By ISTRA PACHECO (AP)

http://www.businessweek.com/ap/financialnews/D9EJR3V01.htm

CANCUN, Mex­ico

The Inter-American Devel­op­ment Bank said Mon­day it has agreed to for­give $479 mil­lion in debts owed by quake-ravaged Haiti.

Bank Pres­i­dent Luis Alberto Moreno said the bank’s board of gov­er­nors voted to for­give the debt and will offer $2 bil­lion in financ­ing to the Caribbean nation over the next 10 years.

“This com­mit­ment is good news for all Haitians, and will help heal the wounds caused by the earth­quake,” Moreno said at the inau­gu­ra­tion of the bank’s annual meet­ing in the Caribbean coast resort of Cancun.

The IADB debt was the biggest sin­gle chunk of the $1.2 bil­lion Haiti owed as of late Jan­u­ary, accord­ing to fig­ures of the Inter­na­tional Mon­e­tary Fund.

The mea­sures are meant to help Haiti recover from the magnitude-7 Jan. 12 earth­quake, which killed an esti­mated 230,000 peo­ple. The new funds would be directed toward sup­port­ing long-term recon­struc­tion and devel­op­ment efforts.

The 48-member regional devel­op­ment bank is Latin America’s largest lender for projects such as roads and power plants.

The admin­is­tra­tion of Pres­i­dent Barack Obama is push­ing for the can­cel­la­tion of other mul­ti­lat­eral debt, as well as the $400 mil­lion Haiti owes indi­vid­ual countries.

Also Mon­day, Euro­pean Union for­eign affairs chief Cather­ine Ash­ton said in Brus­sels that the EU for­eign min­is­ters agreed to donate euro1 bil­lion ($1.36 bil­lion) in devel­op­ment aid to Haiti in the years ahead.

Ash­ton said she will pledge that amount on the EU’s behalf at a Haiti donors con­fer­ence in New York next week.

She says what the Caribbean coun­try needs after the dev­as­tat­ing earth­quake is “long-term devel­op­ment aid.”

In addi­tion to dis­cussing debt relief for Haiti, Moreno said the board of gov­er­nors had voted for a $70 bil­lion increase in the bank’s cur­rent cap­i­tal of about $100 billion.

Colom­bian Econ­omy Min­is­ter Oscar Ivan Zulu­aga said the cap­i­tal increase would allow the bank to con­tinue financ­ing eco­nomic and devel­op­ment projects.

“With this increase, we have estab­lished a basis for the bank into the future,” Zulu­aga said.

In 2009, the bank made loans worth a record $15.5 bil­lion, and it had warned that, with­out a cap­i­tal increase, it would have to cut its lend­ing to about $7 bil­lion per year.