30567: HaitiAnalysis (News) The IDB and Haiti: Deliver us from Debt (fwd)

[Bob Corbett <corbetre@webster.edu>]

From:  haitianalysis-at-gmail-dot-com



The IDB and Haiti: Deliver us from Debt
<http://www.haitianalysis.com/2007/6/11/the-idb-and-haiti>

By: Tom Ricker - HaitiAnalysis.com

The Inter-American Development Bank board of governors announced on March
16, 2007 that it would cancel the debts of Nicaragua, Bolivia, Honduras,
Guyana, and Haiti. The debt cancellation is to cover all debts accrued prior
to December of 2004, and is retroactive to January 1, 2007 (meaning interest
accrued since the beginning of the year on this debt will not need to be
paid.) This is a total of $3.5 billion in debt cancellation for all five
countries, $4.2 billion if one tabulates the interest that would have been
paid as well. This was great news for all the countries involved...except
Haiti. Haiti, by far the most impoverished of the five countries, must wait
at least three years before it realizes this cancellation.

Why? The Inter-American Development Bank has conditioned its debt relief for
Haiti on the country's successful completion of the Heavily Indebted Poor
Country Initiative (HIPC). Haiti has been in HIPC for 10 months, but just
reached the first marker (or "decision point") in November. Completion of
HIPC is a minimum of three years away. The other four countries involved
have completed the HIPC process, and should see debt cancellation
immediately. It is important to note that the HIPC process was established
by the International Monetary Fund and the World Bank; the IDB is under no
obligation to tie its debt cancellation to HIPC.

In theory HIPC is supposed to commit governments to reform measures ensuring
that debt savings are targeted to poverty reduction, transparency and good
governance. Yet, the lending practices of these institutions have not
historically aligned with these goals and are actually biased against
Haiti's popularly elected governments. Of the roughly $600 million that
Haiti supposedly owes the IDB, only 43% was actually disbursed to an elected
government.

The IDB and Haiti's democratic governments

Roughly half of Haiti's current debt burden - from all sources - was accrued
before 1990 elections ushered in the first democratically elected leader in
Haiti. President Jean Bertrand Aristide took office on February 7, 1991 only
to be ousted in a coup on September 30th of that year.

Multilateral donors in general were not favorable to Aristide. The World
Bank approved $37 million in new loans to the Aristide government; $30
million of this was approved 6 days before the coup. The same World Bank had
distributed $256 million in loans to the government of Jean Claude Duvalier,
and another $158 million to the series of military rulers that governed
Haiti between Duvalier's departure in February of 1986, and Aristide's
election.

The IDB did little better, approving a paltry $12 million in loans to the
new democracy in Haiti during its short-lived 7 months, after approving $110
million in loans to the military junta that ruled Haiti prior to the
elections, including $55 million in 1990 alone.

When Aristide re-took his presidential office in 1994, the response of
lenders was initially generous – but with strings. The World Bank issued
$153 million in 1995 and 1996 combined. The IDB approved nearly $190 million
in loans during 1995, and an additional $82 million in 1996. There the well
ran dry. When Aristide and his successor Rene Preval (1996-2001) balked at
some of the conditions attached to new loans, particularly those involving
privatization of some state industries, lenders, led by the U.S.
government's Agency for International Development, simply stopped providing
assistance.

The World Bank would not issue a new loan to Haiti until 2005, and then to
an "interim" government appointed by the Bush administration following a
second coup d'etat against Aristide. The IDB, though it would approve new
loans in 1997 and 1998, disbursed little between 1998 and the February 2004
coup –and then, only late in 2003 after Aristide had drained the foreign
reserves of the country the previous July to pay arrears to Haiti's
creditors.

This de facto aid embargo is often portrayed as a response to an election
"controversy" in 2000 concerning the distribution of seats in seven senate
races. It is important to note that this happened five months before the
presidential election in November that year, and thus well before Aristide
was sworn into office for a second term. In reality, under pressure from the
U.S. government, the international donor community was simply deepening a
policy that had been in place since 1996 – namely, not to broker any
compromise with popularly elected governments in Haiti that blocked
neo-liberal reform efforts. The policy was a clear violation of IDB rules
–whose charter requires that disbursement decisions not be made for
political purposes.

After withholding millions in assistance to an elected government, the IDB
approved $200 million in new loans in November of 2003 – most of which would
not be disbursed until after the coup in February in 2004. The IDB then
approved an additional $215 million during 2005 alone to an un-elected
interim authority. Comparatively, since Rene Preval took office in May of
2006 following an overwhelming electoral victory, the IDB has promised only
$85 million in new loans, and has yet to disburse any of it.

Given the lukewarm affection the IDB has demonstrated for Haiti's democracy,
it seems seriously wrong to now demand that Haiti wait an additional three
years for debt cancellation under the guise of promoting good governance.

What does waiting three more years for debt cancellation mean?

Haiti will pay $270 million more in total debt service between now and the
fiscal year ending in 2010; $120 million of this will go to the IDB.
Ironically, because Haiti borrows from the IDB "fund for special operations"
– the concessional lending arm of the IDB that grants ten-year waivers on
payments of principal – most of these payments will be to service the
outstanding debts of Duvalier and the generals that ruled Haiti until 1990.

In the meantime, the most recent World Health Report (2006) estimated that
Haiti's government spends $10 per capita on health – or $83 million a year.
(The U.S. government spends $2,500 per capita on health.) With this budget,
Haiti has 25 doctors, 11 nurses, and 1 dentist per 100,000 people. Only 24%
of women are accompanied by a trained health provider during childbirth and
only 18% of births happen in a health facility. Haiti has the highest
HIV/AIDs infection rate and the lowest coverage of potable water in the
Western Hemisphere. The low levels of public expenditures on health also
means that services nearly always require a fee – which puts even the most
basic healthcare out of reach of the majority of Haitians.

As a result, between now and the end of fiscal year 2010 in Haiti 90-100,000
children will die before reaching the age of 11 months and another 30-40,000
will die before reaching the age of 5 years. Haiti's under-five mortality
rate is 1500% higher than the United States.' Based on the number of live
births in the United States each year a comparable under-five mortality rate
would translate into 1.5-1.8 million children dying over the same period of
time. Would we sit by and watch that happen?

Approximately 6,000 women will die during childbirth in Haiti between now
and October 2010. In the United States, with 35 times the population, the
total number of deaths will likely be less than 2,000. At the same maternal
mortality rate as Haiti, nearly 100,000 women would die in the United States
during childbirth over a comparable period. Could we sit by and watch that
happen?

Only 6 percent of Haiti's population is over 60, compared to 16 percent in
the United States. Haiti's life expectancy is 53 years and falling.

Would $120 million change all of this? Probably not. But an increase in
public expenditures on health service of $30-40 million a year would make a
huge difference NOW. Haiti could almost double the number of doctors in the
public sector, reduce or even eliminate fees on basic services, expand
vaccination programs or other priorities. If the World Bank and bi-lateral
creditors were to follow suit, and cancel Haiti's debts immediately, this
could be done while also increasing expenditures on education and extending
credits to small farmers to begin to address the collapse of Haiti's rural
economy.

Making Haiti wait three to four years literally means thousands of more
people will die from preventable health problems and/or lack of access to
services. How could this possibly be regarded as a "good governance"
outcome? It is time for the IDB to finally stand with Haiti's democratically
elected government. It would simply be criminal to make Haiti wait another
day for debt cancellation.

Representative Maxine Waters (D-CA) introduced House Resolution 241 in March
this year. This resolution would direct the President to use the influence
of the U.S. government in the IDB and World Bank to insure that Haiti's debt
is cancelled immediately – not three years from now. While this may be a
small step, it is an important one and all should be encouraged to touch
base with their members of Congress to ask them to co-sponsor this
resolution.