16103: (Chamberlain) Haiti-Aid (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Greg Chamberlain <GregChamberlain@compuserve.com>

   By MICHAEL NORTON

   PORT-AU-PRINCE, July 10 (AP) -- Haiti has paid $32 million in arrears to
the Inter-American Development Bank, nearly wiping out its foreign reserves
in its effort to resume frozen international loans.
   The Haitian Central Bank notified the IDB it had made the payment from
its dollar reserves, an official, speaking on condition of anonymity, said
Wednesday from bank headquarters in Washington.
   The Central Bank had about $35 million in reserves before the payment.
   In Port-au-Prince, Communications Minister Lilas Desquiron confirmed
Tuesday's payment. "This won't solve all our problems but it will give us
some air to breath," she told The Associated Press.
   Already the Western Hemisphere's poorest nation, Haiti has sunk deeper
into misery since international financial organizations suspended more than
$500 million in loans and aid after flawed legislative elections swept by
President Jean-Bertrand Aristide's party in May 2000.
   Citing the growing poverty, the Organization of American States in
September urged those institutions to normalize relations.
   But Haiti's debt to the IDB gradually mounted to $32 million, and
international financial institutions do not lend to countries in arrears.
   The arrears had to be paid to start up the complicated process toward
resumption of aid.
   Last month, several Haitian banks negotiated with the government to bail
their country out with a bridge loan, but they apparently did not receive
the guarantees they expected.
   At the same time, Haiti and the International Monetary Fund signed an
agreement obliging Haiti to cut deficit spending from 5.2 to 2.7 percent,
reduce inflation from 13 to 10 percent and monitor spending in public
sector enterprises.
   Payment of the arrears and the agreement are necessary steps toward
receiving a $50 million IDB budget support loan, ratified by Haiti's
Parliament last month. The IDB board of directors must approve the terms of
the loan, a decision expected by the end of July, the IDB official said.
   The first $32 million of the budget loan would reimburse the Central
Bank.
   The disbursement of four IDB loans totaling $146 million -- frozen
because of the elections, then stalled because of the arrears -- could then
begin.
   More than $300 million in additional IDB loans would also become
available.
   If Haiti keeps its promises to the IMF during 12 months, the Caribbean
nation will have access to between $100 million and $150 million in IMF
funds for poverty reduction and growth.
   Other aid, however, remains tied up by Haiti's unresolved political
conflict.
   The World Bank has pulled out of Haiti and will not resume its loan
program until Haiti complies with the IMF plan, pays arrears of more than
$30 million and reaches a political settlement.
   The European Union terminated its $15.9 million budget support grant in
2001 and will not provide another until Haiti complies with the IMF plan
and shows progress in resolving the political crisis.