$1.2 billion in debts canceled to help Haiti

By JONATHAN M. KATZ – 10 hours ago



PORT-AU-PRINCE, Haiti (AP) — Three international organizations

canceled $1.2 billion of Haiti's debt Tuesday, freeing up millions of

dollars each year for the deeply impoverished Caribbean nation that

is beset by humanitarian crises.

The World Bank and the International Monetary Fund said their boards

decided this week to forgive Haiti's obligations to the two

organizations, a move that triggered previously announced debt relief

from the Inter-American Development Bank.

The actions erased nearly two-thirds of Haiti's outstanding debt. As

of April, Haiti owned more than $1.9 billion, according to the

Washington-based Center for Economic and Policy Research.

"This is a pretty big victory, definitely. This is what we've been

wanting," said Dan Beeton, an analyst with the center, said by phone

from Washington. "It's a shame it had to take so long."

Until now, the desperately poor country, where more than 80 percent

of its approximately 9 million people live on less than $2 a day, has

been paying about $1.6 million each month to the World Bank,

according to debt relief advocates at the Jubilee USA Network.

A significant portion of the debt forgiven Tuesday dates back to

loans that lined the pockets of Haiti's dictators, especially

Francois "Papa Doc" and Jean-Claude "Baby Doc" Duvalier, whose father-

son dynasty ended in a 1986 popular rebellion.

Haiti was added to the World Bank and IMF's debt cancellation program

for heavily indebted poor countries in 2006. The Inter-American

Development Bank previously approved debt relief for Haiti, pending

its completion of that program.

But it took several years for Haiti to implement reforms that

included auditing government accounts, adopting a law on public

procurement and strengthening tax and customs administration, as well

as debt reporting. Other steps included approving an AIDS prevention

and treatment plan, financing school tuition for children and

improving immunization rates.

That was accomplished in spite of years of turmoil, including last

year's food riots that toppled the prime minister and four tropical

storms that killed some 800 people and caused more than $1 billion in

damage.

Finance Minister Daniel Dorsainvil praised the announcement in a

statement issued through the World Bank, saying the millions freed up

from debt payments "will help us invest in growth and poverty

reduction programs."

Others were skeptical about the benefits of the move. Haitian

economist Kesner Pharel said debt forgiveness will make it far more

difficult for Haiti to get new loans, impeding the government's

ability to finance much-needed improvements in infrastructure and

other areas.

"I don't see the government for the next five to 10 years having a

lot of money. It's a bad idea. It's a cost, not a benefit," Pharel said.

Haiti is the 26th country to have its debt forgiven under the

initiative, a list that includes Rwanda, Sierra Leone, Honduras and

Bolivia.

Associated Press writer Jennifer Kay in Miami contributed to this

report.

Copyright © 2009 The Associated Press. All rights reserved.