Africa: Haiti's Debt in Context

AfricaFocus Bulletin
Feb 2, 2010 (100202)
(Reposted from sources cited below)

Editor's Note

"Haiti was the only country in which the ex-slaves themselves were
expected to pay a foreign government [France] for their liberty [in
1804]. By 1900, it was spending 80% of its national budget on
repayments. ... In 1947, Haiti finally paid off the original
reparations, plus interest. Doing so left it destitute, corrupt,
disastrously lacking in investment and politically volatile." -
historian Alex von Tunzelmann, in London Sunday Times, May 17, 2009

In June 2009 $1.2 billion of Haiti's modern external debt, dating
to the Duvalier dictatorship and subsequent international
structural adjustment programs, was cancelled. But even after this,
Haiti remained saddled with a debt of more than $1 billion. Now
France has pledged to cancel its bilateral debt to Haiti, and the
IMF has said it will cancel its own debt, including a new loan for
$100 million being made available after the earthquake.
Cancellation of all the country's external debt, analysts say, is
one of the minimal conditions necessary for that country's
reconstruction.

This AfricaFocus Bulletin contains a letter from 80 U.S.
organizations to U.S. Treasury Secretary Geithner calling for
cancellation of Haiti's debt, a background paper on Haiti's debt by
Jubilee USA, and a brief description by historian Alex von
Tunzelmann on the historical origin of Haiti's debt.

Another AfricaFocus Bulletin sent out today contains commentary on
the need for African and international support for Haiti's
reconstruction.

For more on Haiti's debt, see particularly
http://www.jubileeusa.org / direct URL: http://tinyurl.com/yjwhb9t

Also see Sophie Perchellet, Éric Toussaint, "Grants to Repay an
Odious Debt?" January 18, 2010
http://www.cadtm.org/Haiti-Grants-to-repay-an-odious

For previous AfricaFocus Bulletin's on the issue of African and
other developing country debt, see
http://www.africafocus.org/debtexp.php

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Organizations Unite to Tell Treasury Secretary Geithner: Cancel
Haiti's Debt Now and No More Debt for Disaster

January 26, 2010

Today 80 US religious denominations, human rights groups, and
development agencies including the Jubilee USA Network, the
AFL-CIO, the ONE Campaign and TransAfrica Forum sent a letter to US
Treasury Secretary Timothy Geithner, urging him to negotiate
immediate debt cancellation for Haiti by the international
financial institutions.

As the International Monetary Fund prepares to meet on Wednesday to
vote to approve a $100 million emergency loan for Haiti and discuss
possible debt cancellation, the groups urge the United States use
its leadership to ensure that Haiti's existing debt be cancelled
definitively and that any new money comes in the form of grants,
not loans.

January 26, 2010

The Honorable Timothy Geithner Secretary of the Treasury

Dear Mr. Secretary:

We are grateful for the US government's efforts to date to mobilize
emergency assistance for disaster relief in Haiti.

We are writing today to bring to your attention two specific steps
that we believe should be a part of our government's response to
the Haiti crisis: (1) support for the cancellation of Haiti's
remaining debts; and (2) ensuring that any disaster relief
assistance be provided as grants rather than loans.

First, as you know, in June 2009 Haiti secured $1.2 billion in debt
cancellation from its major creditors when it reached completion
point in the Heavily Indebted Poor Countries (HIPC) Initiative.
This was a critical step forward. But even after this relief, Haiti
remains saddled with a debt of more than $1 billion.

More than half of Haiti's outstanding debt is owed to the Inter
American Development Bank (IDB) ($442 million), the International
Monetary Fund (IMF) ($165 million), and the World Bank's
International Development Association (IDA) ($39 million) --
institutions where our government has a significant voice on the
Executive Board. Haiti is projected to pay at least $100 million in
debt payments to these institutions over the next five years unless
these debts are cancelled -- and the earthquake now has devastated
Haiti's capacity to generate sufficient export revenue to be able
to afford these payments.

We have welcomed statements from IMF and IDB officials of their
intentions to consider cancellation of Haiti's remaining debt. We
urge you to use your voice and vote on the Executive Boards of the
IDB, IMF, and World Bank to secure cancellation of Haiti's
remaining debts to these institutions. While arrangements are
worked out for cancellation, we urge you to call for a moratorium
for debt service payments from Haiti to these institutions, without
interest accruing.

Second, we welcome the pledges of additional financial assistance
from international governments and international financial
institutions, as we acknowledge that all available resources must
be delivered to Haiti in as timely a manner as possible. However,
we urge that all support be in the form of grants instead of loans.

While we were initially concerned when the International Monetary
Fund announced its intention to provide $100 million in loan
assistance as part of an existing loan agreement that includes some
onerous conditions, we welcomed IMF Managing Director Dominique
Strauss-Kahn's recent promise that the IMF intends to work to
cancel all of Haiti's debt including this new loan. We urge you to
work with the IMF to ensure that all assistance, including the new
IMF loan, is provided on grant terms and without requirements of
existing loans.

We thank you for your consideration of our views on this critical
issue.1

Sincerely,

[for list of signatory organizations see
http://tinyurl.com/ybufgog]