By Mark Weisbrot and Luis Sandoval | Center for Economic & Policy Research
This paper, "Debt Cancellation for Haiti: No Reason for Further Delays", presents an overview of Haiti’s outstanding foreign debt, and how much of this debt is scheduled to be canceled under Haiti’s participation in the International Monetary Fund (IMF) and World Bank’s Heavily Indebted Poor Countries (HIPC) initiative.
The paper examines how soon Haiti may complete the HIPC process, and compares the benefits of debt cancellation for Haiti under HIPC versus expedited cancellation, in addition to, or outside of, the HIPC initiative.
Haiti is the most
impoverished country in the Western Hemisphere, with 76 percent of its
population below the poverty line and a life expectancy of 53 years. Yet it was
originally excluded from the HIPC initiative for debt cancellation in 1996,
because of a technicality relating to its debt service burden. Although it was
subsequently included (in 2006), because of this delay Haiti is currently
struggling to meet the requirements for cancellation of most of its total $1.54
billion foreign public debt. Haiti still has to reach the "completion point"
under the HIPC initiative in order to receive debt cancellation.
If this
completion point is not reached by September 2008, as now appears likely, Haiti
would have to pay an additional $44.5 million in debt service payments to
multilateral institutions (mostly the World Bank and the Inter-American
Development Bank). This is equivalent to about 26 percent of Haiti's spending on
public health, where there are many vital unmet needs. Furthermore, this total
does not include bilateral debt service of $11.4 million, some cancellation of
which can also be expected.
The paper presents other reasons to avoid
delay, and argues that there is little reason to believe that the conditions set
by the IMF and World Bank for further debt cancellation are likely to benefit
Haiti.
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