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IMF debt cancellation for Haiti at last (and a new loan)
by Nick Dearden
30 July 2010

Last week, the International Monetary Fund finally announced the cancellation of all the debts Haiti owes to the Fund. The cancellation will wipe out US $268 million – by far the largest remaining component of Haiti’s debt.

The cancellation will be given via the newly established Post-Catastrophe Debt Relief Trust Fund, which was set up for this purpose and which can now be accessed by other highly indebted, low income countries hit by disasters. The fund is financed by current debt relief funds and carries a 0% rate until the end of 2011 (as already announced in response to the financial crisis) and thereafter zero to 0.5%.

More worrying is yet another new loan which the IMF agreed on the same day as the cancellation. This is a small $60million, low interest loan, which Haiti has asked for in order to boost reserves under the IMF’s Extended Credit Facility (ECF). The programme will allow Haiti to prevent exchange rate fluctuations owing to the large inflows of foreign aid into the country.

This seems a somewhat distant prospect at the moment because governments who pledged over $5 billion to help Haiti ($10 billion in the long run) earlier in the year have delivered only a tiny fraction of that aid. It has been reported that only Brazil has delivered its entire aid pledge of $55m.

Although small, the new IMF programme carries conditions. The documents have not yet been made public, but these conditions include “macroeconomic stability”, including an inflation target, and “strengthening fiscal governance” which, amongst other measures, will include “improving the Bank of the Republic of Haiti’s independence”.

In addition, the IMF will set up a technical assistance program to Haiti to “foster private credit and investment”, including enabling Haiti to more easily borrow and lend domestically.

So far, the technical assistance looks very similar to the programme set out by Paul Collier – the man who wrote the US’s ‘recovery plan’ for Haiti. Collier believes Haiti’s recovery should be based on the development of low-cost textile jobs (which elsewhere are called sweatshops) and tourism.

In actual fact, as Haitian campaigners are all too aware, Haiti is owed a debt by the international community for its centuries-long exploitation. Canadian activists – the Committee for the Repayment of the Indemnity Money Expropriated from Haiti – ran a hoax press conference two weeks ago, pretending that the French government officials would repay a $21billion debt to Haiti in return for the slave debt imposed on Haiti by France in the nineteenth century.They pledged to continue their actions in spite of legal threats from the French government.

Published by Eurodad

Nick Dearden

is the director of Global Justice Now