16314: Simidor: Lofty Goals of the IDB Loans (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Daniel Simidor <karioka9@mail.arczip.com>


Press Release

July 23, 2003

IDB REACTIVATES HAITI LOAN PROGRAM

Bank approves reformulation of $50 million fast-disbursing sector
loan; streamlines four soft loans for $145.9 million for health,
education, rural roads and water programs

The Board of Directors of the Inter-American Development Bank
today welcomed the amendments agreed between the IDB’s management
and Haitian authorities to streamline the implementation of four
investment loans totaling $145.9 million for Haiti.

These concesional resources will support reform programs in
health, education, rural roads and water and sanitation, four key
sectors for sustainable development and poverty reduction in
Haiti. IDB President Enrique V. Iglesias and Haitian Economy and
Finance Minister Faubert Gustave are due to sign the amended
contracts for the four loans on Friday in Port-au-Prince.

The IDB Board also approved the reformulation of a $50 million
sector loan for Haiti. The new contract for that fast-disbursing
loan was signed this afternoon by IDB Executive Vice President
Dennis Flannery and the Haitian embassy’s chargé d’affaires, Harry
Franz Léo.

The IDB became one of the Haiti’s principal sources of financing
after the country returned to democratic rule in 1994, disbursing
more than $326 million in support of social and agricultural
programs and infrastructure reconstruction projects.

The IDB always kept its country office open in Port-au-Prince and
continued with its technical cooperation program, using grants to
support operations in which private sector and non-governmental
organizations are key services providers. That continuity will
help the IDB respond rapidly to Haitian government proposals and
coordinate its activities with the international community.

The reactivation of the IDB’s loan program was carried out in
close coordination with the international community. Through
various resolutions, the Organizations of the American States has
encouraged the international financial institutions to revitalize
their programs with Haiti as a key step towards preserving
democratic institutions and alleviating the Haitian people’s
suffering.

Fast-disbursing Sector Loan

The $50 million sector loan, approved in December 1996 and
ratified in June 2003, was originally intended to stimulate
private initiative and economic growth. The program, which was
also to have four different executing agencies, was to be
disbursed in four tranches subject to a series of conditions.

Under the reformulation, the program will have a single executing
agency, the Economy and Finance Ministry, and will be disbursed in
two tranches. The conditions were also modified to reflect the
steps Haitian authorities are taking towards deepening financial
sector reform, enhancing transparency and governance in public
sector management and the annual budget process and increasing
controls over ministries’ current accounts.

Loans for Health, Education, Rural Roads and Water

The four investment loans totaling $145.9 million to support
reform programs in the health, education, rural roads and water
sectors were approved between 1997 and 1998. With the Haitian
authorities’ agreement, these loans were simplified to speed up
the activities they will finance and enable more flexible
monitoring and evaluation of the programs, in order to identify
and make any necessary adjustments to ensure their progress.

Two of the programs already have sources of cofinancing and the
IDB is considering alternatives for cofinancing for the other two
programs, with a view to alleviate the burden of providing local
counterpart funds and maximize the benefits for Haiti. Three of
the programs will also be supported through grants to strengthen
the capability of Haitian agencies to undertake projects.

The $54 million loan for the water and sanitation program will
support the Haitian government plan to reform that sector. Under
the amended operation, the IDB will be able to disburse up to $20
million to finance priority investments in five secondary cities
in order to gauge the reform’s effects before Haiti establishes a
new institutional framework for the water sector and extends the
program to other towns and settlements.

The rural roads rehabilitation and maintenance program will be
supported with a $50 million loan that will focus on employment
generation in poor communities. The program will help improve 500
kilometers of secondary and tertiary roads, especially in areas of
the south and east of Haiti that were recently hit by floods, and
will foster the creation of a national road maintenance fund.

A $25 million loan will help finance a program for the
reorganization and rationalization of Haiti’s health sector. The
program aims to raise the quality of and expand the access to
health services provided by public hospitals and private clinics,
increase the efficiency of service at a national level and develop
innovative models to finance and deliver basic health services.

The basic education reform program developed under Haiti’s
National Plan for Education and Training will be supported by a
$19.4 million loan. The amendments agreed with the Haitian
authorities will allow for greater flexibility in the program’s
execution, in order expand access to basic education in the
country’s poorest areas and improve the quality of education
services.

These four investment loans were granted for 40-year terms, with a
10-year grace period. The annual interest rate is 1 percent during
the first decade and 2 percent thereafter.