IMF Cancels Haiti Debt
22 July 2010 at 2:23 pm
The Executive Board of the International Monetary Fund (IMF) has cancelled Haiti’s outstanding debt equivalent to US$268 million and approved a new three-year program to support the country’s reconstruction and growth program.
The IMF move is part of a broad strategy to support Haiti’s longer term reconstruction plans, following the devastating earthquake of January 12, 2010.
The cancellation of existing debt was advocated by IMF Managing Director Dominique Strauss-Kahn in the days following the disaster as part of a concerted international effort to launch a “Marshall Plan” for the reconstruction of the country.
The IMF says the new program provides a strong and forward-looking framework to support economic stability and reconstruction in the country, and will also help catalyze donors’ contributions.
Strauss-Kahn says donors must start delivering on their promises to Haiti quickly so reconstruction can be accelerated, living standards quickly improved, and social tensions soothed.
Strauss-Kahn says at a high-level donors' conference in March, the international community pledged US$ 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.
The new ECF arrangement will provide 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.
Haiti’s Minister of Economy and Finance Ronald Baudin says 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.
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.
For more information go to www.imf.org