Haiti debt relief to free up $50 mln a year

Haiti debt relief to free up $50 mln a year - IMF
Wed Jul 1, 2009 8:48pm EDT
(Recasts to add details from interview)

By Lesley Wroughton

WASHINGTON, July 1 (Reuters) - Canceling Haiti's debts will free up about $50 million a year for spending over the next 10 to 15 years to reduce poverty in the Caribbean nation, an IMF official said on Wednesday.

The country won $1.2. billion in debt relief from the World Bank, IMF and other creditors earlier on Wednesday under a program by rich nations to ease the debt burdens of the world's poorest countries.

"It is a very important milestone for Haiti," Corinne Delechat, IMF mission chief for Haiti, told Reuters.

"It is a recognition of the reform efforts the government has made since 2004 and 2005 when there was some return to political stability and democracy," she said.

Delechat said the government's program to stabilize the fragile economy has reduced inflation, brought the budget deficit under control, improved management of public finances and increased reserves in Haiti.

Finance Minister Daniel Dorsainvil hailed the debt relief as "good news" for the Caribbean nation, where most people live on less than $2 a day.

Writing off the debts will allow the government to increase spending on anti-poverty programs that focus on job creation and projects that limit damage from natural disasters, such as hurricanes, which pummeled the country last year and killed 800 people.

Delechat said Haiti was expected to request a new IMF financing program when the current one expires at the end of the year, which will encourage budget support from donors.

"The IMF program is the anchor for other donors to come and also commit to multi-year budget support," she added. "With that anchor, the Inter-American Development Bank, the World Bank and the European Commission will start budget support operations."

The largest share of Haiti's foreign debt is owed to the Inter-American Development Bank (41 percent of total external debt), the World Bank (27 percent), and bilateral creditors (24 percent).

Helped by 9,000 U.N. peacekeepers, Haiti appears to be on a slow recovery from its troubled past of dictatorship and political violence. Former U.S. President Bill Clinton, who has been appointed special U.N. envoy to the country, has declared this is Haiti's turning point.

Delechat said debt relief offered the government an opportunity to rebuild.

"We are cautiously optimistic," Delechat said. "It is a turning point for Haiti and it is up to the government to use the opportunity well.

"The security situation is much improved and it is a land of opportunity if you're an entrepreneur and an investor," she added. "It is a golden moment for Haiti to start investing in export capacity, particularly in textiles," Delechat said.

(Additional reporting by Joseph Guyler Delva in Port-au-Prince)

(Reporting by Lesley Wroughton; Editing by James Dalgleish, Bernard Orr)

$1.2 billion of Haiti’s debt canceled
July 1, 2:39 PM · Ivanley Noisette - Philadelphia Foreign Affairs Examiner

In a long-awaited move, about two-thirds of Haiti’s outstanding debt was canceled this week after decisions by the International Monetary Fund, the World Bank and the Inter-American Development Bank.

Haiti was approved for the debt cancelation program known as HIPC (Heavily Indebted Poor Countries Initative) in 2006; however the island-nation took several years to implement the requirements for the program.

The requirements included strengthening the management of debt and public finances, an AIDS prevention and treatment program and school tuition programs for children. In addition to implementing these and other steps, Haitian authorities also passed an asset declaration law.

The World Bank director for the Caribbean Yvonne Tsikata said that the move will help “free resources for growth and poverty reduction. She went on to say that ``Going forward, Haiti must take advantage of this opportunity by managing future borrowing prudently, and continuing its efforts and progress towards stronger public expenditure management and public procurement” The Miami Herald reports.

Haitian Finance Minister Daniel Dorsainvil also applauded the cancellation describing them as “very positive”.

For more information on HIPC: Visit HIPC's webpage on the World Bank's website

Copyright 2009 Examiner.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Author
Ivanley Noisette is an Examiner from Philadelphia. You can see Ivanley's articles at: "http://www.Examiner.com/x-9208-Philadelphia-Foreign-Affairs-Examiner"