By CNN Wire Staff

The IMF has can­celed Haiti’s $268 mil­lion debt to the fund so the coun­try can free up more money for reconstruction.

Wash­ing­ton (CNN) — The exec­u­tive board of the Inter­na­tional Mon­e­tary Fund approved Wednes­day the can­cel­la­tion of Haiti’s $268 mil­lion debt to the fund.

The board also approved a three-year request by author­i­ties to sup­port Haiti’s recon­struc­tion and growth program.

The deci­sions are part of an effort to sup­port Haiti’s longer-term recon­struc­tion plans after the Jan­u­ary 12 earth­quake, which killed more than 220,000 peo­ple, destroyed 60 per­cent of gov­ern­ment infra­struc­ture and left more than 180,000 homes uninhabitable.

Six months later, more than 1.5 mil­lion remain in over­crowded dis­place­ment camps.

“The new pro­gram pro­vides a strong and forward-looking frame­work to sup­port eco­nomic sta­bil­ity and recon­struc­tion in the coun­try, and will also help cat­alyze donors’ con­tri­bu­tions,” the IMF said in a post­ing on its website.

The debt relief is expected to help Haiti meet balance-of-payments needs wors­ened by the earthquake.

“Improv­ing the busi­ness envi­ron­ment and fos­ter­ing pri­vate credit and invest­ment will be essen­tial to sup­port growth,” said Charles Cas­tel, gov­er­nor of the Bank of the Repub­lic of Haiti. “The fund’s tech­ni­cal assis­tance will help rebuild eco­nomic insti­tu­tions and build capacity.”

The earth­quake resulted in losses esti­mated at 120 per­cent of 2009 GDP, the post­ing said.

It struck at a time when the impov­er­ished country’s out­look was improv­ing. Last year, Haiti’s growth reached almost 3 per­cent, the second-fastest rate in the West­ern Hemisphere.

Since the quake, a frag­ile recov­ery has been tak­ing place. Agri­cul­tural pro­duc­tion, con­struc­tion and tex­tile man­u­fac­tur­ing are sup­port­ing eco­nomic activ­ity, the post­ing said.

And remit­tances, which grew by 12 per­cent between Jan­u­ary and May of 2010 over the pre­vi­ous year, are sup­port­ing con­sump­tion and imports.

Though the trade deficit is widen­ing, exports are recov­er­ing, it said.

GDP is pro­jected to expand by 9 per­cent in fis­cal year 2011-12, due mostly to recon­struc­tion activ­ity, and by 6 per­cent by 2015.

Infla­tion is expected to reach 8.5 per­cent dur­ing the cur­rent fis­cal year and to drop to 7 per­cent by 2013.

In March, the inter­na­tional com­mu­nity pledged $9.9 bil­lion to Haiti’s recon­struc­tion, of which $5.3 bil­lion is to be dis­bursed over the com­ing 18 months.

But last week, a CNN inves­ti­ga­tion found that most gov­ern­ments that had promised money to the spe­cial fund had not deliv­ered the cash.

Less than 2 per­cent of the $5.3 bil­lion promised had been handed over to the Interim Haiti Recov­ery Commission.

Only four coun­tries had paid any­thing at all to the com­mis­sion: Brazil, Nor­way, Esto­nia and Australia.

The United States has pledged $1.15 bil­lion but had paid noth­ing, with the money tied up in the con­gres­sional appro­pri­a­tions process.

Venezuela has promised even more — $1.32 bil­lion. It too had paid noth­ing, though it had writ­ten off some of Haiti’s debt.

Still, many gov­ern­ments and aid agen­cies have given money to Haiti through means other than the Interim Haiti Recov­ery Commission.

For exam­ple, the U.S. State Depart­ment said it has given about $675 mil­lion through the U.S. Agency for Inter­na­tional Development.

Alto­gether, about $506 mil­lion had been dis­bursed to Haiti since the donors’ con­fer­ence in March, said Jehane Sedky of the U.N. Devel­op­ment Program.

CNN com­piled the infor­ma­tion by review­ing com­mis­sion fig­ures and sur­vey­ing the donors that had made pledges.

No coun­tries told CNN they do not plan to deliver the money eventually.

The pledges are for fis­cal year 2010–2011, so the donors have until the mid­dle of next year to get the funds to the Haiti recov­ery com­mis­sion, Sedky said.

http://edition.cnn.com/2010/WORLD/americas/07/21/haiti.debt.imf/#fbid=Y-71bcd4Kwi