An update on Haiti's debt | ONE

In the hours and days after Haiti was devastated by a powerful earthquake, rescue workers, elected officials, commentators, experts and activists alike expressed the importance of being as committed to long-term help to the Haitians as we were to the saving of lives in the immediate aftermath.

While nearly two months has passed since the earthquake and most of the camera crews have moved on to other things, the long-term rebuilding is just beginning. Capitol Hill will soon consider a large package of assistance for Haiti put together by the Administration. Thankfully, cancelling Haiti’s debt to international institutions is expected to be part of this package. This is a sensible and effective piece of the puzzle backed by the Treasury and key leaders on the Hill such as. Rep. Gregory Meeks, Rep. Maxine Waters, Rep. Spencer Bachus, Senator Chris Dodd, Senator Richard Lugar and others.

Today, Rep. Meeks will lead a hearing on debt relief for Haiti. I’m honored to testify on behalf of the global anti-poverty organization ONE in support of erasing the country’s $1 billion debt.

Most of these loans were made since 2005, with the bulk coming from the Inter-American Development Bank. They were made based upon positive assumptions about the country’s future exports, future growth and its ability to pay them back. The IMF projected 4.5% annual growth rates, and for exports to grow consistently. Over the past six years, HIV prevalence dropped from 6% to 2% and investments in education were going up. And then of course, these assumptions about growth, exports and ability to repay were shattered as a result of the earthquake. For example, a loan for a road that is now destroyed cannot generate the economic returns to pay the loan back.

Holding Haiti to its international debts not only ignores the change in its economic ability to repay, it would diminish the impact of outside assistance for reconstruction. If Haiti is still burdened with old debts, some of our assistance would be turned around to make loan payments. This “revolving door” of assistance – donor assistance turned into debt payments to donor-led multilaterals – defies common sense.

Immediately following the earthquake, ONE , joined by partner groups, Jubilee USA and Oxfam International, launched a campaign to convince international creditors to cancel Haiti’s $1 billion debt and, equally important, ensure that all new aid come in the form of grants, not debt-incurring loans.

The “Drop Haiti’s Debt” campaign culminated in ONE’s delivery of more than 415,000 signatures from around the world to the Finance Ministers of G7 countries who were meeting in a small town in Canada’s arctic north. That same day, Canadian Finance Minister Jim Flaherty announced the G7’s endorsement of debt relief. With the world’s largest donors in agreement, now the institutions need to approve and take action.

Fortunately, the United States has already forgiven Haiti’s debts and our assistance now comes only in the form of grants. but Haiti’s other creditors, including the Inter-American Development Bank, International Monetary Fund and World Bank— have yet to forgive all of Haiti’s debt.

Treasury Secretary Tim Geithner has indicated that the United States will work with partners around the world to relieve all debts accumulated by Haiti. The IMF and the World Bank have issued similar public statements. The two countries who hold Haiti’s bilateral debt, Taiwan and Venezuela, have also made encouraging remarks.

As these international lenders work to reach a final agreement, ONE encourages Congress to approve the debt relief anticipated in the Administration’s Haiti reconstruction request. This is a critical hand up to a nation just beginning a long climb to recovery.

An update on Haiti's debt | ONE

Related Websites

Be Sociable, Share!