Haiti Debt Cancellation Campaign

As Haiti rebuilds from this disaster, ONE is calling for the immediate cancellation of Haiti's $1 billion debt and ensure that any new assistance is provided in the form of grants, not debt-incurring loans.

Background

In June 2009, Haiti qualified for $1.2 billion in bilateral and multilateral debt relief under the Heavily Indebted Poor Country Initiative (HIPC). In order to do so, Haiti met the program's requirements for governance, economic and social reforms. The cancelled debt was incurred prior to 2004, according to HIPC rules.

The $1 billion we are calling to be cancelled now is debt incurred since 2004. Creditors, especially the InterAmerican Development Bank (IDB), have continued to lend substantial amounts to Haiti. Most donor governments (such as the US and UK) only give grants. According to US Treasury, Haiti's current debt portfolio is:

*These loans were not cancelled under HIPC

Haiti is not currently servicing much of this existing debt. Total estimated for 2010 is $44,000. So debt cancellation would not free up a lot of money Haiti to use for recovery in the short term. Our action aims to provide relief to Haiti over the long term for reconstruction efforts.

Equally importantly, we are calling for all new assistance to be grants, not loans. So far, most assistance announced by donors and institutions is in the form of grants. The IMF offered $100m in new loans to Haiti at zero-percent interest, the most concessional resource it is allowed to provide. While this would still need to repaid, there is movement to cancel or improve the term further.

What does cancellation cost?

This would have to be negotiated among the donors. The multilateral debt (that which is owed  International Monetary Fund,  International Development Association, and the Inter-American Development Bank) would normally be covered by resources within the banks as well as by contributions from major donors. These costs should be part of a long-term reconstruction package, not substitute for immediate relief. Donors should announce the relief now in the wake of the disaster and finance this debt relief over several years.

Key points on debt relief for Haiti

• As Haiti begins to recover from this disaster, creditors should immediately cancel Haiti's $1 billion debt and ensure any new assistance is provided in the form of grants, not debt-incurring loans.
• Immediate assistance is still badly needed. Debt relief is part of a longer-term reconstruction effort, giving Haiti a clean slate from which to rebuild.
• Simply giving Haiti a temporary reprieve from its current interest payments is not enough. Haiti received loans to fund certain projects, based on assumptions about its growth and ability to repay -- all that has now changed. Haiti needs to be unburdened by this debt to begin the long road to recovery.
• Debt cancellation is not a silver bullet. Much more assistance will need to be mobilized for immediate needs and long-term recovery and development. But debt relief is one critical component to the strategy.
• ONE.org, Jubilee and many others have joined forces around this campaign