Bank chief challenged over Haiti debt claims
>> UPDATE: World Bank responds
In remarks reproduced on the World Bank's website, Zoellick is reported to have told journalists in Port-au-Prince that Haiti’s $1.7 billion debt was “half-forgiven” and promised “the rest of the debt” could soon be cancelled. He was also reported to have stated that $500 million of Haitian debt had already been cancelled.
In fact, none of Haiti’s debt stock has yet been cancelled by the World Bank, and in recent weeks the World Bank has delayed debt cancellation for Haiti by six months.
This comes as the UN’s Under-Secretary-General for Humanitarian Affairs John Holmes described the four hurricanes that have struck the country as the “worst disaster in the last 100 years” to strike Haiti.
Jubilee Debt Campaign, along with six other Haitian and international civil society groups, has written to the World Bank President requesting a clarification. The campaigners point out that:
- Haiti’s total external debt stands at $1.7 billion, compared to $1.36 billion in 2005, when it was told it was eligible for the World Bank and IMF’s Heavily Indebted Poor Countries debt relief initiative (HIPC).
- Under HIPC and the Multilateral Debt Relief Initiative that follows completion of HIPC, as well as an associated agreement by the Inter-American Development Bank, Haiti stands to receive approximately $1.2 billion of debt cancellation, but only when it reaches HIPC ‘Completion Point’.
- At the World Bank and IMF annual meetings in Washington earlier this month, Haiti’s expected Completion Point date was put back from ‘last quarter 2008’ to ‘first half 2009’ – a delay of six months.
- The only debt relief Haiti has so far received under the HIPC scheme has been limited relief on its debt service payments since entering the scheme in 2006 – estimated by the IMF as $19.8 million. However, no debt stock is actually forgiven under HIPC until a country reaches Completion Point. Haiti’s budgeted debt service payments in 2008 have continued to be more than $1 million every week.
- Some $400 million to $500 million of Haiti’s debt will not be cancelled under HIPC even when the country reaches Completion Point because they are not covered by the cut-off dates for the scheme. World Bank debts are only cancelled up to the end of 2003 and IMF debts up to the end of 2004.
Nick Dearden, Director of Jubilee Debt Campaign UK, said:
"It's already a scandal that the World Bank has put back Haiti’s debt relief by six months when it’s facing its worst humanitarian disaster in a century,"
"But for the Bank’s President to come to the country and apparently mislead the Haitian people that money has been made available to help them is unforgivable."
"Zoellick should be pressuring World Bank shareholders to cancel Haiti’s illegitimate debts immediately – instead he’s giving distressingly inaccurate reassurances that help is on its way.”
Charles Arthur, Co-ordinator of the Haiti Support Group, said:
“The fact that the President of the World Bank apparently doesn’t understand how his own debt relief scheme works speaks volumes about how well the World Bank is tackling the international debt crisis."
"What’s worse, even if it does finally complete the process, Haiti will still owe around US$500 million and will still face hundreds of thousands of dollars of debt service payments every week."
"As Zoellick says, the country is at a tipping point, and it urgently needs all the funds it can get."
The call for a clarification from Zoellick comes as the United Nations reports that only 40% of the $107 million called for in its flash appeal for Haiti has been pledged – let alone delivered.
The full list of organisations that signed the letter is: Center for Economic and Policy Research, Haiti Advocacy Platform Ireland-UK, Haiti Support Group, Institute for Justice & Democracy in Haiti, Jubilee Debt Campaign UK, Jubilee USA Network, Partners in Health.
You can read the full letter here.
>> UPDATE: World Bank responds
Jubilee Debt Campaign has received a response from Yvonne M. Tsikata, Director of the World Bank's Caribbean Countries Management Unit, Latin America and the Caribbean Region. Download it here. She admits that the World Bank hasn't actually cancelled half of Haiti's debt, and says "We have contacted several media, including AFP, to correct inaccurate statements that have appeared on this and other aspects of HIPC".
But she claims that cancelling Haiti's debt is "simply not an appropriate or effective channel" for helping Haiti deal with its current humanitarian catastrophe, claiming that it would "set a precedent that undermines the credibility of the HIPC framework overall".
Jubilee Debt Campaign believes that the credibility of the HIPC framework, which is a programme to deliver debt cancellation to countries on the basis of urgent humanitarian need, is fatally undermined by this kind of inflexibility. While world leaders can bail out reckless bankers at the drop of a hat, the World Bank's debt relief programme can't help a country facing its worst humanitarian disaster in a century. We will be keeping up the pressure to get a more just response from the World Bank.