019 est.)
$33.28 billion note: data are in 2017 dollars (2018 est.)
note: data are in 2017 dollarscountry comparison to the world: 136
1.2% (2017 est.)
1.5% (2016 est.)
1.2% (2015 est.)country comparison to the world: 166
$2,800 note: data are in 2017 dollars (2020 est.)
$2,900 note: data are in 2017 dollars (2019 est.)
$3,000 note: data are in 2017 dollars (2018 est.)
note: data are in 2017 dollarscountry comparison to the world: 198
$8.608 billion (2017 est.)
14.7% (2017 est.)
13.4% (2016 est.)country comparison to the world: 214
agriculture: 22.1% (2017 est.)
industry: 20.3% (2017 est.)
services: 57.6% (2017 est.)
household consumption: 99.1% (2017 est.)
government consumption: 10% (2016 est.)
investment in fixed capital: 32.6% (2016 est.)
investment in inventories: -1.4% (2017 est.)
exports of goods and services: 20% (2017 est.)
imports of goods and services: -60.3% (2017 est.)
note: figure for household consumption also includes government consumption
Haiti is home to a strange monetary phenomenon. Shopkeepers and merchants set prices in the Haitian dollar, but there is no actual thing as the Haitian dollar.
I’ve written before about an exotic type of unit-of-account known as an abstract unit of account. A nation’s unit of account is the symbol used by its citizens and businesses to advertise and record prices. Here in Canada we use the $ while in a country like Japan people use the ¥. The national unit of account almost always corresponds to the national medium-of-exchange. In both Canada and Japan, the $ and the ¥ amounts advertised in shop aisles are embodied by physical dollar and yen banknotes and coins.
Abstract units of account, on the other hand, don’t correspond to anything that exists. In the UK, for instance, race horse auctions are priced in guineas, a gold coin that hasn’t been minted in over two centuries. The guinea is a ghost money, an accounting unit that according to John Munro is “calculated according to the precious metal content of some famous, once highly favoured coin of the past than no longer circulates.”
Money and Costs
Haitian gourde (HTG)
Haggling with street vendors, artisans and moto-taxi drivers is part of daily life in Haiti. Do your best, don’t take it too seriously and keep in mind they likely need that extra dollar more than you do.
Bigger cities have ATMs, but they often run out of money or stop working. Credit cards are usually accepted in the capital but rarely elsewhere.
Automated teller machines are increasingly common in Port-au-Prince, Pétionville and Cap-Haïtien, but have yet to catch on in much of the rest of the country. They’re the simplest way to manage your money on the road, although obviously you’ll need to make sure you’re liquid when heading out of the capital. Most ATMs are directly on the street, with some in secure booths. Always be aware of your surroundings when using an ATM and pocketing a wad of cash – use machines in large grocery stores that staff security guards when possible.
The Haitian currency is the gourde, usually written as ‘GDE’ or ‘HTG’. The gourde is divided into 100 centimes, although the smallest coin you’re likely to see is the 50 centimes, followed by the one and five gourde coins. Bank notes come in denominations of 10, 25, 50, 100, 250, 500 and 1000 gourdes, all with a revolutionary hero on one side and a historic fort on the other. There are still a few very grubby one, two and five gourde notes in circulation, although these are no longer issued.
In practice, most Haitians refer to the Haitian dollar (H$) when quoting costs. The gourde used to be tied to the US dollar at a rate of one to five, with the result that five gourdes is universally known as one Haitian dollar. It’s a system seemingly designed to perplex short-term visitors. When buying something, always check what people mean when quoting the price, eg whether a hundred is in gourdes or dollars (in which case it’s 500 gourdes). To make things even more confusing, prices for expensive goods (or tourist souvenirs) are sometimes listed in US dollars.
The way to minimize headaches is to choose one system, either the Haitian dollar or the gourde, and stick with that. If you choose to work in Haitian dollars, you must divide prices in gourdes by five; if you choose to think in gourdes, you must multiply all Haitian dollar prices by five. Most costs in listings are presented in US$; some smaller items/services, however, such as local transport costs, may be presented in gourdes. For many purchases – hotel rooms, for instance – it’s acceptable to pay in US dollars instead of gourdes.
Note that cash is king in Haiti. With the exceptions noted for credit cards, almost everything you buy will be with folding stuff. Traveling outside Port-au-Prince, you’re likely to be carrying plenty of money, but there are a few precautions to reduce the risk of losing your stash to misadventure.
- It’s unwise to carry wads of money in your wallet, and you’re similarly more prone to being robbed if you carry valuables in a shoulder bag, which can easily be snatched.
- Keep a small amount of money for the day in a handy but concealed place (eg in an inner pocket), and the bulk of your resources more deeply hidden. A well-concealed money belt is one of the safest ways to carry your money as well as important documents, such as your passport. It’s also a good idea to have emergency cash (say US$100 in small bills) stashed away from your main hoard, as a backup.
Most midrange and all top-end hotels (and many Port-au-Prince restaurants) will happily let you flash the plastic. Visa, MasterCard and (to a slightly lesser extent) American Express will all do nicely. With an accompanying passport, cash advances on credit cards can be made in the larger banks.
For current exchange rates see www.xe.com
Haiti must be one of the few countries where if you want to change money, the simplest option is to go to a supermarket. These generally have a separate counter near the cashier where you can top up your gourdes. The US dollar rules supreme, although Canadian dollars and euros are usually accepted, along with Dominican pesos. Don’t bring any other currency. Where there are street money changers, they’re only interested in US dollars.
Most Haitians don’t tip, but in tourist areas it is usual to tip and certainly all gratuities are happily accepted. Restaurant bills generally include a 10% tax and a 5% service charge, and if you’d like to add a little extra for great service, nobody will be upset. It’s also considerate to give bellhops and drivers a little something extra for a job well done.
Traveler’s checks are generally not accepted in Haiti.
I examine here a singular feature of the Haitian monetary universe: the generalized use of a currency without any material existence, past or present, as a coin or banknote: the Haitian dollar. In most transactions in Haiti (price negotiations in markets, working out wages and contracts), calculations are made in the Haitian dollar, while payments are made in other currencies, principally in gourdes (HTG, the national currency), but also in US dollars, Dominican pesos, telephone cards, and other forms, such as the pieces of plastic or metal that smooth the flow of various commercial circuits of basic goods, like water and coal, among the poorest people. The rate of conversion between the Haitian dollar and the gourde is one Haitian dollar to five gourdes. After haggling over a bag of mangoes in a street market, for example, the buyer and seller may agree on a price of three Haitian dollars:
The buyer pays with a fifty gourde note (ten Haitian dollars), the seller keeps three dollars for the mangoes (fifteen gourdes), and gives seven Haitian dollars in change (thirty-five gourdes, in three notes of ten and one coin of five). Or another example: a supermarket bill comes to 234 HD (Haitian dollars). The buyer pays with 1500 gourdes (300 Haitian dollars), the cashier says, “Here’s your change: sixty-six dollars” and gives the buyer 330 gourdes, keeping the 234 Haitian dollars for the purchase. All travel tips for foreigners (in tourist guidebooks or websites aimed at ex-pats) warn about this “bizarre” way of undertaking transactions. The Haitian government, with the support of public intellectuals, has tried many times to ban use of the Haitian dollar, condemning it as just another sign of the country’s barbarity or backwardness.1 Nevertheless, people continue to calculate in Haitian dollars while they exchange other currencies. Many dollars circulate in the monetary space of the contemporary Caribbean, including the US dollar, the Jamaican dollar, the Belize dollar, and the East Caribbean dollar—issued by the islands forming a Common Market, like Bermuda, Dominica, and Grenada. From the viewpoint of standard monetary theories, all of these are “normal” currencies: they serve as a unit of account, means of payment, medium of exchange and store of wealth. They are identified by a symbol (USD, JMD, XCD, etc.) and exist in a physical form, minted and available to be handled. The Haitian dollar also has a symbol (HD), but unlike the other Caribbean dollars, it is an imaginary money, a pure unit of account. Although basically an oral and conceptual phenomenon, the Haitian dollar is also written and objectified in supermarket receipts, restaurant menus, gas station price signs, contracts for international cooperation projects, notebooks recording debts and credits for bets or lotteries, and at banks, where we can find conversion tables like this: 1 USD:8 HD:40 HTG.2
Michael Sheehan, a company spokesman, said the company leases Labadie Beach from Societee Labadie Nord SA, which puts on the entertainment. It also provides rifle-toting guards on days there are no cruise ships, usually Wednesday through Sunday, when they allow in Haitian tourists who can afford it. “On cruise ship days, this place is very different,” says Jean-Arrol Santel, 32, a beach supervisor who earns about 2,000 Haitian dollars (US$400) a month. Maryse Penette-Kedar, president of Societee Labadie, which is known by the acronym Solano, said more jobs could be created if the brisk business continues. “Solano is the No. 1 employer in the north, with more than US$1 million of payroll a year”;
A woman who lives in Cite Soleil is an example of how women in the poorest slum in the world want to improve their lives. According to reports of the Trickle Up program, Anita Leroux is thirty-eight years old and has seven children. The father of the first five children died eight years ago. The father of the last two children abandoned the family a year ago. No one knows where he went. Abandonment is common in this neighborhood when men cannot support their family. Anita’s economic situation improved, however, through an entrepreneur program designed to help the poorest of the poor. Anita started a business selling candies but has since changed to selling hot food. She cooks fried plantains and fried meat in her house in the early moming then sells it in the market during the day. With a US$50 grant from the Trickle Up program, Anita bought many plantains and a small amount of meat. She spends most of her profits on reinvestment, making approximately four Haitian dollars per day in profits. Five Haitian dollars equals one U.S. dollar. Now, four of her seven children go to school, whereas only three went to school before she had participated in the Trickle Up program. She says her life has improved considerably. She is able to provide more for her children. Her family eats no more than two times per day. Before the Trickle Up program, her family ate at the most once a day. Her method to curb her hunger was to eat her meal in the morning and then go to sleep early in the night.
The adverse effects of structural adjustment and the intra-class quarrelling within the Haitian state wreaked further havoc on the impoverished country. The sluggish growth of the assembly-export sector could not accommodate the mass migration from rural to urban areas. thereby resulting in high unemployment and poverty. Even the workers employed in the assembly factories were far from well off. At a minimum wage of three Haitian dollars (US$1.11) a day. Assembly workers could barely afford, or not afford at all, to eat, live in adequate shelter or even travel to work.
And it is added at very low cost. The legal minimum wage in Haiti is three Haitian dollars, or US$1.85 a day, 23 cents an hour. For a 45 -hour work week, a worker would make $11.11. But workers told the National Labor Committee that they actually made the equivalent of $1.11 a day or 14 cents an hour.