PARIS — The IMF says it has canceled Haiti’s $268 million debt and will lend the earthquake-devastated country another $60 million to help it with reconstruction plans.

The International Monetary Fund said Wednesday the decision is part of a plan for long-term reconstruction after the Jan. 12 magnitude-7 quake, which killed as many as 300,000 people.

The three-year loan carries a zero interest rate until 2011 which then rises to no more than 0.5 percent.

The Washington-based fund says its moves should encourage aid contributions to the impoverished country.

“Donors must start delivering on their promises to Haiti quickly, so reconstruction can be accelerated, living standards quickly improved and social tensions soothed,” IMF chief Dominique Strauss-Kahn said in a statement.

In Haiti more than six months after the quake, rubble and collapsed buildings still dominate the landscape.

The number of people in relief camps has nearly doubled to 1.6 million, while the amount of transitional housing built is minuscule. Crime is more prevalent since the quake, with attacks in camps terrorizing thousands, especially women and girls.

Most of the $3.1 billion pledged for humanitarian aid has paid for field hospitals, plastic tarps, bandages, and food, plus salaries, transportation and upkeep of relief workers.

At a March conference, donors pledged a total of $9.9 billion — money that is separate from the humanitarian aid — to help Haiti recover.

But less than 2 percent of it has been delivered. The rest is mired in bureaucracy and politics of the more than 60 countries and organizations that pledged to help.

http://www.google.com/hostednews/ap/article/ALeqM5j9JEpiuNr2naxLKUtP4c1n3TfxYwD9H40SNO0

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

The Executive Board of the International Monetary Fund (IMF) today approved the full cancellation of Haiti’s outstanding liabilities to the Fund, of about SDR 178 million (equivalent to US$268 million). The Board also approved a new three-year arrangement for Haiti under the Extended Credit Facility (ECF) requested by the authorities to support the country’s reconstruction and growth program.

Both decisions form part of a broad strategy to support Haiti’s longer term reconstruction plans, following the devastating earthquake of January 12, 2010. The cancellation of existing debt was advocated by IMF Managing Director Dominique Strauss-Kahn in the days following the disaster as part of a concerted international effort to launch a “Marshall Plan” for the reconstruction of the country. 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.

“Donors must start delivering on their promises to Haiti quickly,” Mr. Strauss-Kahn said, “so reconstruction can be accelerated, living standards quickly improved, and social tensions soothed.” At a high-level donors’ conference in March, the international community pledged US$ 9.9 billion to Haiti’s reconstruction, of which US$ 5.3 billion is to be disbursed over the next 18 months.

Resources freed by IMF debt relief will help Haiti to meet substantial balance-of-payments needs exacerbated by the earthquake. The debt relief is financed by the Post-Catastrophe Debt Relief (PCDR) Trust Fund, recently established by the Fund to help very poor countries hit by catastrophic natural disasters (see attached factsheet).

The new ECF arrangement will provide SDR 40.9 million (about US$ 60 million) over three years to boost Haiti’s international reserves and help the central bank manage potential swings in the value of the local currency — important to avoid raises in the prices of basic commodities consumed by the poor — without adding to the country’s net debt. Financing under the ECF carries a zero interest rate until end-2011 and thereafter zero to 0.5 percent, with a maturity of 10 years and a grace period of 5½ years. The temporary interest waiver is part of the package that was approved in July 2009 to support the IMF’s lending to low-income countries, financed from the IMF’s internal resources, including the use of resources linked to the gold sales, and through bilateral contributions (see Factsheet “Financing the Fund’s Concessional Lending to Low-Income Countries”). The new program also includes important policy commitments from the authorities that will help protect macroeconomic stability, and strengthen fiscal governance.

“The new program will provide a coherent macroeconomic framework to support the implementation of our Action Plan and ensure efficient spending and absorption of aid inflows,” Haiti’s Minister of Economy and Finance Ronald Baudin said.

Technical Assistance

The IMF will also provide a comprehensive medium-term technical assistance program aimed at strengthening state institutions, concentrating in the areas of tax policies, revenue administration, budget preparation and execution, and helping the country in organizing its first ever issuance of government securities.

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

Following the Executive Board discussion on Haiti, Mr. Naoyuki Shinohara Deputy Managing Director and Acting Chair, issued the following statement:

“The January 2010 earthquake was devastating for Haiti, after several years of progress in maintaining economic stability, resuming growth, and implementing essential reforms. The authorities are to be commended for good policy implementation in the six-month period since the earthquake, in spite of limited financial resources and weakened capacity.

“Haiti meets the eligibility and qualification conditions for debt stock relief under the PCDR Trust Fund. Resources freed by debt stock relief under the PCDR Trust Fund are critical to meeting the large and protracted balance-of-payments needs exacerbated by the earthquake and subsequent recovery efforts, and to placing Haiti’s debt on a sustainable path. Debt relief from the Fund is part of a concerted international effort to cancel Haiti’s remaining debt after the earthquake.

“The newly approved ECF-supported arrangement provides a coherent macroeconomic framework to support the authorities’ reconstruction and growth objectives. The macroeconomic outlook, and implementation of the authorities’ reconstruction plan, depends crucially on the timely disbursement of the large donor pledges. Furthermore, improvements in infrastructure and the business environment will be essential to raise medium-term growth, by attracting private investment and expanding the export base. The establishment of a partial credit guarantee fund will help restart private sector credit

“The Fund-supported program aims at smoothing the impact on the economy of large expected aid flows, projected to triple to about 15 percent of GDP over in the next 3 years. Fiscal objectives are to raise domestic revenue, align the budget and its financing with reconstruction priorities, and continue strengthening fiscal governance. Monetary and exchange rate policies will be upgraded to facilitate the absorption of aid inflows, while avoiding large swings in the exchange rate and keeping inflation under control The program is supported by a comprehensive medium term technical assistance strategy, coordinated with Haiti’s development partners.”

ANNEX

Recent Economic Developments

The earthquake of January 12, 2010 caused unprecedented destruction of human and physical capital, with losses estimated at 120 percent of 2009 GDP. The disaster struck the country at a time when its outlook was improving after several years of prudent macroeconomic management. In 2009, Haiti’s growth reached almost 3 percent, the second-fastest rate in the Western Hemisphere.

A still fragile recovery is taking place after the earthquake. Agricultural production, construction and textile manufacturing are supporting economic activity, while remittances, which grew by 12 percent between January and May of 2010 (over the previous year), are supporting consumption and imports. Exports are recovering, although the trade deficit is still widening.

Main Program Objectives

The program is focused on macroeconomic policies that can support growth and the Haitian authorities’ reconstruction plan, as well as help manage the aid inflows. It includes improving the efficiency and transparency of spending, increasing revenues, modernizing monetary and exchange rate operations, and enhancing credit growth.

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

Inflation: expected to reach 8.5 percent in the current fiscal year and to decline to 7 percent by 2013.

Fiscal strategy: to boost revenue collection to 13 percent of GDP by 2013, from 10% percent currently. The authorities’ objective is to enhance the quality and effectiveness of reconstruction spending and rebuild a more modern and efficient tax administration.

Monetary policy: the program aims at building a sustainable external position while absorbing the reconstruction-related foreign exchange flows. To enhance the effectiveness of monetary policy, further steps will be taken to improve the Bank of the Republic of Haiti’s independence. The authorities also aim at gradually developing a market for government securities.

http://www.imf.org/external/np/sec/pr/2010/pr10299.htm

REPRIEVE: A minister said Taiwan could not fully cancel Haiti’s debts given the nature of the loans, offering instead to take over its interest payments for five years

Minister of Foreign Affairs Timothy Yang (楊進添) yesterday unveiled Taiwan’s debt reduction plan for Haiti, with the Taiwanese government shouldering interest payments to local banks for five years as the Caribbean country struggles to recover from a devastating earthquake in January.

Yang told lawmakers in March that Haiti owed Taiwan, one of its major lenders, US$88 million.

Haiti’s total foreign debt was estimated at US$1 billion before the fatal quake. As the debt-ridden country tries to recover from the disaster, some of its major lenders — including Venezuela and the G7 (Canada, the US, the UK, France, Germany, Italy and Japan) — agreed to cancel all of its debts.

Amid calls from the international community for Taiwan to cancel Haiti’s debts, Yan said the debt repayment plan was the “maximum amount” that Taiwan could “afford.”

“We have told Haitian government about the plan and the Haitian government expressed its appreciation, saying the plan could substantially help it rebuild the country,” Yang said.

The five-year period starts this year, during which Haiti will be exempted from repaying any interest payments and principal to Taiwan. The government will take over the interest payments during this period, which are estimated at US$12 million to US$13 million.

The government and Port-au-Prince will discuss a debt repayment plan after the five-year period.

Yang said Taiwan could not cancel the whole loan owed by Haiti as other lenders did, because the nature and structure of the loan were different from other countries’.

The money lent to Haiti was taken from the nation’s foreign reserves via lending contracts with two commercial banks instead of directly from the treasury. The government could not write off the principal and could only take over payment of the interest, he added.

In related news, President Ma Ying-jeou (馬英九) yesterday met with a delegation heading to the Dominican Republic for a forum on Haiti post-quake reconstruction work.

The delegation, led by Council of Agriculture Minister Chen Wu-hsiung (陳武雄), will leave on Monday to participate in the forum organized by the UN on Wednesday to discuss post-quake relief and reconstruction work in Haiti.

“It’s not easy for us to participate in this international meeting because the UN is involved,” Ma said at the Presidential Office. “We’ve stressed the legitimacy of the international works we participated in. It’s important for us to do this to improve our reputation. We want to make Taiwan both a responsible and respectable nation in the world.”

http://taipeitimes.com/News/taiwan/archives/2010/05/29/2003474132

The World Bank said on Friday it has written off $36 million of Haiti’s remaining debts to the lender with the help of contributions from 13 countries.

With the decision, Haiti has nothing further to pay to the World Bank, the institution said. The debt was owed to the World Bank’s fund for its poorest borrowers, the International Development Association, or IDA.

Canceling the debt will free up funds — which would have been spent on servicing the IDA debt — for rebuilding after Haiti’s devastating Jan. 12 earthquake.

The Bank said funding to write off the debt was received from Belgium, Canada, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Spain, Sweden and Switzerland.

“Relieving Haiti’s remaining debt is part of our effort to pursue every avenue to help Haiti’s reconstruction efforts,” World Bank President Robert Zoellick said.

Since the earthquake, the World Bank has committed $479 million in grants for Haiti’s recovery through June 2011. It is also supervising an international donor fund for Haiti through which contributions will be funneled.

Global institutions like the World Bank and the International Monetary Fund last year wrote off $1.2 billion of Haiti’s debts. (Reporting by Lesley Wroughton; editing by James Dalgleish and Jeffrey Benkoe)

http://www.reuters.com/article/idUSN2818522520100528?type=marketsNews

President Obama on April 26 signed into law a bill calling for the United States to take the lead in forgiving debt owed to international lenders by earthquake-ravaged Haiti.

The bill urges major multinational institutions to cancel all debt owed to them by Haiti and recommends that all aid to the country for the next five years be provided in the form of grants rather than loans.

“The President’s signature on this bill is further indication of the United States’ support for the people of Haiti,” Congresswoman Maxine Waters (D-Calif.), who sponsored the House version of the bill, said in a statement. “I authored this legislation because Haiti’s immense debt burden would have severely impeded the country’s recovery efforts.”

The bill was approved in the House on April 14 and passed the Senate earlier in April.

Under the measure, the Treasury Department is required to instruct U.S. executives at the International Monetary Fund, the World Bank and other institutions to use the force and influential power of the United States to cancel Haiti’s debt.

The bill calls for Haiti to receive aid in the form of grants until Feb. 1, 2015. Following that date, multilateral development institutions may resume aid in the form of new loans.

The Treasury said at the beginning of March that Haiti owed $828 million to several international institutions, according to the Associated Press. Since then, one of those institutions, the Inter-American Development Bank, said it would forgive give the $447 million Haiti owed it, and convert remaining undistributed loans into grants.

Other organizations, including the World Bank and International Monetary Fund, have also begun to make moves to relieve Haitian debt, the AP reported.

http://www.afro.com/sections/news/afro_briefs/story.htm?storyid=1105

“The President’s signature on this bill is further indication of the United States’ support for the people of Haiti,” said Congresswoman Waters. “I authored this legislation because Haiti’s immense debt burden would have severely impeded the country’s recovery efforts. Our government will work closely with the multilateral development institutions to ensure that they cancel all of Haiti’s debts owed to them, and that future aid over the next few years is delivered in the form of grants, so that Haiti does not accumulate more debt.”

Public Law No: 111–158 directs the Secretary of the Treasury to instruct the U.S. Executive Directors at the World Bank, the International Monetary Fund (IMF) and other multilateral development institutions to use the voice, vote, and influence of the United States to do the following:

1. cancel immediately and completely all debt owed by Haiti to these institutions;
2. suspend Haiti’s debt service payments to the institutions until the debt is canceled completely; and
3. provide additional assistance to Haiti in the form of grants so that Haiti does not accumulate additional debt.

Public Law No: 111–158 also directs the Secretary of the Treasury and the Secretary of State to use all appropriate diplomatic influence to secure the cancellation of all remaining bilateral, multilateral, and private creditor debt owed by Haiti. A Senate amendment included in the House bill specifies that Haiti should receive aid in the form of grants until February 1, 2015. After that time, multilateral development institutions may resume aid in the form of new loans.

Congresswoman Waters, who serves on the Financial Services Subcommittee on International Monetary Policy and Trade, participated in a hearing today on promoting small and micro enterprise in Haiti.

Congresswoman Waters said, “To help Haiti move forward, I am focused on making sure that durable forms of shelter continue to be delivered and distributed to the millions of survivors living in the camps for the displaced, so that they stay dry and protected from disease during the impending rainy season. Additionally, I will be assisting Haitian small business people and nongovernmental organizations in forming partnerships with the United States Agency for International Development (USAID) so that they have a substantive role in the rebuilding of their country.”

http://www.sflcn.com/story.php?id=8504

“The agreement provides the basis for permanent debt forgiveness of Haiti’s debt burden to our organization,” said Kanayo Nwanze, President of the International Fund for Agricultural Development (IFAD).

The net present value of Haiti’s debt to IFAD is $50.7 million. Under the agreement to write off the debt, approved this week by the fund’s executive board, IFAD will contribute up to 30 per cent of the debt relief requirement, with Member States needing to contribute the remaining 70 per cent.

“Without this type of relief, Haiti would have been hard pressed to repay its outstanding loans to the organization, to the detriment of the critical reconstruction and development activities. With the generous contributions from our members – plus a significant investment on our part – we are breaking that cycle,” said Mr. Nwanze.

IFAD responded rapidly to the January earthquake with a $2.5 million grant for irrigation and watershed rehabilitation in a project that is expected to benefit some 12,000 households in rural areas directly affected by the earthquake.

“A small portion of Haiti’s debt was already forgiven by organizations like IFAD under the Highly Indebted Poor Countries Debt Initiative, but the bulk remained,” said Josefina Stubbs, director of IFAD’s Latin America and the Caribbean division.

“By relieving the country of this burden, we are freeing up funds for redevelopment and reconstruction,” he added.

IFAD is an international financial institution and a specialized UN agency dedicated to eradicating poverty and hunger in rural areas of developing countries.

http://www.enewspf.com/index.php/latest-news/haiti-earthquake/15881-un-agency-forgives-debt-owed-by-disaster-hit-haiti

http://www.jamaicaobserver.com/news/haiti-s-debt-cancelled

WASHINGTON, USA — The United States House of Representatives has unanimously passed a bill calling for the cancellation of Haiti’s debt in the wake of the catastrophic January 12 earthquake.

The measure orders US representatives to the Washington-based International Monetary Fund (IMF) and other lending agencies to take action to cancel the Caricom country’s debt obligations.

It is expected to be signed into law shortly by President Barack Obama.

The bill, known as the Haiti Recovery Act, also urges that prospective aid to the French-speaking nation be in the form of grants, rather than loans.

In addition, it calls on the US government to support the formation of an international trust fund to aid in infrastructural development in Haiti.

“There are many of us who look at this earthquake as opportunity,” said Maxine Waters, a Democratic congresswoman, who sponsored the bill.

“We believe that there is now a real commitment by the world community to come to the aid of Haiti,” she added.

Earlier, the US Senate had also unanimously passed a resolution supporting calls for Haiti debt relief.

“The people of Haiti face a long and difficult road ahead,” said Connecticut Democratic Senator Christopher Dodd, lead author of the Haiti Recovery Act and chairman of the Senate Banking Committee.

“But the United States Senate made it clear that they will not have to walk that road alone,” he added.

In February, the world’s richest countries, otherwise known as the Group of Seven, said they will cancel Haiti’s debt. Those countries comprise Britain, Canada, France, Germany, Italy, Japan, and the United States.

Haiti owes an estimated US$1.88 billion dollars to international creditors. The Washington-based Inter-American Development Bank said about US$14 billion will be needed to rebuild Haiti in the wake of the earthquake.

The US Congress is considering legislation that would provide about US$2.8 billion in new aid to Haiti.

The international community, at a recent United Nations-hosted donors’ conference, recently pledged almost US$10 billion to aid in Haiti’s reconstruction efforts.

http://www.taipeitimes.com/News/front/archives/2010/04/14/2003470544

The Executive Yuan has approved a debt reduction proposal for Haiti, which will see the government repay the interest payments on the Caribbean ally’s debt to Taiwan for five years, Minister of Foreign Affairs Timothy Yang  said late on Monday night.

The move comes after other major donor nations and some international lending institutions forgave about 80 percent of Haiti’s external debt — estimated at US$1 billion — to help with reconstruction after the country was struck by a devastating magnitude 7 earthquake on Jan. 12.

Yang confirmed that Haiti owed Taiwan US$88 million during a question-and-answer with lawmakers at the legislature’s Foreign and National Defense Committee last month.

Under the approved debt-­reduction proposal, the government will appropriate public funds to help Haiti pay interest on the loan over five years and will allow Port-au-Prince to settle the debt with a repayment plan it agrees to after the period. Yang declined to reveal the amount needed to cover the interest payments, saying that the ministry would discuss the proposal with Haiti before it is finalized.

The debt-reduction plan partially answers international appeals for help from countries including Canada, the US, the UK, France, Germany, Italy, Japan and Venezuela, as well as the Inter-American Development Bank and the World Bank.

Taiwan, however, did not meet calls from the US Congress, which passed bills last month urging the US Treasury secretary to use the “voice, vote and influence of the US” to urge all of the Caribbean island’s creditors to cancel “immediately and completely” Haiti’s debts.

The ministry previously said that it offered a debt reduction plan rather than completely canceling the debt because the money was taken from the country’s foreign reserves via lending contracts with two commercial banks and did not come directly from the treasury.