December 8, 2008
For Immediate Release: December 8, 2008
Contact: Dan Beeton, 202-239-1460
WASHINGTON, D.C. – Following the election of Senator Barack Obama, who has supported debt cancellation for poor countries, and a recent trip by World Bank president Robert Zoellick to Haiti, the Center for Economic and Policy Research released a new report today underlining why Haiti urgently needs debt cancellation in order to address humanitarian needs and help the country withstand the effects of the global economic downturn, which is likely to inflict further pain upon the most impoverished country in the Western Hemisphere.
The report, "Update - Debt Cancellation for Haiti: No Reason for Further Delays," describes several key economic challenges confronting Haiti, while Haiti is required to make millions of dollars in debt service payments to foreign creditors such as the Inter-American Development Bank and the World Bank. The paper also describes the technical criteria that have prevented Haiti from receiving full debt cancellation under the IMF and World Bank's Heavily Indebted Poor Countries Initiative (HIPC).
"The whole world knows that Haiti needs all the funds it can get – now – to deal with disaster relief and also to deal with the global economic downturn," said Mark Weisbrot, Co-Director of the Center for Economic and Policy Research and lead author of the report. "There are millions of Haitians who simply cannot wait for their government to jump through the arbitrary hoops set by the IMF and World Bank before the debt is canceled."
Haiti's total foreign debt currently stands at $1.7 billion (USD). Once Haiti reaches "Completion Point" under HIPC, it stands to gain $1.2 billion total in canceled debt. Haiti had been expected to reach Completion Point in September 2008, but recent disasters, economic shocks, and political developments – along with various IMF demands on technical criteria – now mean that Haiti will not reach Completion Point until mid-2009 at the earliest.
This year's devastating hurricane season and rising food prices have underscored the urgency of Haiti's need to free up funds currently spent on debt service payments. In August and September, Haiti was hammered by a series of hurricanes – Gustav, Hanna, and Ike – that killed some 800 people and left as many as 1 million people homeless in a country with a population of 9 million. Entire communities were flooded, and aid has been slow in coming. United Nations Under-Secretary-General for Humanitarian Affairs John Holmes said that only 40 per cent of a $107 million flash appeal aimed at assisting the emergency relief effort had been pledged as of October 27, 2008.
Haiti would also benefit from immediate debt cancellation since it is likely to face further economic challenges due to reliance on trade with the U.S. Haiti's exports to the U.S. were equivalent to 8.6 percent of its GDP in 2007, and the recent downturn in the U.S. economy, led by the collapse of a massive housing bubble, has led to a shrinking of the U.S. import market. U.S. imports are likely to decline further, and unless counteracted by policy changes, these changes will likely have a negative impact on Haiti's economic growth.
The Center for Economic and Policy Research is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people's lives. CEPR's Advisory Board of Economists includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; Richard Freeman, Professor of Economics at Harvard University; and Eileen Appelbaum, Professor and Director of the Center for Women and Work at Rutgers University.