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HAITI: Activists Urge World Bank to Erase Crippling Debt

Nergui Manalsuren

UNITED NATIONS, Oct 31 2008 (IPS) - On a recent visit to the hurricane-ravaged island of Haiti, World Bank President Robert Zoellick declared that 500 million dollars of Haiti’s 1.7-billion-dollar foreign debt had been cancelled, and the rest would be soon be written off as well.

However, Haitian and international civil society groups say that his comments were misleading. None of the debt has actually been forgiven yet, and the International Monetary Fund (IMF) and bank just this month delayed Haiti’s entrance into the Heavily Indebted Poor Countries initiative (HIPC) – a condition for debt relief – by six months.

Dan Beeton, an analyst at the Washington-based Centre for Economic and Policy Research (CEPR), said that he hopes that Haiti’s debt cancellation will be expedited, and that the World Bank and IMF, along with creditors France and the U.S., will cancel the debt without requiring Haiti to “jump through more hoops”.

“However,” he said, “the institution that has really power to make this happen is the U.S. Treasury Department.”

“Unfortunately, Treasury, like the World Bank, has continued to put conditionalities – some of which may actually be harmful to Haiti’s economic development – and bureaucratic red tape first, instead of the needs of the Haitian people, even after what the U.N. Under-Secretary-General for Humanitarian Affairs John Holmes described as the ‘worst disaster in the last 100 years’.”

Over the summer, a series of four powerful storms struck Haiti, killing hundreds of people, leaving thousands homeless, and devastating the country’s already-decrepit infrastructure.

According to Beeton, 54 members of the U.S. Congress, including committee and subcommittee chairs Barney Frank and Eliot Engel, sent a letter earlier this year asking for Treasury’s support for a moratorium on debt payments by Haiti, and to push through Haiti’s debt relief – without waiting for the country to qualify for HIPC.

The letter pointed out that Haiti should have been admitted to the HIPC process 10 years ago, since it is the most impoverished country in the Western Hemisphere.

Legislators expressed their concern over further delays, saying that it would be best if Haiti reached “completion point” for the HIPC process immediately and had its debts cancelled.

According to IMF policy, in order to receive debt cancellation, a country must implement its Poverty Reduction Strategy Paper to the satisfaction of the IMF. However, it is at the discretion of the World Bank whether or not it makes this a condition of receiving debt relief.

The HIPC Status of Implementation report for Haiti says that the six-month delay is a direct consequence of the food crisis the country has been facing. The report says that the commodity price shock has diverted attention from PRSP implementation.

A donors’ conference was to be held in Port-au-Prince in late April this year to set up working groups, which would then lead to a pledging conference for three-year implementation of the PRSP. However, the conference was cancelled due to violent protests over rising food prices, and the subsequent resignation of the prime minister.

Jonathan Stevenson from Jubilee Debt Campaign told IPS that he hopes that the head of the World Bank will issue a clarifying statement about his remarks made in disaster-hit Haiti in late October.

“And [Zoellick should] commit to raising the question of how to fast-track Haiti’s debt relief with the bank’s shareholders, as the current situation is woefully inadequate,” added Stevenson.

Steven Jackson, a spokesperson for the bank, told IPS that Haiti has received about 42.9 million in debt relief so far. He said that when the country reaches its completion point, Haiti will be eligible for relief under the Multilateral Debt Relief Initiative (MDRI.)

Currently, by the World Bank’s estimation, Haiti is expected to reach completion point by mid-2009.

Stevenson from Jubilee Debt Campaign argued that faced with such a crisis, which has only gotten worse with the series of storms and global food price hikes, the World Bank should have taken action to fast-track Haiti’s debt relief, and not delay it.

“But telling Haiti it must wait six months for debt relief is like Hank Paulson telling Wall Street he will get back to them in the New Year,” Stevenson told IPS.

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