Haiti – Economy: The BRH Scrutinizes Economic and Financial Data (2010-2024)

The Bank of the Republic of Haiti (BRH) has just published its 7th Research Paper. A 120-page document that explores, through four empirical studies, the complex links between money supply, banks' foreign exchange gains, credit granting, and the country's economic health. The institution focuses on the period 2010-2024 to analyze the dynamics shaping the national economy: monetary growth and economic activity, determinants of foreign exchange gains, causes of non-performing loans, and the effectiveness of monetary policy. In this publication received by our editorial team, the BRH emphasizes that its work is part of a scientific approach and its role as guarantor of financial stability. The document draws its foundations notably from the works of Kaminsky and Reinhart on banking and monetary crises, while also drawing inspiration from the 1997 Asian crisis to inform macroprudential thinking. Monetary Growth and Economic Activity: A Limited Link The first study examines whether the growth of monetary indicators corresponds to the evolution of economic activity in Haiti. The results reveal the absence of a conclusive statistical link between monetary variables and the cyclical indicator of economic activity (ICAE) for the period 2018-2024. In contrast, monetary impulses influence inflation (Consumer Price Index). The BRH concludes that there is a dichotomy between the real and monetary spheres in the Haitian context. Foreign Exchange Gains: What are the Determinants? The second study analyzes the factors influencing the share of foreign exchange gains in bank revenues between 2015 and 2024. The results highlight the notable influence of inflation and economic activity on foreign exchange gains, the major impact of regulatory measures introduced in late 2020 on the foreign exchange market, as well as a marked dependence on foreign exchange gains in foreign-capital banks, particularly Citibank. Contrary to popular belief, the research does not confirm that foreign exchange revenues necessarily lead to financial disintermediation. Non-Performing Loans: Multiple Causes The third study (1996-2023) identifies several factors influencing the quality of bank portfolios. Inflation degrades repayment capacity, while monetary growth and bank profitability improve loan quality. The exchange rate has an ambiguous effect: negative in the short term, but positive in the long term due to the gradual adaptation of actors. The study emphasizes that economic growth in Haiti remains largely non-inclusive, with an informal sector accounting for approximately 60% of employment, limiting the macroeconomic impact on banking health. Monetary Policy and Bank Credit: Limited Long-Term Effectiveness The last study evaluates the capacity of monetary instruments (interest rates, reserve requirements) to influence credit granting. Verdict: in the short term, they have a measurable influence on credit, inflation, and the exchange rate, but in the long term, their effectiveness is considered weak, or even non-existent. These four studies confirm that Haitian monetary policy faces weak integration between the monetary and real spheres. The BRH calls for strengthening coordination between monetary policy, financial stability, and economic development to address the country's structural challenges. The editorial team