Haiti’s Debt

Despite being the most impoverished country in the Western Hemisphere, Haiti lags behind many countries in the Americas in obtaining debt relief through a program run by the International Monetary Fund (IMF) and the World Bank.

A hard-hitting paper published in December by the Washington D.C.-based Center for Economic and Policy Research (CEPR) argues that the IMF and World Bank should disregard the rules of their HIPC (Heavily Indebted Poor Country) program: “Haiti’s debt should be cancelled without further delay,” wrote Mark Weisbrot and Luis Sandoval, authors of the study entitled “Debt Cancellation for Haiti: No Reason for Further Delays.”

If Haiti were to comply with the conditions of the HIPC program by September 2008, then about $1.2 billion of its $1.5 billion external foreign debt would be canceled.  The study explains why it is very unlikely that Haiti will meet the conditions of the program by that date.

As a result, Haiti will have to pay an additional $44.5 million in debt service payments in 2009 alone to multilateral institutions (mostly the World Bank and the Inter-American Development Bank).  “This is equivalent to about 26 percent of Haiti’s spending on public health, where there are many vital unmet needs.” noted the study.  The life expectancy of Haitians is an abysmal 53 years, with 76 percent living on less than $2 per day.

In December the International Herald Tribune reported that Doctors Without Borders (MSF), citing improved security, would be leaving the Port-au-Prince slum of Cité-Soleil.  John Carroll, a doctor living in Cité-Soleil, writes, however, that “structural violence is still at an all time high in Soleil.  The children are literally starving to death and their immune systems are rendered impotent.  Diseases such as pneumonia and meningitis fill the overcrowded pediatric hospital wards.”  He laments that patients of Saint Catherine’s, the only functional hospital in Cité-Soleil, need Doctors Without Borders as well as “participation from the State of Haiti.”

Marlene Bastien, the executive director of Fanm Ayisyen Nan Miyami/Haitian Women of Miami (FANM), argues that US policy makers should support the dropping of Haiti’s debt, writing recently that a “self-supporting Haiti is good for Florida.  The more health and prosperity in Haiti, the less anyone will need to worry about seeing another boat wash up on our shores like it did March 28 at Hallandale Beach.”

But international aid to Haiti has fluctuated heavily over the years, slowing when elected governments promoted sovereign policies.  Haiti was excluded from the HIPC program in 1996 based on a “technicality” that the IMF tacitly admitted was a mistake when Haiti was reinstated in 2006.  Hence, observed Weisbrot and Sandoval, through no fault of its own, Haiti lost several years to comply with conditions of the program.  However, they also argue that there is “little reason to believe that the conditions set by the IMF and World Bank for further debt cancellation are likely to benefit Haiti.”

The CEPR study cites a report by the IMF’s own Independent Evaluation Office which examined the experience of 29 Sub-Saharan African countries that were subject to IMF conditions from 1999-2005.  It found that IMF pressure contributed to diverting three quarters of aid money away from urgent needs and instead directed it towards paying down debt and building up reserves.

The IMF’s economic advice is now widely discredited in developing countries and largely explains why its portfolio worldwide fell from $96 billion as recently as 2004 to just $20 billion today.  Venezuela and Argentina, most notably, have achieved impressive economic growth and poverty alleviation in recent years by rejecting IMF orthodoxy.

The CEPR study also noted that multilateral institutions were key participants in a US led aid embargo on the government of Jean Bertrand Aristide from 2000 to 2004: “There is considerable evidence that this cut off of aid was part of a deliberate effort by the U.S. government to destabilize and ultimately topple the elected government of Haiti. . . . Because of their participation in this effort, the multilateral institutions should at the very least cancel Haiti’s debt as rapidly as possible.”

From 2000-2004 the aid embargo blocked loans totalling at least $500 million from a government that had a total budget of only $290 million in calendar year 2000.  In 2004 the economist Jeffrey Sachs recalled, “U.S. officials surely knew that the aid embargo would mean a balance-of-payments crisis, a rise in inflation and a collapse of living standards, all of which fed the rebellion.”

The main justification for sanctions against the Aristide government was “flawed” legislative elections in 2000.  The results of those elections were in line with what USAID commissioned polls had predicted — Aristide’s Famni Lavalas Party romped to victory — and were certified as fair by the OAS.  However, with some allies in the OAS, Washington disputed how run-offs were calculated for seven senate seats (out of thousands of legislative and municipal posts filled), casting aspersions on an election overwhelmingly characterized by observers as free and fair.

Even with an ever shrinking budget, Aristide’s government invested heavily in education and health care, but a coup ousted the administration on February 29, 2004.  The embargo on aid to Haiti’s government was lifted after an unelected interim government backed heavily by the US, France, and Canada took over.

According to the Jubilee Debt Campaign, 40% of Haiti’s public debt stems from loans made to the US-backed dictatorships of Francois and Jean Claude Duvalier which brutalized and plundered Haitians from 1957 to 1986.

In March of 2007, US Congresswoman Maxine Waters brought a resolution before House of Representatives calling for immediate debt relief for Haiti.  The resolution presently has 66 cosponsors.  The Oregon-based Institute for Justice and Democracy in Haiti (IJDH) has urged US citizens to pressure their elective representatives to support the resolution.

Bastien observes that “Haiti’s debt is an albatross, a form of present-day enslavement that maintains poverty and desperation — a burden on its government, people and future.”

IMF and World Bank officials were asked to comment on the CEPR study but did not respond to requests.

Joe Emersberger and Jeb Sprague contribute to HaitiAnalysis.com.

| Print