Representative Maxine Waters (D-CA) introduced the Debt Relief for Earthquake Recovery in Haiti Act of 2010 (H.R. 4573) to the U. S. House of Representatives on Thursday. The legislation would cancel Haiti’s debt to multilateral financial institutions so that “the nation can focus its limited resources on rebuilding after the devastating earthquake and not be burdened by payments to the World Bank, International Monetary Fund (IMF) and other creditors.” Representative Waters’ office stated that the bill has more than thirty bipartisan cosponsors.
“The array of problems that Haiti faces right now is compounded by foreign debt,” said Congresswoman Waters. “I am encouraged by initial statements by World Bank President Robert Zoellick and IMF Managing Director Dominique Strauss-Kahn that they are already considering measures to cancel Haiti’s debt. I encourage their prospective debt cancellation plans to also include providing grants so that Haiti can begin the arduous process of rebuilding.”
The Debt Relief legislation would require the Treasury Department to “use the voice, vote and influence of the United States in multilateral financial institutions” as it worked to: cancel all debts owed by Haiti to such institutions; suspend Haiti’s debt service payments to such institutions until such time as the debts are canceled completely; and, provide additional assistance to Haiti in the form of grants so that Haiti does not accumulate additional debts. The bill also requires the Treasury Department to begin immediate efforts to ensure that other bilateral, multilateral, and private creditors cancel immediately and completely all debts owed by Haiti to such creditors.
Representative Waters and 93 fellow Democrat Representatives sent a signed letter to Treasury Secretary Timothy Geithner on Wednesday, February 3, asking international communities for their help in eliminating Haiti’s debt obligations. The letter also encouraged members on the executive boards of lending institutions to vote for the relief of Haitian debt. More specifically, in that letter the House Democrats asked that the upcoming $100 million loan from the IMF be given to the Haitian government in the form of a grant.
On June 30, 2009, Haiti was granted $1.2 billion of debt relief by reaching the completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative approved by the Boards of the International Development Association (IDA) and the International Monetary Fund (IMF). To reach the completion point, Haiti carried out a number of reforms aimed at establishing a more stable macroeconomic environment and at implementing its national poverty reduction strategy. President René Préval’s government also instituted aggressive changes in the nation’s education and healthcare systems.
Despite these recent accomplishments, the January 12 earthquake has the potential to set the country back many years. On this subject, Congresswoman Waters says, “Haiti had been making progress since suffering extensive damage by a series of hurricanes in 2008, and last year’s debt cancellation helped to move Haiti in the right direction. Unfortunately, it seems like one step forward, three steps back. We cannot allow Haiti to bear the additional burden of expensive debt payments following this most recent tragedy.”
Relieving Haiti’s current debt and offering future financial assistance in the form of grants, as opposed to loans, offers the country an honest chance at rebuilding its social and economic frameworks. The country’s high death toll and displacement rates following the January 12 earthquake have devastated this small, already impoverished nation. We need to encourage the U. S. Congress and multilateral financial institutions to forgive Haiti’s current debt and to offer immediate assistance in the form of nonobligatory grants.
Haiti’s $709 million debt to the international financial institutions breaks down as follows: Inter-American Development Bank (IDB), $447 million; International Monetary Fund (IMF), $165 million; International Fund for Agricultural Development (IFAD), $58 million; World Bank, $39 million.comments powered by Disqus