Haiti
- Total external debt: $1.3 billion
- Total external debt payments: Haiti gave $58 million to the rich world in 2005 in debt payments.
- Population: 8.5 million
- Poverty: 80% of people live on less than $2 a day
- Average life expectancy: 52.2 years
(All figures are latest available from World Bank and UN Human Development Index. Most are 2005)
DROP THE DEBT FAST
Haiti is the focus of the Drop the Debt Fast on Tuesday 22 April. On this day in 1971, the death of Haitian dictator, Francois 'Papa Doc' Duvalier was announced.
Where did the debts come from?
Between 1964 and 1986 Haiti was ruled by the corrupt and oppressive Duvalier family. Loans incurred during this period alone are estimated to account for approximately 40% of Haiti's debt. These funds were used to strengthen the Duvaliers control over Haiti and for various fraudulent schemes. Large amounts were simply stolen by the Duvaliers. Although donor countries and institutions were aware of the misappropriation of funds, it was tolerated so long as the Duvaliers stayed in the anti-communist camp.
Why should the debt be cancelled?
This money was used to prop up a corrupt and oppressive regime and should not now be repaid at the expense of those who have already suffered at the hands of this regime. The Haitian people should not have to pay for the crimes of their past leaders. Not only did these loans fail to benefit the Haitian people, the consequent debt service payments continue to cost the country millions of dollars that could be better spent on education and health. For example, less than one quarter of children aged between six and 12 living in rural areas are enrolled in school. Haiti is one of the countries worst affected by the recent huge increase in food prices, which has led to riots and social unrest.
Debt cancellation denied
Haiti is the poorest country in the Western Hemisphere. But Haiti was not considered for debt relief when the Heavily Indebted Poor Countries initiative (HIPC) was first launched in 1996 as the international process to grant debt relief and cancellation. In 1998, Claire Short, then UK Secretary of State for International Development, said that Haiti should be included in HIPC as an "exceptional case". In 2005, the World Bank stated that Haiti seemed to be committed to poverty reduction and tackling corruption and therefore could be "potentially eligible" for the HIPC scheme.
Debt cancellation to come?
In October 2006, Haiti was finally allowed to enter HIPC. However, campaigners argue that HIPC is not the right route to debt cancellation, for Haiti or any other country. Haiti has been told that when it finally completes HIPC, it will be eligible for cancellation of around $716 million of its total debt of $1.3 billion. (This also includes cancellation for the Multilateral Debt Relief Initiative (MDRI), which came out of the Gleneagles G8 summit.) In the meantime, Haiti will receive temporary debt relief from certain creditors; but in order to get its old debts permanently cancelled, it will have to undertake several more years of controversial conditions before having the debt cancellation HIPC provides. Under the conditions of the World Bank and IMF’s debt relief program, Haiti will not qualify for cancellation until possibly 2009 - by which time the country will have paid hundreds of millions of dollars more in debt service. These resources could be more effectively used for poverty reduction initiatives.
What is left out?
The debt cancellation under MDRI will only cover debts contracted up to the end of 2004 for the IMF and Inter-American Development Bank (IDB) and until the end of 2003 for the World Bank. Debts contracted after this date are excluded. This includes the $40 million of Haiti’s own reserves that it used in 2005 to clear arrears to Word Bank before it could enter HIPC. Haiti will also receive reduced loans from both the World Bank and IDB to offset the debt cancellation they provide. This is not acceptable as Haiti needs and deserves full debt cancellation as well as aid. Without this, Haiti will be unable to truly break from its long history of debt and poverty.
Previous news on Haiti:
Haiti starts debt cancellation process (November 2006)
Last updated: April 2008
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