The Washington Times
October 22, 2002

Rumors spur run on banks by Haitians

Michael Norton
ASSOCIATED PRESS

     PORT-AU-PRINCE, Haiti Haitians hastily withdrew millions of U.S. dollars from banks last week after rumors that the government planned to convert
account balances into Haitian gourdes at lower-than-market rate, officials said.
     The rumors, which started earlier this month, have continued to circulate despite the government's repeated assurance that they are false.
     Economists estimated that depositors had taken out about $20 million (600 million gourdes) by Wednesday, when the withdrawals appeared to slow.
Nevertheless, economists doubted that the U.S. dollars would return, which caused concern over 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. Last week, the exchange rate was 32 gourdes to the dollar, compared with 25
gourdes a year ago.
     Government officials have denied the rumors that it plans to convert $460 million in dollar accounts to gourdes, saying such a move would have dire
consequences for investment.
     President Jean-Bertrand Aristide denounced the rumor as an attempt "to destabilize the already-sick economy" and scare off potential investors.
     "The economic war is linked to a psychological war" that is intended to tarnish Haiti's image, he said.
     Haiti is one of the Western Hemisphere's poorest countries and has been in a political crisis since the 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 exactly how much hard currency had been taken out from Haiti's 12 commercial banks.
     "Several million" had been withdrawn by Tuesday from Haiti's largest bank, Sogebank, Jean-Marie Boisson, the bank's chief economist, said on independent
Radio Metropole.
     About $850,000 (25 million gourdes) was withdrawn from Unibank, bank President Carl Braun told independent Radio Vision 2000.
     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," Mr. Beauboeuf said. "People believe the
government is so irrational it could do anything, even nationalize dollar accounts."
     Haitians lost countless millions in savings this year after the collapse of a government-endorsed pyramid banking scheme. The government's pledge to help
investors recover their deposits has not been fulfilled.