15582: Ewen: Haiti reaches agreement with IMF in a deal that could free up millions in aid (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Stephen Ewen <sewe0171@fau.edu>



Haiti reaches agreement with IMF in a deal that could free up millions in
aid

MICHAEL NORTON, Associated Press Writer

Tuesday, May 13, 2003

(05-13) 13:25 PDT PORT-AU-PRINCE, Haiti (AP) --

Haiti has agreed to cut spending and stabilize its currency in a deal with
the International Monetary Fund that could pave the way for other
institutions to release suspended funds, an IMF official said Tuesday.

Haiti, the Western Hemisphere's poorest nation, has sunk deeper into
despair since international financial organizations suspended more than
$500 million in aid to the Caribbean nation.

Some institutions also blocked loans after flawed legislative elections in
May 2000. Citing increasing poverty, the Organization of American States
urged financial institutions to normalize relations with Haiti, but its
debts to the Inter-American Development Bank and the World Bank already
have mounted to more than $60 million.

International financial institutions do not lend to countries in arrears,
said Mounir Rached, the IMF's representative in Haiti.

The agreement, reached on Monday after intense negotiations, obliges Haiti
to present a plan that cuts deficit spending by nearly half, from 5.2
percent to 2.7 percent. The plan also requires Haiti to reduce inflation
from 13 percent to 10 percent and to monitor spending in public sector
enterprises.

"It's a great step. Last year, they weren't ready to do it," Rached said.

"This agreement with the IMF will help other donors ... resume financial
assistance," he added, pointing to the IDB, the World Bank and the
15-nation European Union.

If Haiti fulfills its obligations during 12 months, it will have access to
between $100 and $150 million in IMF funds for poverty reduction and
growth.

The agreement sends "a strong signal to the international community" that
Haiti is putting its economic house in order, said Haiti's Finance and
Economy Minister Faubert Gustave.

Haiti owes about $30 million to the Inter-American Development Bank and
about $30 million to the World Bank.

Once the IMF agreement is signed, expected this month, Haiti will be
eligible for a $50 million IDB budget support loan if it is able to come
up with the money still owed to donor nations or other sources. Haiti has
about $25 million in exchange reserves.

Once its debts are paid to the IDB, Haiti will be eligible to receive four
IDB loans totaling $146 million that were frozen at first because of the
elections, and remained stalled because of the arrears.

Since flawed May 2000 legislative races, the government and opposition
have been in a deadlock. The opposition now refuses to participate in new
elections as long as President Jean-Bertrand Aristide is in power.

It was Aristide's governing party, Lavalas Family, that swept the races,
winning more than 80 percent of the seats in parliament.