December 12, 2007
For Immediate Release: December 12, 2007
Contact: Dan Beeton, 202-293-5380 x104
WASHINGTON, D.C. - Delays in debt cancellation threaten to cost millions in urgently needed funds, and Haiti would benefit from immediate debt relief instead, according to a new paper from the Center for Economic and Policy Research. The paper, "Debt Cancellation For Haiti: No Reason for Further Delays," notes that Haiti is supposed to have most of its debt canceled under the IMF and World Bank's Heavily Indebted Poor Country (HIPC) Initiative, but this process is still in its early stages, and is likely to fall behind schedule. The delays could have tragic consequences for Haiti, which is the most impoverished country in the Western Hemisphere and has a life expectancy of 53 years.
"Because of the endemic dire poverty, the recent hurricanes and other natural disasters, and because of their own role in damaging Haiti's economy through a previous aid embargo, multilateral institutions should cancel Haiti's debt as quickly as possible," said economist Mark Weisbrot, Co-Director of the Center for Economic and Policy Research and co-author of the paper.
Haiti could receive $464.4 million in debt cancellation from the World Bank, and as much as $525 million from the Inter-American Development Bank (IDB) under the HIPC Initiative. Before this can happen, however, Haiti must meet a series of conditions, which have taken previous countries an average of three years to complete. If Haiti's debt cancellation is similarly delayed, it may owe over $44.5 million in debt service payments - an amount equal to 26% of the Haitian government's public health budget.
The paper also notes that the track record of IMF conditions placed on countries under debt cancellation agreements has not been positive, and that this presents another reason to cancel the debt immediately, rather than subject Haiti to extended conditionality.
Haiti was previously excluded from the HIPC process due to a technicality, and was not allowed the debt cancellation received this year by the other HIPC countries in the Americas. The paper also recalls the World Bank and IDB's role in cutting off funds to Haiti beginning in 2001, which crippled the economy and contributed to the toppling of Haiti's elected government in 2004.