Haiti: How the debt was dropped

More than four months on, people in Haiti are still feeling the effects of January’s earthquake. Over 300,000 people died and more than a million were left homeless. Already poor, Haiti needed to rebuild from the rubble, while saddled with millions of dollars of foreign debts built up by past governments.

Hundreds of you added your voices to an international outcry calling for Haiti’s debt to be cancelled. And your voices have been heard.

Before the earthquake, the UK government had already cancelled all the debt it was owed by Haiti through the Heavily Indebted Poor Countries Initiative, the debt cancellation scheme which followed the Jubilee 2000 campaign.

But during the weeks that followed the earthquake, you emailed former Prime Minister Gordon Brown to go a step further. You asked him to use his influence and voting power at the IMF and the World Bank to approve the cancellation of outstanding and recent multilateral debts.

A global petition of over 400,000 names was also delivered to the finance ministers of the G7 group of rich nations. They agreed to push for the cancellation of Haiti’s biggest multilateral debts.

Millions cancelled

the balance sheet foo

Inter-American Development Bank

Debt cancelled: US$441 million

Grants pledged: US$2 billion over ten years

The World Bank

Debt cancelled: US$39 million

Grants pledged: US$151 million

Investments pledged: US$60 million although it is unclear whether this will be spent according to Haiti’s government priorities

Source: The Jubilee Debt Campaign

As a result, the World Bank and the Inter-American Development Bank (IADB) both agreed to cancel the debts which Haiti owes them: a total of US$480 million.

While there is good news from the World Bank and IADB – the picture from the IMF is mixed. Haiti owes the IMF over $250million, including a new $102million loan issued in January.

Although they have so far failed to act, the IMF has shown it is willing to look at cancelling Haiti’s debt. In April, its Board of Governors stated that they "look forward to consideration… of proposals for providing exceptional debt relief to countries hit by catastrophic disasters and, in that context, to joining international efforts to relieve Haiti’s debt."

Cancelling debts from the past is vitally important. But equally important is ensuring that Haiti does not enter a new spiral of debt as a result of this disaster. Any new money should also be free of restrictive conditions, so that Haiti can make decisions about its own development, rather than having decisions made for them by donor countries.

Campaigns communications manager Katy Harris said, “CAFOD campaigners can be pleased that long-standing debts have been cancelled and no new debts are being built up for Haiti. Thank you for your action in solidarity with the people of Haiti.

“We’ll continue to keep a close eye on the IMF’s consideration of exceptional debt relief to all countries hit by catastrophic disasters and hope that their words can be turned into action.”