(Photo of hospital in Haiti taken on January 18th by Catherine Laine)
By Hayley Hathaway
Here I have attempted to map out the recent progression of events related to Haiti's debt cancellation amidst the earthquake. Thanks to everyone who has called, written letters, and spread the important word about a just and fair response to the crisis.In the wake of the tragedy in Haiti, Jubilee USA Network members have been joined by the ONE Campaign, Oxfam, Christian Aid and others in calling for the immediate cancellation of Haiti's more than $1 billion debt. To many, debt cancellation is an obvious and simple response to the disaster.
Without debt cancellation, Haiti will pay more than $100 million over the next five years to the international financial institutions, including the International Monetary Fund, the Inter-American Development Bank and the World Bank. This money could be used for Haiti’s rescue and recovery.
Initially, one voice did not agree on the debt cancellation strategy: the International Monetary Fund announced that in response to the earthquake they would give Haiti a $100 million loan, not a grant or debt cancellation. The loan would come on top of the $165 million debt Haiti already owed the IMF.
This announcement caused an immediate backlash. A loan for Haiti in this moment of crisis is totally inappropriate, or, as Oxfam said today “cruel and unnecessary.” Even the World Bank announced it would give Haiti a grant, not a loan. Finally in an unprecedented announcement, Dominique Strauss-Kahn, Managing Director of the IMF, committed the organization to Haiti's debt cancellation:
"The most important thing is that the IMF is now working with all donors to try to delete all the Haitian debt, including our new loan. If we succeed—and I'm sure we will succeed—even this loan will turn out to be finally a grant, because all the debt will have been deleted. And that's the very important thing for Haiti now."
We couldn’t agree more.
Yet, the loan is not the whole story. The International Monetary Fund's unpopular legacy comes not simply from the amount of money it is owed, but by the conditions it attaches to the loans. Historically these economic conditions (called "structural adjustment programs") have left countries with weaker economies and include such requirements as privatization of industries, reductions in trade barriers, budget and wage cuts. We were concerned that any type of arrangement with the IMF would include economic conditions that have impeded Haiti's path to end poverty in the past. Yet, a spokesman for the IMF confirmation confirmed that the loan would be condition-free:
"The US$100 million loan does not carry any conditionality. It is an emergency loan aimed at getting the Haitian economy back to function again..."
Again, this was good news.
Now, a few days later (after news reports have announced the IMF's positive commitment) Dominque Strauss-Kahn has been found backtracking.
His Huffington Post piece calls not for debt cancellation, but for a mere postponement of debt payments: "For now, and for at least the next couple of years, Haiti has no payments to make on its existing debts to the Fund, while the emergency loan we are providing is interest-free, with no repayments due for five years. " Haiti will still have to pay back all of its debts; it just gets to wait five years before it starts. All of us with personal debt know how dangerous this can be. Strauss-Kahn also retracted his statement to cancel the debt of the new loan - saying that it too can be paid back in five years.
He writes, "Looking beyond the emergency phase, and as part of an international plan to rebuild the country, there will be a need to reassess Haiti's debt situation in light of the catastrophic damage to its economy. At that stage, the international community needs to be ready to provide comprehensive debt relief."
We do not need to reassess Haiti’s debt situation. We know what Haiti's debt situation will bring. We see what it has brought for more than 200 years - a cycle of poverty and dependence that has helped create what some are calling an "un"natural disaster. Haiti's debt cancellation cannot wait; the international community has made a definitive call for Haiti's debt cancellation and now the International Monetary Fund most follow through on its commitment definitively and swiftly.
Haiti’s debt is not only to the IMF. Together, the international financial institutions make up most of Haiti’s debt at $664 million. They have also responded positively, but not definitively. The Inter-American Development Bank announced it "could consider the possibility of providing further debt relief to Haiti". The World Bank announced a moratorium on debt payments, which still not good enough. All of the institutions must act immediately to cancel Haiti’s debt, giving the nation the appropriate help it desperately needs.