Haiti's external debt
Encyclopedia
Haiti
’s legacy of debt began shortly after gaining independence from France
in 1804. In 1825, France, with warships at the ready, demanded Haiti compensate France for its loss of men and slave colony. In exchange for French recognition of Haiti as a sovereign republic, France demanded payment of 150 million francs (modern equivalent of $21 billion). In 1838, France agreed to reduce the debt to 60 million francs to be paid over a period of 30 years. In 1883, Haiti made the final payment.
From 1957 to 1986 Haiti was ruled by the corrupt and oppressive Duvalier
family. Loans incurred during this period alone were estimated to account for approximately 40% of Haiti's debt in 2000, before debt-relief was granted. 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.
, International Monetary Fund
(IMF), and the Inter-American Development Bank
, based on the argument that this debt is unjust (under a legal term called odious debt
) and that Haiti could better use the funds going towards debt service for education, health care, and basic infrastructure. (In fact, Haiti's current debts are not odious because they were all contracted by Haiti's democratic government after 2004. Older debts were already canceled under the Heavily Indebted Poor Countries
program and the related Multilateral Debt Relief Initiative.)
The Haiti Debt Cancellation Resolution had 66 co-sponsors in the U.S. House of Representatives as of February 2008.
Several organizations in the U.S. issued action alert
s around the Haiti Debt Cancellation Resolution, and a Congressional letter to the U.S. Treasury, including Jubilee USA, the Institute for Justice & Democracy in Haiti
and Pax Christi USA.
and IMF's highly indebted poor country initiative (HIPC
) following the election of new president René Préval
. In September 2009, following a program of economic and social reforms, Haiti met the requirements for completion of the HIPC program, qualifying it for cancellation of its external debt obligations. This cut the face value of the debt by $757 million and future debt service (including interest) by $1.2 billion.
Haiti's largest creditor, the Inter-American Development Bank
(IDB), was part of the debt relief initiative, but the initiative only canceled loans made before 2005, and the IDB has lent more since. Haiti's debt to the IDB amounts to approximately half a billion dollars with debt service payments projected by the IMF to increase in the following years. The U.S. government has been paying this debt service on Haiti's behalf since before the quake.
With the devastating effects of the early 2010 earthquake in Haiti
there came renewed calls for a further debt cancellation from civil society groups. In light of the tragedy and new borrowing that lifted Haiti's debts back to $1.25 billion, groups such as the Jubilee Debt Campaign called for this debt to be dropped. Furthermore, during the aftermath emergency money was offered to the Haitian government from the IMF in the form of loans. Civil society groups protested the offer of loans and not grants for such an already heavily indebted country trying to cope with such destruction. Some have argued, however, that because Haiti's annual debt service payments are so low ($9 million a year, net of the debt service paid on Haiti's behalf by the U.S. government), canceling the debt would do little to help the country recover from the earthquake, and should not be a priority for activism.
Agence France Press reported on 26 January 2010 that President Hugo Chavez
of Venezuela
said that Petrocaribe
, Venezuela's cut-rate regional energy alliance, will forgive Haiti's debt. Haiti's debt with Venezuela is $295 million, about one-quarter of its foreign debt of $1.25 billion, according to International Monetary Fund figures.
On 28 May 2010, the World Bank
announced it had waived Haiti's remaining debts to the bank. The value of the waiver was $36 million.
Haiti
Haiti , officially the Republic of Haiti , is a Caribbean country. It occupies the western, smaller portion of the island of Hispaniola, in the Greater Antillean archipelago, which it shares with the Dominican Republic. Ayiti was the indigenous Taíno or Amerindian name for the island...
’s legacy of debt began shortly after gaining independence from France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
in 1804. In 1825, France, with warships at the ready, demanded Haiti compensate France for its loss of men and slave colony. In exchange for French recognition of Haiti as a sovereign republic, France demanded payment of 150 million francs (modern equivalent of $21 billion). In 1838, France agreed to reduce the debt to 60 million francs to be paid over a period of 30 years. In 1883, Haiti made the final payment.
From 1957 to 1986 Haiti was ruled by the corrupt and oppressive Duvalier
Duvalier
Duvalier is a surname, and may refer to:* François Duvalier , nicknamed "Papa Doc", President of Haiti * Jean-Claude Duvalier , nicknamed "Baby Doc", son of François Duvalier and President of Haiti...
family. Loans incurred during this period alone were estimated to account for approximately 40% of Haiti's debt in 2000, before debt-relief was granted. 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.
Initiatives to cancel Haiti's debt
Jubilee USA, Jubilee Debt Campaign (UK) and others, called for the immediate cancellation of Haiti's debt to multilateral institutions, including the World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF), and the Inter-American Development Bank
Inter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
, based on the argument that this debt is unjust (under a legal term called odious debt
Odious debt
In international law, odious debt is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred...
) and that Haiti could better use the funds going towards debt service for education, health care, and basic infrastructure. (In fact, Haiti's current debts are not odious because they were all contracted by Haiti's democratic government after 2004. Older debts were already canceled under the Heavily Indebted Poor Countries
Heavily Indebted Poor Countries
Heavily Indebted Poor Countries is a group of 40 developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund and the World Bank.- History and structure :...
program and the related Multilateral Debt Relief Initiative.)
The Haiti Debt Cancellation Resolution had 66 co-sponsors in the U.S. House of Representatives as of February 2008.
Several organizations in the U.S. issued action alert
Action alert
An action alert is a message that an organization sends to mobilize people - often members of their group and supports of a specific point of view - calling on them to take action to influence public policy. Typically, action alerts are in reference to a timely issue, where prompt action is needed...
s around the Haiti Debt Cancellation Resolution, and a Congressional letter to the U.S. Treasury, including Jubilee USA, the Institute for Justice & Democracy in Haiti
Institute for Justice & Democracy in Haiti
The Institute for Justice & Democracy in Haiti is a non-profit organization based in Boston, Massachusetts, USA that seeks to accompany the people of Haiti in their non-violent struggle for the consolidation of constitutional democracy, justice and human rights. IJDH distributes information on...
and Pax Christi USA.
Debt cancellation
Haiti had a total external debt of $1.8 billion at its peak. In April, Haiti was added to the World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and IMF's highly indebted poor country initiative (HIPC
Heavily Indebted Poor Countries
Heavily Indebted Poor Countries is a group of 40 developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund and the World Bank.- History and structure :...
) following the election of new president René Préval
René Préval
René Garcia Préval is a Haitian politician and agronomist who was the President of the Republic of Haiti from 14 May 2006 to 14 May 2011. He previously served as President from February 7, 1996, to February 7, 2001, and as Prime Minister from February 1991 to October 11, 1991.-Early life and...
. In September 2009, following a program of economic and social reforms, Haiti met the requirements for completion of the HIPC program, qualifying it for cancellation of its external debt obligations. This cut the face value of the debt by $757 million and future debt service (including interest) by $1.2 billion.
Haiti's largest creditor, the Inter-American Development Bank
Inter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
(IDB), was part of the debt relief initiative, but the initiative only canceled loans made before 2005, and the IDB has lent more since. Haiti's debt to the IDB amounts to approximately half a billion dollars with debt service payments projected by the IMF to increase in the following years. The U.S. government has been paying this debt service on Haiti's behalf since before the quake.
With the devastating effects of the early 2010 earthquake in Haiti
2010 Haiti earthquake
The 2010 Haiti earthquake was a catastrophic magnitude 7.0 Mw earthquake, with an epicentre near the town of Léogâne, approximately west of Port-au-Prince, Haiti's capital. The earthquake occurred at 16:53 local time on Tuesday, 12 January 2010.By 24 January, at least 52 aftershocks...
there came renewed calls for a further debt cancellation from civil society groups. In light of the tragedy and new borrowing that lifted Haiti's debts back to $1.25 billion, groups such as the Jubilee Debt Campaign called for this debt to be dropped. Furthermore, during the aftermath emergency money was offered to the Haitian government from the IMF in the form of loans. Civil society groups protested the offer of loans and not grants for such an already heavily indebted country trying to cope with such destruction. Some have argued, however, that because Haiti's annual debt service payments are so low ($9 million a year, net of the debt service paid on Haiti's behalf by the U.S. government), canceling the debt would do little to help the country recover from the earthquake, and should not be a priority for activism.
Agence France Press reported on 26 January 2010 that President Hugo Chavez
Hugo Chávez
Hugo Rafael Chávez Frías is the 56th and current President of Venezuela, having held that position since 1999. He was formerly the leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007, when he became the leader of the United Socialist Party of Venezuela...
of Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
said that Petrocaribe
Petrocaribe
Petrocaribe S. A. is a Caribbean oil alliance with Venezuela to purchase oil on conditions of preferential payment. The alliance was launched in June 2005. The payment system allows for a few nations to buy oil on market value but only a certain amount is needed up front; the remainder can be paid...
, Venezuela's cut-rate regional energy alliance, will forgive Haiti's debt. Haiti's debt with Venezuela is $295 million, about one-quarter of its foreign debt of $1.25 billion, according to International Monetary Fund figures.
On 28 May 2010, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
announced it had waived Haiti's remaining debts to the bank. The value of the waiver was $36 million.
See also
- Third world debt
- HaitiHaitiHaiti , officially the Republic of Haiti , is a Caribbean country. It occupies the western, smaller portion of the island of Hispaniola, in the Greater Antillean archipelago, which it shares with the Dominican Republic. Ayiti was the indigenous Taíno or Amerindian name for the island...
- Institute for Justice & Democracy in HaitiInstitute for Justice & Democracy in HaitiThe Institute for Justice & Democracy in Haiti is a non-profit organization based in Boston, Massachusetts, USA that seeks to accompany the people of Haiti in their non-violent struggle for the consolidation of constitutional democracy, justice and human rights. IJDH distributes information on...
(IJDH) - Jubilee USA
- Jubilee Debt Campaign (UK)
External links
- Cancel Haiti's Odious and Onerous Debt- Haiti Debt Webpage
- Break the Chains of Haiti's Debt
- Factsheet on Haiti's Debt
- Debt Cancellation for Haiti: No Reason for Further Delays from the Center for Economic and Policy ResearchCenter for Economic and Policy ResearchThe Center for Economic and Policy Research is a progressive economic policy think-tank based in Washington, DC, founded in 1999. CEPR works on Social Security, the US housing bubble, developing country economies , and gaps in the social policy fabric of the US economy.According to its own...
- "Haiti Needs Justice, Not Charity"
- "The Question Not Asked: Paul Wolfowitz, Haiti and the World Bank"
- For Haitians' Sake, Drop the "Drop the Debt"
- Inter-American Development Bank - Debt Relief
- Haiti: Enhanced Initiative for Heavily Indebted Poor Countries—Completion Point Document
- France Urged to Pay $40 Billion to Haiti in Reparations for "Independence Debt" - video report by Democracy Now!Democracy Now!Democracy Now! and its staff have received several journalism awards, including the Gracie Award from American Women in Radio & Television; the George Polk Award for its 1998 radio documentary Drilling and Killing: Chevron and Nigeria's Oil Dictatorship, on the Chevron Corporation and the deaths of...