by Keith Richmond
In the wake of the deaths and devastation caused by the earthquake in Haiti, campaigners are calling for the cancellation of all of the country’s outstanding international debt. They have also condemned the International Monetary Fund for extending new loans to the country at a time when, they say, significant grant aid from the international community is what is really required.
The Jubilee Debt Campaign welcomed the cancellation of two-thirds – $1.2 billion – of Haiti’s debt in 2009, but notes that the country still has $641 million in debt on its books and in 2010 is projected to pay around $10 million to international financial institutions – money it can ill afford.
The group called the IMF’s proposed offer of $100 million in new lending to Haiti “completely inappropriate”. It says the proposal contradicts the IMF’s own policy recommendations that Haiti should not borrow more money because, even after debt cancellation, its potential for “debt distress” remains high.
Nick Dearden, director of the Jubilee Debt Campaign, said: “Haiti’s dire poverty has been built on centuries of injustice perpetrated against the country by the rich world. Now it is time for our part of the world to pay its debt to Haiti. That means full cancellation of all of Haiti’s debts and large grant funding.
“It is completely inappropriate for international institutions like the IMF, which bear a good degree of responsibility for the poor state of Haiti’s economy today, to be making new loans with more damaging conditions.”
Julian Oram, head of policy at the World Development Movement, said: “The poverty that already exists in Haiti will be even more devastating as a result of this emergency and it clearly requires high levels of aid to combat it. This should also come with wholesale debt cancellation and the need to ensure that aid is given in the form of genuine grants as opposed to traditional IMF-backed loans, which would undoubtedly worsen an already dire situation.”
Campaigners are angry that IMF loans come with conditions which include raising prices for electricity, refusing pay rises for public sector employees except those on the minimum wage and keeping inflation as low as possible. Haiti, they argue, is still suffering as a result of conditions applied by the IMF to its economy in the past.
Fifteen years ago, the IMF forced Haiti to slash its rice tariff, leading to a surge in imports of more than 150 per cent between 1994 and 2003, most of it coming from the United States. This devastated the country’s farmers.
Traditional rice-farming areas now have some of the highest concentrations of malnutrition and a country that was self-sufficient in rice is dependent on foreign imports.
